tv Squawk Box CNBC June 29, 2022 6:00am-9:00am EDT
>> going into today, if the meeting were today, i would be advocating 75. >> more of her comments straight ahead. a vote of confidence for bob chapek, disney announcing it extended the ceo's contract for three years. cost cutting under way at tesla, the company cutting about 200 jobs in its auto pilot division and closing an office in california. it's wednesday, june 29, 2022 and "squawk box" begins right now. good morning, welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square i'm becky quick along with joe kernen andrew will be joining us later this morning he's live from the aspen idea festival with a big
lineup including slack ceo stuart butterfield and alex carp. this is a movie we've seen play out before, things have turned weaker, dow futures down 21 points s&p 500 down by 7, the nasdaq off by 32 and yesterday was a rough one for the markets, the worst in two weeks which doesn't sound like a lot but it's been a horrible first half. the dow down by about 1.5%, a decline of almost 500 points, the losses got worse from there with the s&p 500 off by 2%, and the nasdaq off 3%. getting lower and at the end of the first half the s&p is down by more than 18%, about 19% right now which makes it the worst first half we've seen in over 50 years. treasury yields this morning are looking lower than they were at this point yesterday right now the 10 year is at
3.179% and crude oil prices picked back up, above $112 a barrel. $112.12 for wti, ice, 118. crypto prices got weaker too last night they were just below 20,000 bitcoin right now $20,045. >> a lot of fed heads here's one. i guess we care. we never know. they vote. but we don't know whether they're sent out to put up trial balloons do we care what -- >> just the idea that she's thinking -- i think so, because the conversation over the last several days has been should they raise another 100 basis points or should they stop because jeremy segal was saying he thinks inflation is breaking faster than measures are picking up >> when i left the market was in better shape and thinking maybe
the market had done some of the work for the fed, some commodities were rolling over and onenegative print for tv g back down. i'll start it. back down. i'll do it i'm confusing people cleveland fed president loretta mester said if economic conditions remain the same at the july meeting she's going to add vocate for 75 basis points she told cnbc she would make a supply and demand conditions part of the meeting in order to determine her preferred path of monetary tightening she weighed in on the risks of a recession in the u.s. economy. >> my baseline forecast is for growth to be slower this year than it was last year, 5.5%, which is extremely high. we're going to see some slower growth this year but that's okay because that's what we're trying to do. we're trying to get demand moderated so it's more in line with that constraint supply.
>> we get it sad that you like demand to be as strong as possible, it's just the supply that's the issue. so when you have limited supply, that's going to cause prices to go up. but we've talked about it again and again and again. that's no way to really run things to try to dampen economic activity we want a high gdp but if the supply chains are constricted you don't want the inflation it would be preferable to have slower growth with less inflation than good growth. >> yes, but the debate is wide ranging right now. on monday, from home depot seeing what he sees there, a lot of different companies in terms of demand with freight companies, says he thinks he needs to raise 100 basis points, this is a big prop, it's going to have to jack up rates to deal with higher inflationary prices. jeremy segal yesterday caught me off guard saying you're seeing
commodity prices already rollover, that could be an indication things are slowing down the government data has never taken rent prices into effect and housing prices into effect, it's been worse inflation than that, but he thinks it's weaker now than maybe they're picking up on too and if they go too far he worries they're going to put us in a deep recession. >> it's a little disconcerting to start hearing we already raised enough when we're just getting started historically but then again i see we may be in a new normal where 3% may be the same as a 5, 6, 7 used to be but certainly you don't want a fed put. you don't want the fed to react to what happens in the stock market but the stock market in the wealth effect it can be self-fulfilling you slow the market down. >> john williams was on yesterday saying as far as he sees it, everything is going in
an orderly process so he's not worried about anything he sees in the markets. >> he thinks a soft landing is still possible >> he does >> he does we can hope now we're negative on the dow. in china you can see businesses reporting a slow down in the second quarter from the first quarter, reflecting the prolonged impact of covid controls and shut things down. that's according to the u.s. based china beige book, which did interviews between late april and mid june the report said there wasn't a power house bounce back that most expected and few signs that government stimulus was having much of an effect, at least at this point >> tesla is closing its office in san mateo, california, eliminating 200 jobs part of a broader cost cutting effort. hundreds of employees at that facility were tasked with labelling videos from the cars
in order to improve auto pilot two employees told cnbc they knew tesla's lease was up at that office. they previously moved employees to palo alto they've been hiring teams in buffalo, new york. fcc commissioner brendan carr tweeting a letter he sent to ceos of apple and alphabet urging them to remove tiktok from their stores. writing it is not just an app for sharing funny videos or memes. at its core tiktok functions as a sophisticated surveillance tool that harvests sensitive and personal data. citing a buzz feed report saying sensitive data had been access in beijing that same day that the buzz feed
report came out, tiktok announced it was routing all of its u.s. user's traffic to its own data centers in the united states and singapore this has been a huge issue that washington officials have talked about for a while. >> if you're prone to wearing tin hats you can come up with interesting scenarios. are youth being controlled by the chinese? >> i have heard from reliable sources that there are big concerns about what happens to this. >> do they have our best interests at heart, do you think? are they trying to make us a better country if you really want to -- you know, you could really go crazy with the conspiracy theories >> i -- i don't think this is a crazy conspiracy theory. i have heard this before it's the reason i don't have tiktok. >> what i see on tiktok a lot is -- it's a different world from when i was -- i'm not saying that's good or bad. i understand i used to look at the previous
generation and think how silly they were when i was growing up. but i think it's reversed. some of the stuff i see is -- some of it is okay, i guess. some of it i think is wacko. don't you think? headed the wrong direct. >> you get to see a lot. >> what are we going to do, kids coming up we'll talk strategy with two trading days remaining in the first half. and then later an exclusive interview with the new ceo of next ahead of the company's first investor day in more than a decade you're watching "squawk box" on cnbc
our next guest says markets are in a slow motion grind toward lower valuations both equities and treasuries, joining us now president at shri global strategies we were having a conversation earlier the case is being made for somewhere between 100 basis point hike next time or no hike. we have a wade range of opinions some people think that commodities are already rolling over and we need to be careful already about dampening demand too much others think prices are surging and we have to get it under control. what do you think we need to do,
what do you think the fed will do >> two points. one even when the last time when they moved up by 75 basis points, i had recommended they go up 100 basis points and cut qe reduce the bond purchase as holdings by $100 billion per month and start it off immediately. of course, they didn't do either of those it was just 75 i expect there will be one more 75 coming at the end of july as fed president loretta mester talked to cnbc a few hours ago, i don't think anything more is going to happen. yes, some commodities are turning over but others are not. fuel is not. oil prices, crude prices are up again today and food prices are not coming down either rent is going to keep accelerating these three key comeponents of
acceleration are going to be significant. they keep the inflation rate and treasury yield high so no way the fed can relax, even if it ends up in a recession you have to face the recession for a simple reason. you, the fed, misjudged inflation more than a year ago, and it is like you're doing penance today. there's no way out for you at this stage, because of the seriousness of the error of c calculating nation. >> inflation. >> we lived a little too well and it wasn't on something that was lasting, economically viable, i guess. we should know that sri, that the fed cannot make our lives better, it can make it feel better for a while but you need the economic activity from the private sector which is how you
make gains so we have painted ourselves into a corner right now that it's going to be difficult to get out of let me ask you this, the markets have already reflected a lot of this, and individual names, a lot of the biggest high flyers, a lot of air has come out of them at 3,800 or so on the s&p, what's a more realistic number from your view reflect these issues, problems, 3,500, 3,000 where does the grind lower take us >> to pick a number, i'll pick somewhere in between the two you mentioned, something like 3300 on the s&p quite a ways to go. and the vix, there's not enough blood on the street. until that happens, that's not the end. the calculation has not happened
yet, joe that's why the fed has to keep acting and until the financial markets come down and you have a final capitalization on the equity side, inflation is going to remain high. here is one key issue. the fed has two mandates, supposedly, growth and inflation. but it has generally behaved as if it has only one mandate, growth and boosting the equity markets. it is time to switch to inflation and since it is doing it so late and for the first time in a long, long while they have to do it for a lot longer, even if growth suffers that's the tragedy of the situation. >> we go from gorging, whether you want to talk about a punch bowl or food, to really taking the punch bowl away completely can't have a drink you have to go on a -- like an
atkins diet or something, have fruit three meals a day, that's what you're talking about. that's going to be painful. >> that's going to be painful. >> where are rates eventually headed you say we're going to grind lower in stocks and bonds? where does the ten year finally top out? >> assuming no further errors on the part of the federal reserve and we go with loretta mester's prescription, you have 75 basis points and the indication the jackson hole meeting at the end of august that the fed is going to remain tight. then i will see it topping out -- the ten year topping out at 350 to 375. but this is not a fed that you can depend on to not make mistakes fed members contradict each other in public and that could cause volatility and i can see that going over 4% in that case. here is a key point to note. the neutral rate of interest,
which is where the federal reserve -- federal funds rate needs to go to, has been talked about as being in the 250, 275 range for a long time or indicated or implied i really think it's more like 4%, which suggests that we are still too low on the fed interest rate and have a long way to go before we call it quits. >> well, we're going to put a nail in the coffin of mmt, i think, because how long is the expression there's no free lunches been around. if we could print prosperity, print enough money for everyone to be prosperous, give everyone a million dollar check, then that million dollars is worth like 10 bucks, that's the problem. >> absolutely. i thought mmt made no sense at all to me as a very strict monetaryist and economist, joe it was not just a few private
sector economists that pushed mmt, the fed was behaving as if there was always a free lunch. they should have known better. and finally, the talk about recession and what was the last time the fed chairman or a senior fed person predicted a recession and told you to prepare for a recession. they never do. so you don't want to behave as if the fed is correct and act according to the sayings. >> we've seen a wheelbarrow full of money to buy a loaf of bread and we've seen szimbabwe, someon had a currency, what was it, a trillion or something -- >> the note? >> yeah. >> maybe a million. >> during my travels i had lots of numbers following a one, it was -- not even worth five u.s.
