Since april and the first time in 47 sessions where it broke the streak of days where the s p hadnt dropped by 1 first time we have seen a loss like this in a while nasdaq was down 2. 2 that was the worst day since february if you look at treasury yeields, we saw action. The 10year treasury pushing higher the 10year is 4. 41 2year at 4. 19 . Andrew, we talked about the market blowing off the downgrade from fitch in the morning. Yields under pressure which is the opposite through the course of the day, yields did pick up a bit i know you have comments from Warren Buffett in a moment i dont know if this is a number of earnings which were better than expected, but some were weaker you have the report. That brought the expectation to bring more pressure on the fed to raise rates that, to me, is a much better rationale than the fitch report. As you know, my view is not that it is silly. It is important to say aloud the world is a relative place. If you downgrade the United States, you have to downgrade all of the other aaa developed countries in the world otherw otherwise, if we get a cold and sneeze, they sneeze. I will say listening to one of the guys at fitch responsible for the downgrade, we are looking at this 20 years and this is getting worse. Worse than before the pandemic and worse before the financial crisis that may be down from 120 that we were a year or two ago. You see improvement there. If you look at this over 20 years, governance has gotten worse. You are talking about a worse outlook. Those are things worth paying attention to here. Sometimes the silly things matter it is one thing to talk about the economy and another to talk about the markets. Especially in 2023, equities have defied graph vity for a lo time and expectations. Sometimes something sparks the ce sentiment shift. Im not saying this is the thing. There is a fact in fitchs explanation to why they did this. I dont disagree with the explanation of the perspective im suggesting if you downgrade the United States, you have to downgrade everybody else or it makes a mockery of the rating. Is the u. S. Not able to payoff the debt . No if we cant pay off the debt, canada cant either. All of a sudden, you have a Rating System that doesnt make sense. I agree with the commentary around the idea that were not in a better state than 20 years ago and there are important things we have to look at here, but the timing of it here. If they had done this and i had done reporting and heard that they were going public with the view like this two months ago when the debt ceiling debate was happening. That would have been understandable it seems the timing of it all is odd. Not the overall view, but you have to do all the other things at the same time. This brings attention to the treasury markets this is not new news we have comments from Warren Buffett on the downgrade of the rating he says he is not worried about it it is not changing anything that berkshire is doing in the markets. Here is the quote. Berkshire bought 10 billion in u. S. Treasuries last monday and this monday. The next question is if we buy 10 billion in threemonth bills or sixmonth bills that is the decision berkshire makes every week we spoke with him in japan and he spoke out at the annual meeting in may this is the safest place to be he doesnt think people should be worried he made the comments to ease concerns about the downgrade he said there are things people should worry about lets not to say the concerns raised are not valid, but he doesnt agree with everything the federal government is doing right now. It doesnt change the treasuries or the dollar. The dollar is the reserve currency of the world and Everybody Knows it something to keep in mind on all of the issues if you look at the big voinvestors and not changing their perspective on dollars if you look back, he is saying berkshire was fortunate because they were invested in the u. S. Treasuries back in 2007 and 2008 with the great financial crisis which hit. If he had been invested in aaa bonds at that time or credit markets, things froze up he would not have been able to do all of the things because berkshire was invested in treasuries it is the default place he wants to be. It shouldnt change perspective on that. That is the other thing, becky. This bond p mmarket is one of te most covered by Warren Buffett people understand. This is the most well understood markets. It is not to dismiss what fitch is saying because they are raising important issues one issue on treasuries or a Smaller Company some very Indebted Company and you say i need to pay attention. I dont know can i add fitch with the comments i heard from one of the fitch people who made the decision was saying we are still at the second highest rating we have for any of these things we are seeing a steady decline over the last 20 years in things that matter. Governance and debttogdp those are important measurements and it is valid. Moodys did this years ago and has not reversed and put it back this is the second Rating Agency to do it. It reminds me of the 11th grade english teacher. I turned in the paper and got it back and got a b and i was mad because my classmates got better grades i said why did i