If you bought it at four, thats the problem inflation wise, youre not necessarily down with inflation falling. You no he know what im saying youre going to make money because eventually theyre going to come down. Thats what i dont understand f youre telling me right now this isnt a good deal, youre telling me that im going to be able to get the ten year. Im telling you two things. Youll get your principal back and it is part of any diversified portfolio to have a large part in bonds where you know youll get your principal back thats all i can guarantee you. Year. 2 years from now, if rates fall and inflation goes down, wake up at 3 and you lock in higher rates, they always make a mistake in the bond market. Back here is what i was really thinking, i was asking experts about this this morning, we are getting into hazy territory because we are going cross discipline here. Im looking at 4. 4 and im thinking isnt there a 4 rule for 401 k retirement . At what point do we go to the territory where if you put a comfortable position into the 30 year, you can live off of that. There are things about this, and it really does make sense, but at some point we are getting to places dont the other thing you got 430, the 400 make every year on the 10,000 investment now you can get an appetizer. For the big return you can actually get a taxi from downtown to uptown and have a problem. Is mac on 10 grand there are people that say theyre using treasury direct for the first time and they admit im not making a lot of money, but it feels good do you like shrimp cocktail . Would you go for the dessert . That might seem like something youd not be able to afford. We are shedding light on the decline in the s p 500. Scott rubin her or rubbing her, they told limburg that options tied to the s p 500 with a maturity of less than 500 felt the decline by which it drop by 4. 7 in an hour. Thats known as zero days till expiration and forces the marketmakers to buy stocks to keep the books balanced. On tuesday, the cost of the strike place of 44. 40 spike from . 70 to nine dollars in a short span almost 100,000 billion dollars, you had with the initially sold for, citigroup earlier this week shows trading in the zero days expiration contract and it ballooned in popularity with xmis. This is a new thing . Not at all. If you are out of the money on friday you get it at noon say theyre closing at 1 00, they could be closing. And people to decide to do this and they had enough money to move this into the money, if you are 10 points out of the money in a cell program or by program, a 16 can go to 4. It is crickets out there. I dont know if you noticed the same thing, im around, did you think people are taking advantage of the thin volumes its machine trading also. When they have the same opportunity and just go for it . They would say we know our test and, i dont know, we have to ask them. The dog days are already over. What are the dog days . July third to august 11. Why those days . The astrological sign. Thats where dog days of august came from. Even though it is cancer month . I dont need it. Lets get an update on the wildfires in maui. Hawaiian electric is speaking to structuring firms to address the financial and legal challenges according to a wall street journal report that says more customer lawsuits are expected in the coming week. The journal reported that Hawaiian Electric concluded in 2019 that it had to do far more to prevent powerlines from emitteds marks but is done little to address it. Its amazing how much attention is on california with the same problems. Officials are still investigating the cause of the blazes that ravaged historic seaside communities and killed at least 111 people. In the meantime, new york city has band access the tik tok on Government Funds unofficial devices. Visited pose a Security Threat to Technical Networks with limited access the state owned phones with a few exceptions in the Public Relations field for marketing purposes. When you get a state like new york sign this and when is new york going to do it california go to do it . The doesnt seem like they are the ones not banning it . Be like okay its band on government devices, but nothing more galvanizing or flawed in terms of actually getting rid of it . What i can tell is whether its a Security Threat or whether we are actually much more in line with the sort of the sort of theater around our views the drone ports about putting all the inputs into your phone, if you have it on the app, its collecting all the keystrokes. Okay, i could see a problem. Collecting your keystrokes when you are on tiktok, not on everything. Are you sure . Im pretty sure. I believe they are moving this thing over single project houston i wonder if that is something that would actually suffice or if anybody thats been a lot of hoopla and not much substance. The content itself is corrupting youth. Thats what they are talking about. Oh, sure. Im as addicted to reels and stories on instagram you are seeing arent corrupted . How do you know you arent being totally corrupted. Its like sing try fentanyl, you will love it. I dont think the instagram algorithms are that good. The tiktok one is that much better . Thousands of times better but subversive subversive. On instagram its another mommy real and on tiktok it will be dozier they think they are undermining our youth from within. And then theres the Data Collection but there are people that know this is a multiyear plan. Is a sense of all, they are trying to destabilize things. They are smart enough to do that. Im not convinced. The real thing i dont understand is why im an apple fan. If everyone has such a problem with this thing, why isnt apple or google dozier its too popular. You think someone would come to them and say we cant have this. You arent worried about peeing off china . Theres a whole circular issue. Well talk about another story the wall street journal reporting that President Biden will announce metal from germany in canada, they found steelmakers in the official antitrust they make up 44 . New tariffs if you sell a product in one country at one price, you can then sell it at a materially cheaper price. In another country. You dont suddenly like something. Other trying to undermine america . Unrelated. But tariffs in general are a dislocation of you dont like tariffs either week i dont like them. You like the trump tariffs, thats why i didnt like them. But there must be some american makers of tin plate tariffs for tuna cans being harmed by this or presumably they would move ahead with this. Mac this is anybody making tin cans in the United States would be hurt by those dumping in the u. S. I do know that was such an issue. Coming up among the market catalysts, we have earnings, walmart, the full plan is less and we look into ciscos report. Is a the present premarket. You are watching squawk box. Wealthchanging question are you keeping as much of your investment gains as possible . High taxes can erode returns quickly, so you need a taxoptimized portfolio. At creative planning, our Money Managers and specialists Work Together to make sure your portfolio and wealth are managed in a taxefficient manner. Its what you keep that really matters. Why not give your wealth a second look . Book your free meeting today at creativeplanning. Com. Creative planning a richer way to wealth. 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. 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. Welcome back on squawk box. We have a lot going on. Will tell you what is on deck. Retail earnings that will not and coach pairing to to report next hour or so. We will keep our eyes on that and we have job claims do at 8 30 a. M. Eastern time. I am back on a thursday. Time to get another round of jobless claims. Lets check out cisco shares, they beat estimates, but full your guidance, and a touch light. Chuck robin said they gained three Percentage Points with the largest that working in the quarter so far. Joining us now, we welcome carrie firestone, chair ceo of Asset Management and cnbc. We talk about cisco. What is there to say . What you think . Cisco is on a come back and thank god for ai, because they can discuss ai a lot. If you need brothers for ai, this is a comedy that had its heyday in the late 1990s and it did nothing for a decade and a half or two decades. So now theyve got a whole new world, and i think Chuck Robbins pointed out on the call which wasnt well understood that the background really is growing and they got a lot of opportunities. Just in ai. Connect the dots a little bit for me, more demand for large, they need more routers. Its the chip plus routing the information. Its so much more. We arent an owner of cisco, but i see the appeal for people that missed the big tech trade, they missed mega caps and some of the heavy movers, it is a place to go. And theyre coming back and it looks pretty good. Decades. Its with ge, market dominance at 600 billion. 200 billion today. If the peak if you look at the 25 your start. What was the little phone . It was a little camera, a flip thing. It was the biggest fad for 2 years. Everyone was going out of their brains about it and they said why were they in this business and they just want to get more data over the internet. Early pioneers. When you used the word server, its ridiculous now, and member it was john chambers, and i would ask him, can i get that in a pastel blue . So what color to the service come in . Pastel blue would look good. Deny server. Right . Im look at ge market now which is 123 so to ciscos credit, oracle charts are similar, if not all just the magnificent seven, some of the old tech names are finding a way to present themselves. Oracle and microsoft. Is the market where if you havent been one is mega accounts, its a problem, but we need more participation, you can just have those leading the market indefinitely. Thats what have to take a pause right now. Nuan on, you are an asset man. You to buy bonds at some point. For diversity. For diversity. For 10 years. Legal 30 years for a portion of your portfolio . We dont have any tenure bonds. Right now we have three months, six months, one year bonds. You have to be kind of stuck with a fixed return. Wouldnt a dividend stock, can be smart find the, that will increase the dividend overtime we the dividend yield is like. But its goes up. Is going up. If a chance of going up 15 per year, it will double in every 45 years. Urine those bonds stuck at 4 . You will get your principal back, but. What if she came on and said we would just talk but the 30 year bond. [ laughter ] i think theres an appeal if you can get 5 guaranteed for a few years, i think thats great. And you stuck 2 years now the stock market that might move away from you and you are reinvested into years. We dont have that much the bonsai. Literally. She worked the whole portfolio and there. It depends on the comfort level. Some people cant handle the tension. The cant handle the bond market or stock market . They cant handle it. Theres people i know who very successfully bought bonds in the 80s and lived off of them for many years and did way better than everybody else out there. The lazy girl job, this is lazy girl job. Reporter by zero bonds at mature far and 200 bucks, the bond market moves and they go from 200 to 350 in a year and im nothing if not. I want to hear more about them. In real life. Heres a question for you, but say you were a little bit cautious on the market like some of us a little bit earlier this year and you recognize weve moved sharply with me. Runs to to sing this now everyone on the street is piling in and bracing price targets. You start doing more, do you look at that and say hey maybe its time to start hedging more . We are actually very positive on the market at the beginning of the year, we thought it was oversold and their buying stock last fall and entered the year pretty heavily invested in the stocks that we own, they moved up. Does that surprise you . No. I dont really think so. If you, we got four and half percent from the alltime peak. That sells, that felt a little rich. We sold from apple a couple months ago. For a while we didnt look smart that trade, you can look at the market and say the stocks of moved 50 the 200 , perhaps we should take some money off the table. If i had no money, what i put it into the tech trade and Communication Services . Would i purchase metaor salesforce this minute . Not necessarily. But that doesnt mean they arent great, but it can pause. 