cents. >> that's what happens it's a rude awakening, sri but we will -- the more you talk, the readder we get here, not me, but the markets. time heals all wounds next time you might come on and be really, really excited about things. >> let's hope so thank you, joe >> all right when we come back, a vote of confidence for bob chapek, disney extending his contract. the details after this later talk holiday travel with the ceos of best stweern hotels and resorts "squawk box" will be right back.
disney has extended ceo bob chapek's contract for three years it had been set to expire in february of next year but the board voted unanimously to extend his tenure to july of 2025 saying disney not only weathered the storm of the pandemic but emerged in a position of strength his tenure has been rocky including engaging in a political battle with florida. and company's stock is down more than 35% year-to-date. "the wall street journal" points out that this is a situation where the board believes in chapek's broader vision for the company going from a business-to-business distribution model to one you are working directly with consumers through disney plus. he's had an aggressive plan for disney plus wants to get more than 200 million subscribers and be profitable by 2024.
those are important markers that the street will be watching and probably the board, too. >> these are not normal times. that chart there would not normally be something that would usher in another three year contract but it doesn't look a lot different from a lot of other legacy media, comcast, not as bad as some of the new media. >> netflix >> netflix, others very trying times. the kind of times that test men's souls. the vix really spiked yesterday, to 28. >> that's why you have john williams, the new york fed president, saying things are orderly. they're down but down in an orderly fashion. >> i wish he would shut his trap because -- >> don't want to trust that theory. >> if it's orderly it's not going to end. >> the fed is not going to say no more.
>> it doesn't get the fear factor up to -- was that an nbc show >> "fear factor" that was disgusting >> did things -- >> get in a bin full of snakes. >> yes and much worse i'd like to be in the room with the people -- i wouldn't like to but they're crazy. some of the stuff was no, no normal person can think that coming up, nato members -- i want to bring that back. is it not on anymore >> i don't think so. look it up nato members striking a deal that paves the way to admitting finland and sweden we'll take you live to the meeting after the break. and here's a look at yesterday's s&p 500 winners and losers
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good morning and welcome back to "squawk box" live from the nasdaq market site in times square checking the futures, negative now, just a little, 27 points on the dow. the s&p now down 9 or so we look like, s&p wise, we were headed back in the 4000 range which people would give a little bit of an all-clear but quickly gave a lot of that back yesterday. down to 38 and change, $38.20 or so check out the shares of dow. analysts say goldman sachs is not an improved outlook but the position to outperform and what is likely to be a worsening economic backdrop. >> nato members striking a deal that paves the way to admitting finland and sweden
kayla tausche joins us live. this is a big deal. >> reporter: it is a big deal. nato would say it's a historic and unprecedented deal just this morning nato member leaders are awaiting an address from ukraine's president zelenskyy, he has pleaded for more military assistance in the past, but it comes as the transatlantic alliance is rolling out dramatic upgrades to its own force posture in the region, an eight fold increase to troops in the country and the u.s. adding to the 100 it has in the region adding a new combat team in romania and adding f 35s to the uk and guided missile destroyers to spain this morning, the president saying the threats are all around. >> together with our allies
we're going to make sure nato is ready to meet threats across every direction. putin has shattered peace in europe with an attack, the united states and our allies are going to step up >> reporter: the addition of sweden and finland likely finalized in the coming months will add $14 billion in defense spending while doubling the land and sea border with russia, the largest in nearly 20 years made possible by turkey dropping opposition after the three countries made a deal. later today mr. biden will meet with turkey's president who has requested from the u.s. the sale of several dozens of f-16 fighter jets worth an estimated $6 billion, as well as software upgrades a few moments ago i was told
they see the value in upgrading the systems of its existing fleet but it's going through the contracting process. >> so many issues on this. this was what vladimir putin was hoping to avoid. but the process is a long one. it's not finished as of this meeting it takes a while for this to be ratified. >> right and the secretary general said it will be a swift process. but appoinit's a change to a tro it requires all 30 legislatures to sign onto this. the quickest process was in 2009 when croatia and albania joined that took about 12 months but there's such public opinion in favor of this move perhaps it could happen by the fall is what experts are telling me. >> the idea turkey is awaiting these jets and want the sale to go through, is it somehow tied to their approval on this, and
if they don't get it would it mean potentially their legislature would not sign off on it? >> we know president biden and president erdogan, he made a formal request for the fighter jets and system upgrades last fall and it's been going through the contract process since then. in may president biden suggesting it should improve the software system upgrades at least. we'll see what comes out of that in this meeting but it seems providing new fighter jets themselves that does not sound like it's on the table, sounds like it's simply the software system upgrades. turkey is trying to occupy this middle ground as a critical nato ally while also maintaining a relationship with moscow. pinterest ceo ben silverman
stepping down, took the company public in 2019, now going to serve as executive chairman. the company named bill ready its new ceo he was previously in charge of google's commerce business and the coo at paypal pinterest has recently shifted to make ecommerce more of a priority the stock up a little. both sillbermann and ready will be on mad money tonight. later don't miss andrew's interview with stewart butterfield. you can watch or listen to us live any time on the cnbc app.
about 4,500 hotels thank you for being with us this morning, larry travel is something we talk about all the time, mostly complaints, people worried about high gas prices and whether or not their planes are going to take off on time but this is a situation that has to be a wind fall for you. >> thank you for having me on my program. just as an aside we both grow up in the region. you went to andrea, i went to hammond clark high school. and i just wanted to say shout out to the region. >> it is great to see somebody else it's you, me, and bob chapek who also grew up in the region, either hammond or muncy. >> that's correct. we are witnessing a very strong recovery in many parts of the world and our occupancy, average daily rate and revenue per available room are trending upward, continuing to trend upward and really exceeding
pre-pandemic levels in many of our markets. what's really encouraging is, in the united states, our primary markets are receiving much needed relief, cities like san francisco and new york, seattle, portland they actually had occupancy greater than 75% in the week ending june 18th, which is very, very encouraging that people are returning not just to i'll call it secondary markets but the big cities and so tourists are returning. >> larry, how much of your business is tourism and how much of your business is people who are traveling for business >> the majority of our business at best western is the leisure side and as a result, we're seeing that demand on weekends and holidays being exceptionally strong the saturday before memorial day, that memorial day weekend, we set an all-time system wide record for the company for
average daily rate and in recent weeks, occupancy has generally been just slightly below pre-pandemic levels with adr up 11 to 18% as compared to 2019 so the performance has continued to be exceptionally strong over the summer months. >> the big question people have, because of the higher gas prices, because of the higher fares that they're charging on airlines because of the fact that so many flights are getting cancelled, is this going to put a damper on things, people are taking the travel they preplanned but will that drop off in the summer? what are you seeing in your forward bookings our forward bookings remain strong with the weekend coming up, by way of example, triple-a is predicting 48 million people will travel more than 50 miles over the weekend holiday
and this represents a 3.7% increase over 2021 so although gas prices have increased and there has been, i'll call it, the headwind of inflation, travel has remained tremendously strong. what happens after the, i'll call it, very, very successful summer season is yet to be determined, recognizing there are those headwinds. we're hopeful that business travel continues to rebound, however, in the fall as it has begun in the summer as well. >> let's talk about the inflation headwind as you mentioned. how much is inflation impacting you in terms of your profit margins? in what have you seen in terms of higher costs and how do you offset it? >> i'd say what hotels are experiencing is consistent with what consumers are experiencing, labor, operating costs, those are all increasing consistent with the rate of inflation so far i think consumers have
understood that our hoteliers, who are generally small businessmen operating hotels are witnessing the same cost increases they are and they've been tolerant as a result of hoteliers having to adjust rates to also account for inflation. such that it's not impacting their bottom line any more than it would any other consumer. >> how tough is it to find people who work in these hotels at this point? >> labor is one of those headwinds. i've long said, however, that the hospital industry is all about people who enjoy the, i'll call it, the responsibility of caring for others and welcoming them into their hotels as a result, again, my position has long been, people who have that in their dna will return to the hospitality industry
it's just a matter of time, i believe, until we can recoupe the labor losses that we experienced through the pandemic >> in the meantime do you just not clean the rooms as often i've seen that everywhere i've stayed just about. >> it's not that we don't clean the rooms as often we're managing guest expectations allowing guests to determine if they want their room cleaned or not, especially with regard to a short stay, one night versus two night we've seen some guests would prefer to have a tidy of their room versus a full-service clean. rejuvenation of towels and potentially linens but possibly not the full clean that is one way to manage labor and labor costs. but again, it's about managing expectations and making sure if that guest wants that overnight
stay cleaned we will, in fact, perform it keep in mind as well if a guest elects maybe to just have that tidying of their room versus a full clean that's also something that is, i'll call it, environmentally friendly in that those towels or sheets don't have to go through a wash cycle and water isn't used so there's another benefit, not just labor, with regard to a guest electing not to have that, i'll call it, overnight clean of their room >> understood. larry, i want to thank you very much for being with us by the way, a fellow member from the region, anybody who doesn't know what the region is, lake and porter counties northwest indiana. go indiana thanks, larry. >> thank you. you didn't go to high school in oklahoma? >> i did but then i transferred to indiana. i went to high school in multiple states.
