Transcripts For CNBC Squawk 20240704

Were peppy boys. Three down weeks in a row for stocks. It looks like weget out of the gate in a positive way. Dow would open higher by 133. The s p is good for 21. Still early with the nasdaq which has been beaten up is up 89. Bond yields here come after declines of 2 last week for each of the major averages. Treasury yields spis part of th story. 10year treasury eased off last week, but still at 4. 29. Steve. The upper end of the range recently. 4. 30. Some people telling me 4. 50 is not out of the question. A lighter touch from the China Central bank. Lowered the oneyear prime rate by ten points. Economists expected 15point cut. The economists expected a 15basis point rate cut to the fiveyear prime rate. Major indices in china were down across the board. Palo alto here for liesmaniacs want to talk about the fed. Palo alto. You must have been talking about this. It is odd they did the release on the summer friday in the afternoon. It wasnt a bad one. It was a good one. Everybody thought it was a bad one. Why would you do a release on a late august summer friday . It never happens. I like the way they did it. After the closing bell. It turned out much to do about nothing. Palo alto guidance came in higher. The stock is up sharply this morning. I know this guy. Big hitter. Big, huge swing. Did you play with him . No. He hits it far. Address the buzz and he is a good ceo. Saying they want to give ample time for analysts to have oneonone calls over the weekend ahead of the sales conference that began yesterday. That is what i was going to talk about with the fed. I thought they had gone too tfa. Now im worried about this is just a stopping point at 4. 2. Now im worried it may turn into something. You know what i mean . The inflation rate at 4. 2 . No. The bonds may go to 6 eventually. If everyone is saying it is a great buy is if Interest Rates go down from here if were near the top. 4. 3 for ten years is not 7 which is what stocks average. Nothing good about it. If rates go down from here, you can make money in the bond market. If they go up historically at 6 or 7 , it is not the time to buy here. I talked to Bond Investors last week. They like it . They are nervous. The market never hits the fundamental rate on the first go. Thats what im thinking. You know, one guy who does a lot of bonds said 5 is cheap to me. I might dabble in there. Another guy said me and my clients, as long as i can get five and change on the shorshor short end, i cannot take the risk on the long end. You lock it in. Let me go back to the first guy who was talking about the fundamentals. 2 yield. 4. 30 is not crazy. It might be that is where we are. You might keep up with inflation. You wont build wealth. Jeremy siegel is going to be on. You wont build wealth. Im here. Youre here. They think long and hard about who will do each one. A Committee Meeting sdplchlt ri. It started with caplan. We have Jared Bernstein coming on. I am interviewing him. Lets talk to him about it. I can run through the guest list right now. Who is doing what, scott . Another guy . Joe is leading china. Senator mike braun. China. Is this a nightmare gone bad . A communist socialist gone bad. Now a lot of debt. No one living you can buy a nice apartment if you want to live in one of the provinces. I lived in moscow. I was comfortable with people trying to i dont know what they were trying to tdo. Were you insinuating rates to get back on track that it is a threehour show. The risk this week is that yields go up more because powell says something thats more hawkish in jackson hole . Last year it was eight minutes. A sharp do you have the chart in the background . I want to show the fed funds last year to this year. Last year going into jackson hole or just after, 3. 55 funds rate by the end of the year. Now were up to 5. 40. You see the drop in the middle. That is the Silicon Valley bank. I would say somewhere along the line p that is a success of powell. He was able to convince we are going higher for longer. I dont know he has a need to convince the market of much this august ju august. Just doesnt mean he has to make a major statement. He is in waitandsee mode. I didnt make this chart. Look at the inflation rate. Inflation rate last time at jackson hole was 8 . It has come down 5 depending on how you look at it. He has that success there. The recession call is still out there. Look at that. Why doesnt he use jackson hole to declare victory before they snatch defeat from the jaws of it . Because this is a good question and jason has a piece on the journal this morning. He doesnt want the market to think they changed the inflation target. He this the feds credibility is on the line. Just because they are not hitting to doesnt mean they will change to 3. Are on the way to 2 . They are on the way to 2. The threemonth annualized rate is down. I dont think he will declare victory. He may like the fact the higher rates are out there on the long end. That helps bring down the question i have going in and it is not like we have big questions, but are they ready to say the economy has operated well above trend for last year . Now we will do a 3 or 4 this quarter . Inflation has come down. Are they ready to get rid of the model to run below potential . Do we have to bring down growth . Do we have to have the rate increase or am i chilling and let the process play out . As a worrier, i cant believe after everything in the last ten years that you can bring inflation down and the economy doesnt have recession and we all live happily ever after. I wonder maybe we are replacing printing by the fed with the fiscal stimulus of. That will take time. Sooner or later, a bigger reckoning is happening. The fine gymnast on the balance beam has done the landing part 11 times and stumbled six or seven. Three or four times the gymnast has stuck the landing. You are right, i think, to bet against the landing. It looks like at the moment, joe, that we did that story i want to believe. I think it is good do be a little afraid. What they do on the balance beam i will never understand. Never. Have you tried to get up on one of those things . They spin around. I cannot get up on it. The balance beam . No way. Steve, take us to break. We go to break . We did none of the stories. You never go to break at 6 10. Coming up, more on jay powells speech at jackson hole. Later, we take you live to Southern California where Tropical Storm hilary is wreaking wre wre wreaking havoc. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. 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. 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. Sleep more deeply and wake up rejuvenated. Purple mattresses exclusive gel flex grid draws away heat relieves pressure and instantly adapts. Sleep better. Live purple. Right now save up to 900 off mattress sets during purples labor day sale. Visit purple. Com or a Mattress Firm near you. On this weeks planner, several earnings reports of the we hear from Toll Brothers and macys and dicks sportsing goos and we will hear from kohls and dollar tree. We will have jobless claims and durable goods on thursday. We will have jay powell speaking at jackson hole on friday morning. We will have live coverage starting thursday morning from jackson hole. Joining us for a look at the potential market catalyst in the week ahead is the stifel economist. Lindsey, ill start with you. Why dont you tell us your expectation for jackson hole and the chairman speech on friday . You talked earlier about the fed not wanting to declare victory because they have not reached the 2 goal. The fed has made progress restraining price pressures off earlier peaks. The intention was not to get inflation down 8 to 3 , but to get to the 2 target. I think the fed has reason to be confident and they are continuing to make improvements. As we saw in the july fmoc minutes before the latest hotter than expect ed inflation number, there was still a significant upside risk to inflation. I do think the chairman is going to emphasize the need for more work to be done and potentially resulting in a higher for longer rate scenario. Karen, is this an event as far as the stock market is concerned . Is there only Downside Risk to the chairman talking hereand he will be hawkish and that is not possiblitive for the stock mark . It is not much of an event like last year where we were looking for guidance from powell. It will be subdued. We are looking for powell to give us guidance of progress with inflation. I dont think it will be as groundbreaking as last year. The market knows we have a way to go with inflation. It has stronger than normal Economic Data as of late. I think the fed chairman is only going to say what we already k know. Karyn, are you advising the fed is going to stick the landing here and it will come off the balance beam and stand up with its arms in the air and get 10s across the board here . Are you concerned more like joe over the end here . I am concerned. That not an easy stick on that landing as you were discussing. If we do see a recession, it is not going to be severe. We wdo have buffers. We may see a mild recession. It is not off the table yet. It is very difficult to thread that needle and have a totally soft landing. We know Monetary Policy has a lag. We havent seen the effects of what is going on with raising Interest Rates so much so quickly. Therefore, im cautiously optimistic. Lindsey, i want to ask the same question of you, but make it more geeky. What does the fed do as it brought down inflation as much as it has last year and unemployment has been flat and gdp so far this quarter is running crazy. The last several quarters it has been above trend. That is not comported with the forecast or their view of the economy should work. It certainly hasnt. I think they under theestimated number of supports that were deployed during the unprecedented time in the pandemic and immediate aftermath that continued to artificially extend to the consumer and broader economy. I think the fed underestimated the timeline needed to see the intended effects of tighter Monetary Policy. That doesnt mean the weakness has been deferred. There is an expectation the recession in early 2023 and pushed out to 2024 which is the expectation for the downturn. That doesnt change the fed focus and tighter Monetary Policy which is to raise rates and tap down investment and consumption and eventually see the slowdown in topline growth resulting in benign inflation. The fed has achieved a good portion of the intention. Getting us down from 8 to 4 . In order to reach that last 200 basis points and getting back to the 2 target, the fed will have to eventually tighten enough and reach that restrictive level and policy to slow growth enough in order to see that more benign price level. We will see the downturn. We pushed it down. Karyn, it is scott. How at risk do you think stocks are here . Some of the high flying names, we have a connecrrection territory. We know this is a weak time for markets. When i look at earnings, it is hard to be bearish. We held our own in qq2. It is hard to be that bearish. Companies are telling us they are resilient. The economy has been resilient. If we have a downturn, it will be mild. The china data is concerning. The guidance held its own in q2 and im optimistic we will have a good end to the year for the markets. Lindsey, your story here is it is the government and Government Spending which is responsible for the strength of the economy and that runs out some time in 2024 and thats when the economy slows down . Government stimulus was part of the artificial support. We have to look at what the consumer is relying on. They had a tremendous amount of savings estimated over 2 trillion. We have drawn down a lot of that. Consumers are turning to credit cards and taps into 401 k . The local stimulus or support coming down the pipeline. There is a number of temporary support to allow the consumer to remain resilient. When we look at the spending patterns unless the supports remain deficit, we resexpect th weakness to set in and eventually resulting in the benign pressure on the demand side allowing the fed to achieve the 2 goal. Great discuss, lindsey and karyn. Thanks very much. Thank you. Are they sticking around . We need diversity on our table. We have plenty of diversity. I have no hair. You have hair. You have the blue shirt. White shirts. Blue trie. Black tie. You want me to put my jacket on . I said, if you want to wear jackets, whatever you want to do. New tolerant joe. What am i going to do . Look what im dealing with most days . Coming up, a live report from beijing on Chinas Central Bank moves overnight. That is coming up at 6 30. First, we are tracking Tropical Storm hilary battering Southern California this morning. We will take you live to our friend jane wells. Janes great. I wo e 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 woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. From big cities, to small towns, and on main streets across the us, youll find pnc bank. Helping businesses both large and small, communities and the people who live and work there grow and thrive. Were proud to call these places home too. Theyre where we put down roots, and where together, we work to help move everyones financial goals forward. Pnc bank. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. 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. Together, we built something truly beautiful in the true iconic notion of what america is all about. this is our task. This is our mission. We have a clear focus, and we have the ability to be agile and innovate. It takes years of dedication to get us to this milestone. It is all because of you. Never doubt that a small group of thoughtful, committed citizens can change the world. It is the only thing that ever has. to be a woman leader, its not so easy. But its easy if the passion and the love is coming from your heart. The New York Stock Exchange is the symbol of what america is all about. The potential of capitalism, the potential of the american dream. The only way you can move a Society Forward is a true expression of freedom. sfx Stock Exchange bell ringing Tropical Storm hilary battering Southern California. Jane wells is joining us live from palm springs. I have seen rain twice in my life. Its bizarre . Reporter joe, this creek is bone dry in august. This is the middle of fire season. Nothing is normal this year. In palm springs, as we show you video trying to get through the flooded intersection yesterday, they got walloped. They get 5 inches in a year, but as california had the first Tropical Storm warning, there were all kinds watches. We had to drive around a massive boulder. Watch. Friday, a farmer sent me this video as south of here they are trying get everything out of the ground before yesterdays rains with the tornado watches and whipping winds. In the valley, they grow most of the vegetables most of the americans eat in the winter. We are getting hit hard and working overtime running double shifts and asking employees to please work to prepare the ground and get things ready. Reporter disneyland closed early. Sunday baseball games moved to saturday. The chargers still played at sofi yesterday and lost. Hundreds of Flights Canceled and many schools closed today and we had a 5. 1 earthquake in ojai. All things considered, it could have been worse. Thats the take. 5. 1 is thats rocking and rolling. To really get your attention. A 6. 0 is the weird scale. It is ten times as strong as a 5. 0. Reporter it doesnt sound like they had much damage. A 5. 0 will wake you up. Once you get to 6. 0, you will get destruction. We know the song it never rains in Southern California. When was that . Albert . Reporter im sure that was before my time. Not before my time. Okay. Ill let you have that, jane. Ill let you have that. Barry manilow sang it, too. He covered it, i guess. The first one was 1973. You were a glimmer in your mothers eye. Rei remember the earthqua. Sylmar. Whittier was 87. You know why i remember 1987. Right around the market crash. Almost the same week. Go figure. All right. Jane wells, thank you. Palm springs. You been . Good place. I dont think i have. Never been. Golf. Golf heaven. Pga west. Id like to go. Madison club. L laquinta. It is an hour and a half west or east. Coming up we take you live to china on the surprise Interest Rate move overnight. Eunice yoon joins us next. As we look to break, the winners and losers on the s p 500. Palo alto stock higher. Much so this morning. Up 12 . Were right back on squawk box after this. Casey, Richard Raymond finch sfx ping please dont go please dont go. Please dont go please dont go dont goooooo dont go away please dont go the thought of getting screened for colon cancer made me queasy. But now ive found a way thats right for me. Feels more easy. My doc and i agreed. I pick the time. Todays a good day. I screened with cologuard and did it my way cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. Lets look at the futures. It doesnt look like most of the month p. It does actually. We have seen green in the morning to get a lot of it back. It happened a few times last w week. August was rough. The market hasnt done anything. New own pvernight, lighter toucr China Central bank. Eunic eunice yoon, there is a piece in the journal that blew my mind for the prospects for china maybe well talk about that at the end. Reporter the central bank, as you said, lowered the key lending rate by tenbasis points when the market was expecting a 15basis cut rate for the oneyear prime rate. What surprised people here is the fiveyear lpr did not change at all. The expectation was it would be a bigger than normal move because that is the rate that mortgages are referenced upon. With the trouble in the property sector, there is expectation that the government would want to do something. That left investors puzzled. Investors are caring about the Real Estate Market because it drives chinas growth and growth in the world. There are interesting numbers. Real estate accounts for 25 of gdp. It is a massive storer of weth f wealth for the middle class. That means you could see a direct hit on Property Values and wealth effect. In addition to that, the Financial Sector with 40 collateral held by banks. There may not be a lot of options to try to manage the crisis because of the concern about the runup of debt. Over xi jinpings time in office, it went up 297 just last year. You understand why the authorities are hesitant about the idea of throwing out sy stimulus to raise debt further. Eunice, i asked whether xis move away from private sector and whether there was second guessing about that. It seemed to focus on Something Else. Now you cant lead. A Strong Economy is like the basis for Everything Else he wants to do for china in the next five years. If you dont have that, it cuts you off at the knees. Reporter yeah. You know, it is interesting you say that because i think over decades, the communist party had been looking at the economy and said when you have a Strong Economy, you have security. Security for the communist party. That has been one of the tenants we have seen where the businesses and american businesses would say at the end of the day, the government would push through the Infrastructure Project or do whatever is necessary to make sure the economy is strong here. Now it just looks the definition of National Security is changing under president xi. It looks like different parts of the government, the economy is really important. For the National Security folks, it looks like what their definition of National Security takes precedence. Thanks, eunice. Lets bring in the former chairman for morgan stanley. You probably read the piece today, stephen. I wonder if you think it is overdone in the journal. For decades, china invested in factories and roads and sparked a period of growth and now the model is broken. Many economists are saying what used to be 6 is now 2 to 3 . China could look like japan in the 90s when we thought japan would be a global power forever. The Real Estate Market busted. We had disinflation or deflation for almost 25 years. Thanks, joe, for having me back. Sorry for not wearing a white shirt like the rest of you. I think we go very fnto a japan box or into an autocrasy box. It accounts for 30 of the gdp. It has gone back and forth of emphasizing market based control. It doesnt know who it is right now. It does pose the risk of japaneselike concerns especially in the property sector and interplay as eunice correctly pointed out with the enormous push of debt intensive growth. The governments policy actions dont really seem to be all that forceful or really have a grip on who china is and what it will take to resurrect that type of growth dynamism we have grown an k accustomed to for so long. There is a statement that they may never surpass the United States. 25fold increase per capital gdp, but only now 12,000 which doesnt get them to a highincome country. Japan is 42,000. United states is 76,000 per person. Maybe 800 Million People are out of poverty, but they have a long way to go. Will they stop that progress . You have the finger on the missing link of the story. The article focuses on the supply side of the chinese economy. The infrastructure and capacity and the roads and buildings and, of course, the housing. The missing piece is the demand side. The consumer and china still accounts for less than 40 of the gdp. That ratio has been stuck at a low level. The government now tells us they are focusing on stimulating consumer demand. Honestly, they have been saying that for close to 15 years now. They recently put out a 21point plan to stimulate consumption. It doesnt touch on the big issue in my opinion which is excess precaprecautionary savin the aging population doesnt have the safety net it needs to feel secure about future spending. Until the consumer piece comes in, that per capital comparison you eluded to will not converge on higher income norms. Stephen, its scott. Nice to see you. If there ends up being a japanlike malaise as you discussed with joe and you think is somewhat of a possibility, what then does that mean for the Global Economy and most importantly here in the United States . Well, scott, china, since the Global Financial crisis has accounted for 35 of the cumulative increase in world gdp. If you have the major engine of Global Growth shifting to the lower pace, that means borrowing a new china or source of global dynamism and that means the world will grow slower. That is problematic, obviously, for us and other nations who have been heavily dependent on Global Growth to drive the economy. Maybe not that big for the u. S. The other countries are bigger. Stephen, you and i have known each other thalonger than we wo care to admit. China did not have to dismantle the state companies because it would let the private sector grow around it and over time, the state companies would be less. Xi reversed that and support the state companies. He did worse than that. He suppressed the private sector and really taken the shootine o that. Do you think he might rethink his policies here and say that was the right way to go . Thats a fair point, steve. I think xi jinping is a complex man. His primary focus is on the survival of the party and control of the party and dominant role of the party plays in shaping all aspects of the Chinese Society and system. For him to do a 180 on his shift back to supporting Stateowned Enterprises would really mean to the same thing as saying the core premise or philosophy in driving the nation is wrong. I dont think he is prepared to do that right now and i think thats been a very significant shift and disappointing one in his tenure as leader. We got to go, i guess. Now people think i could see two things. I could see him pulling back china and worrying domestically or getting more aggressive. Theres no reason to think xi will become less popular. This isnt going to help. This means taiwan is a goner and South China Sea and balloons and buying up farm land. Does this make him more aggressive in that regard, steve . Joe, like the u. S. And president biden, china is fixated on security. You have the two largest countries in the world and two most powerful militaries in the world both paranoid about security. Many of the issues that you just addressed become more contentious and more an important part of the conflict between these two nations. I wrote a book about it and i think that will be a lasting problem. Great. The dooms day clock at 11 59. 