19 times earnings. What you do with new money . Right now, you can get 20 to 5 in the money market. And theres an awful lot of names on the top. If you were to talk about the october load and like the top 10 at least the top. If you said the market was going to do well, how many times a be here about the october load being well, lets think. Ad nausea. One time i think i came on and said all you here if youre watching cnbc or other networks about the market is that its going to go down. There are no other networks [ laughter ] 1213 strategist at the end of the year said thered be a recession and the market was risky and you shouldnt touch it. Market timing is not what i think anyone is good at, but it certainly was a time where stocks were trying to move in there are many stocks down 50 . Is and that what you are supposed to do . It looks very smart market. But like you said with new money. New money, should look at the money market. You have plenty of time, by stocks, by dividends dose looking for the lazy girl investment. We appreciate your. Coming up on the other side of this, Fall Travel Trends to watch, will get some Realtime Data hopper with bargain vacation out there in the destination with a premium. Cisco ceo Chuck Robbins will be on the street in the 9 a. M. Hour. Thats an interview you dont want to miss. We will be right back. What if buildings could tell you how they could be more efficient . Im listening. Well, with ibm, you can use software to help you connect and analyze data from hvacs to elevators to lights. What if we use aidriven insights to pinpoint inefficiency . Yep. And act on it. Saving energy, money. And emissions. Yup. Thats a big one. Now youve built Something Better for everyone. Thats the sustainability solution ibm and a Global Real EstateCompany Created. What will you create . Ibm. Lets create. This is dr. Arnold t. Petsworth, hes the owner of petsworth vetworld. Business was steady, but then an influx of new fourlegged friends changed everything. Dr. Petsworth welcomed these new patients. The only problem . More appointments meant he needed more space. Thats when dr. Petsworth turned to his American Express business card, which offers flexible spending limits that adapt with his business. He used his card to furnish a new exam room, and everyone was happy. Built for dr. Petsworth business. Built for your business. Amex business. Fly to paris. See the tower. Smaller than you expected. Wait in line. See the mona lisa. Smaller than you expected. Check in. See your room. Bigger than you expected. Join one key, where gold and platinum members get travel perks, like room upgrades. fan 1 there ya go thats what im talkin about join one key, where gold and platinum 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. Welcome back, talking travel trends. Domestic travel is going down finally, but lower prices wont last that long. As for international trends, fares to europe remain 11 higher than a year ago, but if you are looking for a bargain, tickets to cancun average 270 and joining us to talk about it is the hopper lead economist. Good morning to you. I got to tell you, the air fare still feels high to me. Every time im online trying to find a seat on something even domestically, it doesnt feel like it is really coming down to the extent it is, which is what youre saying the data suggests, how long will this be and how long are we talking about . We are seeing airfares dip to most regions of the world, domestic, international, short and long calls, mostly because of the demand that we see every year after the summer, travelers are hot on spring break vacation and summer vacation, but most of us go back to work and school at the end of august. September and october is not very popular. It incentivizes hotels and airlines to drop prices and we expect prices to remain low for the next eight weeks. Are we talking week over week or year over year . Meaning what was it like in the shoulder season last year . Prices for domestic are lower than prices these last year and compared to 2019, so domestic prices for the next two months will be the lowest theyve been in about 4 to 5 years now the International Flights as he said flights to europe and asia, still more expensive than last year but dropped relative to peaks in july. And is your sense of that continue . Talk about thanksgiving when families run the country try to get together christmas time for family and domestic travel, families going to big vacations internationally. Relative to prices today, airfare for thanks giving and christmas and end of year trends will be higher, but we expect them to remain in line with or slightly below 2019 levels. Surprises will be advantageous for domestic travelers to the end of the year. International travelers, prices will remain high and they are cooling to europe which is great news because they are 20 higher to last year. Airfare to asia is a different story, we are 80 higher than prepandemic and we dont expect those to come down soon. Why is that . Capacity hasnt come back. We are still at 65 capacity compared the 2019 to asia so until we see more flights takeoff and passengers able to book, we wont see those prices come down substantially. Would 24 look to you . Especially for international travel, weve seen really strongly in the summer months, continued demand for longhaul trips to europe and asia even with high prices, flexibility is key. We see a really strong signal that travelers are privatizing having more looks ability to book travel and coming out of the pandemic, its the trends we expect to continue into next year. Tips and tricks for those in the know, are there certain days you are supposed to book travel, certain hours like tuesday night at midnight or something where you can get better rates . Is that true . Unfortunate, it is not true. Everyone wants the golden rule in an easy way to get a great deal, the reality is that prices are incredibly volatile and airlines are getting prices consulate, so the best time to book your specific trip or date destination wont be the same, it wont always be a tuesday at 6 a. M. Or saturday at 2 a. M. , the best way to get a good prices to use a Price Monitoring tool that is what we monitoring the price of your trip constantly and sending you notifications. Thats what you do . Thats the core of our business, we predict the future price to tell our customers when they should by, and we do the Price Monitoring and notify them when prices hit the low point. What about miles . For those of us that are cheap and never can use them i hear they are going away. And are they getting devalued, thats whats happening . We see the market investing loyalty programs, what those look like might change of the next couple of years as travelers travel slightly differently planning more last minute, but i expect you will see loyalty and some sense and see how it might adapt. We appreciate it. They say if they pass the credit card it will go away . Base pay 3 now, the abrupt the rival networks that are cheaper, but they wont come with any of these perks. Thats because, that would actually be a great thing in certain ways for the country because the 3 michael the credit card tax, its the tax on the system and if you could get rid of even one of the one percentage point off that tax though you may not get Fraud Protection. If you have Fraud Protection and lose other things, thats a different story. I dont know if it will pass. Coming up, we will be joined with the take away from yesterdays that minute and they will get us ready for the central Bank Gathering in jackson hole next week. We are coming right back. The sheer majesty. Experience it with stateoftheart expedition equipment and handson Scientific Research activities, all in exceptional viking comfort. We invite you to discover the worlds seventh continent antarctica. Viking. Exploring the world in comfort. Permission to dig in . Granted. Breyers carbsmart is so rich, so creamy, it tastes totally offlimits. But with only 4 grams of net carbs in every delicious serving, youve got the green light. Better starts with breyers. Wake up, achievers. Youre making the most of every hour of your life. Youve got the green light. Except the hours that youre sleeping. 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, free Home Delivery when you add a base. Shop now only at sleep number. Good morning, welcome back live from the Nasdaq Market in times square, checking futures were up a little bit, thats not the story necessarily, we did have a couple of tough sessions already this week, august 10th has been great, kind of a pause and one that refreshes or one that shows that we got most of the gains for the year, nobody knows at this point, stock did and lower, it was after the release from the minutes from the july meeting suggesting that rate hikes might not be done quite yet. Steve leachman has a details and for a while weve been saying all right, maybe one or two more, we see at 75 basis points in a whack, 3 to 4 times in a row so we were okay with just a couple more. Is that starting to change . Might be more than a couple suddenly . The tenure is really the story that we are all paying attention to. I think with tenure, its dancing to a slightly different tune. I see the kind of commendation of supply and demand, i think it is still maybe a 25 or not a 25, but heres what we know from the minutes after the hike by a quarter point in the july meeting, most fed officials thought more would be likely but a minority did emerge suggesting the case was maybe not so clear into participants thought they should have hiked at all at that meeting. So heres a flavor the backand forth on the one hand and other hand, minutes that we had, they said number that was to be achieved with goals have become more twosided, but they went on to say most participants see significant risk inflation which could require further tightening of Monetary Policy. So the minutes were somewhat more balanced than recently, but it may be too early to sound the all clear signal on any rate hikes at all. You some of the minutia from the minutes, they said there was progress on inflation and some setting up the job market staff backed off the recession call and they were all uncertain about the effects of tighter Monetary Policy and Tighter Bank Credit conditions. There are signs of economic slowing, but they also saw considerable momentum in the economy. The trouble of all of this is that since the meeting Economic Data has come in strongerthan expected and this could be a key with the minute saying many thought you have to have a period of below trend growth to bring supply and demand back in the balance. Moment the economy appears to be growing well above trend, maybe next week we will get a little clarity on what this surging Economic Growth means for fed policy which obviously you have two Different Things happening that the big fed summit next week you think powell is likely to talk, we have some interviews of fed officials and to me, the question is how to the square this idea above trend growth at the moment but still declining inflation whether that necessitates additional rate hikes. Inflation and Economic Growth is definitely related. Its all related, but its just a little, im sure its just a coincidence that the minute we decided a recession was off the table, the fed decided it had to do more. I know they arent trying to cause a recession, but it is a pretty strong coincidence. And it has to do with a strong Economic Activity that it will cause inflation to be stickier than what we thought. I see how that works, but it isnt its happening at the same time. With feel that what we wanted to do at the recession. We have to keep raising. And we do, which i wish they would. And i attenuate a bit of what youre saying. I dont think because of higher Economic Growth they decided it needs to do more, i think those it may be better to say because of higher Economic Growth, it raises the risk the fed may need to do more and certainly the market is kind of trading a little bit with it, but i have to say theres only a 37 or 40 probability of another rate hike. The trouble is the economy is not operating according to the models and it may have to do a lot with this kind of weird post pandemic economy that where he had several orders of trend or above trend growth declining inflation. The question is is that coming from just clearing up supply chains . Is there an effect of higher Interest Rates . And is there a lag . I think theyre facing what they call high uncertainty, it is a more patient approach. I dont think it is a done dea. But as an investor, i think it has to be on the radar screen. The biggest fear is that the economy is so strong at some point with her so much spending and if you read the lead editorial, theres a lot of spending that will continue 4. 2 trillion on climate and infrastructure and by definition , when there is that much spending, you continue to have really strong Economic Activity which could be inflationary and that is what i worry about. It gets so inflationary that you have to orchestrate a hard landing to break the fever. Because right now with Interest Rates where they are right now, but if we are going to six, eventually couple years from now in this upward trend like 70s or 80s type pitch, that would scare me. No, i think thats the right way to think about it, i agree with what youre saying, the fiscal side is pushing on the inflationary buttons. I think the Inflation Reduction Act was not, things lot of things that you may or may not have wanted, but i dont think it had a lot of inflation reduction and i think thats a bit of a misnomer but there were other offsets. What if we are having, what if we are importing deflation from china . What if you have this surge in productivity that could help a little bit. So it has always been a question for me and one of the things i will try to figure out in jackson hole is the extent to which the Monetary PolicyAuthority Want to be responding to the fiscal authority. Had they done that earlier, we may not be in the pickle we are now. You will be on the lookout for a yeti. I asked for that graphic. Dont they only come in the winter . In jackson hole you have spotted them on some of those real wilderness shops they have out there. So get ready for that. I believe it mightve been a bear, but if you want to think you saw a yeti, thats good for you. Thats okay. He exists. You know he does. He is just a really good hider. Coming up we have sector economics look at the industrials, where are they . Leading or lagging . Squawk box will be right back. upbeat music Constant Contacts advanced automation lets you send the right message at the right time, every time. Constant Contact. Helping the small stand tall. Welcome back to dispense addition of sector economics, one that is been an under performer versus the Broader Market over the course of the at least this year and even over the last 5 years or so. You can take a look at the s p 500 the ticker sp why up 55 versus the 40 gain for the industrial sector in the industrial spider overall going all the way back for the last 5 years. What we have seen in the five year span, some of the more volatile names to the upside and downside happening to be in the key parts of market around transportation and travel and heavy equipment. United rentals and be use paid over the last 5 years so a measure of market volatility versus the s p 500, United Rentals comes in as one of the highest betas, more volatility versus the market in the s p 500 at 1. 