born in indiana in the region. >> how many states >> i went to two high schools but i lived in indiana, ohio, texas, oklahoma. >> did you get kicked out? >> no. my dad is a geologist we moved around >> do you know this story? >> you've known me 18 years. you are also from. >> cincinnati, boston, colorado, los angeles. i'm on the run i've admitted. i was going to ask, will do you the buffets now? >> i don't know. i've never been a big fan of buffets. >> i'm back to the breakfast like at the best western they got the spread, i'm in. i'm in >> yes, i do -- but i usually make oatmeal or eat secereal there. >> people sneezing i'm in.
i've seen every germ known to man. spirit air shareholders set to vote tomorrow on the officers we'll dig into the bidding war next pimco has reinvented fixed income to create opportunities for investors in every market environment. so, no matter what happens you can build the bonds that mean the most to you. pimco, a global leader in active fixed income.
operator: 2-1-1, how can i help you? vo: call 211 or visit 211.org 2-1-1 get connected. get help. jetblue raised its offer to buy spirit airlines. spirit ceo jim christie told jim cramer there are some problems with that plan for budget airlines >> their strategy would be to remove seats from our flights which is capacity constraint, that's a no-no, and they justify it by raising fares. but you layer on top of that that they're currently in a litigation with the department of justice over the northeast
alliance with american we asked them, look, we're going to need you to sprain to us how you're going to get this thing done in order for us to show the risk they threw up blocks >> which way is it going to go at this point for the frontier bid do you think >> yeah, it's going to be close. right now i'd give the upper hand to spirit and i think jetblue really only has itself to blame there. their latest offer was underwhelming. it was a big disappointment to many investors >> notion that the deal couldn't get done or would take a long time, is that merit? does that have merit jetblue, you know, tried raising the break-up fee to give it a little more credence, but even iss saying it's too close to the
vote to change their endorsement. does all that make sense what's happening behind the scenes, aaron? >> yeah, absolutely. i haven't spoke ton one investor who thinks jetblue's bid is likely to get doj approval but there are a lot of investors who think the frontier bid is unlikely to get approved by the doj. it's a reasonable perspective. you think both are unlikely to go with the doj. go with the one that will pay ah ticking fee, and that lass a higher offer once you're in court, anything can happen it's a reasonable perspective if you think both deals are highly likely to get blocked. i don't think that's a perspective that we would expect spirit's board to have >> go into the ticking fees. jetblue is at what at this point? >> yeah, so jetblue's latest offer, and, again, it was a bit overly complex
they added a ticking fee starting in january 2023, ten cents per month, but for the first 12 months, that ticking fee reduces the consideration. i think if jetblue was really serious about upsetting this vote that ticking fee should have been edited weave he a seen a couple transaction recently announced with a long-timeline, td's acquisition of first horizon they have ticking fees starting nine months. the latest offer from jetblue just didn't do enough, i think >> when you talk about anti-trust, don't you need to know who's going to be in washington would it change if the administration changes if congress were to change would it be more likely that jetblue could actually succeed >> well, i think we know who's going to be in charge of the doj for the next three years, really, under this administration if congress flips, there are
counter veiling viewpoints main it emboldens the administration to get more aggressive in anti-trust enforcement and in their other initiatives. knowing that they may only have three years to do so >> so tomorrow, what's today the today's the 29th let's say hair holders go for it is it over jetblue comes back what happens >> if shareholders vote for the frontier deal, the saga ends we'd expect spirit's shares to trade down, maybe to the 21, 20, $21 range. and then we're following the frontier process, which in and of itself will be challenging. >> for shareholders, does it make sense that you'd want to have stock in the combined entity in or would itten better to just get the cash and get the heck out >> well, cowens airlines analyst, she sees value in the
pro forma company. >> she what? >> she sees val newt pro forma company. >> she's recommending what, then >> i don't flow that she's made a recommendation that i'm aware of >> but she thinks that the potential for frontier and spirit, what would jetblue, would it, what's more impoto jetblue, spirit or the alliance with american? >> our airlines analyst thinks that the airline is more important. the latest offer from jetblue kind of makes you wonder, do they really want spirit? or are they doing this to force frontier to pay more to lever up a competitor, to weak and competitor, to help their case with the doj for the northeast alliance that latest bid from jetblue was waeng, it was underwhelming.
>> thanks. main we'll get helene on, we don't want you speaking for her. maybe after tomorrow we'll have something to talk about. thanks >> fantastic, thank you. when we come bang, andrew will be joining us a little later. he's live from the aspen ideas festival with a big lineup, including stewart butterfield and alex carp. plus we'll be talking inflation and the eramican consumer with former advisor kevin has et. "squawk box" will be right back. , so you know all you need for recovery. and you are? i'm 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... i'm done. i'm okay.
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good morning futures slipping into the red in the last hour. we'll get you up to speed in the markets. fedex is doing something it hasn't done in a decade. that's holding an investor day we will have an exclusive interview with the fedex ceo in the next hour. and are you ready for sizzling inflation this fourth of july? from beef to beer, you won't believe how much it's going to cost you we'll speak to former cea chairman kevin hassett about the inflation explosion and much
more the second hour of "squawk box" begins right now good morning welcome bang to "squawk box" here in cnn benjamin i'm joe kernen along with bengy quick. andrew's at the aspen ideas festival he'll be joining us in the next hour u.s. equities futures right at this point are down around the flat point down 15. t premarket treasuries were higher for a while. kind of reflecting oil >> 105 >> now bang at12 >> in our headlines this morning, delta airlines is waiving change fees for the upcoming holiday weekend delta is making that move to
counter possible operational difficulties that could arise because of weather, staffing and other factors. it applies to flights scheduled between july 1st and july 4th. and any re-banked travel has to take place before july 8th walt disney has extended a contract they say chapek emerged in the position of strength he has been in the middle of several controversies during his tenure, including a clash with florida governor ron desantis over the don't say gay bill. this is a vote of confidence coming from the board. and pinterest chairman is stepping down as ceo he will be replaced by google's former president of commerce in the meantime, the tech sector continues to be badly beaten down, but investors
continue to hook for growth areas in the market. joining us is tech sector specialist at jeffries, and i've heard pretty convincing arguments that technology was the leadership for a long time, but now it's really being turned over to value stocks and international stonges, that those could be the leaders from here when you look around the tech sector, what do you think? what could be areas that would you tell people to put their money right now? >> for sure. at the end of the day, tech is one of the most economically-sensitive sectors out there. it's down 30% year-to-date and from your point, you're seeing other areas of leadership emerge within the market if you look at most recently what's happened over the last couple weeks, you're seeing cyclical sensitive areas break down we're sitting ton frern lows we're advocating to, for
portfolio strategies to move away from semis to the growth areas in the broader market, when you start looking at structural growth and software we think there are more growth opportunities in those sectors >> why, because they are more recession proof? >> if you think about what the fed is doing, it's so important to reanchor long-term inflation expectations if the fed can successfully do that, you're going to see significant positive development with respect to long-duration assets it's so susceptible to a rising rate environment the more confidence we're going to have in terms of the fed reanchoring expectations, that's a significant positive within the group. during recessionary times there's going to be scarcity value with respect to growth and software's going to outperform more sectors such as semis >> a lot of companies have invested a lot of money in technology over the last few years as people working from home, the pandemic shut things
up was that forward spending? will those companies not need to spend as much in the coming years especially if there's a recession? >> exactly pcs are one of the best examples we were shipping 260 million pcs globally pre-covid that ballooned to 340 million post covid as we're having multiple pcs where households were all working from home that market's going to decline about 10% this year. that's a great example of how we pulled forward years' worth of investments. and we're going to have to get through that digestion from a semi-conductor standpoint, it becomes a little difficult >> i know you've said that corporate america would still be willing, through uncertainty and even potentially through recession to spend on things for mission critical what is mission critical, and what stocks does that lead you to >> for sure. going back to the earlier point
in terms of structural growth outperformance, looking within the areas of software. cyber security is a great example in terms of areas that can be more recession proof than not. when you look at cloud strike, that are lever to key cyber security trends that can benefit during recession at the end of the day, if you're a fortune 500, a fortune 1,000 company, what's one area that you're probably not going to cut down on from a budget standpoint it's certainly cyber security. tools are deflationary in nature, which is why they're seeing an uptick in demand right now. >> we've talked an awful lot about what a strong job market it is. but when you look at some of the places announcing layoffs, it tends to be with some of these high-tech companies where for so long they've been paying to chase the talent has the situation changed from
that perspective is talent easier to find is there any upside to this in. >> on the margin, if you look over the last three to four weeks, it's pretty remarkable how significant the market has slowed from a labor standpoint and the fed's language is certainly impacting this we're seeing a slower economic environment. we've seen 25 to 30 major companies over the last four to six weeks either start freezing or cutting jobs across the board, and, you know, that's never good to see. but at the same time, i think it's going to help in terms of finding really high-quality talent that's out there. and i think it's also going to help the fed in terms of spiraling wage inflation, you see signs of that starting to ease with respect to the broader labor market right now >> thank you >> thank you so much coming up, the latest read on housing, and former counsel
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housing front. >> mortgage rates actually dipped slightly last week, prompting a small increase in refinance activity, but nothing from buyers. mortgage demand was basically flat the average fell to 5.48% from 5.98%, for loans with 20% down but don't get too excited. it's already moving back up this week, almost at 6% again last month the drop managed to reduce demand a little bit, still down 80% from the same week one year ago. after two years of record-low rates there are very few borrowers who can benefit from a refy 24% lower year-over-year that's a combination of higher rates, still high home prices and growing economic uncertainty. the a.r.m. is still high, just over 10%, as buyers are now treching to afford it, but the average loan size is coming down off the record high it set last
march, because prices moderating and buyers not being able to borrow as much at these higher rates, back to you guys. >> are we rolling over in people said real estate's going to be the last thing do you foresee it joining some other economic activities as being on the other side of a, of the slope? is that happening in. >> i mean, it's definitely slowing down we're seeing sales come down we're seeing demand come down, and the last one will be will prices come down we're already seeing a slight ease in prices so i think, yeah, you're going to see some pain in housing. we're already seeing it in the mortgage market. more layoffs announced because there's just no demand >> rents aren't going to come down >> that's a problem. if you can't buy a house, you're still going to have to rent. you need somewhere to live i did see some reports that rents are easing slightly off
the incredible highs, the record highs. we're still seeing record-high rents, but the gains are coming back a little bit. we simply need more supply, more affordable rental supply but you're going to see that increase if people can't afford to buy a home. >> thanks, diana when we come back, the inflation explosion. wait until you see how much your fourth of july barbecue is going to cost this year. we've got the numbers and the impact of inflation on the holiday weekend coming up. and then noah glakstein will join us, and why he thinks the market downturn is a great opportunity to put money to work "squawk box" will be right back. time now for today's avalanche trivia question. who is the highest-paid athlete in t wld iheorn the answer when cnn benjamin's "squawk box" continues. in show. aflac! paul is about to suffer a shelf-inflicted injury.