48. Iran has a bomb. Russia. Were screwed. Ste ste stephen, thank you. Thank you. Its monday. High note. Yeah. End on that high note. Were goners. Were going to work on a reason for you to get up and get dressed this morning. Turn on a tv. Coming up, survey data shows economists are more confident that the fed can achieve a soft landing. Im upbeat. Dont miss our economic adviser Jared Bernstein. Something good on the calcalend. Squawk box is coming right back. Confidence is kbgrowing tha the Federal Reserve can achieve a soft landing for the economy. Nearly 70 of the economists think the fed will bring inflation down without sparking a recession. One of the interesting parts of the survey was 36 think the inversion in the bond market signals recession in the next 1 12 to 18 months. Thats a big departure from the conventional wisdom is recession is automatic. I was interested to see they are not on board with this. Only half of what it was . The inversion . Yes. Now in the 70s. I didnt look this morning. What is this, scott . I stopped blocking people. It is much better. Sometimes i like them to know. They are so obnoxious. I love the mute. You think they are still engaged. I think i would have 6,000 more followers if i hadnt blocked people. Whats mute . Welcome back, x, the platform formerly known as twitter may soon look different for some users. On friday, elon musk said the company would eliminate the block feature except tr direct messages. That has long been seen as a safety feature that allows people to make sure that hateful content ask harassment doesnt show up in their feed in response to their posts. Users will be able to use the mute feature, which prevents you from being able to see the undesired responses. Metas threads will soon be launching a web version of the app, which could help it compete with the app. Jo welcome this morning. Thank you. First things first, i mean, were talking about, you know, this new thing with threads and the block feature potentially going away. Musk himself is in japan for the first time in some nine years, which nobodys talking about, although i guess were trying to figure out what the real purpose of that is. Japan has been a pretty twitter x Centric Society in a while now. Musk has interest in knowing what the japanese want out of the platform. In terms of this blocking feature issue, weve got no reason to think this isnt what musk would like to see on the platform. Weve got a real reason to be skeptical that it will happen. Apple and google require some kind of blocking feature to exist for the app to be in their stores. We know the guy has spent 20 billion in smoke since he brought twitterer x. Its going to be hard for the new ceo to do her job if there arent any eyeballs. I think theres some real question marks about whether this is going to happen or not. You think this is on the medium sized to long list of m muski, an, if you want to call it that, bettweets that may not resemble full reality, i dont know how to put it. It could be the feature version of the cage match, lets say. We know that elon musk would love to do the cage match. Is it going to happen, thats not necessarily the same thing. I think that he wants to signal this is a place for free speech. He doesnt want any soft treatment of people on the platform. On the other hand, theres real issues when youve got the Auschwitz Museum saying it needs the blocking feature to make sure that its account isnt overrun with antisemitic responses anytime it puts out a tweet. The holocaust is settled history and if these folks cant be on the platform free of harassment, then it cascades from there. It becomes a very difficult situation. So after threads launches, you know, obviously theres all this hype about the tremendous number of users that go there, and then it sort of drops off. And now were reporting on this new web version this morning. Does that change the game, and if it does to what degree . It could do. So meta has had a great run this year in terms of blocking their competitors, first through threads which we saw had that huge uptick as people connected their instagram accounts to threads and fred in the masses from twitter. They also released their open source model llama, the ai model which made it difficult for their competitors like open ai and google to keep a huge march in that ai race. But at the same time, i dont know, have you been using threads . I signed up for an account, and i havent really been on there recently. It will help if theres a web version. It gives people more ways to access the platform. Gives a bit more flexibility, its recognition that meta built this on the run, and now theyre catching up and giving you the full Service Treatment they probably always wanted to give you. But it doesnt mean youre going to find threads exciting. Thats another big open question. Ryan appreciates ryan heath of axios. Futures pointing to a higher open, at least right now. Well show you the biggest vemors next. And Jared Bernstein will join us live. Squawk box coming right back. 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. Good morning, investors, no, no, wait a minute. Good morning. Investors facing a week of tests for the markets, from huh . Worked anyway. Good morning, involves. Good morning, vietnam. From nvidia results to fed chair jay powells speech at the annual central bank fishing symposium in jackson hole for some, the futures this morning are indicated higher, and from the do not try to play golf. My wife told me i could either fish or golf. Cant do both. From the nations power grid to the future of energy, the company, the Southern Company, chris speaking of golf, the companys ceo is involved with the pga, well talk about that as a side thing, but hes not Southern Company was Georgia Power for years and years. Hes in studio. Talk about the pressing issues facing americas aging infrastructure, just built a Nuclear Plant, first one in 25 years. All right. Huh . Yeah. And Tropical Storm hilary makes landfall out west dropping torrential rain, the latest on the storms track and the impact on businesses there as the second hour of squawk box begins right now. He got it good morning, investors, and welcome back to squawk box here on cnbc. There was a period. That one actually was i think it totally works anyway. It does. Have you you know what you could do . Good afternoon, investors. A whole new thing at noon, right . Isnt it 12 01 when you 12 00, i mean. Yeah, thats right. Unless they throw it to me late. 12 01. Like we always do. Were live from the Nasdaq Market site in times square. I dont like that three shot, but what are we going to do . I mean, its fine, just in todays world, you know, its a little bit too much tes toast r testosterone. And theres you, you dont help. Im joe kernen along with scott wapner and u. S. Equity futures indicated up not triple digits and trceasuries made the move. I think were at about theres a tenyear at 2. 296. What was the high, 435 or something . Last week, right . Yeah, that the twoyear hasnt just summerrged up to 5. Something. I do want to tell you, joe, i met a golfer. You did, uhhuh. Somebody who im sure you revere. I cant tell you that it was an off the record comment this person made to me who said he likes fly fishing way more than golf. That was off the record. Why cant you reveal the golfer and just not the message. Because he asked a famous golfer. Can you give me an idea . I cant, i cant. Whats his age. Whats his approximate age . Hes older. So hes like one of the legendary golfers. And i think it would be bad for his business to know he likes fly fishing. He has a business. I just gave that away. Lets keep talking about this storm, Tropical Storm hilary drenched Southern California from the coast to inland mountains and deserts last night prompting rescues from swollen r rivers. Millions are racing from more flooding and mudslides even as the storm moves north and weakens. Hilary dropped half an average years worth of rain on including palm springs, which saw nearly 3 inches of rain last night. The Los Angeles Unified School district said all campuses would be closed today and san diego schools postponed the first day of classes until tomorrow. Lets getlet to frank holla how are you guys doing . Palo alto moving higher after a strong eps guidance, that dan ives from wedbush initially called head scratching and had some investors worried. Shares fell about 17 in august before the report, and enhe the after the report, positive reaction, with revenue outlook and outlook for the full year below estimates. Positive results from the street from td koun with an outperform rating. Shares are up more than 12 . Nvidia moving higher ahead of its earnings after the bell on wednesday and several bull calls this morning. Baird calling it the top pick in chips. Thats a more than 75 upside for the chip maker thats already moved 200 higher this year, but fell into correction territory last week with four other magnificent seven stocks. Shares of nvidia up more than 2 right now. And this ones pretty interesting, napco security dropping more than 30 after saying it made Financial Reporting mistakes in the first three quarters of fiscal 2023. They said those errors led to an overstatement of inventory, an understatement of cost of goods s sold. Napco makes wireless communication devices for security and fire alarm systems. Shares are down more than 30 in the premarket. All right, frapnk appreciate it. Joining us now the chairman and ceo of strategas. A baird company. Jason, i guess we are going to start where joe was talking about earlier which is the rise in yields. How much of a challenge is it for stocks right now . For the magnificent seven, i would argue it probably doesnt matter at all. I wouldnt short those stocks if you put a gun to my head because theyre generating a ton of cash. The problem is that my opinion if you look at the russell 2000, theres about 40 of the companies in that index that havent had a profit in the last 12 months. There are pockets of the market that have been built on the kindness of strangers, that have been built on free money. So for the lower Quality Companies back up in longterm Interest Rates, its hard to deny that it makes a difference. For the leadership im not sure it makes much of a difference because these guys generate so much cash. They actually benefit from higher Interest Rates. You went from the big 7 to what about all that space in between . And then i mean, its a cliche, but then youre going to have to be an Old Fashioned stock picker and see which company is managed well. A lot of companies have tdone a good job of terming out their debt, unlike uncle, sam which we can talk about. 60 of our debt matures in the next three years. A lot of companies are better able to deal with that that are able to manage themselves well. There have been an awful lot of companies built on the free money weve seen. Lets do the fed and then well do the fiscal side. You know, joe thinks that powell will hang out a Mission Accomplished sign in jackson hole. Thats what im worried about. Victory. Yeah, howd that work . Im if youre asking me what my view is, especially with longterm Interest Rates backing up, thats also going to that actually helps thats helpful. I would be careful about the Mission Accomplished idea, and the reason being is that my one of my partners our chief economist looked at 2,000 years of history, to the extent you could find that history of inflationary periods and what we found in all but 15 of the times, inflation tends to come in waves, and there are reasons for that, and i would say thats especially true when you have large Government Spending, a lot of Government Spending is indexed to inflation, especially if you have unionization, you get a wage price spiral, and so there are things that are automatic ways in which the inflation can compound on itself, and i think thats there is an element of truth in that right now. I wouldnt put out the victory sign, the Mission Accomplished sign, but certainly he should be slowing it down as he is. But they should also say theyre have you moved a lot of money into the fixed income . Do you do those things . I have not, and listen, ive been you know, you and i have talked about this, ive been more kacautious, but i havent sold a lot of stocks. Ive just been more cautious about what i own. Youre getting something in the order of 5 shortterm money. People are saying you should do longterm, which is i dont know. Well, government, the federal government should be two weeks ago, janet yellen issued 850 billion worth of bills at 5 , when she could have issued 850 billion worth of tenyear treasuries at 4. Why i have no idea. That makes no i dont want to please explain it to me. That doesnt make any sense to me. A couple of things are happening, one is because of the debt ceiling, the percentage of bills compared to the total was drawn down compared to average. Theyre issuing bills right thousand to get it back up to that 15 to 20 average. The other thing that why . Ill tell you why because over the history of time that ive been covered, which is a couple decades right now, the treasury does not want to game the market. The treasury wants to be a reliable provider of securities and not play the curve. So over time what its going to do, what it says its going to do, what each under secretary of the treasury has told me is that we will do in regular proportions. Were not going to go at a time of low Interest Rates and term out our debt so were seen as a reliable partner in the market. Thats what theyve told me. If thats the right thing to do theres a word i cant say of television that im thinking. Its cable. I say go for it. And worry about it after. Closer to. Just call it a its nonsense. We have 50 of our debt, we have 32 trillion in debt, 50 of it matures in the next three years. The weighted average coupon is 2. 