9, American Airlines and alaska both have one a half betas versus he s p 500 which is a 1, so watch those types of names in terms of volatility. As for the least volatile ones, its mostly defense contractors in that mix, but theyve been volatile for the last couple of years, but for the up and downside, Lockheed Martin is 0. 6 and 0. 5, lines of the stress petition is Like Airlines for high volatility and defense contractors longerterm lower volatility. Thats industrial sector economics this month. He right here beusofcae much more coming up after this break. One is to get do, well see you after the break. Im andrea, founder of a boutique handbag brand andi and this is why i switched to shopify. Its the 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. Evercore isi out with a new report on Key Takeaways from the Second Quarter earnings season, including the firms top internet picks the top large cap names, uber, amazon, meta, and spotify and pinterest tops the small and midcap picks, followed by Website Builder wix. Com and magnite. Magnite joining us with more is mark ma haney, head of Internet Research my new favorite person. Im not going to go there how many kids . I have ten children thats so awesome isnt it dont get any im truly speechless. Im speechless i am i wish honestly, i love it it is so great anyway, were talking about stocks what do you think of what you just heard you agree . I hope so, yes. Just wrote that. So, look, we just have gone through earnings season. Multiples have come up a lot this year. We started this year with a big rally in megatech for good reasons because the stocks got so beaten down last year and the estimates got so beaten down we had some raeally great setups setups are more difficult now. Fundamentals still havent recovered. If you think about the three biggest parts of internet revenue, retail, advertising and cloud, those growth rates are all depressed. You want to be constructive on growth rates when they can recover. And then the third thing is were finally starting to see margins improve. We have all these layoffs last year a bunch of other things that happened there, efficiencies, that amazon brought to its distribution center. The good news for investors is youre at a point where Revenue Growth can start reaccelerating and margins are expanding. Stocks work well in that environment. We stay tactically constructive on the secretarier in terms of macro, you dont worry about the minutes . We do the demand trends it shows up in the demand trends theyre still soft amazons online store retail growth this last quarter was 4 . Like, thats depressed but you want to be constructive on the stock when valuation is reasonable and think you can go from depressed growth rates to normal growth rates. Have you heard anyone say this whole a. I. Phenomenon is setting up very similar to the late 90s. I have heard people say that. I just think it is fundamentally different this time. So, you know, you were around back then. Different this time yes i shouldnt have said that i shouldnt have said that these businesses are a heck of a lot more profitable than they were back then theres more cash amongst the Large Tech Companies than there was market cap back then these are obviously highly profitable businesses and thats why the stocks, the megacap names have done so well this year this is going to be an enduring theme. You can look for the derivatives. The market has gloomed on to two of them. Microsoft and nvidia i think there is more than that. Aws, amazons Cloud Business can be a multiyear beneficiary of the rollout of generative a. I. Youll see more Companies Roll out solutions, apps based on this there is going to be an infrastructure way to play that. Amazon is one of those. Nothing is overheated things dont have to be identical. History can rhyme and seems like theres been, you know, a lot of concentration in one small part of the market, the breadth isnt what it should be at this point. This is what you do. This is your sector. Youre lucky you picked that sector. Maybe im lucky i would make it a point if the market starts to recover, wouldnt you want it to start to recover with the highest quality names out there and then get to the speculative names . If you look at big tech names, look at the Balance Sheets, the growth rates, the secular trends these are some of the best well run companies in the country those are the companies that should lead the rally. Then well start shifting out. Is there value there . I dont want to say value would you consider these value names or theyre not there is nothing unloved about these names. They have become more mature and more value oriented or even garpy or value oriented. Let me stick with one of my favorite names, meta very controversial name in the past for a lot of good reasons i understand that. But this is now trading at 15 times gap earnings for a company that is going to exit this year growing 20 year over year with Margin Expansion and theyre buying a heck of a lot of stock. So this is almost like a 20 to 30 earnings grower trading at 15 times you dont normally see stocks trading at that much of a discount to the growth rate. I like meta as a stock it is our number three pick. Mark ma haney, thanks you work late at the office, i guess. Do you go home ever . I spend a lot of time at home, yes. Hold is the youngest . 12. And the oldest . 23. So 10 and 11 years . Coming up when we come back, walmart set to report in the next few minutes were going to bring you the numbers and instant reaction straight ahead sfx people cheering sfx Stock Exchange bell ringing sfx people celebrating sfx people celebrating sfx Stock Exchange bell ringing businesses need 5g solutions today. Thats why they choose tmobile for business. Mlb partners with tmobile to not only enhance the fan experience, but to advance how the game is played. Aaa relies on tmobiles network to stay connected nationwide, so they can help get their members back on the road. And were helping pano ai innovate, to stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. upbeat music Constant Contacts advanced automation lets you send the right message at the right time, every time. Constant Contact. Helping the small stand tall. Good morning futures higher as investors digest the fed minutes a look at whats moving markets coming up. Walmart expected to report in just seconds. Well bring you the numbers and instant reaction. Parents, listen up, if you think your rent is too high, wait until you look at the bill for your kids off campus apartment. That and more. The second hour of squawk box begins right now good morning welcome back to squawk box here on cnbc were live at the Nasdaq Market site in times square im Andrew Ross Sorkin with kelly evans hanging out with us for becky quick and joe kernen u. S. Equity futures at this hour, well see if this turns or moves. We have a couple of big Earnings Reports about to hit plus, we got some data coming at 8 30 a. M. Eastern time right now, 63 points higher on the dow. Nasdaq higher as well, 20 points higher s p 500 looking to open about 6 1 2 points higher. We have been talking about treasuries all morning after we heard from the fed and Steve Liesman earlier. Tenyear note now at 4. 308 . And seems like kelly everans is happy to buy the twoyear. Lazy girl investments. Your phrase, not mine. Im not saying that. Lets take a look at quick side note on the tenyear, lets not forget the mortgage rate. We have not yet pierced 7. 5 but if were at 4. 30 , well be close today. Not slowing down the market. There is nothing to buy. Shocking it hasnt been more of a headwind. Lets skip the rest and go to walmart earnings i think theyre hitting as we speak and thats why Courtney Reagan is sitting at the table staring intently im going to look up now, i promise. Thank you very much. Good to be here. Walmart is reporting earnings of 1 abo 1. 84 adjusted profit also beating out, thats a beat, which is what we saw with target yesterday. On revenues of 161. 36 billion, thats above estimates so, thats opposite of what we heard from target. The retailer increasing full year guidance to 6. 36 to 6. 46. Thats above the 6. 28 street consensus. Sales guidance also increasing again, thats the opposite of what we heard from target yesterday, with its forecast walmarts u. S. Comparable sales coming in up 6. 4 . Street was looking for an increase of a little more than 4 they also say that trransactions and tickets increased. Walmarts net Digital Sales growing 24 led by pickup and delivery ad business up 36 in the u. S. I talked to john david rainy who said the quarter was better than expected across nearly all segments and while there was softness in general merchandise or discretionary goods like target noted, it improved at walmart. Rainy said sales of general merchandise like electronics, sg Single Digits but up from the prior quarter. He said there is a little bit of a shift to cook from home with an interest in prepared meals and blenders and mixers. Food prices are steady, while general merchandise is an area seeing deflation compared to last year. He said privately Grocery Sales are up 9 for the quarter. Overall penetration of private label up 40 basis points year over year for total sales. Private label does make up 20 of walmarts total u. S. Sales. Despite the increase in private label, raney said he continues to be surprised by consumers willingness to spend and said i honestly feel better than what we talked three months ago, adding i would describe the consumer as choiceful or discerning theyre spending but picking moments. Were seeing strength around seasonal events, holidays, and back to school and make sure to tune in to squawk on the street for my interview with John David Rainey, walmart chief financial officer. Courtney, stick around. Joining us now, Forester Research analyst great to have you on the most notable surprise in your view . Yeah, these numbers were just as courtney said, pretty strong. And there was almost no metric that really seemed soft. If anything, the top line revenue number was a little bit shy, softer than it had been in previous quarters which may such that the consumer is flatlining and getting saturated with all of the price hikes, particularly in sectors like grocery. To the degree that shoppers are buying at all, it appears to be theyre absolutely buying and theyre buying at walmart. Different product mix to some extent, different businesses necessarily. You see at target. Do we know about shrinkage and other cultural issues . Did that affect target in your view and it is not affecting walmart . Right, right. We talked about that yesterday that there seemed to be at least the claim from the target management that this culture war issues were a big factor in some of their challenges. In walmarts case, they havent stepped as much into that field at all to their credit, it is very difficult to do because there are often sectors of consumers that demand that consumers take a stand or that Companies Take a stand and walmart has been pretty resistantto taking side on a lot of those issues in a way that could adversely impact them shrink is impacting all of these merchants, but i havent heard as much about the smash and grab scenarios at walmart stores, so it is less likely to be an issue. And even overall shrink has been a factor in the Retail Industry for decades. And it tends to be a small, small single digit percent im not sure that it would really weigh into walmarts numbers in a quarter like this so thats not as big of a factor the bigger issue is theyre so weighted in grocery and that is absolutely what consumers are spending in, thats what the cfo said that the shopper is buying is that they are cooking at home and they are purchasing those grocery items which are those consumables that before the prices are going up. I did have a chance to speak with the cfo we asked about shrink and wasnt called out in the release because he says, yes, we are seeing slightly elevated of shrink like other retailers and certainly in certain areas where the prosecution is low, the felony threshold is high, those are the areas where they are seeing the issues and agrees it is an industry wide problem. But i guess what im curious about, especially with your expertise in ecommerce, walmarts u. S. Ecommerce sales growing 24 , while targets fell 10. 