with a salary of $170 million. sec commissioner brendan karr tweeting a letter that he sent to the ceos of apple and alphabet, urging the companies to remove tiktok from their app stores in the letter karr wrote that in his words, tiktok is not what it appears on the surface it is not just an app for sharing funny videos and memes that is the sheep's clothing it operates as a sophisticated surveillance tool that harvests extensive amount of data he cited a buzz feed report that said sensitive data harvested by tiktok had been accessed in beijing the same day that the report came out. tiktok announced it was rallying all of its u.s. user traffic to oracle cloud service you have to check out shares
of carnival this morning sharply lower after morgan stanley is cuttingity price tart nearly in half from $13 to $7. it's also introducing a new bear case of zero dollars based on liquidity issues that do arise if there was a demand shot causing cancellations. they've got liquidity of 7.5 billion at carnival. it appears to give it a solid cushion. but the company has $4 billion of debt that matures in the next 18 months, and $5 billion of its cash is customer cash. so if that high-yield market were to close and/or if there was a demand shock that causes trip cancellations, you'd have to give a lot of that money back to the customers, their
liquidity could very quickly shrink the analyst says. even then the leverage looks unsustainably high and they think the debt needs to come down to $20 billion or so that would imply a $12 billion equity raise >> right. and if the stock goes down, you're not going to be able to raise $12 billion. in it's a $12 billion market cap at this point. so that is clearly a high-risk issue. obviously something that could be very dilutive and discount the shares significantly i mean thrngs is interesting, because it's looking just at carnival, but the cruise stonges are down across the board. carnival down by 7.5%. royal krinian down by 4% norwegian down by 4% as well >> i don't know why their demand, this would happen if theres with a demand shong >> if there was a demand shong >> what are we talking about >> if there's another covid outbreak >> it's not gradually rising interest rates which would cause the demand strike. >> no, but if you needed to get
back in, if there was another covid closure, people started backing out of the trips or you had to cancel the trips, then you couldn't get access to high yield. that would be the difference the last time they were able to raise capital, they might not be able to do it again. >> you better get a list of industries >> it could impact lots of companies. >> then we're going back to 2020 if we did. if theres with a demand shock. >> although i think some are at higher risks than others cruise lines would be one. >> maybe we should short carnival coming up, or no, tesla is closing its offices in san mateo, california eliminating an estimated 200 johns, hundreds of proiys at the facility were tasked with labeling videos from the company's cars in order to improve their driver assistance systems known as auto pilot. two of the laid off employees
said they knew tesla's lease at that office was approaching an end. tesla previously moved a number of its auto pilot employees to palo alto, california. the company has been hiring and training data annotation teams in buffalo, new york and a panel of fda advisors voted to approve new vaccines that would target the omicron variant. subvariant b.a.2 became dominant over the spring. and sun variants 4 and 5 are gaining traction across the globe. it would take about three months the panel said it's crucial to make a decision soon on whether to update the vaccine so the manufacturers actually have time to produce the shots for the fall but another challenge looms. congress has not promoted money
for additional vangss. the u.s. may have to ration shots for people at highest risk such as the elderly. i heard meg terrell reporting on this yesterday and talking about how moderna and pfizer said they coulden ready in october and november with those new shots if they were approved rapidly the fda said this could happen as early as july >> i had covid, i'm done i would, i got to get my second hinkles. did you get that >> my second shippingles no >> did you get your first? >> yeah, i did >> can i just get by with one? >> i don't know, i'm kind of hoping, because it's now been a while. >> people say if you, you know, it can't kill you, but you wish you were dead. >> i've heard it's very, very unpleasant >> got to think about that got to call walgreen's how long are you supposed to
wait? >> within six months >> six months, okay, i'm within that window. the other ones you going to do that are you going to get back on that horse >> i might i'm not going to get it now. >> i feel like having had it that -- >> it's a shot >> it's a shot that, you know. i don't like doing that. >> i get a flu shot every year you don't. >> no, i don't still to come, we're going to talk to kevin hassett for his take on the fed, inflation and much more. >> i have little kids at home who bring home everything. >> i know. i'm just not going to hold my life to be a series of vaccines every month. our exclusive interview. >> better than a series of covid infections >> that's true be worried or live your life interview with the ceo >> live my life and get a shot it tak aes minute and a half >> that'd be my fourth
conditions remain the same at the july fomc meeting she will be advocating for a 75-point hike to interest rates she would make an assessment of supply and demand concessions before that meeting in order to determine her preferred path of monetary tightening and weighed in on the risks of recession on the united states economy. >> my baseline forecast is for growth to be slower this year than it was certainly last year where it was 5.5%, which is extremely high and we're going to see slower growth this year, but that's okay, because that's what we're trying to do we're trying to get demand moderated so it's more in line with that constrained supply >> and, again, that's loretta semester, who is a voting member on the fomc saying at this point, she'd hike by 75 basis points, you can see what happens in the coming weeks. we're going to continue along these lines. according to the american farm
bureau federation, this july 4th is going to cost you almost 40% more to purchase all of your favorite barbecue essentials ground beef, chicken breast, pork chops are all up. now to tark about inflation's impact on your wallet, kevin hassett. he's now a distinguished visiting fellow at the hoover institution. we've talked to you. you had this job it's almost like you were talking to milton friedman, then we talked to the current chairman of the same organization, kevin. that's like talking to paul krugman, and our viewers at home are going, they have no idea who to believe at this point it's gotten so, the talking points rs spin, everything else. what should a normal american think at this point, if they were to just look for an objective viewpoint on what's
going on >> right, i think, joe, that if you look back to about a year ago, john and i wrote an article that said inflation was set to take off it was a careful analysis of supply and demand. there was a big increase in demand coming from all the government spending and contraption in supply because of threatened tank hikes and heavy regulation one of president biden's first moves when he came into the white house was he made it so new regs don't have to pass the cost-benefit test, something they had to under president trump and they could go willy-nilly, regulating everything there are more new regulations in president biden's first year than any other president in history. it heats demand. sustains lower supply. before you know it, inflation's taking off i don't think it's a partisan
thing, and i think there are non-partisan solutions to it right now. >> do you remember at the beginning of the trump administration larry summers said that the move in the stock market, the dropping unemployment rates, the rising gross rate for gdp, said all that was a sugar high, and you guys said larry summers has no idea what he's talking about now he came out with something about inflation and all the republicans are citing larry summers. it's like one of your own, not your own >> i was saying this before larry summers last year. >> suddenly larry's right. let me ask you this. how many is just too many dollars printed by the fed and obviously, your guy, president trump, kept browbeating the fed to keep rates lower and wanted to replace j. powell, so if it really is the fed's fault, both administrations are guilty of trying to keep rates too low for too long
>> right, well, what would have happened, you know, milton said that inflation is always a monetary phenomenon. in fact, you know, i think that the biden stimulus in the end was way too large, and the other spending that they did that year with infrastructure was way too much the fed could have neutralized that, like when the treasury tried to borrow that money to send it to people to spend, the fed could have said hey, we're not going to pie that stuff. at which case there would have been high interest rates and it would have extinguished the inflation before it happened you can say it's partly the fault of biden and partly the fault of the fed, because the fed did p monetize all that spending >> and reopening and covid and supply chain issue around the world had a lot to do with it. but you're saying increased regula toro activity and not just energy but across the board that we've seen since day one
with the biden administration. that shrunk the supply and then the demand with the american recovery and all the other spending, that increased demand so it's just a perfect storm >> right, and there's also on the labor side, a lot of people got used to being home, especially older folks decided not to rejoin the labor force, so that squashed supply as well. the fact is, it's a supply-demand story, it's not a republican-democrat story in the end. if you want to fix it, can you ask congress to try to help, in which congress would pass laws, reduce government spending and come up with ways to stimulate labor force participation or have the fed go it alone right now the biden administration appears to have let the fed go it alone. and by doing that, when the fed raises interest rates, it certainly squashes demand, so people buy fewer car, fewer houses and so on but it also squashes supply,
because people don't want to expand their factories and buy new machines because the cost of capital is higher. you're creating a downward race to get inflation and supply under control. the history is central bank policy, if you're going to not do that you need to get fiscal policy >> let's say it's a cold winter in europe, and putin is still, god knows what the end game looks like for what happens in ukraine. if we don't change our ways here, in this country, just in terms, i mean we're still saying the same thing, we're not going to really, we're going to ask saudi arabia and venezuela to increase, but we're not going to do it here we're not going to remove any of the constraints here, because we want this transition we can walk and chew gum, blah,
blah, blah, if he would don't do that, energy prices are going to stay up u and prices are going to stay stubben. >> and we're seeing wages start to catch up. we saw iented pilots get a wage hike the best thing we could do is get fossil fuels right before it was before covid we're still way, way below trump levels of oil and gas production if you look even at russia, they're exporting more now than they were at the start of the ukrainian war, and so their supply, global supply is up, and ours is down so i even have a hard time thinking it's putin's price hike we're the biggest part of that and it's because of the heavy regulation in the u.s. so i think that we need to get some realists in the white
house. they need to stop doing political talking points and just think like what is the problem, how do we fix it? gas prices are high, u.s. production is way down let's address that problem if we do those things one by one the government can start to get ahead of the curve on inflation. if they don't, the fed has to go it alone and you're going to have a deep recession. >> if hydrocarbons cost more, that makes wind and all those others more competitive. that's always been a wink and nod for what the green lobby wants to happen. why should we ever brief, if you see the statement that we're at record oil production under the biden administration, do you know what they actually mean they don't mean overall record oil production is at a high. now they mean that since biden's become president we're now at record production for his term in office. they actually use that and put it in print so that the rest of