5. A year from now, our interest expense is going to be more than our defense budget. This is the time. You know, to the extent to which the yield curve because of quantitative easing has been manipulated for the past four years, theres a reason in my opinion the fiscal side should follow suit. This is the time to do it. I think the late great sam zo broke the grlass ceiling there. He didnt say a dog, he actually used he used the real can you give us two seconds, two minutes about the stock market right now . Are there places where you like . We dont have two minutes. Ill give it 30 seconds. The place that im most excited im being like, you know tissue. We dont have two minutes. Like the fed. Print time. Who cares. Mmt. Now youre taking his time. We had two minutes, you killed it. I think energy is one of the more interesting parts of the market now. I still do. Technically theres more companies above the 200 ta moving average in the Energy Sector on a percentage basis than there are in the technology sector. The magnificent 7, thats a whole other deal, but i think thats one place youre getting a lot of cash flow. Dividends. Better share repurchases. And for the first time in my lifetime, Energy Companies are good stewards of shareholder capit capital. I mean, usually these guys are put on earth to punch holes through the ground. Thats been my experience until the last couple of years, now theyre actually saying gee, we want to return money to the shareholders. So in my opinion, thats one Place Investors can look to find some real value. Good place to stop. The musics starting. That means thank you for that. Play us out, johnny sf, go, s you. Now its me. Talk about bernstein. We got chris womack coming up. White House Counsel of economic chair Jared Bernstein, people are setting their dvrs. Well talk bidenomics, inflation and much up next, the nations power grid being put to the test from heat waves and Power Outages to deadly wildfires. But more interesting is the Nuclear Power angle. Were going to speak to the ceo of Southern Company. I dont think hes been there a year yet, but hes on set about the need for upgrades. Squawk box will be right back. I didnt really, like, know anything about the sport. I didnt like it at first either. I remember it was the banquet night. Coaches said most improved player goes to najee harris. i was just like and i looked up, like,what . that award changed the trajectory of how i looked at life. You know, football, people see it as a sport. But i see it as tools for life. fan 1 there ya go thats what im talkin about but i see it as tools for life. 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. 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. Over in two. Over in two. I played the chris womack is here. They spent the entire break talking about golf. Because we were in a fox hole together at pebble beach and its like i also talked about about of course Nuclear Power making a comeback, Southern Companys new Nuclear Plant is now online. Joining us now on his first tv interview is ceo chris womack, a Southern Company chief executive, longtime Georgia Power chief. Hes a young guy. Hes a great guy. Hes still involved. Hes got a lot of life ahead. Hes doing some work with impo and a lot of cyber work hes continued to do. Hes still very enfwajd. You get to talk with nuclear with us today. I do. Its exciting. It is exciting. Is it the first one in 25 years thats opened . 30 plus years. 30 years, and so, you know, we brought our first unit online on july 31st, and so were excited the plants running very well, performing very well, and then just yesterday we completed fuel load on unit 4, and so just i think just a wonderful opportunity, wonderful s celebration for the company that shows we can do hard things. This has not been an easy journey, but weve persisted. Weve been relentless in moving forward. I think the company, the state, the country is going to be real proud that we finished this project. As we make this transition to a carbon free economy, nuclear has got to be a part. Theres no other way. We cant do it. Were excited about the renewable activity wering it. We just got 2,100 megawatts of renewables in georgia, 2,100 megawatts in alabama. Were making the transition. We used to have some 66 coal plants. Now down to 15. So were making the transition, but we cant support this economy without a Nuclear Power. If you were to say zero hydrocarbons of any kind, how much of the fwridgrid could you power . Zero hydrocarbons . Dont you have to power the grid for Georgia Power . Theres no question. Using the other stuff, whatever you want to call it. Like i said, if you look at our you cant do it. So how much nuclear do we need . How long does it take . You cant even get a permit for this . Thats the exciting thing about completing this project. It shows we can do this. How long did it take . It took some 13, 14 years. And the next one . Right now youre looking at different technologies, some small modulary actors. Were excited about that. We talked to the government about it. We see some Companies Looking to move in that direction, so once again, i think the work that weve done at southern, at Georgia Power with these units says we can do this, but also i think more importantly it demonstrates that for this economy we have to have Nuclear Power Going Forward. So we got to take advantage of this opportunity. If it seems so obvious to you as you say it is and to you, joe, how do you convince more people that its as obvious of the future as you suggest and see it. Its hard. I mean, its hard, and yeah, its complex, and so one of the things we talk a lot about are solutions and not getting wrapped up in i think a lot of these illogical and political divides. Yes, its hard, and so weve got to have partners. The governments got to be a big partner. Theres got to be a consortium in the industry. We all come and try to do this together, we can get it done. It takes a lot of hard work, if you focus on solutions, not the politics, not the ideology. Youve got to talk about the politics at least a little because the green lobby was totally antinuclear. Are they coming around at all . Look what happened in europe. They got rid of all their there is some progress there, but our thing is its about the solutions. I mean, we need we need this to support this economy. I mean, were proud of the economy in the southeast, in georgia, 3. 2 Unemployment Rate, alabama, 2. 1 Unemployment Rate. I mean, economy thats doing very well. I mean, we see opportunities for economic expansion. Thats good for our business. Did we miss a chance were going to have Jerry Bernstein on. 1. 2 trillion is now the number thats going to be spent on renewables. Is any of that nuclear . I dont think so. But i think the opportunity, once again, is that weve demonstrated we can do this, and even with renewables, youve got to have firm power underneath the renewables when the sun doesnt shine and the wind doesnt blow. Were going to do other things, battery storage, were going to use hydrogen, were going to pursue other technology. We got a grant award for direct air capture. As we all move toward net zero, theres got to be new technologies that will have to occur to make sure we can achieve net zero and nuclears got to be a major part of that. Its expensive. Yeah, its not cheap. I mean, and yeah, but i think at the owend of the day, our produ is still cost competitive, still cost efficient, still in the money for us and our customers in georgia. Chris, can you talk about what percent do you think your demand is going to increase oaf t over the next ten years, and can you break down what the source of meeting that new demand will be . If you listen to conversations about economic expansion, conversations about electrify occasion, from data centers, from additional computing power, you hear guesses of two times in terms of what will happen, what will be needed Going Forward to power this economy, so you move up nuclear about 20, 25 , natural gas, we got it working with Carbon Capture for natural gas, other renewables, and so yeah, i mean, thats kind of how that mix is going to work out. I think as we go forward. But we know theres going to be a growing need for electricity as we go forward to support this economy. Can we glean anything from Southern Companys results about Economic Activity in the because it was all about weather this past quarter, wasnt it . Yeah, weve had kind of the mildest year, i think 129 years. Weve not had the heat wave that weve seen in texas and other places. Weather has been incredibly mild. I was just down there for two weeks ago, it was 115 degrees every day. You know where i am. I know where you are. S s yeah, no, its been a mild year. We see some heat coming in this week, but the thing is weve got to be prepared for whatever conditions occur. We think about our friends out in california now surviving through hurricane hilary, and what that means, so yeah, weve seen these extreme weather conditions. Weve got to be prepared from a reliability but also a resilient standpoint to make sure we serve our customers. What is fanning do . Is he still on the atlantic fed . No, hes not on the fed. Are you going to go on there . Theres no plans at this time to do that. Tom is still fully engaged. Hes a dear friend and a wonderful mentor and friend of mine for many, many years. Dont we need to give him a second to talk about why hes up here in new york . Yes, yes, yes. Sorry about that. Steve, thank you very much. Im not going to bring up golf. I have to recuse myself. Cliche 30 seconds, theres a reason hes in new york, a little promo, its okay. Its good corporate charity. Weve been the sponsor of Payne Stewart award after his untimely death. Today we get to ring the bell with gary koch whos been awarded the 2023 Payne Stewart award recipient. Wonderful guy, had a wonderful career on the pga tour, stellar broadcasting career. One of the best. And then hes had this deep engage the with the First Tee Program in tampa and just really put all his effort and energy there helping kids from Diverse Communities use golf to enjoy golf but also to focus on core values to help them in a bigger part of life, which kind of aligns to us at Southern Company in terms of our values, focus on safety, focus on integrity, intentional inclusion, and superior performance. So theres great alignment between Southern Company and golf, and were excited about what were doing this week with the true championship in atlanta. So weve got a great field coming to atlanta. So its a good time. There are a few things that happened in georgia that involve golf. There are a lot of good things that happened in atlanta about golf. How about the frederica boys, brian harmon, lucas glover. Have you seen how well lucas has been playing . Nobody wins two straight. What lucas has done with that long putter that has changed his game. Total plausible deniability. Im going to get the blame for this. Its great to have you on. Ive been asking you to get here, and i hear you played my course without me. Thats all right. Next time. Thank you. All right, coming up, u. S. Companies with exposure to china are on wall streets radar, a look at some of the companies in focus both here and in beijing. Pee. P dil ming umeca exns next. Squawks ceo call is sponsored by truist securities, experience expertise, execution. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. 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. 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. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com an abundance of negative news surrounding china, seema mody joining us with more. Good morning, scott, ceos this earnings season have been quick to point out the challenges theyre facing in china. Intels Ceo Pat Gelsinger saying the china market hasnt come back as strongly as people would have expected overall. City citi Group Calling china the biggest disappointment. Caterpillar expecting sales in china to be below its typical 5, 10 range, and the thing here is that it hasnt been all bad news. Consumer facing names like walmart seeing china sales in the Second Quarter increase 22 yearoveryear led by strength from sams club and ecommerce. Thats not convincing, though, strategists at evercore isi who over the weekend warned clients that as the economic back tdrop worsens, s p 500 companies and more than 20 revenue exposure in china could be at risk of seeing investors scale back their holdings. They point to names like intel and tesla. Street now awaiting results from nvidia, which like many Semiconductor Companies does business in china and that upcoming brick summit later this week in johannesburg where president xi is set to attend and the economy will no doubt come up in conversation. Seema, appreciate that. Joseph. Still to come, the council of economic advisers chair Jared Bernstein on the fed and a lot more. The future this is morning as you can see are in the green, but triple digit on the dow. lseif iwel e t lasts. Squawk box will be right back. S the us, youll find pnc bank. Helping businesses both large and small, communities and the people who live and work there grow and thrive. Were proud to call these places home too. Theyre where we put down roots, and where together, we work to help move everyones financial goals forward. Pnc bank. In washington news, a recent poll shows only 36 of americans approve of president bidens handling of the economy. I didnt write this, jared, and i know what youre going to see. I dont even need you. Jared bernstein. You need me. When you ask them specific things, though, theres a different story. They like this. They like that and they like this. I dont know if i even need you here, jared. Come on. But 36 we need each other. I tell you what i think it is, jared. Inflation is the rate of change is coming down but stuff people bought two or three years ago because of the initial increases, things are still expensive. They might be blowing up less, and wage growth only recently has started keeping pace with that. People still feel like theyre behind. I think thats got to be it. I dont think you can deny it. Its probably not a good idea to deny that people are feeling that. So let me unpack a lot of what you said, and i am going to agree with you on this angle of when you get down and you drill down to what were actually doing as opposed to these kind of more abstract 40,000 feet up questions. 