5 . As far as i know, thats the worst number we have seen from target since they have been reporting that metric. Very strong for walmart. Do you think that walmart is taking share online from target . Oh, absolutely, courtney. Because the average growth rate right now of ecommerce is in the low teens. So anybody that is growing higher than that is gaining share and walmart is outpacing the average growth of the market it is even gaining share, i would argue, from amazon, which in north america from our estimates is in that low teen number target, for whatever reason, is losing share, the numbers are negative it is unclear why because its execution has been pretty strong and its done pretty well through the pandemic and it has set up a lot of those omni channel strategies well to capture sales post pandemic. But it just hasnt closed the deals and i expect that a lot it has to do with assortment and the shopper choosing to purchase in other places. Can you just talk a little bit more about whether the fed is, you know, why would the fed not watch walmart and just take it to the most granular level to see what to do next. What is it telling us, do you think, about the macro well, i think that what were seeing is that there is still there is still resilience in Consumer Spend no question about that the shopper keeps spending and they have been spending at record high levels, even through the pandemic and certainly following the pandemic so, that suggests the economy is pretty strong. But i am worried about the sputtering consumer. There was a report from San Francisco fed the other day that said that we have probably about another couple hundred billion dollars of excess savings left over from the pandemic, and the consumers probably going to spend through this in the next couple of months if that happens, and then you have all of the student loan payments having to restart again, what we have is potentially a pretty soft fall and q4, particularly for the mass merchants that are focusing on the average consumer and the consumer that is going to be most affected by those types of metrics. So, im sure that the team at walmart is doing the happy dance now as they should, but they should probably be a little cautiously optimistic for the rest of the year. What about inflation . The second derivative. They obviously, gasoline and everything else, it can help and hurt, i think, at walmart. What are you seeing . Is it slowing . Reaccelerating from what you can see here at walmart . From what we see, gas prices are down, so it will be interesting to see what the sams club gas numbers were. They should have gone they should be in a decent place given that Energy Prices are in a better place as far as consumers are concerned. Food has been stubbornly high. And thats one of the biggest that is the biggest area of spend at walmart and that is the biggest area of concern for consumers right now. That doesnt seem to be letting go at all. So we need to wait and see what Brand Manufacturers and producers do with their food prices moving forward. I dont see how the consumer is going to sustain this, it will trade down or just purchase less in the future. Right sucharita, thank you you good in. I always have more questions but im good. Thanks, courtney. Coming up, the rate on the tenyear note hitting levels not seen since 2007. Minutes from the latest fed meeting pushing rates higher as investors weigh whats next. Were going to talk all about that next. Later, back to school, back to pricier off Campus Housing. A look at the big players, Investment Opportunities and how much students and parents will be paying this upcoming semester it is a lot. Squawk box coming right back 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. Wake up, achievers. Youre making the most of every hour of your life. To sport your style. Except the hours that youre sleeping. 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, free Home Delivery when you add a base. Shop now only at sleep number. 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. 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. Welcome back to squawk box. Tenyear u. S. Treasury notes yield this morning hit a 15year high, which threatens so many this is like the benchmark for the whole economy. It is going to sent Mortgage Rates to maybe 7. 5 within a day or so. Banks, shocking theyre not down more premarket anyway. A lot of concern on wall street about the potential fallout across all of the industries stocks, bonds, housing markets joining us is matt hornbach. Good to see you. Do you think that everyone is too sanguine about this . It is odd how complacent a reaction were seeing. Yeah, thanks very much for having me on the program look, i think we are in a summer low, a period of time, we are seeing governments continue to issue securities as they do month to month, week to week and the buyers are on vacation i think thats the easiest explanation for what were seeing happening in the market today. There is a lot of bond supply coming to market and once we make our way past labor day, corporates are going to be issuing more and more. There is going to be a lot of supply for investors to take down the good news is people tend to go back to work after labor day. So we should see more demand. I dont know. Maybe youre right maybe youre right and this is just a little bit of a quirk, but i feel like these technical traders always talk about, you know, moves that are when you Start Talking about now were at around 4. 3 on the tenyear, 4. 42 on the 30year, you dont think the significances were able to trade up here and it took us 15 years to get no this point it is certainly notable that yields have risen this much. But it is also understandable given what we have just come through. I mean, were dealing with still elevated inflation, relative to the past 15, 20 years. And Central Banks have responded by tightening Monetary Policy pretty aggressively. And thats one of the things that came through in the minutes that from the fomc yesterday, they still think inflation is tie too high it is not totally surprising that Interest Rates are higher than what were seeing. Now he seems to me like everything is totally fine so the economy 4. 3 rates, 7. 5 mortgage rate, you know, and it is no big deal, you know . This is just normal. There is not going to be any kind of shoe to drop or anything. Matt, is there a number where the Duration Risk rears its ugly is anyone not prepared with their what theyre holding, theyre marking it at maturity, so theyre fine. Is there anyone where, you know, we need to start worrying about Smaller Banks . Joe, the time to worry was really last year when the prices of bonds were falling precipitously. And i do think investors took it on the chin last year, pretty hard, in fact. So, but at this point, you know, the with yields higher than significantly higher than they were last year, the Duration Risk in the market is actually a little bit lower today than it was a year ago because yields are higher thats some funky bond math i wont get into, but effectively the bond market, of course, is risky. There is Duration Risk similar in the equity market a lot of Duration Risk in the asset classes. But the fact that yields are higher does, i think, offer some cushion for investors looking to put money to do work in the bond market today it certainly does all right, so let me kind of back up for a second, matt where do you think then, you know, if some of this is exacerbated by thin summer trading, you fastforward to december, what does the world look like . And where do you think the best Investment Opportunities are right now . Yeah, well, i mean, we think the fed is done hiking thats a call from our chief u. S. Economist alan zehntner we think theyre done. We think they can focus on the level of real Monetary Policy restriction in the economy, which should be going up in other words, policy should become more restrictive as inflation comes down and we do think that inflation will continue to fall into the end of the year. Our forecasts for core pce inflation, which is the metric the fed really focuses on is much lower than what the fed has. So theyre saying they need to cut rates if thats going to happen they dont want to necessarily keep tightening, but maybe they do. At some point next year, we think they will be cutting rates. The Investment Opportunity to your question is really about putting money to work in the sectors of the bond market that are going to react most to those rate cuts. We think thats the intermediate sector of the yield curve at this point, around the fiveyear maturity point. Good system at morgan so, if this, like, blows up, what did ellen say it is good to be able to do that how do you feel about ellens call what did you say ellens call was, were not going to that were done hiking. The fed done hiking rates. If theyre done hiking rates, youll be, like, hey, ellen, i dont make all these it is good to be able to spread it around, like diversify the risk at morgan. So you really think that we have a very Collaborative Culture and there are certain things that we have a different perspective on in this case, were very much aligned. I think you agree yeah. Really . Okay that are they higher for longer . The economy is so strong that maybe were all were you around for 8 and 9 that used to be normal for Interest Rates on the tenyear i guess, never going back there . I was born in 76 my first memory was star wars. Well leave that for another conversation i had my first grandchild not really a joke soon. Oh, god matt, thank you very much, this morning, we appreciate it yeah. Steps along the way before that, i hope. Higher rents not just hitting adults, College Campuses are seeing soaring rent. Diana olick has that story next. And futures right now indicated that up about 75 points. Pretty good session so far looked that way yesterday and look what happened well be right back. Time now for todays aflac trivia question. 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Which Company Created the color swamp holly orange to use as the official color for yellow trucking the answer, dupont swamp holly orange. As College Students head back to school, parents are holding on to their wallets, especially when it comes to off Campus Housing costs. Diana olick is here with more. Diana, with the tuition prices, what are we talking when you throw room and board in now, over 100,000 a year for some of these places well, were talking about not the dormitories, but the off Campus Housing so while you may have heart apartment rents overall are cooling off, this type is doing just the opposite. Off Campus Housing that is Student Housing apartments, not dorms, but apartments, specifically for students by Developers Like american campus communities, gray star and landmark, Student Housing rent growth depending on the region of the country is anywhere from two times to ten times the multifamily rent growth, thats according to cbre, up from 7 year over year in the northeast to nearly 13 in the southwest the ceo of landmark says it is all about supply and demand. If you look at the top 200 or so universities in the country, which are the universities in which we target, you know, you see very stable enrollment growth at the same time, there is only a limited amount of land that is close to the universities that can be developed there are significant barriers to entry the net result of this has been very consistent and stable cash flows over a long period of time one more barrier to entry right now is the cost of capital, for investors who are looking to get in on that growth, there are no longer any publicly traded Student Housing reits. American campus was acquired by black stone last year. But both landmark and acc are part of bread, blackn nonlisted reit. It has been such an incredible investment, i dont want to diminish that. 20 years ago, we said how can the costs keep going up and they keep going up. Is there anything that can mitigate this Going Forward . More supply, actually you look at you were saying the difference between dormitories and off Campus Housing, a lot of buildings, high end buildings that students want to be in, theyre very close to campus and have all kinds of amenities like the infinity pools and the granite countertops, et cetera, they need more of those they need them to be slightly cheaper. And the issue is a lot of zoning restrictions and a lot of land restrictions so the Developers Say if they can pencil in more, if they can put more supply in there, then the costs will come down at this point, they just dont have that ability. Yeah. So it is interesting basically it is would you say the supply coming online is the biggest threat, not threat, maybe relief, to apartments and to rents there and off Campus Housing is just not it is not going to see that kind of supply growth no, i mean, look, in the multifamily region, we have seen a lot of supply, especially record supply coming on to the market this year for general apartments thats why youre seeing rents easing when you want to be right by campus, and you want to be in the desired locations and there is not enough there, thats the reason why the rents are going up so high and colleges themselves would like to build more dormitories some are contracting with some of these developers to build dormitories that they then lease back to the universities, which then they use for Student Housing. Is it i dont know if it is the larger story, but the bigger piece of this, what youre talking about, an explanation for one of the reasons that Higher Education costs so much money in terms of total costs and what you have is this sort of unique Market Dynamic about off campus costs, which are going up, which therefore gives latitude and room to universities for their on campus costs to go up, and it creates this sort of terrible, terrible spiral . Yeah, look. The cost of college right now, i got two kids in college. You dont have to ask me it is incredible the amount of gains every year we see going up when it comes to tuition, room and board, and then off Campus Housing. I had a son in off Campus Housing in one of those buildings, he then moved to a house with a bunch of guys because it was so expensive. It was slightly cheaper, but even that house, where hes living with eight guys and it is not beautiful is still costing quite a bit. But the conundrum is the infinity pool that is going on off campus is forcing the universities to think we need an infinity pool too because kids want an infinity pool and they need i havent seen that in a dormitory. Not infinity pool, but trust me by the time things like that are coming because they think they have to compete. I hate it. You want the market to compete in certain ways, but not like this. Diana, thank you coming up, kicking the can, speaker Kevin Mccarthy floating the idea of a months long funding package, a Government Shutdown at the end of next month. Well get the latest on d. C. s spending showdown with jake sherman. Inside the creator economy why tiktoks highest paid earners are expanding into the food and beverage sector dont miss our interview with marc damelio squawk box returns after this. Welcome back to squawk box. Want to get to dom chu with a look at this mornings premarket movers dom . Andrew, if you look, first of all, well start with the earnings headliner of the morning. Walmart, the big earnings headliner, member of the Dow Jones Industrial average is up about 1. 