the mainstream media picks it up and then says we're at record production that's the kind of stuff we're dealing with, hassett. did you do stuff like that >> yeah, yeah. >> you did >> excuse me in. >> did you do stuff like that, too? did you play with words like that >> i tried not to. >> you tried not to. >> when i said stuff wrong i came out on your show and admitted i got it wrong. >> did you that a lot. >> i guess i got a lot of stuff wrong. but i was honest about it. you make a good point. very uncharacteristically, no, seriously, the biden administration, don't forget, right when they had taken office they put together a commission to tell us what the optimal price of oil is and the social cost of carbon, and if you take their social cost of carbon and add it to a barrel of oil you get about 120 bucks per barrel so the price now is what biden said in february is the optimal
price. it is the case they told us explicitly what they want the price to be. that was the point you were kind of hitting at, joe, that they're shall be internally consistent. they got the high prices it encourages wind and solar and that's the world they want and we're going to have to get used to it i fear you're right about that >> that's what's so funny about a lot of this or eye ron ink is that on the campaign trail over and over again he said i am going to put the fossil fuel business out of business and then when it happens, you see the effects of those policies, then it's like who, what, no, these guys are price gougers, profiteering, they have all these leases or permits, whichever one that can you conflate with being able to actually drill, that's the one they keep using, because you can't get the other thing that you need, and then you can't plan long term you can't build a new refinery if they're going to close you
down in three years. so nothing has changed about the overall stance of the administration toward that industry so we're not going to do it here we're going to have to go hat in hand to these other places >> the fact is, and you've covered this really well over the years, that the far left of the democratic party, i've got lots of friends in the democratic party, a lot of reasonable people, but the far left that you have to get to vote for you believes in fairy tales. they believe that we can suddenly power ourselves with the winds. it would be great if we could, but we can't >> we'll have less crime if you dee fund the police and opponent prisons. >> they just believe fairy tales. and the fact is that we've got people in power who historically have governed in a moderate way. like the biden team told people they weren't nearly as crazy as the left but the point is they're governing as if they believe in the fairy tales, but fairy tales
don't come true, at least not in our lifetime and that's why the economy's falling apart. the question is, it's like that scene in "airplane", are they going to slap out of it and recognize that hey, i can brief left wing things, i can agree with larry summers and it's not a fairy tale if they do that, even before 2024, my view is they're going to be in denial all the way through, sadly >> that movie is so canceled i'm just going -- >> i guess i'm canceled for mentioning it. >> i'm not sure what you can till watch you know, "bambi", you can't terrible things happened there there's not much "animal house", forget it. all right, kevin hassett, thanks good to have you on. >> yeah, thanks. when we come back, can fedex deliver for investors? a preview of the company's big meeting is straight ahead. plus big news out from bed
welcome bang to "squawk box. we're up in the dow, hallelujah. we haven't seen green in a while. we're up, but the other two, the s&p's down, and nasdaq's down, but breaking news from bed bath and beyond the retailer has replaced. no kidding you'd get so mad when you would say his name look we decided it was tritten. >> yeah. >> tritten so we won't have to replace about that replacing ceo mark tritten, saying it was time for a change in leadership and independent director sue gove.
>> i think it's gove >> it could be go-va at the same time, they had, that is frightening i'm going to hit up a qing, what was the high on that a long, sickening fall from grace, right >> yes, if you go back, even recently, it's been as high as $120 in the last year. >> no. seriously? >> on november 22nd, 2021. >> bbby? >> bby >> best buy. >> we'll get it.
coming up, you going to do fedex? >> we are. fedex is holding its first investor day in over a decade today. we're joined right now with a preview. frank, good morning. >> good morning to you, becky. we are here in memphis at fedex headquarters ahead of its first investor day in p a decade we're going to be sitting down with the new ceo just after 8:00 and have a wide-ranging discussion about his business and newly-released financial targets the company just released a few seconds ago with a focus on increasing shareholder return remember, since june 14th, shares are up almost 20% since the company increased its dividend by 53% in a deal with d.e. shaw. right now we're going through the release. but here are some of the highlights in the plan to release shareholder return 14% to 19% through fiscal p
2025 adjusted pay out of at least 25%. also 0% consolidated operating margin, including margin expansion in each of its operating divisions, express, ground and freight freight had a record quarter but ground and express missed margin estimates that's something that new ceo says he's going to focus on, improving quality, and just after 8:00 today, right here on "squawk box," we're going to sit down with the new ceo. a wide-ranged discussion about the message he wants to send to investors and analysts who have come here to memphis to see and hear what fedex has planned for the future as well as the future of e-commerce, the trucking business sourcing labor that was something the company flagged in the last earnings call, wide-ranging discussion. should be a very exciting look
also we're going to talk about some of his projections on the economy. he said if fedex puts out projections for the u.s. economy they may have to lower them. but he does not believe a broad recession is on the way. great conversation coming up right after 8:00 >> sounds good, looking forward to it, frank coming up, noah blackstein and we'll be right back. walter hagen. he was equal part style and skill. he won eleven majors. it's said he'd show up in a limo after partying all night. on the first tee, he'd ask, “what's the course record?” then he'd hoist the trophy on eighteen. the golf course was his stage. and now, it's yours. walter hagen apparel. available at dick's and golf galaxy.
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this week we've heard from major players on wall street about whether or not we are in a recession. are we in a recession right now is this. >> never say never i think we are in a recession right now. i think intellectually, we're in a recession right now. >> we think we're in a recession. and we think a really big problem out there is inventories the likes, the increase of which i've never seen this large in my career, and i've been around for 45 years. >> recession is not my base case right now t's hard to predict a recession. they happen for a lot of different reasons. we do have a path toward bringing inflation down as we need to do and keep the economy gro growing. >> joining us is noah blackstein the question is, are we in a recession, and the second question is, what do you do if you're looking at the stock market, are there opportunities
or not. >> i think whether or not we are behind sight will tell us. it's possible this quarter might be negative as well. but that tends to come perhaps later in terms of future revisions. there's certainly a lot of sectors in the market today where you have stocks down 30%, 40%, 50% in places like communication services or consumer discretionary the stocks have priced in a recession. given the dee clieps and so whether it gets officially announced or not, the market has seemingly been willing to price a lot of stocks in a lot of sectors as if the recession is here already. >> i mean, is that good news if you're somebody who's looking to put money into the market? worst case is already baked in or no. >> listen, it's always darkest before it goes pitch-black is a
joke they sometimes like to tell but the reality is that hook, the federal reserve is on this, we're in a unique situation. the san francisco fed talked about the 2020 and 2021 stimulus kubting over the last little while and the federal reserve since december, whether it's liquidity through repos or raising interest rates or every time the stock market goes up they try to talk it down the federal reserve is trying to rein in a lot of that. consumers reacted as would you have expected them to with the transitory spike in incomes. perhaps businesses acted as if it was a permanent change in incomes. now i think we're beginning to see the effects of a near doubling of mortgage rates and really the anniversary in march
of the last checks that went out. it's going to be hard to figure out if it was the fed tightening that did this, the overall market by raising rates on its own, there's no question there's a slowdown here for sure that's impacting a whole host of sectors. for many sectors, though, that's in the price a lot of people don't recognize that sometimes once analysts get around to cutting estimates, stocks start moving higher if there was any period of time where you really need to look at the longer term, and i mean over the next three years, not the next three days or three weeks, it's now if you can't find stuff to buy when things are down 30% to 50% or even 25% to 30%, i'm not sure what you're doing. if you're waiting for everything to be under 52 before you buy that's a different strategy. >> yes, things are on sale if you have a longer time frame if you're not doing that, what
are you doing? >> i assume you're buying energy because there's more of a momentum player. if you have a bias, the longer-term growth will be okay, that this was a transitory spike, you know, then i think that there are a lot of names that have become very, very cheap, very, very quickly. >> like what >> i think if you look to the consumer discretionary area, can you find companies that have her sort of guided down that have secular growth opportunities who used to trade at 30 or 40. even if you look at some of the larger names which were a bit more on the emerging growth side everyone's talking about e-commerce, issue of e-commerce, but you're basically looking at amazon stock price today and paying 19, 20 times cash flow for amazon and you're not paying anything for the retail business meta trading at the same level
as tobacco stocks. maybe you're pricing in no growth there's a hot of upward moves if can you take a longer term time horizon. it doesn't mean that we're not going to slip into recession and it doesn't heene things can't get worse over the mebs few months, and sentiment is off on all that, sure but now is the time for a longer-term for sure and if you can't figure out how to make money on some of these names from here, i think that, you know, i'm not saying the next six months are going to be great, but here to the next three to five, we're setting up very well. >> noah, are you always a straight delivery, but is it fair for me to say that, hey, you're pretty excited about the opportunity to be out there right now? >> listen, i'm as, obviously, we're going through a period, we've gone through policy and macro hell really for the last seven months, trying to correct
some obviously policy issues with, you know, the embrace of modern monetary theory and sending out checks to people, but as this economy normalizes, and it will normalize, and as this economy hopefully stays relatively capitalist and relatively free, the opportunities over the next three to five are big. this is a mass pull back, by the indeces. can you see motte on a price weighted but an equal-weighted basis. the communication sector down 50%. consumer discretionary down 40%. are they all really that bad do they all have terrible outlooks over the next three to five years? are there no secular growth drivers you know, up until last week, where biotech had an enormous move, you had the largest.