70 76 of people support the infrastructure law issue the bipartisan infrastructure law, and thats obviously to repair highways they drive on. Broadband internet they use, clean water they tri. 72 support the chips act. Thats not only critical to strengthening supply chains, u twothirds support the inflation reduction act. Some of the statistics i think youre citing are get ago little bit stale. University of Michigan Sentiment is at its highest level since october of 21. Consumer confidence, highest level since july of 21. Some of these hithings are starting to move in the right direction. The reason for that is Something Else you said, real wage gains. I think you make a fair point in terms of how people feel about disinflation, which is less pleasing than deflation. When you have real wage gains, essential ly your consumption basket becomes more affordable, so thats also moving in the right direction. Jared, theres a lot of talk about china today, were going to continue to talk about it. And some of it just at least made me think a little bit about what were doing in the United States in terms of stimulus, the positives for it, and the negatives for it, and you know in china the debt is so high now that they may be you beushering extended period of lower growth because of debt service. Nearterm, the economy it looks like were dodging the recession bullet at this point maybe. Hopefully. But will is quite a bit of stimulus still in the system from what you talked about, the infrastructure, the ira, the chips act. It makes the feds job maybe even harder and may end up causing them to go higher than they would have normally had to go if there wasnt so much fiscal spending. Do you worry about that . Well, i think here we dont have to speculate. We can actually look at how much fiscal impulse there is in the economy. And remember, the key thing here in terms of growth and the fed and all the things youre talking about, stimulus, fiscal impulse, which is the change, the delta in the primary deficit, and if you look at, you know, brookings has a measure of this, which you can point and click to, their fiscal impulse measure. Its just been about zero. Of course it was through the roof during the pandemic, and it kn kneade needed to be to get families and businesses to the other side of the crisis, set up one of the strongest labor markets weve seen, unemployment below 4 for a year and a half now. Its an interesting comparison with china. One of the problems you see there thats less talked about, the debt overhang i think youre accurately describing, but also the household sector that really isnt capable of coming in and providing the kind of Consumer Spending they need right now. Thats because theres been large disinvestment in that sector, and even some suppression of consumer accumulation there. You know, in our economy, we obviously have a strong consumer and we have a 68 Consumer Spending gdp. If we have a tight labor market with the tailwind of rising real wage gains helping consumers keep things going, youre going to get numbers like the retail sales we saw last week. Somewhat of a Virtuous Cycle going on here and with inflation easing down twothirds from its peak, now were talking about real wage gains. Again, i think thats more positive news for the fly wheel pushing this expansion forward. Philosophically, theres always been a debate about whether the government should direct investment into favored industries. Where im going with this, we just had chris womack, Southern Company, they just started a Nuclear Plant theyve been working on for 13, 14 years. The 1. 2 trillion in the ira for renewable energy, i think its risen to that, its a lot of money, i dont think any of that is nuclear. That might be part of the issue. Are you sure the government knows how to spend and subsidize 1. 2 trillion better than the private sector, which might be wait a sec. Go ahead. The 1. 2 trillion includes the private sector just to be clear. Thats including some of the contributions but the governments picking the vindustries, though, and it may not be the right industries that the private sector would pick if it wasnt government directed. Right. Theres two points there. So one is that i think its a mistake to conclude that weve never done industrial policy up until this moment. In fact, the history of not just this country but every economy is very much pfilled with lots f industrial policy. Its Alexander Hamilton with manufacturers back in the beginning of our country. But then if you turn to the tax code, i think the problem that we have, weve argued about this over the years, is that we were doing industrial policy in a way that was pretty you know, not particularly thoughtful. Whoever had the best lobbyist got the best tax break. Thats not the way this president wants to proceed. With bidenomics growing the economy from the middle up and bottom up, were reversing decades of disinvestment in key sectors including manufacturing. And again, people recognize that this is very important not only for replacing some of the hollowing out that occurred during globalization when places lost factories that really made their towns and therein, we see hundreds of billions of dollars coming in from the sideline to help, to help rebuild this sector in areas of Clean Energy Production and semiconductors, two areas where the market very clearly produces what we need to achieve both resilient supply chains and our National Security goals. So those seem to us and to most americans like smart investments. And by the way, part of that group are investors who as we start ed this part of the conversation are quite excited about these actions. Jared, can you tell the bond market that the fiscal impulse is zero . You guys have surprised the bond market almost every time the treasury has opened its mouth with a higher than expected amount of bond sales that are out there, the testify sit numbers seem like they keep going up. Is that a problem that you guys feel you need to address . Are you getting concerned about the level of Interest Rates out there and the amount that the governments going to have to dedicate to Interest Payments . Well, first of all, theres a lot of things that are moving the bond market and right now, and certainly expectations of growth coming in stronger is something that is in the mix. And look, when we get a retail sales number, when we have unemployment below 4 per year and a half, when youre starting to see some of the High Frequency gdp calls here for 23 to be significantly above trend, those kind of thing also get reflected in the bond market. Im pretty sure youd agree with me on that point. He was just shaking his head. I dont think he does, jared. I had a you dont think the bond market is hang on, jared, some of the movement in the bond market has been linked to higher than expected growth. Thats exactly what i said. But some of it has also been linked to higher than expected issuance. Yes. You ignored that part. Thats exactly where i was going next. Okay. If you look at what weve tried to do with our budget, it has significant deficit reduction in it because we recognize that we need to we need to get that Fiscal Consolidation moving in the right direction, but we cant do that part by ourselves. So we have 2. 5 trillion in deficit reduction in our budget. We can get that kind of thing moving tomorrow. If you actually look at the deficit reduction weve achieved this far, a trillion since the president got here and another trillion in the debt ceiling agreement, which was overwhelmingly bipartisan. Were very much aware that the fiscal outlook needs to be dealt with and were doing our best to do so, but we cant do that by ourselves. I think you know that. Hey, jared, its scott. Good morning. Its nice to see you. Its pretty telling as we talk about gdp and the gdp now from the atlanta fed at 5. 8, which was stunning, obviously to everybody, any president who had numbers like that, a 5. 8 gdp, wages where they are, Unemployment Rates low, consumers are strong, theyre keeping the train on the track and, you know going at a pretty good clip, and yet, the polling numbers as we talked at the outset are just 36 . Its a dramatic disconnect, obviously, but it also points to the fact that inflation is driving the train and as long as inflation remains even if it remains where it is, its still sticky. How do you compete against that narrative . Because otherwise you could build a case that said, you know what . The economys pretty good, but the people dont care because theyre tired of paying higher prais prices and they think the president is at least in part, to blame. Look, i hear where youre coming from, asnd i get this question all the time, but i feel like that line of questioning is starting to get a little bit stale, and the reason i say that how . Im going to explain. The reason i say that is youve got to get into some of the guts of what these polls are telling us. I understand the Approval Rating and i think that invokes a level of political tribalism that has a lot to do with things other than how the economy is doing. From my perspective, look at the university of michigans sentiment, the highest level since october of 21. Its been coming up. Same thing with consumer confidence. Job satisfaction is at a 36year high. The consumer Board Satisfaction survey is the highest level its been since they started tracking that in 87. You talk about inflation, Inflation Expectations are down in the university of michigan survey, so i think if you get under the hood, you look at some of the more recent trends. Were beginning to see particularly and i think it is disinflation, i think its the fact that inflation went from 9 to 3 , is registering with folks and especially when it starts generates real wage gains. I think the remarkable thing in this economy that you didnt mention is we got all that inflation reduction without giving up anything thus far on the Unemployment Rate for aficionados of the phillips curve, thats a zero sacrifice ratio. And thats a strategy to get real wages going up, maintain tight labor market with easing inflation, real wage gains. Thats precisely what were seeing, and its starting its starting to show up in some of these poll numbers. All right, jared, i like you better on the lawn, you know, but guys always mowing the lawn or the leaf blowers, is that why youre inside today . No, its more that its kind of early, we do this at 8 00, im on the lawn. Okay, all right, Jared Bernstein, thanks. See you. Thank you. Uaw members will vote this week on whether to authorize a strike when their contract pis. Exrethe latest on where talks s. That is straight ahead. Coming up, were going to talk markets, the fed and more with wharton professor and market historian jeremy seagle. Get the best of squawk box on squawk pod. Listen anytime. Stay tuned. 