25 . Just over a quarter million shares of Trading Volume premarket after americas biggest traditional retailer and biggest private sector employer reported better than expected profits and revenues driven in part by growth in its grocery and ecommerce channels. Walmart raised its full year forecast for key sales and profitability metrics as well. On balance, it is off its premarket highs, but still up 1. 25 . Also on the earnings front, shares of Cisco Systems up about 2 on 40,000 shares of volume after the computer networking equipment giant and dow component as well also came in with better than expected report for profits and sales. Cisco is also getting a boost in sentiment as it tilts more towards Artificial Intelligence focused Data Center Products the company says it already received sizable orders for a. I. Related products from large Cloud Computing oriented customers. So up 2 and well end on technology as well, analyst call on adobe systems, that stock is up roughly 1. 5 , around 30,000 shares of volume right now helped along by analysts at b of a who upped that stock to a buy from a neutral they raised the target price to 630 bucks. It was 575 they cited things like adobys emergence as a leader in a. I. , when it comes to software geared toward generative a. I. Products. Adobe systems continuing the big trend, up 56 so far this year back over to you. Impressive, thank you very much. Markets are look for direction after the july minutes yesterday. Here with more insight, give us some direction, david bailen, city Global Wealth chief Investment Officer good to have you here. Welcome. A lot of people saying the minutes were hawkish was that your read that is my read thats why the bond market is reacting the way it is, but the bond market is also presenting us with an Incredible Opportunity because the minutes are looking backwards and when we look ahead to 2024, well see inflation fall substantially and you rarely get an opportunity to buy bonds with these kinds of real yields in them. They are walking right into im well aware of that, yes, indeed isnt low inflation already priced into the market it wouldnt do you think that the tenyear yield is where it is because it thinks the cpi is 5 instead of 3 next year . I think we look at where the cpi is going to be next year, it will be by the end of 2024, 2. 5 to 3 . Where do you think the market is. The market stays around 4 based where we are right now what is clear is that the last remaining part of inflation, related to real estate is what will come down next year Mortgage Rates are unusually high. But Everybody Knows that. We have seen the data, right so thats my question, my question is why what im trying to figure out, why are bond yields so high, right are there just enough people in the market who dont, you know, believe that it is going to go that direction thats exactly right. I think thats the huge debate a whole bunch of people that believe inflation is going to be persistent and simply embedded into the economy and when you look at a the other thing i would also say is there is a huge amount of cash on the sidelines. The average ultra High Net Worth investor has 25 of their money in cash, taking the shortterm view, theyre piling into notes, piling into short duration treasuries and not looking at where else they can move their money. It is one of the biggest calls we have right now, like i say to people, you can get 5 for six months or 6 for five years, which should you do . Where do you get 6 for five years . Corporate bond markets, not the treasury markets people should be moving out in duration right now to intermediate or longer bonds to do that, you believe inflation will normalize. For everybody else, theyre probably saying, well, treasury market is a good proxy ill take that, maybe i get 4. 5, not quite, instead of 6. Right and, again, i just dont see a whole lot of people buying intermediate and Long Duration bonds. Thats whats taking place so, it really is a debate on inflation. And i think the data is unequivocal with the exception of real estate, you know, which is going to be the lagging impact, youll have lower inlags. A lot of money left to spend. The government does, on infrastructure did you see manufacturing, factory construction up like 100 . Right. Theyre giving away money to people to subsidize industries were just Getting Started with this you dont think that keeps were also investing in things that are going to be more expensive, like chips built here will be more expensive Renewable Energy, 1. 2 trillion were spending on that thats all going to be more expensive. Right so there is no question, if you look at covid spending, Government Spending on infrastructure, Inflation Reduction Act, all of that, and the lagging impact of what took place from covid to now, there is no doubt were going to be doing that there are parts of the economy that are structurally deflationary, right . All of the stuff with green energy is actually now becoming very real, able to produce energy at lower costs, thats going to keep the costs of energy down, youre seeing real wages, real wages are actually up 85 and Renewable Energy isnt cheap. It is more expensive. Renewable energy, per unit of kilowatt power is being produced at well under the price of oil today. Youre seeing an enormous shift. We just dont use it 100 of the time. Of course not but these things are 20year shifts and the larger issue, when you look at the components of the economy, you saw walmart, inventories are coming down. They were very, very high. Manufacturing levels in the United States are below average right now. Goods is deflating, but without a slow do you expect the labor market to be a lot worse off next year than this year how do you get to 2 , 3 without wages basically running at that level . Thats where theyre ultimately going to end up running to thats what were heading to look at the Interest Rates and you look at how resilient hiring has been, no question, it exceeded expectations. Everyone was told there would be a recession, it hasnt occurred. And in a sense now what i worry about is complacency everyone is, like, sure, it is not going to happen and it becomes more vulnerable. The lagging impact associated with rates this high, take almost two years, right, to knock in the fed when it reaches peak rates holds them there for an average of 7 months, just coming to peak rates. As we look to 24, youll have moderating demand on employment, ultimately going to have major sectors of the economy going down with inflation rate 1 to 2 some parts will be higher. We are absolutely headed down and thats one of the reasons why we love bonds at this point. And obviously some stocks that have the Growth Potential that youve seen. Real quickly, we have what would the stocks be that you also like here. There are areas that are so, for example, all of the small and mediumsized industrials, manufacturing stocks that are cheap at 14 times earnings despite the slowing economy next year will be the recovery year, very tepid recovery year from where we are. Earnings are down year over year by 6 . This was the first sequential growth quarter as we going to to 2024, that is going to be a moderate growth year, but were going to have an earnings recovery due to the circumstances we have got. Earnings recovery macro slowing, wages slowing listen, ill try to put it all together you know i like your conclusion. Im not going to this is why people have to have a balanced portfolio and not keep so much cash. Theyre looking at all of these details and theyre not taking a look at the overall trend, which is good for bonds and good for stocks. David bailin, thank you for your time. Appreciate it. Coming up, a pharma partnership. Blue shield of california transitioning its 4. 8 million members to mark cubans cost plus drugs and amazon pharmacy. Were going to tell you how the move can save you money on prescriptions. Thats next. Get the best of squawk box in our daily podcast. Follow squawk pod on your favorite podcast app and listen anytime. Stay tuned pair of industry disruptors, and Bertha Coombs joins us with more hey, bertha. Hey, joe. Blue shield of california is looking to make drugs more affordable for its 4. 8 million members. Signing with mark cubans cost plus drug company, the 20monthold Online Pharmacy which sells drugs at 15 over wholesale and amazon pharmacy, which just this week launched 35 insulin. Blue shields ceo Paul Markovich says the transition will start in 2025. I expect were going to when this ramps up completely, were going to be saving 500 million a year if this were to be applied across the country, the savings could reach easily 100 billion. This is just a Second Health insurer to sign with cost plus i asked mark cuban how hard it has been to win them over and he told me there are a lot of bad habits they need to break, but payers now realize the cost plus has made the price of medications transparent, with doctors and patients seeing what prices should be and the industry will have to adjust still, in addition to cost plus, amazon blue, blue shield will continue to use cvs for specialty drugs. Because thats an area where you still need to have that scale. How big a deal is mark cubans business becoming . He says that theyre growing at about 20 a month but this is a tough business to disrupt because youve got the big players, they have the scale, and they can get do they see him now, though, as a as a unique and genuine competitor or do they think this is some kind of side show . I think they dont yet. Hes not as big a threat yet but you have insurers that are still on their contracts, so maybe as their contracts come due. And likely the blues and the smaller players might turn to them certainly, you know, cvs health isnt going to they have a benefit management. Thats United Healthcare isnt going to hes never going to get the big three, but he does say that were talking with all of them if you try to go to a pharmacy, it is crowded a lot of times. It is takes time. Allot some time. People like to talk to their pharmacists about their prescriptions. It is not just talk thats the question didnt you write that question people do like to talk to pharmacists. For the pharmacists, they have to often call and get reauthorization, so it takes a lot. It takes a while one thing amazon has that ability online to be able to talk to people, but they also have the ability for you to pick up your prescription at a physical pharmacy as does cuban, they actually partnered with a few individual pharmacies, trying to grow that network. So you can still go in and see a pharmacist but when you have complex things, you know, my late mom had a lot of issues in terms of hypertension, copd, it was really helpful to be able to talk to the pharmacist when she had all these different drugs that might interact. So just so im understanding this, basically the existing system controls 80 of the pharmacy locations and cost plus and some of the others you have to do mail order . And so but is he right that those middle Market Players are thriving if we all just did the cost plus model, would we need medicare drug negotiations . How much of the high cost of prescription drugs is because of this old system and what would the people behind the old system say about why we need it that is the huge point of contention in the business now, kelly. You got people in washington actually, there are a number of bills, whether theyll ever make it to the floor for a vote is another question a number of bills, bipartisan, trying to get at the middle men, the pharmacy benefit managers, the drug payers say we have to raise our prices, because were going to get such big discounts from the pbms. Theyre the problem. And the pharmacy benefit managers and everybody else points to the drugmakers raising their prices twice a year. Why do we need the pbms why cant it all be direct the scale of it, you need to have people negotiating and being able to basically, you know, do the logistics on it but there are a lot of questions about whether or not that model is going to continue they argue that they provide a service in that they will get a big discount from a drugmaker. For example, right now, the glp1s, the weight loss drugs, as you look forward to next year and get lilly coming online, they might be able to play off lillys drug against Novo Nordisks drugs and get a discount, making them preferred in the formulary and then that discount, they say, helps to smooth out the premiums for everyone, depending on how an employer wants to this is why i love competition. Lets see. I dont know. Thats their argument this is a huge area of contention right now and one that is getting a lot of scrutiny from regulators, from lawmakers, and from businesses as well. Fascinating thanks, bertha. Bertha coombs. Coming up, House SpeakerKevin Mccarthy floating a stopgap measure to keep the government funded past september. Yes, it is this again. And Chuck Schumer apparently likes it well talk about the rare unity and if it can last after the break. Quick glance at futures. Were holding on to gains. The s p by 11, the dow by 45, walmart rallying after the strong Earnings Report squawk box will be right back. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from morgan stanley. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. 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. Nice footwork. And man, youre lucky,eone who watching live sportsion. 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. Welcome back to squawk box this Morning House leader Kevin Mccarthy and Senate Majority leader Chuck Schumer are discussing the idea of a monthlong funding package to avoid a shutdown next month what do you think the chances are that this is the path . Let me start with this. I do think, andrew, between now and the end of the year the government will shut down. Maybe january, maybe february if you want to stretch it out a little bit whats that . In 24 youre saying, january, february . Could be 23 or 24 well have to see how it shakes out. I understand schumer and mccarthy agree on a shortterm stopgap because theyre not going to finish their work in six weeks but the reality is if mccarthy has to load up that stopgap, with spending cuts, you hear the republicans calling for the border wall, the department of justice, the fbi, schumer is not going to agree to that can mccarthy put a bill on the floor without those things im not entirely sure hell be able to do that. You could see, i would say 60 40 chance of a shutdown at the end of september can you layer in this president ial election into this . How much does that even factor does it factor in how both parties want to play this issue in terms of government funding, in terms of these cuts and how the public is supposed to think about all this a couple layers to think about here number one, the layer of how house and Senate Republicans are going to act visavis funding when you consider trump being on trial in four different places theyve already said they want to cut money again to d. O. J. , fbi, local assistance to prosecutors such as Fulton County where trump is obviously under indictment so theres that layer. Number two, house lawmakers tend to look at the immediate political issue in front of them, which is their reelection, and they dont always do that, quite frankly. Actually, go back for one second you think that those two things are intertwined meaning their personal election prospects but then you would think that defunding the fbi and other Law Enforcement agencies in relation to the trump indictments, they think thats good, that would ultimately be good for their election prospects no. The House Republican conference is largely controlled by the right. We know that thats been the story for the last 10 or 15 years. So they controlled the agenda. Remember, there are 18 republicans in districts that joe biden won. In no way, shape or form is shutting down the government or causing chaos a good thing for their reelection and in term keeping their eyes on the house of representatives they dont have their eyes on the prize in the larger sense. Lawmakers dont think of how their behavior will impact the president ial election and to the extent they do, the right wing saying my constituents in the deep red districts want me to defend the fbi, they dont mind a Government Shutdown if it over the border wall or protecting trump. So that is very difficult to reconcile. The 18 House Republicans in these biden districts do not benefit from anything but middle of the road legislating. We seen very little of that this congress im going back to the president ial election only because i think weve been watching just various candidates either emerge or seem to fall. Desantis was on our air earlier this week, Brian Sullivan had a fascinating interview with him where do you think he really is in all of this given the indictments, plural, this all shakes out . And does it shake out in the next couple months or do you think this plays out much longer than that . Much longer than that i was talking to a smart House Republican the other day who basically said desantis play has to stay in the race in case trump gets convicted or is unable to run for some other reason, he gets put in jail for violating the terms some judge puts on him. Andrew, we know for a fact that donald trump in every single poll is at 50 , just below 50 , above 50 , 30 or 40 points ahead of ron desantis. I dont know how he overcomes that and i simply dont see any path for any other candidate besides donald trump i know theres this fantasy that somehow the tide is going to turn i dont think weve ever seen the tide turn 30 points absent some sort of external event like convicting donald trump or him ending up in jail for some reason play money ball with us since were here on bsquawk box. In terms of fundraising and money, has what weve seen happen in the last couple weeks with trump changed the ability for the other candidates to raise money or has it actually made it harder its probably made it a little bit easier but ill Say Something controversial just to get rise out of people theres a lot of stupid money in republican politics, meaning theres a lot of people who dump millions of dollars into candidates who had no chance weve seen Newt Gingrich raise money. In this era where one rich private equity person or any rich person could dump millions into a super pac, that candidate stays afloat because of that there is no argument really theres a little argument, very little argument that theres a smart Investment Opportunity with ron desantis. Just looking at the publicly available data, theres not a ton of evidence that ron desantis has a chance of coming back period. So, listen, i do think that there is the people who are making longterm bets that trump will be convicted or put in jail otherwise unable to run and thats allowing desantis and others to raise money. Not a great bet. Jake, we got to run we appreciate it talk to you soon thank you. Still ahead, from social media to the supermarket, tiktoks highest paid creators are launch, demilo foods with their new array of snacks hitting the shelves this fall. Well ask the patriarch of the family why hes ingog into the food and beverage sector next. Squawk box will be right back. Good morning futures pointing to some gains at the opening bell. Stocks have hit the skids lately the dow now on pace for its worst week in over a month playing a part in todays premarket game is walmart. Were going to tell you all about the Second Quarter profit and revenue beat thats pushing the shares higher this morning and the patriotarch of tiktoks first family we have an interview with the father, mark damelio will be with us as the final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square im joe kernen along with andrew and becky is off today we have stalled out the gains we saw from the october lows, stalled out in august, which maybe not surprising it is kind of slow but sometimes you see some big moves when not all the Major Players are in part of it are treasuries, getting interesting with the 10year right around 4. 3 , 4. 298 and the 2year 4. 95. Maybe were almost finished with the near term shortterm rate increases but maybe there arent any cuts coming . What did goldman say, Second Quarter . Yeah. The market already has them priced in. Gains with walmart, shares up about 3 last check. They raised their forecast, dom. Pretty good given all the headwinds. Definitely. But were losing a little bit of steam here the big earnings driver is whats happening with walmart. Remember the Dow Jones Industrial average, dow component part of the story. 1 gains as kelly points out, it was up more earlier on the sessions, about 400,000 shares of premarket volumes so far, americas biggest grocer and biggest private sector employer. It expects betterthanexpected profits. Its driven by grocery and ecommercial walmart raised its forecast. So overall its generally positive but were losing a little bit of steam as well. On the retail earnings front this morning, we have shares of tap i tapestry after the Parent Company of brands like coach, kate spade, in a deal with michael coors, capri holdings. It also gave guidance that was viewed as below consensus as well so tapestry shares feeling pressure and we end with hawaii electric, down 18 this morning, bringing its total yeartodate declines of 72 as the Hawaiian Electric utility faces continued speculation of any potential liability it may face in the aftermath of the maui wildfires. Theres a wall street journal report saying they have engaged some Restructuring Experts to help them through this process well see what happens there a very quick turn of event. Thanks a programming note on wall part dont miss an interview with walmarts cfo, John David Rainey coming up later this morning blue shield of california becoming the second to sign with mark cubans Online Pharmacy they sell medications for 15 over wholesale pricing its been around for less than two years and blue shield ceo telling cnbc he expects the switch will save 500 million a year cuban saying there are a lot of bad habits they need to break but payors realize theyve made the prices transparent they will continue to use cvs for specialty drugs. Take a look at the other Big Health Care players this morning, all down. Cvs taking it mostly on the chin there, the biggest loser at a little over 5 off right now. The existing pharma model has brought this upon itself to some extent looking around for defendants of the existing model and one of the arguments is if you did away with the pbms entirely, maybe the pharmas would be happy the lack of transparency, the rebate issues going on for years. And cvs bought them because they were supposed to get rid of Investment Bankers went wild. The idea is if the pbms are extracting something from that customer, theyre going to vertically integrate and its going to be better for the customer but never is. Right, nothing changed. Certain times you cant even tell what the price of something is its so convoluted with all the middle men and drug places blame the middleman. This is a mail order business they might struggle with that aspect of it, not going into the pharmacy and talking to somebody but i think these price moves premarket are warranted because this does feel like a big shakeup very interesting to watch what mark cuban does here if its down 5 just on this news, you have to believe somethings really happening i dont know if it is yet. It may take much longer. You know institutions better than anybody theres a sense of once one person does it, it may clear the way. Others may try. No one wants to be the first but once the first one goes, it can start to pick up momentum, unless someone has a bad experience it should be the best experience in town you can take a pill rather than being in the hospital, its better if you can manage it at home and it convenient when it shows up at your House Investment sentiment has swi switched to abject fear and loathing i dont know if thats good or bad. As soon as everyone stopped feeling better about the market, the market stopped going up. Thats typically how it works, joe there is tremendous skepticism around the ability of risk assets to continue to move higher our view is that stocks still look a lot better than bond. They think this is great trade, the risks around stocks versus 4 in the bag. I think the opportunity is high locking in low rates for the next ten years heres our view i think rates could move higher. Were in an environment where the demand for treasury has evaporated and buyers have switched to sellers, china, japan, Global Demand for treasuries has shifted from hot to cold. When you look at stocks, whats interesting is theyre doing all the right things what makes me happy about the private sectors and corporate and consumers is we all learned our lesson in 2008 and 2009 that floating rates is bad and thats great today is consumer and corporate Balance Sheets are still very healthy given the amount of inflation weve had to shoulder, et cetera. I dont know its one of those environments that were looking at in 2008 and 2009 and bracing for the end of the world and its actually a very different setup today i guess youve been watching the show we keep having that discussion about 4 for ten years versus, i dont know, if you got a good company with a dividend and its growing at x amount per year, then you got all the potential up side of the company, you know, being well managed and run effectively and increases that gets you to the 4 savita, where can i get a 4 yield and im not going to get you dont have to get it now. I dont want verizon. Buy a 2. 5 yield now and it goes up 15 a year, over the next ten years, that dividend yield will be up double digits and you also get the appreciation the best youre going to get on the 10year is your principle back, probably eaten away by inflation and taxes and taxes i like it were very likeminded this morning. To your point, i think can you actually get higher Free Cash Flow from Energy Companies if you look at energy versus tips everyone is worried about inflation protected Income Energy versus tips, the free cash difference is nine percentage point so i think that were in an environment where there are still dirt cheap stocks that arent necessarily discounting a healthier environment, meanwhile all the economists on wall street have dialed back their recession forecast, or most of them have, and were looking at Consumer Spending still strong pockets, you know, landscapers are starting to weaken it mostly in services where we cant spend money on travel because were going back to school i think were in a pretty good spot and there are not enough people hearing about how good the the but getting us up to 4 1 2, 5 . Youre not going to build well at 4 nobodys ever built wealth in anything other than the stock market ron baron messaged me thats totally fair youll get your money back, maybe not eaten away by inflation. Heres the xle, 3. 