even lower than 2008 so there are opportunities can you see. but you're in equities, so you have to take a longer term time horizon. the only place that i would say is going to be more difficult for certain equity investors, for the last number of years if you were using the equity market as a bond proxy and bonds for capital gains and had the worst start for bonds ever in history, but, i think if you look at today's yield on equities, it's well below treasury, so go back to the stock market for capital gaines over the long term. >> noah, it's great to see you, thanks >> thanks. coming up we're going to head to the aspen ideas festival andrew is there and has a preview of what is coming up >> joe and becky, it is great to see boat of you. coming up, we have another big hour of squawk two interviews you can't afford to miss. a live interview with the slack
ceo, stewart butterfield is going to be here, his perspective on the economy, what the future of work is starting to look hike, and slack's latest product update and palantir ceo alex carp, always provocative, never one to hold beingba. big ho sllurti ahead, "squawk box" after this with those interviews and more. stick around
good morning two more trading days left in the first half of 2022 futures looking a little more stable at the moment meantime, fedex hoemding its first investor day in more than a decade we'll speak with the shipping giant's ceo. and we'll talk about the future of work and the technology of war right here at the aspen ideas festival next 60 minutes you'll hear from stuart butterfield and alex carp the final hour of "squawk box" begins right now good morning, and welcome to
"squawk box" here on cnbc, live from the nasdaq market site in times square, i'm joe kernen along with becky quick and andrew ross sorkin, who's at the aspen ideas festival in colorado you could be in davos. you've got the davos wear going. it's interchangeable aspen wear, davos wear, wouldn't you say? >> it's marginally warmer here, but not much so i think there's a way to modulate a little bit. it's a little warmer here. >> in these tight times with nation and all, if you could have davos wear, aspen wear. >> combine it into one >> combine it. it all works i like that. is that a what would you call that, peach? >> camel >> camel >> camel the sweater? >> yeah. >> that's what they say t's the camel color. >> and it is not a sweater from what i can tell. >> no.
from we have the sorkin sweater of the month club that we used to, we don't do any of those fun things anymore wait a manipulate, wait a minute we still got it. we still got it. >> there's the business there. >> you know what i think you could do that. i think you could do that. i really do. but i'm not sure it will let you. it's certainly an idea u.s. equity futures at this hour, we're up 120 points, people have been waiting for you to show up here, sorkin. we've been up, we've been down u that is definitely a little shift from where we have been and a nice, firmer tone. it's not a huge move, but we wonder what went on. treasury yields, did they drop not really little bit, maybe. 3.15 no, on the ten year. >> let's get to a recap of some of today's top business stories as well. bed bath and beyond announcing the departure of the ceo mark
tritten. the company said it was time for a leadership change. because it will look for a permanent replacement. it comes as bid bath report add larger than expected quarterly loss the shares are now off by about 14%, it's a $5.58 stock at this moment, down by about a dollar shares of carnival are sharply lower. morgan stanley is cutting its price tart nearly in half from $13 to $7. morgan stanley also introducing a new bear case of zero dollars, yeah, that would be a bear case. based on liquidity issue that could arise if there was a demand shock that caused another wave of cancellations, like a return of covid. this concern is that if the company needs more cash, i think 5 billion, maybe $5.5 billion of its cash right now is customer cash those are deposits on trips that they are planning to take. if customers cancel those trips
they'd call a lot of that cash back, and if carnival needed to recapitalize they're worried they would have trouble recapitalizing carp val shares down 7%. royal caribbean and norwegian are down as well, each by about 4.75%. dold been sachs, a new note out this morning, the upgrade doesn't mean it has a rosie view of bank stocks overall bank of america thinks goldman should be able to outperform in what it expects to be a worsening economic environment that could hurt earnings outlooks at some of the other banks. let's get back to the broader markets now, as we come off a pretty ugly day on wall street we were meandering around, mike santoli, and suddenly, we're back in the green. you see anything happen? >> i didn't. you know, we were down 2%
yesterday. getting a lift is in the margin of error we're at month's end we're still sort of above last thursday's close that's been the big swings back and forth. treacherous footing but there's some look. june lowe's, 3636 by the way is the interday low right there still a little bit above that, but nothing has really happened to change that downtrend over the last week or so, we've been saying this rally has to get you above 4,000 before people start to believe. and that would be 400 on the etf to say this has been a bit more than just another reflection bounce again, this doesn't look terrible if it stands as it is right now. 385 was the may interday low so we're kind of chopping around, still plenty to be proven here. take a look at the really market
shift for free cash flow versus growth tomorrow. 70%, 80%, actual tech not very profitable expensive. but great upstart type companies and the cash cows index, the highest in the s&p 500 massive divergence here. as you can see starting in the early part of last year. at some point, this is going to have a little bit of a convergence. we don't necessarily see the makings of it right now, but this is a dynamic to watch to see if any kind of leadership shift might be under way and whether in fact people are going to migrate back. the tips yield, the ten-year paper, this basically gives you the yield after implied inflation, and it's been surging, this is a measure of real yield, nation-adjusted yield. as you can see, solidly
positive the fed wants this to get to something like neutral it's something that does pressure equity valuations bang in late 2018, in a brief brush, equity market didn't like t we banged off from there this is something that's good news in the inflation expectations have been easing back, but more so than the number nal yields have been, joe. >> checking this now, mike, i i'm being told anecdotally that german cpi ratings were a little bit, not quite as hot as people thought. i think that's going to, that could do it. >> this is where we are, yeah. >> any reading anywhere about inflation that gives us, you know, any insight into whether there is a little bit of cooling even if it's motte in energy and food, just anything, i think, would help it's a weird position to be in, mike, where the fed says, yeah, we may orchestrate a hard landing, but we need to because of inflation >> it's very twitchy
>> and we're reaching -- >> we're going to side with a recession before we would side with allowing inflation to continue to run hot. >> look, yeah. they think the side effects are worth it for the, you know, the medication to actually take hold we are really kind of grasping at some of the more secondary indicators yesterday the inflation expectations number seemed to be a little bit of a sore point, that's not something that typically has moved. again, is it something that usually drive the market in we're in this zone between major releases you have the pce coming, i guess, tomorrow, that is going to tell us a little bit more >> thank you, mike santoli we'll see you. andrew >> okay, coming up, we are live in aspen, colorado this morning with slack's ceo butterfield, but it's a very big day for fedex. for that, frank collins is live this morning in the company's hometown of memphis, tennessee
frank, what have you got for us? >> hey, good morning, andrew coming nun a few minute, we're going to sit down with the new ceo and talk about his vision for the company ahead of the company's first investor day in a decade also announcing new financial targets to enhance shareholder return much more coming up right after the break.
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so boost your bottom line by switching today. comcast business. powering possibilities. today fedex is holding its first investor day in ten years. prank collins is there and joins us with a very special guest >> good morning to you, becky. i am joined by a very special guest, the ceo thank you for being with us ahead of your first investor day in a decade. >> it's great to be with you in the great city of memphis, tennessee. we are very excited to host investors here today the plan is very straightforward. we have a three-step plan. we're going to drive operating margins of doubling digits we're going to arrive balance revenue growth and improve our
asset intensity 200 basis points overall drive a total shareholder return of8% to 22% it's a 50th year of fedex. we've built the asset base quite strongly, and now it's time to unlock the value of this >> speaking an of that plan, you put out a release. one of the those is 14% to 19% eps growth your share is moving higher in the premarket. you're going to increase your adjusted deaf depd ratio your previous tart was about 20%. your dividend has really gotten investors excited. you announced a 53% increase >> it signals a confidence in where we think our business is, and where we're going forward. the, you know, the projections that we think would generate cash flow, and the priorities of
investing back into the business but there's enough cash flow for us to drive back to shareholders and dividends. >> one of the things you mentioned on the earnings call was source pressure. part of your plan going forward and your vision of the company going forward is to expand those margins. is the labor the biggest issue, the biggest headwind in achieving that goal? >> well, it's a very good question, frank. last year, about this time, we saw a tremendous labor pressure because of labor arailbility and it's in two ways one was the fact that inefficiency of our routing and secondly the wage rate we have essentially taken care of the inefficiencies and the wage rate is now in our numbers. we have dealt with it head on, and the margin conversations that we're talking about in the future assumes that that's in our numbers. so we're going to improve.