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. Im andrea, founder of a boutique handbag brand andi and this is why i switched to shopify. Its the allent 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. I remember being on aau trips, high school games. My mom would always say, you need to fuel the body and you need salt. I would always be the kid not cramping, ready to go. Fast forward 20 years and i go from eating salt out of my palm to drinking lmnt. Welcome back. We are monitoring the shares of goldman sachs, which you can see are up about 1 . The Financial Times reporting that the bank is considering the sale of the personal Financial Management operations that it bought four years ago and bought the Investment Advisory business from united capital, that it acquired back in 2019. Uaw members will vote to authorize a strike when their contract expires. The Union Representing about 150,000 members and the big automakers are building up supply ahead of the september 15th deadline. Hey, phil. Hey, scott. For the uaw, were about three weeks away from when we finally see whether or not theres going to be a strike or work stoppage of some sort. Everybody expects it in detroit and in the auto industry. For the big three, this means building up their inventory. This is the day supply calculation as of the end of july. Look at stellantis. Its been known theyve been cranking up production. They know whats coming. By the way, normal day supply in a normal market nonstrike is 65 to 75 days. Jd power has its own calculationing showing the levels of inventory is only at 36 days, half of where it was four years ago when the uaw had a strike at General Motors which lasted about 40 days. This all comes down to hourly cost. If you are the big three and the hourly costs were your labor on the line is 63 to 67 and then to tesla and thats really the focus here. The big three are transitioning into more ev production in the future, Everybody Knows that and it takes fewer workers to build. And the uaw president said yesterday at a rally in detroit they do not expect to extend this contract beyond september 14th, which they often do when these contract talks come up. We being looking at some type of a work stoppage come september 15th. We talk about a strike from the uaw. What if the big three, one of them, says you know what, fine. You want to have somebody go on strike at an engine plant, were locking you out, everybody, all 40 or 45,000 of you are locked out. That would send a message and its not far fetched with the inventory levels that some of the big three have right now. Phil, appreciate it very much. Lets bring in mark fields, the former Ford Motor Company president and ceo. Its nice to see you, a cnbc contributor as well. You heard, i presume, phils report. Are you expecting a strike . I think theres a much higher probability this go around in contract talks than in the past for the things that phil mentioned. You got a couple of things going on here. You got a newly reconstituted union that was still recovering from corruption charges. You have a new leader who has been using very bellicose language, calling the auto theautomakers the true enemy of the uaw. Hes setting expectations very high for his Union Members and you have the automakers going through this once in a century changeover to Propulsion Systems which have higher costs and lower margins right now. Its a set up for a very contentious set of discussions. Sean fain tactics are different as well, the uaw, you know this better than anybody, would traditionally not lay out the hand on the table and say ante up here. Theyre telling the auto makers, the big three, what we want, come meet us. This is different, isnt it in. Its very different. And the new leader, hes never led an association before. Hes basically led plant level discussions. Hes ripping a page, hes kind of distancing from the past of the uaw leadership because of the corruption issues. It was very mysterious. They used to elect the president via delegates versus direct election. He was elected directly and hes very transparent to his Union Members as to what the expectations are. That may paint him into a corner. He might get expectations so high that it might be very difficult when he brings a contract back for the rank and file to ratify it. So, you know, hes plat the same toke n, he feels he ha a mandate. He was only elected by 500 votes out of 45,000 Union Members. As a past member said, its easy to get them out to strike but it takes a leader to get them back. Well see what kind of leader he is. Were talking about strikes almost of week in various industries and you just had this strike averted with ups. But the fact that they got what their workers feel is a pretty good deal and only emboldened the uaw. The uaw always felt they were the benchmark. Theyre looking at the ups agreement that needs to be ratified. Theyre looking at things like caterpillar and john deere agreements from last year. The difference is those businesses are primarily b to b type of businesses. And in the case of ups and fedex, its almost an oligopoly. This is the only industry that hasnt consolidated that youd expect an industry to. So the consumer has many, many choices. If they decide to win the battle but lose the war, that means less workers for them and their business model, the Union Business model is members because members pay dues and that allows the union to operate. Wages dont really matter much if you dont have job. Thats what hell ve thao balance. Thats mark fields joining us. Squawk box right back. Like nike, jordan, on, carhartt, hoka and more. The looks you want, the backpacks you need, all under one roof. 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. Good morning. Futures pointing at gains ahead of the opening bell. Major averages all coming off a losing week. It was the dows worst week since back in march. And a big week for the markets. Awaiting a highly anticipated speech from jay powell, earnings from nvidia and a rash of new Economic Data. And hilary, the Tropical Storm, slams the west coast with rain and flooding, the first Tropical Storm to hit california in more than eight decades. Well get an ontheground update on the storm and hear what it means for california business 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 scott wapner and steve liesman. Guys, youre a shorttimer. Youll be out of here later today. I didnt know that until i went to go make a reservation. From newark . Thats pretty convenient. Which means ill miss the denver airport. With the crazed statue with one eye. And game time hasnt even started. And a dodgers fan. Unbelievable pictures because of the Tropical Storm hurricane. Unbelievable. Chevez ravine. Yeah, some of the pictures. Amazing. More rain than they get in ten years. I was hoping you would read off the top again good morning investors. Its like my good morning vietnam. Might be like a Robin Williams thing. The dow up 133. Well see if that holds. They had Trouble Holding last week whenever it was green in the morning. And treasury yields are on everybodys mind. Thats why youre going to jackson hole. Its secondary to what im doing. The National Hurricane center downgrading hilary to a post Tropical Storm but they are warning of likely flooding. It became the first Tropical Storm to hit Southern California in the u. S. In some 84 years. Rain and debris washed out roadways and some cars were left stranded. More than a dozen people had to be rescued from one homeless encampment. Well get a live report from jane wells in just a few moments. Goldman sachs is looking to sell part of its business, the personal Financial Management, and it is about 29 billion worth of assets. Goldman bought the business for 750 million back in 2019 and part of i dont know, goldman is really good at some things. Maybe this wasnt what they should have been trying to do. Theyre making money or just unloading it. Well have complete coverage of the fed summit. Joining us is jeremy siegel. Good morning, professor. Good morning, steve. So lets start off with where the economy is now and, jeremy, you have an idea here about whats going on with productivity that, i dont know, i dont think people are thinking enough about this. Weve had a couple lousy quarters and then we had a couple really good quarters. Do you think were really having a productivity surge in this economy . Yeah. The last border was outside the pandemic, the best for quarter for productivity in over six years. The st. Louis fed is way up there, others are not that high. Given modest growth in hours and in payroll, it looks like another Third Quarter boone in productivity. This is really saving jay powell. This is the best news. I mean, thats how you can have strong gdp Growth Without pressure on the labor market and really without pressure on inflation. You know, thats the golden magic over here. So i think that thats really playing into what we see in the economy. And, by the way, why yields are going up also. Real gdp growth and real yields. Id like to comment you guys had a great discussion at 6 00 when you opened at real returns and the tips going to 2 , is that a way you should now invest in for wealth. Let me mention, 2 a year, its good. Its the biggest in decades. However, 2 after inflation a year takes 36 years to double your money. At a 20 pe, which you also mentioned, which is right, thats a 5 earnings yield in stocks, the general s p 500, that takes 14 years to double your money. Okay, all right. How do you double your money in bonds, youve multiplied your money by five times in stocks. People tell me, oh my goodness, bonds are as good as stocks. No way for long run wealth creation. Lets unpack that, professor. I think thats important. Its kind of against my thinking on this youd like to like bonds but you cant make that case. Im going to try. Nobody has ever built wealth. Professor, i can see this five juicy percent twoyear note and i put my money in there at the end of the period, im going to get 5 and thats going to be 3 Percentage Points higher than the inflation rate and im going to be really happy. Youre telling me im going be to unhappy because i would have been better off putting my money in stocks. First of all, in two years, anything can happen. We know that. The stock market could go down 10, 20 . Im talking about building longer term wealth. Im saying particularly if youre young, youre building a retirement account, youre thinking about your retirement, thats what really counts. You know, 2 is only attractive compared to earlier. By the way, when tips came out in 1997, they were 3 1 2 and they went above. Even though 2 is certainly better than it was 10 years ago and five years and so on, it isnt all that great compared to history and well below stocks. The average is 6 1 2 and im giving a conservative 5 return. You might be happy with bonds, you might not be happy with bonds. If rates go down, you have nowhere to go, youre stuck with your stupid 5 . If rates go up, i guess you can reinvest a little and get 6 . But if you dont want to buy nvidia and make whatever or the magnificent seven or something really sexy, you can buy really Good Companies that have a yield of like 2 or 3 and they raise their dividend every year for 15 so suddenly the dividend is up to your 5 in a couple of years and you got the capitol. Unless you need a stable part of your portfolio that you know youre going to get a return on. If its not corporate, if its not treasuries, then you got to worry about getting your money back anyway. Professor, can you handicap this weekend . I am putting a portion into the you are . If you put ten grand in, i told kelly this last week, this is on a longer term, it went from 4 to 4 and a quarter. If you take your wife out, you can get an appetizer after a year. Because of 400 you get on ten grand, its 425. Come on. This is a stock market channel. That doesnt mean people should only invest in stocks . I know but it kind of does. Can you handicap this week . Where is policy going and what does that mean for the stock market . Very honestly, steve, and you follow it so closely, since the three and a half weeks, i guess it is since the last press conference, i dont think a lot has happened that changes the outlook. I think hes going to stay were not i think hes hes going to stay very data dependent. We still have a full month load of data announcements coming out before the september 20th meeting so hes going to stress that data dependency. I think there will be kind of a slightly hawkish tilt because, you know, were not down to that target. Honestly, if you want the truth, the higher real yields and the high are Interest Rates are working in his direction towards tightening policy without raising the fed fund rate. But heres the thing. If he follows what you talked about at the beginning of the conversation, that productivity is higher, we can have stronger growth, lower inflation and lower Unemployment Rate, would you tell him he should not be hiking anymore and should think about cutting . Absolutely. I would be on the alert and i would say you dont need to hike anymore. You have tightening since the last meeting and when we take a look at all the other indicators. Up know, break even between the tips and the 10year, which is one of their favorite indicators of what the 10year inflation is going to be, its 2. 3 . Thats not 2. 0 but, my goodness, take a look at what the market is looking at longer term and seeing those trends. I dont think thats threatening. Listen, the sector is uninverting. Do you want to uninvert it more . Yes, you will. Professor, always a pleasure to talk to you. Thank you very much, steve. Coming up, china in focus. Were going to talk about that countrys property and Overall Economic problems and the potential risk to u. S. Investors. Indiana senator mike braun will join us but next the war over tipping comes to the windy city. Were going to speak to the chicago Restaurant Owner worried about a campaign pushing to change the way the wait staff gets paid. Dont go anywhere. Much more squawk box after a moment. 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. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. Bridgett is here. She has no clue that im here. She has no clue whos in the helmet. Are you ready . Im ready alright. Xfinity rewards creates experiences big and small, and onceinalifetime. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. A fight over restaurant wages and tipping flairing up in chicago with implications for the labor force and the culinary experience. Activists want to end the windy citys tipped wage system under which some restaurants are allowed to pay servers less than minimum wage. Some Restaurant Owners are getting nervous that rule changes would force them to hike prices or lay off staff. Joining us is coowner of chicagos 5050 restaurant group. Scott, good morning. How are you this morning and what are the prospect of this passing . The mayor has tied it to the budget. Why is it such a big deal to you if this actually happened . It happened in california and it was many, many years ago. Obviously theyre getting by, i guess. Whats the big problem here. Californias barely getting by. Its not a great place to open up a restaurant. 62 , thats going to be the increase to labor. And with the pandemic, its just really not a great time to start upending an entire Restaurant Industry in chicago based on political rhetoric and thats really what it feels like. So an employee says, you know what, i just want to be paid the 15. 80 per hour rather than have to rely on the generosity of a customer who just may not tip well. Whats the problem with that . Well, the reality is that the restaurant is making sure in covering up to the 15. 80 and i would suggest that probably 90 to 95 of the tipped employees in chicago are making well above 20. In fact, the Illinois Restaurant association offered the administration that we would guarantee tipped employees made at least 20 an hour. That was rejected, which sort of tells me that this really isnt about wages. And, you know, further where i get nervous is that this is going to bring a lot of restaurants into whats called the Service Charge model. In a Service Charge model, unfortunately a lot of the people that the administration is trying to help are actually going to be hurt. Theyd probably make far left. In the Service Charge its considered [ inaudible ]. Ultimately it could go toward kitchen benefits or towards anything. So i dont think that the city of chicagos mayor really understands exactly what hes doing right now with these changes and all were really asking is sit back, let us identify what were trying to do here, who we really want to help and lets try to find something in the middle. Would you consider raising your men youve prices if this happened . You know, weve been raising menu prices and thats been one of the Biggest Challenges during inflation is the price is up, up, up. Weve actually started to bring them down. Because were just talking chicago, not the entire state, when people want to look at our menu prices and also see those guys are expensive, im going to go eat in the suburbs or go venture to another state, it really isnt a good look for us. Additionally, Everybody Knows you can order for less money by picking up your food. Its not just a onestop shop. I think most people know when they dine out theyre expected to leave a gratuity. How is business generally speaking . You have 13 brands. Give us a read on how business is when weve been talking a lot these days about how seemingly strong the consumer has been and maybe thats thinning out at least someone but whats your view . You know what im seeing right now is in the neighborhood restaurants, specifically the ones where theyre family dependent, foot traffic is down. Downtown in the chicago loop, especially where businesses are trying to get their people back to work, were seeing a lot of corporate spending. Tuesdays, wednesdays, thursdays you think is boone time. Ultimately my group is running flat from last year. Were above in the Corporate Private events world and down in other areas. Thanks for joining us this morning. Scott weiner. When we come back, jane wells still live on the ground looking at how the persistent problem of not enough water in an area may have just gotten flipped on its head. Jane, what do you have coming up . Reporter joe, this is weird here in august. We look at what happens when a Tropical Storm hits a state thats used to wildfires and earthquakes and, yeah, we had one of those, too, and what it could mean for the availability of broccoli and spinach this winter. Let Innovation Refunds help with your erc tax refund so you can improve your business however you see fit. Rosie used part of her refund to build an outdoor patio. Clink dr. Marshall used part of his refund to give his practice a facelift. Emily used part of her refund to buy. I run a wax museum. Let Innovation Refunds help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Tropical storm hilary slamming into Southern California. Were following the impact from flooding to farming and beyond. Jane wells joining us now with more. Jane. Reporter hi, scott. Yeah, were used to floods, were used to high winds, were not used to both at the same time, especially in august. This creek is supposed to be dry but im here in palm springs, which is one of many cities and areas that saw record rainfall, nearly three inches here in a play that maybe sees five inches in an entire year. This massive boulder came tumbling down on interstate 8. Last friday one farmer sent me a photo of sprinklers trying to keep his hjalapeno crops cool knowing the rains were coming. The farmers dont have Crop Insurance and the farmers are concerned that they wont dry out in time. Many are on a strict schedule. Depending on the moisture coming out of the sky, we have to wait. It pushes the date back and forces you to do work youve already done. There was a 5. 1 earthquake in Southern California. Many schools will remain closed. School is in session here. The airlines will have to recover from all the cancelled flights. It was just a really dramatic day, scott. More more i dont know, chaos than catastrophic. It was really weird. We were talking earlier, these pictures coming out of parts of los angeles, including Dodger Stadium, which is already, as you know because youve been there so many times for us and otherwise, a lower lying area in part of los angeles. Im just imagining what other pictures are going to emerge that are just startling to see. Yeah, that Dodger Stadium the storm didnt go where they thought it would go. It ended up veering over compton and los angeles. And compton is still up higher than downtown. But ive seen those photos. It was just fortunately no loss of life that we know of here in the United States. One person died in tijuana. Just a weird, weird day. And all the crazy people who still went down to the l. A. River, wihich you shouldnt do because youre going to fall in and all that, no loss of life as far as we know. Thats jane wells out in palm springs. Coming up, indiana senator mike braun joins us for a wide ranging conversation on economics and inflation and the esenyear report card on pridt bidens Inflation Report card. Squawk box is coming right back. 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. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. 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. Our customers dont do what they do for likes or followers. Their path isnt for the casually curious. And thats what makes it matter the most when they find it. The exact thing that can change the world. Some say its what they were born to do. Its what they live to do. Trinet serves small and medium sized businesses. So they can do more of what matters. Benefits. Payroll. Compliance. Trinet. People matter. Welcome back to squawk box. Futures starting the week out at least at this moment in the green. Been a couple of rough weeks in stocks because in part treasury yields have been elevated. Lets look at the Treasury Curve as well. The 10year this morning is at 4. 30. Eight its a touch higher. And crypto, bitcoin is down about one third of 1 . News out of china this morning the countrys Central Bank Cut it 10year bench rate and left its 5year rate unchanged. China is dealing with a slumping real estate sector and its locked in a battle with the u. S. Over access to advanced Artificial Intelligence and computer chips. Joining us is senator mike braun of indiana. He serves on multiple committees, including the budget and appropriations committees. I was stunned to read the journal piece this morning about how far things have fallen in china. I cant help but wonder what it means for us more than i care about china. I would like their people eventually to come up to the same standard of living maybe as the rest of the world but theyre nowhere near it and the gdp there is 12,000. A 25fold increase. Were at 76,000. I thought they were going to pass us. They made a wrong turn somewhere. Well, per capita is one thing and then your economy is another. The world gdp about 100 trillion, were around 25 trillion, chinas about 14, eu maybe 22 or 23. That is a lot of the worlds economy. You see places like india and think that has just eclipsed maybe japan. But all of this with china, they realized communism wasnt going to be a way to build an economy and they became state capitalists. And the more you try to direct the market centrally, that is what theyre grappling with. I think they are savers but theyve been huge borrowers as well and that is kind of surprising. Even getting close i think to where japan might be. Were headed that direction. Theres a lot of complication out there but china picked the lowhanging fruit and theyre kind of reflectioning back to their political system. I think it will hurt them economically. You alluded to were directing quite a bit in the last couple years, are we not, governmentdirected investment . So far most people i mean, if you hear about bidenomics, we had Jared Bernstein saying this is a huge success for the government directing investment. Look at the economy, the soft landing. We were able to raise rates and keep unemployment very, very low. Id say be careful. He leans that way. I debated that bernie sanders, deficit financing, couumulative debt dont make any difference anymore. We by nature have become a consumer driven economy. We now through the government side of it are borrowing. Were not financing it the tough way, which is raising fees or taxes. Heck, nobody in dch. C. Wants to talk about that. When i got there 30 years ago, 18 trillion in debt, now were 40 trillion. 42 trillion in five years and 52 in ten. Start taking the new financing costs and i asked a bunch of reporter of 1 of 30 trillion would be. None of them could come up with that figure. If you start calculating the cost of debt, the trust fund goes broke in five years, and Social Security in eight or nine. And ive asked people about, you know, what is the way out and by 2050 i think were at almost 200 debt to gdp. They say, well, we need to grow. Were not doing anything to stimulate growth so thats not going to happen. Thats what we would need. So it sets up for a very pessimistic view on what the prospects are for us being able to deal with that. Were not going to be able to deal with that because were not going to be able to grow. You look at the federal government being at 27 of our gdp, Consumer Spending just under 70, were negative on exports imports. When it comes to should the government be producing that, they should get their act together on the basic things we need to do, defend our country, infrastructure and reform entitlements . It cant even do that. And Business Investment becomes a smaller part of it. Weve made it to where its been easy for us to borrow and spend, not to say that we dont need to do things to help the economy in general. We never raised revenues more than roughly 18 of our gdp. Weve traditionally spent at 20 , regardless of the tax rate, high or low, we get into our government about 18 of our gdp. So the facts are there. Dont go deeper into the hole. Try to realign it to where youre doing a little more Business Investment. That lowers cost in the long run but not through government. We can either talk about what china, what this mabs of their approach to the world. If things go south in china, it could be even worse i would think. Weve got balloons flying over here and taiwan in the cross hairs or we at that and the big elephant in the room is not going to show. Whats going to happen . Youre a republican. What do you say playing out between now and the election . Well, i dont think you could have written a novel more complicated more when trump came on the sen, he represented half the people fed up with business in dchlkts c. We do need term limits and a balanced budget amendment. The other side of the ill, the political enterprises, but theyre running it into the ditch financially. We, owned, generally dont want to do anything on policy and play defense by doing things through the courts. Id love to see what was happening precovid extrapolated into the future and i think a lot of people out there know that trump did it but they wonder how that works out politically. I dont think what biden is selling is working. That takes us deeper into the hole. Referring back to china real quick. When their population starts to tank, their