7 dividend yield. The past five years its gone from 70 to 87, the price its okay, you know, but nobodys ever gotten rich in investing in just getting your principal back its not a get rich thing. So you put it under a mattress, you do even worse but you do a little better in your tenyear, 4 , but people come all these people who are smart enough you dont even have to be that smart when the market goes from 1,900 in 81 to 35,000 you just have to be in it. To win it you got to be in it. I think you got to be in it and in the right sufficient. I dont like the cap weighted stuff here the equal benchmark is better. The equal weighted benchmark has outperformed the cap weighted. Theres something going on in the stock market, a broadening out, that not all the companies are going to go to zero and up just want to own seven tech companies. There is a strong reason to own a Broader Market portfolio today. I think the other important factor that weve noticed during earning season is that youve had Companies Tell Us that theyre spending on efficiency and theyre actually starting to reap some of those benefits. If you look at productivity, it jumped in the Second Quarter labor efficiency, companies are dealing with high wage pressure but theyre doing the right thing. Theyre thinking about how to get leaner, how to get more efficient. And longer term what weve found is that investors are willing to pay a much higher multiple for companies focused on efficiency than companies that are just earning money from buying back their shares so i think were in a great spot right now. I actually feel more positive on Corporate America than i have in years because companies are thinking about how to handle a higher hurdle rate and theyre doing the right things theyre cutting costs, theyre getting efficient, theyre thinking about where they can use a. I. I dont think a. I. Is a panacea but its part of a larger efficiency story that makes me more bullish where i see the risks is u. S. Treasury the u. S. Sovereign debt just got downgraded the best youre going to do is get your money back ive been on a stock market show for 30 years but i think kelly is going to work at a bank brandon at twitter has my back lets go, brandon you can get Capital Appreciation on bonds when rates decline. We got to go. If rates decline. You can, if rates go down i know, i kw,no im out of my depth. Well be right back thank you with just one capsule a day of advanced hair complex. Conquer hair thinning. And fall in love with your hair all over again. Only from natures bounty. 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. My cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com upbeat music Constant Contacts advanced automation lets you send the right message at the right time, every time. Constant Contact. Helping the small stand tall. 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. 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. Welcome back to squawk box. Were going to talk about the crater economy, people producing their own product, content and having success doing it. Today well focus on the damelio, theyve secured a 5 Million Investment from fifth growth fund and it will drive the companys expansion into food and beverages joining us is the founder and cofounder of the brand. Its great to see you, sir lets talk about whats happening in the greater economy and specifically the food space. I remember watching mr. Beast. Hes in the burger business across the country, never even had to open an actual burger store to do it does it effectively at ghost kitchens how does what youre doing work and lets sort of talk about how far you think this whole world can go hey, andrew, good to see you, man. Last time i was here, we talked about launches Damelio Brands and footwear, and just got back from vegas and opened up a bunch of retailers and thats been very successful. Now we started a brand, launching it in october, with a global retailer called be happy snacks were really excited about that and it the first time im talking about it so what does that business look like . You know, that right now where we did footwear, we went direct to consumer this business is going to be working with retailers across the globe and bringing it directly to your local store and selling be happy snacks through places youre familiar with every day. And will they be branded demilo . How will it be branded were calling it be happy snacks my daughter has a song called be happy and it kind of sparked us to come up with that brand name. So it will be called be happy snacks terms of the marketing, is all the marketing effectively happening through your social Media Channels is that the entirety it have do you have to shift as these things build out and grow . What does it look like we definitely has learned a lot. My background is selling to retail thats what i did prior to all this craziness thats happened with my family i think one thing i would say to all the creators out there, your following doesnt equate to customers. You really have to do the work and weve learned that part of the work is working with retail and making sure that people, as it relates to footwear, people could touch and feel and pride try get it on rather than thinking theyll come to you and push a button and shop its not always the case having a massive following doesnt necessarily translate. Do you have to think about what that customer and even what the followers now look like . Are you having to get moe re granular on focusing on a consistent audience . Absolutely. Especially you got to think about your product category. Footwear, womens footwear that were selling is an intimate purchase and you have to make sure theres a sizing, use, all kinds of things. Weve had someone come to our web site 73 times before they made a purchase. We have to know our customer we do think selling whole sale, working with retailers is one of the ways well be able to at a retail location. Mark, huf had such incredible success. How much was the rise of the demillo family yours this is it when i started feeling most comfortable when we first started going on tiktok and social media ill be quite honest, i felt like a fish out of water and i grew up in new york city and i had my own brand were you resistant to their sort of, you know, we all as parent are trying to figure out whether or not to even let the kids have the phone. Did you watch it passively or nervously or the second they all posted were you all in i think fo an older guy, i monitored it and i was definitely open to it. When charlie was coming in my room every day and aid, woman its just been a crazy foreign experience and now its coming full circle where were actually having a blast running a business together. Assume cool final question, how far can the brand go youre doing clothing, youre now clothing and the shoes. If youre hitting here at the table. Theres tons of companies that have a bunch of different brands what im trying to do really is just giving my daughter and her family options to do things and and i say it all the time, influencers set themselves in a hamster wheel and just creating something that they can decide what they want to do with it, whether they want to run it or sell it but were having a lot of fun along the way one more for you. Go ahead. My one more is the quick sugar high of somin versus doing it yourself and the investment of it and hoping its going to work out on the other end instead of just taking the cash and running. I assume theres times when someone comes to you with a huge number and they might even now be in the space that youre trying to invest in to turn into your own business. Weve been very lucky we started this when i was fairly successful in my business we never had to take an opportunity that just didnt feel right and charlie and dibsy both will come to me when an opportunity presents sfl, oot and one of our first deals early on as a family that we had together, we hassed on because it just didnt feel right for us mark, thank you its always to. Coming up, were going to dig into walmarts Second Quarter earnings but first, you can get the best of squawk box on a daily podcast called squawk pod. Were coming right back. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. Welcome back to squawk box. Futures right now have turned negative at least in the dow we still have the nasdaq up about 57 points as you can see. The s p up 11 and change i guess were not going to look at the yields. The numbers coming in a second well talk to Rick Santelli in the meantime lets talk about our Favorite Company, shall we . Former is it our former Favorite Company or is it our Favorite Company well always have paris and bed, bath beyond. And buy buy baby is getting a new lease on life. I had no idea you guys had this affinity. We like to go on rainy weekends and just browse both of you did this . Together. We go to like the vaporizeor section. Is this from a movie i havent seen nope. Just the movie that we would make that no one would seeor une have you ever been in a bed bath i have. Many times. To buy a keurig i love bed bath they have no baths. Or beds. Thats why they went belly up. Meantime, the chief marketing officer of the baby goods retailer dream on me says the owners of his Organization Plan to reopen 11 stores in the northeast. They bought byebye babys intellectual property at an auction. I think, joe, we missed out on buying the i. P that would have done it Rick Santelli has the numbers in chicago yes, we are awaiting of course the release of continuing claims if you look at continuing claims in particular, weve had one, two, three in a row under 1. 7 million. We want to Pay Attention to that dynamic. I do see a philly fed hitting the wires. We looking for minus 10. It came out at 12. 12 doesnt sound good but theres something neat here. We had 11 nesitive 12 breaks th, 13 or 14 negative ones in a and is the highest number since april last year, 239,000 on initial claims, spot on with expectations and at least for the moment 9,000 less than our last look at 248,000, but that may get revised. 227,000 was the last week in august i do like to point out we havent been over 250, a psychological area to be sure, since made june. And on continuing i have to say that if you folks 1,716,000, you have to be fast to read these headlines. Thats a little bit higher than the 1. 7 million that was expected and a little hyper than 1. 864 million in the rear view mirror and it does break the consecutive run for three months in a row if you look, were still moving a little bit higher. We were at 428 were at 429 now of course i have to point out that last night was a very important day if youre a trader in the fixed income space. A clo bo and owl ask knight 4. 25 and change were hovering just below 4. 3. Anybody throughout as a technician understands well have to see where it goes on friday to make our next guest i what 30 years havent done it yet. Their high was also on the 24th of october last year at. 438 granted we are higher than that now but we havent closed above it back to you. Okay, rickster. Thank you for that i want to go to the professor, Steve Liesman joins us with his take on this data news the only thing i add to the jobless claim numbers is theres some discussion as to the yellow bankruptcy created something of a surge. It came in spot on i dont know if rick saw this, but i have here that they revised up a little bit to 250 the prior week so claims are actually done. And maybe the fun who might have lost work because of the bankruptcy and working its way of the system. We want to okay knowledge whether and its a sign of continuing demand out there. Worried some sign in the philly fed number of the prices paid index cenking back up above 20 and the Employment Index was and the number itself was strong it defies explanation that now we have perhaps a broadening of the sector dont miss cnbcs coverage of next weeks Federal Reserve summit steve is headed out west, live from jackson hole, wyoming that is next thursday and friday and, you know, steve puts on the western clothes. He does maybe a hat some waders hes got places where he could keep a bunch of lures. A lot of plaid not that he. We talked about this issue with him he said its a lot harder getting the fisher in than it used to be coming up, Michael Ferguson helps us make nssee of the rates and if they will go up again youre watching squawk box on cnbc 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 . upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Talked a lot about jackson hole and a lot about the fed lets continue because according to minutes from the last months Federal Reserve meeting, fed officials still see up side risks to inflation they say more rate hikes could be necessary to tame rising prices Roger Ferguson joins us now, former fed vice chair and cnbc contributor. Roger, that was the headline that was the takeaway. I couldnt help, i was reminded of the late, great prince. There were a couple of doves that were crying a little bit and i heard that, too. Im wondering i think its good because nobody knows everything and its good that not everybody is there just to nod in agreement what do you think the doves see that maybe the rest of the fmc, they dont see what do you think theyre looking at well, first i think youre right to point out that while the headline was pretty hawkish, there were a range of views that came through i think the contrarian point of view is theres been quite a bit of tightening already in the system, theres still some uncertainty about credit tightening coming forward and maybe its time just to take a pause to let all of this work its way out. There are a couple places where that kind of sentiment came in around the risks being a little bit more balanced and not all on the inflation side i think thats what the doves are seeing the 10year might do some of the work for the fed at this point. That could