>> overall the long term, going through the fiscal targets, how do you source labor at a better price? where do you see the labor market going forward >> at this point, the labor market is strong but stable, stabilized so we have, this is why we have to make sure that we have the revenue quality to make sure that we are pricing above inflation and also productivity. >> speaking of pricing, i think that was the big headline from your last quarter. you saw big increases through all three of your segments, freight having the biggest, with 28, but what drove the pricing increase is that demand a lot of your customers wanting to mow that they can get some of your capacity? >> there are several factors here, frank. firstly, the overall global capacity, fedex plays a big role now in moving international
trade. sdengly, we are critical infrastructure for e-commerce. so, you know, there is a very important value that is applied to all e-commerce providers. and, you know, we also are being quite selective in some of the, you know, low are kweelding traffic. so the combination of those three things grow around the equality >> just a question for you obviously, with so many of the things you're doing are fedex kpifx, but people look to you to get a good gauge of what's happening in the economy what are you seeing in terms of demand and edges pecktations for demand as we get toward the holiday season retailers have been very up front about how they have excess inventory and are worried about getting rid of that. does that play out at all in the demand you see in let's say, online hopping >> that's a very good question, becky. you look at the results we
announced a couple weeks ago, last week. can you see there's definitely volume was pressured in all of our lines of business. so that's reflective of the current environment we're facing you look globally, china went through a shutdown in the april-may time frame now they're back on track. and the manufacturing is back. the europe is in worse shape because of all the pressures of fuel and inflation and interest rates and the geopolitical issues there, and the u.s. is somewhere in the middle. on the u.s. side, you know, the consumers are spending, but they're spending more on services versus goods. so we have factored these things into our calculus. the good news for fedex is our network is so vast that we're able to flex up or down, depending on the volume levels just before covid hit, we were taking a look down significantly only to take it back quite
quickly as the demand surged right after the pandemic it's something we can balance as we go forward. >> one last question before we let you go i'm sorry, becky >> just very quickly, we've had a huge debate about whether or not we're in a recession at this point. do you think we are, raj >> well, you know, i'll leave that for the economists. all i can say is that, you know, we are seeing volume slow down, which would be shown in the q4 results. >> last night we were treated to a video from chairman fred smith. he laid out the position when it comes to fedex and u.p.s. and amazon where does fedex sit compared to u.p.s. and amazon. is u.p.s. a competitor is amazon a competitor >> well, first of all, the market praise for e-commerce is quite large. it's driven by retailers, small customers and brands
fedex is in the center of that ecosystem. and that ecosystem is growing very, very fast. in fact the last couple years, fedex' growth was $25 billion, compared to $50 billion over the last 0 year, and it's run by the fact that we are the critical infrastructure for e-commerce. we have a much more diversified portfolio than our direct competition. and i think we are well-positioned both from a physical point of view and digital infrastructure to succeed in this market place >> last night it sounded like you don't brief amazon's a competitor, but you obviously think u.p.s. is. >> of course u.p.s. is our direct facing competition. and they have been for a long time in the united nations, there are only two networks that connect each and every point from excellent raj, thank you so much for joining us share up since you announced new mans, including increasing your
dividend payout and improving par gins thank you so much for sitting down with us ahead of your first investor day in a decade >> thank you for being here. >> becky, back over to you >> thank you very much andrew, what do you have coming up from aspen? >> thanks, becky we're going to talk about the future of work here in aspen, colorado at the aspen ideas festival with slack's ceo stewart butterfield, and alex carp we'll lk uaitakrne, president zelenskyy. you're watching "squawk box" on cnn benjamin
welcome bang to "squawk box" this morning, live at the aspen ideas festival and one of the highlights of the week so far has been the chance to sit down with palantir's ceo and co-founder, alex karr, and we had a wide-ranging conversation he became the first western ceo to visit ukraine and meet directly with president slirns, given the understanding of the technology that both russia and ukraine have, i asked him how he thinks this war is going to play out. >> i believe a lot of what will happen will come down to the health of the president. i don't want to reduce, you know, a lot of times, you look at things from the prism of what you've done, and in tech, in
general, you can reduce company to the founding team, doesn't mean a great founding team will win. but any idea will not work without a founding team that's created and is interesting and has business acumen. so i'm very indexed on him >> that's one of the concerning things he said he reiterated something he said in davos, his worry about a nuclear war and the possibility that the longer this goes on the greater the chance is for what he describes as a mistake. we talked about that and then we talked about another conversation, the fact that so many ceos have stayed quiet about the supreme court decision to overturn roe v wade of course karp nern one to hold back >> first of all, like so we have internal policies around, i mean, i'm pro choice, but we have a lot of people at palantir who have different views than me at palantir, we provide, we always provided for people to
leave taits or go to places where they, their rights are protected, and we pay for people and their families to move, if they need access to medical treatment or abortions i, i don't see it exactly that way. if you do not have a general focus, if you're x company and your product is y, then you may not know when or when you should not, you should speak out. where we speak out always, and again, not in our interests. it was not in our interest to say we would not build a muslim database it was not in our interest to tell governments, by the way a lot of times as american allies, they want us to work in these countries and we have offended politicians on both sides. >> and given alex's relatively progressive views, self described, i asked him about peter thiel, who of course has a
very different political view from him >> business dialog, we tend to have similar assumptions, but not always the same interpretation, it's a very productive relationship, and i would call him a good friend and yes, we don't agree, and we have a great division of labor, you know, i, i'm, look, there's a yesterdayish term which means rags i'm a designer and purveyor of digital, i'm an operator and that's what i do for a living and i am re focussed on that i'm not without talent in that area, and i really enjoy my discourse with peter on areas where i think he's the best in the world. and we don't agree politically, and by the way, i felt very free i got in trouble, there's a public tape you can find where i used four-letter words to describe trump
i warned my friends and colleagues that trump was going to win part of the reason i knew he was going to win was i'm in dialog with people who liked him. and a lot of my friends thought that was an asinine and stupid proposition, and maybe if they listened, maybe it would be a different world. but they didn't listen and only listened to people who agree with them. >> we covered all that ground, and all of it is available online he touched on so many issues, provocative across the board, and it was quite something to hear his views again, though, perhaps the scariest part of that conversation was less about where he is on the political spectrum and much more about his concerns about a nuclear war and what that could mean he's also deeply concerned about the relationship that we have with china, guys from so china, not russia, being his biggest concern right now? >> no, no, no, no. clearly ukraine-russia is the
number one issue and his rue is that mistakes happen, and the longer this goes on the greater the chances there is for a mistake and that is what he worries deeply about whether you think about longer term, the idea that in our lifetime, or a gain theory would suggest that if everybody has a nuclear warhead that they'll never be used is something that he doesn't think, it's not a view he subscribes to. and really does believe in, i think is concerned that there is a chance, always a risk and that that risk unfortunately has increased over the past several months meantime, by the way, i should mention that nbc news group is the media partner of the aspen ideas festival where we are at and broadcasting throughout the week >> thank you we are a few seconds away for a final look at the gdp. it's something we're
anticipating futures this morning are higher as joe pointed out saw this bounce in the futures that came after germany had some less hot than anticipated numbers. >> below analyst and down from the previous month >> we're off our highs of the morning, butty are off our lows of the morning the dow up by 88 points, s&p up by 7, the nasdaq up by 12. the ten-year note at this point yielding right around 3.something percent. yeah, 3.53 rick, are those numbers available yet? >> no, they're not available yet, but we do like to discuss something before they hit the wire services. you know, the notion that we're down 1.5% and looking for our third attempt to see if that changes much, really underscores how many gdp measuring instruments for the third quarter aren't looking very good
either i don't care what the experts say, investors think that's recession. down 1.6%. it expanded from minus 1.5 to minus 1.6. if we look at the consumption numbers, this is very aggressive, considering how far along we are they almost cut in half, from 3.1 to.8 and on the gdp price index, moved from 8.1 up to 8.2, the highest quarter inflation rate, two quarter since 1981, which actually goes as high as 11% so we'll probably be comped with 1981 for a while, hopefully. the core personal expenditure moved from 5.1 to 5.2. if there is good news there, it's that it was 6.1 in the second quarter of last year, the i hooest since 1983. but that pricing index matters,
and you see interest rates, we are down across the board, two, three, five, seven and we do have a banking meeting today. maybe we'll see some information regarding what's going up with fragmentation, kristine lagarde and the notion that the ecb might be in the main seat, if you're an investor looking to see how dwroebl interest rates are affected by the foot dragging up until now, ecb will have to wait and see and watch that dollar yen. it is very close to extending again its 24-year highs. the dollar against that belated and definitely hurt currency joe, back to you >> all right, rick, thank you. coming up, slack ceo stewart butterfield on the push for employees to get back to the office and where his company's products fit in. stay tuned, you're watching "squawk box" on cnbc that's the one with the amazing camera? yep! every business deserves it...
on the cutting edge of productivity slack's founder and ceo, stewart butterfield. help us understand, we keep talking about what's happening in the economy and whether a recession is in the offing, but that all relates, i think, potentially to whether people are going to return to office, and how people are working these days are you seeing a shift in. >> yeah, we are seeing a shift there are definitely more people returning, but it is minority around the world we did a survey, 66% are still working part of the time from home and i don't see that really shifting >> you don't believe, there is a view that if we move into recession, as the economy gets tougher, actually more people move back into the office. proximity to power, to be seen, face time, all of that, you don't think that that's back in a moment where people start to worry about their job as bit more >> i think if you have an
employer that's a little bit of a threat, that could definitely happen but for most large organizations if never yueilly mattered whether you why there because there's50 offices around the world, and inside one of the large campuses there's four buildings, in each building there's ten floors >> what are you seeing and hearing from customers it's been about a year since the transaction with salesforce. >> yeah. >> in terms of the uptake for slack services and more broadly, companies making new contracts for slack or probably with salesforce, are you seeing any kind of hesitation, given what's happening in the market place in so many other big tech companies or small tech companies are pushing back in terms of labor >> there are procedural hurdles to clear the demand is still there. going back to the last question, imagine it's march 2020 and we're in this parallel universe
and could you continue to go to the office and commute and go to business dinners, but you took away all the software, every organization would disintegrate in 24 hours. so there is this shift that happened in the last couple decades. >> what do you think happens to the whole startup community culture. there are a lot of companies that have been running for growth without profits, and there's a real worry over the next year that some may run out of capital and capital will not be available to them and i imagine some of them are customers of yours >> that's true, but we have 200,000 customers around the world. there's a pretty diversefied group. the company was founded in march 2009 with the co-horizontal >> you think this is one of those moments. >> look at it from the perspective of one of those
founders there's definitely many that might be able to get the funding, but for the one that does there's a lot less unnecessary or stupid or wasteful competition, because it's not like 50 companies got $50 million, and you don't have this war of attrition. >> we're here at this conference >> yep >> and it used toen up until a couple years ago you meet people, they give ah business card, their e-mail and say send me a note. now sometimes they'll say give me your phone, and they type in their krefl phone number, not to call you but to text you everybody wants to text you. i don'tknow if that's about th intimacy of tex over e-mail, invariably they text you and then they want to, you're trying to schedule something, that's not really built for this either and nobody has a unified in box. you're living with e-mail, slack, text messages, whatsapp is there a solution to this in it almost feels like we've gone
backwards, oddly enough. >> longer term there's a solution because people tend to work things out. remember that movie "you've got mail"? the whole premise is, sometimes you don't have mail. it occasionally happens, whereas you open your inbox and there's millions and millions of messages there's your wedding invitation, an important document. and that benjamins a little overwhelming, but if you zoom out, it's all the communication is very cheap. it's a little bit like no one complains that it's too easy to travel now, whereas have you ever driven across utah? i cannot imagine what it would be to travel pioneer speed across that thing. >> you want friction >> what we need to do is find better ways to cope in a world of -- >> now people send you a text message. they send ah e-mail and send ah tex message, hey, fyi i sent you
an e-mail. makes no sense >> it does hake no sense there are lots of stories about 1910, 1920s, applications. as a species, i'm confident we'll work this out. >> we were just talking to alex karp about this roe v wade decision some companies have been outspoken. some have been less outspoken. salesforce has been a leader m this, you as well. how are you thinking right now about speaking out about these social ish snus because it does feel actually that there's been a swing bang oddly enough to being a little quieter than before >> there's an interesting phenomenon where there are a bunch of issues that are important. but then a lot of stuff happens.