get the b and the teacher said this is b work for you it doesnt make total sense, but for the United States, maybe this is not aaa work we know it is one thing for Warren Buffett not to be concerned and jamie dimon not to be concerned ordinary investors and citizens thinking about making choices on election day, should they think about the economy or maybe more concerned about the direction . I dont know there may be something here. Then that comes up with this question how political is this with the timing we are getting other reaction to the fitch downgrade from joe manchin. He has a message for the squawk box audience. The downgrade of the Credit Rating by fitch is historic failure by leaders of both parties and the executive branch the Credit Agency specifically cited the decline of governance and ballooning of the National Debt to make the determination to lower the Credit Rating this is the warning that cannot be ignored we must act to fully fund the government and address the National Debt before we wake up to a future where americas super power status is in jeopardy and we lost the confidence of allies around the world and every american will suffer if washington politics gets in the way to address the challenges september is the crucial month to address the deadline. Now is the time for both leaders of both parties to Work Together and send a melgs ackssage to ree the Credit Rating and keep americas economystrong for this generation and the next senator manchin will join us live at 7 00 a. M. Eastern time i think we can say amen to that. He is looking to take a buy partisan approach to just about everything in washington these days that, i think, is hard not to agree with it is good to hear washington stepping up and listen to fitch and the concerns saying they will address it. I look forward to hearing from senator manchin in the next hour and the dplcomments from mani and buffett come after jamie dimon said yesterday he spoke to leslie picker about the fitch downgrade. It doesnt matter that much the markets decide not the rating agencies. Number two, they point out issues which we knew about with the debt ceiling crisis. Number three, most importantly, the American Public. This is the most processed nation on the planet it is the most secure nation on the planet there are other countries rated higher with aaa, but they live under the American Enterprise military system. That is ridiculous more on that dimon interview throughout the morning, becky. It is a different tone from what w we are hearing from joe manchin. I dont think there is much difference with buffett and jamie dimon and joe manchin. I think if the three were in a room, they would agree on the points dimon and buffett can say the market will continue to operate as normal, but buffett and dimon wants washington to address the issues buffett does an agree with everything washington is doing right now. He made the comment that congress can only screw this up or the administration can screw it up if you push too hard he thinks sounder people will prevail in all of this because you ccan screw it up along the way. I dont think there is anybody who says you need to address the debt. Warren buffett is saying im doing the same thing this week as i did last week and same thing next week. Joe manchin is saying here is a chance to do something different. That is the action. I think buffett would applaud what joe manchin is saying here. Lets take this seriously. When we come back, it is a busy morning for earnings. Central banks and economic data. We get you ready for the trading day ahead. That is next. Tomorrow, we have an exclusive interview with Steve Schwarzman you are watching squawk box and this is cnbc announcer this cnbc program is sponsored by Truist Securities have fun, sis cant stop adding stuff to your cart . Get the bank of america customized cash rewards card, choose the Online Shopping category and earn 3 cash back. 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. Sleepovers just arent what they used to be. Nows the time to see what americas largest 5g network a house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. On todays planner, we have results from hasbro and Conoco Phillips before the opening bell we have amazon and apple after the close of the bell. We hear from coinbase and booking holdings the bank of england will report the Rate Decision today at 7 00 a. M. Today in the United States,richmond fed president tom barkin will speak at 8 30 a. M. His speech is recession revisited. And we get weekly jobless claims and Second Quarter productivity claims. And in legal news, former President Trump is due in court today and expected to be arraigned on felony charges on the efforts to overturn his loss in the 2020 election billionaire investor bill ackman is betting against the 30year treasury against the hedge of the longterm rates on stocks he believes this is one of the few macro investments that offers upside gains which is greater than the Downside Risk he arguing if u. S. Inflation is 3 in the long term instead of 2 , then 30year treasury yields could hit 5. 