cause, i dont know, the housing market, Mortgage Rates. A lot of things are pegged to that so maybe they dont need to take short rates higher and the twoyear seems to be indicating that maybe there arent too many near term hikes. Were back to where we were. All along weve been saying for six months, roger, one or two more and one more, were still stuck on that. Were stuck on it because the minutes themselves say while inflation comes down, its still very much above the 2 target and the fed said in the minutes that i think they used the word confident, that inflation is clearly on the path towards 2 the reason were continuing to get these hikes is inflation is still high and, as weve seen recently, there continues to be in a positive sense more momentum in the economy but that feeds through to what theyre worried about. So there may be a pause in september depending very much what the data points are roger, nobody can ever see that far into the future the thing that scares me, i guess, is maybe were under ive always been thinking that inflation would take care of itself after the supply chain issues went away i guess Robert Kaplan got me thinking about how much more money we really do have to spend with all these programs. And because now the narrative is theres not going to be a recession or at least its going to be a soft landing, what scares me is on the down side, we could have to go much higher, like back the rates i was used to my entire life, whether its 6 6, 7, 8 they didnt cut off the stock market back then, we did fine with 7 1 2, 8 notes, roger. Do you have see that as a possibility that the fed has to keep going and going and going for the fever to break i wouldnt say going and going and going. I would say two things, though first, the experience of the last decade or more, two decades are very, very low, Interest Rates are certainly an anomaly, it was not normal for money to be free. Secondly, we do continue to see these imbalances in the labor market i think thats one of the things thats going to drive them to be open to going further. I think the way i would think about this, joe, is certainly one more and the possibility depending how the data come in of more than that. And the market has got to get its head around that concept the reason i think the market was surprised is an expectation that the fed is almost done. The fed itself kept saying its not just inflation has come down, its the level that is still too high and a level that is clearly on a trajectory of 2 that suggests to me the possibility of more working to done going, going, going, dont know. I think its too early for the market to say, well, the fed is done or even too early to say one and done i think its very data dependent and theres a lot of Forward Momentum here. If you try to paint a picture of a stock market that under performs on a secular level for five years, lets say, there have been some guys and gals that think we could be below historical years and rates of returns on the stock market and not get not necessarily making new highs that were used to thats a scenario that i could see would cause Financial Assets not to perform well for five years, if were just underestimating getting all the way back to those higher levels if we need to. I hope not, like you otherwise are there geniuses and they stuck the landing no recession, Interest Rates go back down, stock market goes up and we live happily ever after has that ever happened, roger . It has rarely happened. Lets hope it happens this time. I would caution a soft landing doesnt mean rates are coming down any time soon, higher for longer has always got to be a mantra thanks, roger good to have you on, as always well be right back. Were always saying that well be right back. The notsosecret to our success . Earn and keep trust. Build and maintain financial strength and stability. Deliver solutions that meet complex needs. Do right by customers, clients, and policyholders, always. Repeat daily for over one hundred and seventy years. Massmutual. Partnering with financial professionals, benefits brokers, and institutions. please dont go by harry casey, Richard Raymond finch 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 walmart revenue estimates. The real taitail really had stronger quarter, beating expectations for revenue, comp the earnings conference is under way. I just turned it down. Mcmillan said jobs, wages and pockets of disinflation but rising Energy Prices, resuming stude student loan payments, as well as excess savings or headwinds and the forecast Going Forward is cautiously optimistic one thing thats better is the run rate in the previous quarter and when backtoschool started and when that is strong, it bodes well with halloween and christmas. I do think consumables in walmart will go up private rates in grocery increased 9 and there is evidence of purchasers eating more at home based on the food theyre buying and appliances. I will have more coming up on squawk on the street. This quarter looks like its painting a bit of a different picture. Softness in some of the discretionary categories but improved at walmart. What do you have see as the distinction between the two companies in. Everybody points to mix as the big reason obviously walmart has much more Grocery Stores than target does. That increases frequency and their sales mix is vastly different. But also the online component is starkly different with walmarts online sales up 7 and target down 10 1 2 perhaps thats part of it. It does look like maybe theyre taking share they also said they had more walmartplus signups in the quarter than previously. Maybe there is value that consumers are starting to see there and using it as grocery but then again for other things. Its more we are definitely still trying to ask that question a lot and tease it out. Is walmart picking up share or are consumers spending less on the staff target sells or do we have to say docuug mcmillan is amazing . Shes hes under the radar but hes so good about this shes doing very well we think of the got to admit. You got it in there you want to disagree with me on that . No, but doug mcmillon. Absolutely. Hes so young and he knows the Business Inside and out served as an hourly associate. Its pretty amazing. The only thing i wonder so, obviously, they benefitted from some of the people who moved from target, dissatisfaction, what have you, but are they able to convert that customer and keep them . Is that opportunity the kind of thing that wins you a lifelong customer or come a year from now when this is a distant memory, if it is, will they lose that and face a harder im just curious. Such a good question. They started to see this higherincome consumer come in, i think, when things started to get tough with inflation, and it seems like theyve held on them so far the big question is, can they convert them into buying those higher margin categories, the home and apparel theyve done better, so maybe they are holding on to them. Jamie dimon thats true Mike Cavanagh keep going. Why are you shaking shameless for more on walmarts quarter, lets bring in michael lassar, whos been listening to the Earnings Call as well. Why did the shares turn negative was it a little bit of caution around the outlook that courtney was talking about . Good morning, kelly i dont think it was that. I think the expectation was pretty high heading into the spring walmarts had a really good run. The stock has had a really good run over the last several months its a well owned name by institutional investors, and i think the combination of high expectations, a premium valuation, are leading to the share price action today still, the stock is set up very well while trying to remain objective. I would concur with some of the comments you dont have to remain objective. With the strength of the Management Team and how the com companys being led because theyre really hitting on all cylinders. Your trying to avoid a great quarter, guys vibe. The forecast is pretty good. I dont know what do we even talk about from here i guess the question is, can they keep taking share thats the key question are they going to double down on some of the things that are working . Also keep in mind that they are seeing some benefits that probably are temporary, such as antiobesity medications doing really well. That added likely about 150 to 200 basis points to its samestore sales growth in the quarter. Things like ozempic. Thats going to fade as we get into next year, but it still has a lot of profit drivers that they can use as tools to reinvest back in the business, and this is a stock that youre going to want to own for the longterm as it continues to execute against its strategy what did you just say about ozempic . They sold around 2 billion worth of prescriptions for antiobesity prescriptions in the quarter so thats a meaningful driver of their recent performance wow it is i believe that the cfo, John David Rainey, when he was talking about that, also talked, michael, about how the margins are not particularly good for that, although the sales are is that right . Super good point, courtney. Thats exactly right they might fill a scrip for 750 to 1,000 and earn 5 to 10 gross profit they will renegotiate some of those relationships and improve the profitability of those over time they just want people in the store. They might get 5 on ozempic, but they want to get the 50 on the milk and the seasonal categories or whatever courtney, thank you. Michael, thank you as well coming up, were going to get you ready for the trading day, which is coming up at 9 30. The futureris ght now back in the green. They were negative its all walmart. Except the hours that youre sleeping. 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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. We are just over half an hour to the opening bell on wall street joining us now to talk markets, the declines weve seen lately is julie biel, Research Analyst at Kayne Anderson rudnick. Its been tough out there. We got a little bit of green this morning, but i dont know i dont know between where the fed may be going and just about everything else, are you in the buy, buy, buy category, or would you be holding your powder . Or in the bond business like kelly evans . You know, we live in the hold, hold, hold at kayne. Our average hold period is five years, and i make maybe one or two trades a quarter our positioning is always the same because we really pretty deeply believe its hard to predict whats going on. We were all wrong about this recession that never showed up so, i think that taught us that it doesnt really pay to be defensive or value or growth its really better to just own very good quality businesses that can do well regardless of the economic conditions. You have a take on what the feds going to do at this point . You know, i think its important to kind of bear in mind how higher Interest Rates really filter through the economy. Its important because you need to be thoughtful in terms of, are you stocks that you own overvalued relative to where Interest Rates are and its interesting to me how strong the economy the stock market has been despite having very attractive yields for investors, and i think people are just theres a lot of fomo and a lot of people feeling forced that they have to participate in this market but theres not a lot of conviction. You look at earnings, and any company that even was soso, the stock sells off immediately, and so people are really nervous about any kind of cracks what did you think of walmarts earnings we keep talking about walmart versus target. Operations, operationally, and the mix out of walmart versus sort of where we are across the board in terms of the economy. Yeah, i mean, i think a lot if you look at anything in retail, before coming out of the pandemic, any retailer did well because we were just so desperate to spend money and now, people are really just kind of choosey about where theyre going to spend money because inflation has taken a lot of wind out of their sails i think its a function of the level of execution you see stores in the same categories, dollar tree, dollar general, and they have complete divergence in how things are going in terms of their traffic, and its just a function of how well youre executing to bring your consumer into the store and its as you guys were talking about, walmart is just executing extremely well both in the store and on lineup, and target just isnt. Julie, thank you. Appreciate it. Thanks. I think about Advance Auto Parts versus auto zone there have been a lot of these divergent situations. Trucking firms going by the way, the philly fed, i think that has something to do walmarts turned around and gone agree premarket but the philly fed came in at plus 12, highest rating since 2022, and pretty good gauge of overall ism, gauge of the overall market, so for those who want to argue things are bottoming and the worst is behind us, there you go. Give you that data point this morning. Put it all together, shake it up, and thats what you get. 78 points on the in nasdaq the dow indicated up 55 points or so. The s p indicated up 16. Its august, but things are happening that are important a lot of it in the bond market most people are on my side today. Most of the people we had. You know, i heard something a little different make sure you join us what did andrew hear . We got to go every strategist we had on said, buy stocks and julie. Join us tomorrow squawk on the street is next good thursday morning, and welcome to squawk on the street, im sara eisen with jim cramer live from post nine at the new york Stock Exchange. Carl and david have the morning off. Take a look at futures this morning. Its really the bond market thats in focus, and were seeing a little minibounce this morning. A minibounce were still down for th