economic woes even get worse. Just seems like a perfect storm for republicans if, you know, if an individual is going to get the nomination but cant win the general. Do you think he could win the general, President Trump . Well, if he makes it through and he does, i think the democrats and the enterprisers would be the reason for it. And what was happening precovid. He he can and stick with that, people out there know that it worked then and they wonder who would make it work. Thats where were at. So youre at this point assuming that former President Trump is going to be the nominee . I think whatever they try politically through the indictments and so forth, that strengthens him, not weakens him. They probably want to do that because they think that biden can beat him. I think they are calculating it that way and and i think the American Public might be a little smarter than that. Because they cant sell th sell their economics and spain they dont like politics, the way it was done by donald trump. Why dont you get guys like that to run for president . Its definitely a glass house. It smarts. I got a little on top. I stretch it as much as i can. I dont know. Its just the strangest period in time, though. But i like to come to you because youre from indiana and thats the real tristate area is indiana, kentucky and ohio. I dont know what theyre talking about back here, this tristate thing. Its not connecticut or anything like that. Its in the actual world. And sadly we only got about three or four of us. So generally thats a depiction and ive been able to see things fairly clearly. Politically and especially in building a business, we need a different dynamic in d. C. If it wasnt donald trump, lets say that like 91 counts. Lets say its not him. Who would you like it to be . I this i clearly a guy that is different that espouses a lot of what trump did would be Vivek Ramaswamy because youre going to have to have somebody that has a business background, is entrepreneurial. Thats the only chance we turn the biggest business around in the world so we not borrowing from our kids and grandkids. I think thats why hes resonating. Went to my high school. Salt of the earth. Senator, thank you. Youre welcome. Good to have you on. Coming up, chart master Katie Stockton helps us understand the latest move in the averages and the leslie picker will join us of evidence of grown shoots out there in m a land. Good morni, veor unginsts. Yore watching squawk cnbc. Schedule one for you. Or the whole crew. Plus, theyre free. Really . Healthier is getting a flu shot on your schedule. Cvs. Healthier happens together. 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 Estate company created. What will you create . Ibm. Lets create. 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 . Dad, we got this. We got this. We got this. We got this. We got this. Yay we got this. We got this life is for living. We got this lets partner for all of it. Edward jones 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. I get it. You do . Do tell. No, dont. No, lets not. Youre not up a hundred points. It weakened a little bit when yields started to go up. Wheile we were talking to th senator the long end went above 4. 30. The market is very sensitive right now. A followup to fridays results of palo alto net woshs. T networks. The stock is up sharply this morning. The ceo addressed the buzz around the schedule saying they wanted to give ample time to analysts to have oneonone calls with analysts over the weekend ahead of the companys conference over the weekend. We didnt talk about the most important stock in the entire stock market this week. Comcast . Nvidia. Besides comcast. Nvidia reports earnings this week. After whats happened in tech . Whats the expectation . Well, i mean, they blew everybody out of the water last time with their unbelievable guidance. Now, i mean, the bar has got to be pretty high, although the stocks come in, its a trillion dollar market cap. It Still Matters a lot. What did jason say to us this morning about the big seven . He said he would buy them he said they would short them. He said theyre immune to the rising rates. And its the smaller stocks you need this number to be good to keep the narrative in tact of a. I. Is the future of everything and thats why these stocks have done as amazingly well as they have. Ill say ill be a little bit cautious about making big what the nasdaq has already done in august, which is its been a pretty big loser, you are dont really want to have nvidia post a bad result. Thats right. Because then you may have a bigger problem in terms aof a bigger problem to worry about. Nvidia is not apple yet. Well, i almost think that you could make the case that given what tech has done that right now its arguably more important because the stock is such has had such a remarkable run. Are you saying nvidia has replaced apple as the bellwether . I think apple matters, too, and i dont think the market can stabilize until apple i think it matters right now. When does nvidia come out . Wednesday. I just think its cool that we can talk about companies com. Over in europe, theyre going to start busting our stones again. Theyre just so jealous over there. They love to regulate our companies because they dont have any. Youre referring to the front page story on the journal, is it . No, it just bitter, party of one. Yeah. All the innovation is happening here. So, they come after us. Thats the only way they can compete. Commentary is flashing at the bottom of my screen. That happens a lot. It does. Do they even have to flash it anymore . Theyve done that before. They used to flash commentary. Like, this is not cnbc talking. Those comments are joe kernans only. Its been an exceedingly quiet year for dealmaking on wall street, but investors are starting to see signs of life. Dealmaking green shoots appear to be popping up all over in the last week and m a, youve got a bidding war for u. S. Steel and activism. Youve got starboard engaged in bloomin brands and in ipos, instacart and arm are gearing up. This is welcome news for a market thats been effectively dormant for a year and a half now. North american mergers and acquisitions came in at 960 billion during the First Six Months of the year. Thats about 16 below the prepandemic first half average. And ipos dont really fare any better, despite well publicized debuts by cava and kenvue, u. S. Listed ipos are raking in about a tenth each quarter than they did in 2001, which was a nearterm peak, according to kpmg. And while the engines appearing to turning back on, its not quite full speed ahead yet. Bankers and other sources i have been talking with, a lot of companies are in wait and see mode right now. They want to assess larger ipos and get more comfortable doing deals in this regulatory environment. Regulation has been front and center for potential deal makers. They want to look at that before really doing anything major. But as the prospect of a recession seems kind of further and further away, you can expect to see a little more activity than weve gotten used as some of the csuite executives, they didnt want to do a deal if there was a recession or a hard landing right around the corner. Leslie, thank you. Leslie picker. Up next, well get you ready for the monday morning opening bell on wall street. Top technical alanyst Katie Stockton joins us. Stay tuned. Good luck. Td ameritrade, this is anna. Hi anna, this position is all over the place, help hey professor, subscriptions are down but thats only an estimated 15 of their valuation. Do you think the market is overreacting . Howd you know that . The Company Profile tool, in thinkorswim®. Yes, i love you please ignore that. Td ameritrade. Awardwinning Customer Service that has your back. vo explore the world the viking way td ameritrade. From the quiet comfort of elegant small ships with no children and no casinos. We actually have reinvented ocean voyages, designing allinclusive experiences for the thinking person. Viking voted worlds best by both travel leisure and conde nast traveler. Learn more at viking. Com. warehouse ambience introducing togos new french dip sandwiches featuring fresh Artisan Bread piled high with tender roast beef, smothered with melty provolone cheese and served with hot au jus for dipping. Try the roast beef or pastrami french dips today only at togos the futures are up, but theyre not up like they were, and the major averages are having a tough august. The dow just had its worst week since march. Joining us now, Katie Stockton from fair lead strategies and a cnbc contributor. Maybe we should talk about bonds instead and yields and what those are indicating to you, because they seem to be the dog in the stock market seems to be the tail right now. Theyve really accelerated to the upside, such that the tenyear yields are now up into resistance at 4. 34 . It would be a natural place for a pullback or some digestion, and indigestion. Yeah. Exactly. When we look at treasury bond benchmarks like tlt, for example, to me, it still feels like its rangebound, that that support will hold for some time, and yet, eventually, like if we do see tenyear yields clear that 4. 34 , the next resistance on the chart, which is the best way we have to understand upside, is about 5. 25 . And that wouldnt be a nearterm objective. That reaction i get all the time. Wow. Check, please. Right. But from i just i was so used to 7 and 8 . Im not afraid of that eventually. A lot of people are. I know they are, but companies did just fine with yields like that. But that would be a shock to the system. I think it would be. Were seeing some deterioration in equities, but its not really that meaningful yet. So, to me, i think we see this corrective phase as just that, a corrective phase, something that should yield a buying opportunity. It comes at a very normal sort of seasonal time for this kind of volatility. But and you know, the longterm momentum has gradually shifted to the upside this year, so i think well at least have an opportunity to take advantage of that sometime during q4, even if its not longlived. What about the momentum in mega cap and potentially losing that . Its obviously been edgy the past couple of weeks. Now we have nvidia looming. How do you see all of that . That has the potential, obviously, to set the tone near term. What we have seen behind the nasdaq 100, which, of course, is driven by the megacaps, is a loss of intermediate term momentum, not just shortterm momentum, so the gauge that we track had been positive since about midnovember, and it just flipped negative last week. So, we publicized that because it is significant, and it tells us that the corrective phase should be more than just a couple threeweek event, something that would be more in the sort of six to eightweek range, so it gives us a sense of time frame around the corrective phase, but weve come so far and not so fast but for so long that it would be only natural to see this kind of action. I dont know which to talk about, but we always do the s p. So, the 3,600 october lows or whatever they were, those, we arent talking about anymore. Whats the first solid support underneath the s p right now . Were referencing for the s p 500 former resistance from february, in part, which is around 4,195. Just shy of 4,200 and i think a lot of people have that 4,200 level in mind, and because of that, in a way, it could become selffulfilling as support. Thats what we use to gain Downside Risk but its really a setup in our indicators that we use to cue the reentry point. The indicators are still pointing lower, and theres a still a good deal of room to not shortterm oversold territory. Were already there now today. Theyre noncorrelated bitcoin is totally correlated. Y you thought 25 was pretty good support. 25,200 was former resistance. Below that, i dont want to say the bottom drops out for bitcoin, but the next support is below 21,000, so to me, that would be a setback, and i would suggest that Risk Appetite is really, really not there. Its not a one for one correlation, but it does give you a sense of how people are feeling, and look at china too. Sh shanghai composite is near its lowest level of the year. Katie stockton, monday, good to have you on. Most mondays, i think. Final check on the markets, which, not much to talk about at this point. Theyve backed off from tripledigit gains but the nasdaqs up 65. The tenyear got up to 4. 3 and thats sort of what cast a pall on markets. I thought it was a good show. I enjoyed it too. I enjoyed both of you gentlemen jacketless. That was okay, right . You got through it. You going to put one on . Rest of the day, yeah. Ill consider it. Squawk on the street is next. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at post nine of the New York Stock Exchange. Bulls trying to keep fridays modest gains going. Very big week, nvidia, housing data, yields still a little spicy this morning. Our road map begins with the markets threeweek pullback. S ps on track for the worth month since september of