5 and he says it could happen soon. Ackman said he will purchase options rather than shorting bonds. Lets talk about that and more on the markets with matthew who is the senior portfolio manager. Good morning to you. Good morning. Lots of places to go, matt. Im curious what you think of the fitch downgrade and the reactions we just heard from bill ackman and equities lets start with the fitch downgrade. If you are an investor and watching this, what are you supposed to make of it i think you and becky are right. Analysis with Warren Buffett and dimon and joe manchin is not cons consistent we are where we are and we could do better. When all is said and done, tbills are the valuable form of collateral in the Financial System we are still in the position prior to the downgrade i think it is not a good sign. It is a warning shot of sorts. I dont think it is necessarily changing things fundamentally. What do you think of the bill ackman statement of 3 is on the table and 2 is a pipe dream i think it is rational. When i think about the way you recapped the way he implements the trade, it makes sense. If you pay option premium, you are at risk of losing premium. You have the payoff. Janet yellen has said recently that maybe we should move up the inflation target instead of trying to aim for the lower one. I think it is consistent with the information the market is given. I dont think it is, you know, i dont think it is a bad trade. We have seen the 30year from 4 to 4. 25 in a couple days. So far, he is right. Does inflation at 3 mean that the fed, therefore, stops and thats why we live at 3 or do you think jay powell decides it is my job to hammer down to 2 no matter what . We had hot jobs numbers. We get the job number tomorrow how much does that impact that adp job numbers impacted the equity markets yesterday ending the bull spell we had i think earnings tell you a lot. When you look at the performance thus far this season, those which outperformed rallied a bit. The ones which missed have been punished that tells me bullishness is priced in on a number of fronts. The reason we are seeing the most recent pullback is we are priced for perfection in an an imperfect world you see a dent in the armor as an excuse for the move are you fully valued you dont have to look too far for inconsistencies. If you look at the Interest Rate prediction screen, it looks like the market is going to cut rates early next year. What would drive cutting rates into early next year it would not be because we hit the inflation target Job Well Done it would signal a probability of recession and something between a soft landing and hard landing. I think people are taking stock of where things are right now from the price perspective i think it is a prudent decision to have dry powder have money ready to work. Look at investing in public equities. Matt is more negative than the rest of the markets. We appreciate your perspective on all of it we look forward to talking again. Thank you jon. Coming up, the bank of england set to announce the latest Rate Decision at 17 00 a. M. And abinbev numbers are dropping after the bud light backlash squawk box is coming right back so i broke up with bad banking and moved to sofi checking and savings. 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Welcome back the bank of england latest interest Rate Decision is due in a mhalf hour. Lets get to Arabile Gumede in london with more it is the decision which is due later on which touched the market red it takes sentiment from fitch with the u. S. Government debt, but the picture from the bank of england is significant and key we had tech earnings come out today with infineon here in europe pointing down infineon saying demand for its chips are said to be weaker. Iphone or Smartphone Market is not necessarily up to scratch. They will get some suffering and huawei with the ban from the United States with their chips which is a downfall. 10 down on infineon overall although there is a bit of a pullback, the ftse 100 in the uk and ftse mib in italy was down 1. 5 this is what with the yields picture is looking like ahead of the bank of england decision the 10year managed to gain 1 basis pointis currently sitting8 on the lower end of the scale, we are seeing a little bit of pullback fiveyear is managing to go down four basis points. The 2year gilt is 4. 193 the bank of england is all but certain to deliver the 14th straight hike taking rates to the highest level since 2008 the question is whether it will be 50basis points or 25basis points markets are pricing in a 2 3 chance the bank will slow the pace of hikes to 25 points and the implied probability of 50 points standing at 37 that is what we are looking at here over the inflation environment improvimproving it will be interesting to note that decision out in a bit yes, indeed 32 minutes away. Arabile, thank you when we come back, the ceo of nerd wallet joins us to talk about earnings thats next. We have more reaction from the fitch downgrade from Warren Buffett and senator joe manchin. We will hear from manchin in about an hour. As we head to break, here is a look at yesterdays winners and losers my cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. Good morning welcome back to squawk box on cnbc we have red arrows across the screen dow off