they make these pronouncements four times a week. so we're seeing a little bit of that fatigue >> is that fatigue in or is that a lack, dare i say a lack of moral carolina look, you haven't spare add word about some of the things we heard about yesterday, which i think empirically, whatever your politics are you have to be disturbed by and yet most business leaders, i don't know if you have a view about it, don't say anything from i think it's a fair criticism, but then you go down the list of who's saying anything about the war in yemen. this is every single day do we want, i don't flow, couple thousand statements? i'm not saying it's not important. in the roe v wade case, i think the important signal was less of public opinion about the procedural aspect of the court and more to the employees that we care, we want to take care of you and relocation funds are
available. that's, i think, in this case it's more important for employees to hear that than to have one more opinion. >> before we end, what's very important to me that we talk about an announcement that you are making today here at the festival that's why you're here >> yeah, so we start add program called next chapter. and that is training an apprenticeship program for people to become software engineers. this is the real deal, this is like the multi $00,000 stock option career. and the numbers are smaller. but assuming we get real traction, we've announced partners, paypal, stash. and it's really exciting there have been, you know, not just individual lines, but families and communities and neighborhoods. >> how many people have you hire thad have been previously incarcerated so far?
>> i don't know the total. but people coming to the program, i think there's thine inside of slack. the numbers aren't huge, but after four years, there's dozens across the industry. this is in addition to the other programs for more entry-level job, data entry type jobs, but going through the whole program, it's fascinating to see, the skills, but the how to communicate, how it collaborate, how to become an effective employee that's very different >> very cool stewart butterfield. we're going to do a panel a little later together, we'll a talk about it perhaps tomorrow on the broadcast becky, back to you >> andrew, thank you very much when we come bang, we have jim cramer's first take. and don't miss the old ceo and the brand-new ceo of pinterest at 6:00 p.m. eastern time tonight. let's get a few of this morning's top headlines.
jim cramer joins us. we were kind of in the middle of what looked like a -- i don't know, a near-term bounce that people doubt, ones have youly, and the vix came down to much lower levels than we had yesterday to remind us that the camp that says the lows are not in, still alive and well we had a german number that really was, i guess important. we're watching every data point for inflation and it was cooler than expected in germany it's a global phenomenon obviously. what else is on your mind? are we in the middle of just a brief bounce >> yeah. >> or to we make a bottom? >> not new lows. we're ong. we have strength in the financials but the semi-conductors are just hideous. and i think it's just unfortunately going toen really terrible and i think that that's going to cause a lot of people to lower the semis lower than they have
a lot of negative commentary about the internet what i find is that people really seem to want this market down and, you know, that tells me that, be careful you can't will a market down semis can be down, but there's some other things like general mills that are up. i say it's case by case. but there are people who really seem to think this is over, joe i bet you and i think it's not over there's still some upside. >> yeah, but then i'm just wondering whether, and people have described the scenario that we're going to have a relief rally through the summer and then main in earnest into that horrible month of october that we've seep before. are we going to get a back-to-back down gdp number in and would that help as far as whether the fed thinks main they're, you know, >> they're done? >> partially through this? >> look, we have tremendous decline in commodities other than oil, and i think that the fed can keep talking things
down, but if we get oil down more than, well, right now it's up i think you're going to discover that the inflation spat is over. i'm a little more bullish than everyone now, because i just don't flow anybody who's positive nobody it's everybody because i don't know anybody who's positive. nobody it's like when they wrote off burrow, right? people thought joe burrow wasn't a good quarterback that's what it's like. >> yeah. that's coming soon again too mean meanwhile, you know, baseball is almost impossible to bet on, jim, but i don't care. i'm going to figure out a way. i think pete rose learned that he's even a manager and couldn't make -- >> i would say thumbs up until bryce. but the negativity is unbelievable, so horrible. and it's not all that bad, okay? not everything is that bad a lot of things are beyond that
bad. >> you can't get more negative on where a lot of these names are already. that makes me think they're ahead of -- you know, they may have already anticipated all this and already are seen their worst levels. >> it was like the nike conference call and the ceo said it will be a couple years to solve things that was it. then it was like, all right, forget about it. and bed bath had a lot of inventory. anybody who had inventory on a boat is hurting. >> yep all right, jim >> i'm not giving up i know we're going lower, but i'm not giving up, joe i am a bengal fan, okay? i'm not a dolphin fan. >> i haven't been able to think about that since i was at that game i haven't come to grips with that yet i love your team so much >> gamers. >> all right we want to remind you about jim's a gamer, but remind you
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bed, bath & beyond announcing the depar which you have of its ceo. the company said it was time for a leadership change. they'll look for a more permanent replacement, also reporting that larger than expected quarterly loss, the shares down another 14%. $5, andrew it was about $70 a couple years ago. >> did you see the bank of america report that bed bat was disputing it but the company is struggling so much that in fact they were turning down the air conditioning at some of the store. >> i saw that earlier. that's what analysts were saying, yeah >> right >> yeah. if you hear that, probably a good time to -- >> sell. >> yeah. pull the lever on the sale joining us to talk bed bath and new calls on corn value and goldman sachs, receiveny link, investment strategist at hightower and a cnbc contributor. i don't know if you saw jim a
couple minutes ago he's concerned about semico semiconductors what do yes v we need for one aspect of technology, but technology is out of favor, but what do we need, a pandemic for technology to work again >> well, if you see slower growth you'll probably want to find more growth names we have a ways to go, joe, on technology in general. i don't own any semis and haven't for a couple months because i was nervous about double around triple ordering. that hasn't even begun yet you want to be careful in technology i like the accenture quarter last week to where they beat. that was because of fx, not demand i like ibm they've been a champ in this environment, up 7% year to date. i still like the cybersecurity names, and i own meta, which is very cheap, and i think pricing in just kind of doomsday at this
point. >> stephanie, are you feeling -- you feel like buying or selling in general i don't know would you raise cash at this point or just sort of i guess just stick with your program, try not to be emotionally involved in the daily moves? >> yeah, no, look, we have to wait for earnings. i don't think earnings season for the second quarter is going to tb a demand problem as i mentioned, accenture. nike they said demand was not a problem. car max. general mills this morning, 13% organic growth the problem is obviously the cost side of the equation and currency we have to watch and wait and see. but i want to own companies that have pricing power and benefit from higher commodities. that's obviously energy. i think their earnings will be spectacular. materials as well. as i mentioned, general mills, i think some of the consumer staples, they have pricing power, i like hershey, pepsi, coke i've owned in the past, might get back into that, p&g if
it comes down. these are names for the longer term you look at the discretionary names, they're pricing in recession, target, starbucks, nike i like those i've been nibbling at those on the way down i own -- or just recently bought berkshire, trading at 1.2 times book, quality company, great balance sheet, huge free cash flow and a diversified business model. >> you think in 2024 we'll be saying the 2022 recession or the 2023 recession, do you think that that is a given, or not necessarily? >> yeah, i mean, look, i don't know if we'll see a recession this year. i don't think so because i think there's enough momentum from all the stimulus we put in place over the last 2 1/2 years. it takes a long time to get it back into the system i think maybe we can eke out 1% to 2% in terms of gdp this year. next year, definitely, there's a problem when you have a hawkish
fed and a slowing economy at the same time, and there's not much they can do in terms of inflation unless they put the kibosh on the economy. 2023 is a little more murky, but i think down 20%, the market is starting to tell you that, right? again, some stocks are down 30%, 40%. i think you can nibble for the long term, and i think by 2024 we'll be glad we did >> we still don't know really whether inflation is kind of quasi-transitory because of the war, because of the reopening and the supply chain it still could be more transitory than systemic indianapolis you believe that we prints do much and spent so much that, you know, we've got years to work that off and if the fed is fighting the energy issue that it can't really control anyway, then, you know, it'snot even -- doesn't have its eye on the right cause of things. it's very difficult right now. >> it's a really tough time right now. you have to look at quality
companies, good balance sheets, good free cash flow. that doesn't mean they won't go down they may not go down as much as some of the high flyers. you have to be careful and selective. i have a bit of extra cash on hand, buy on the dips. >> okay. and people lose their pets on july 4th, so i don't know what to do with that either xanax or something i just read that thanks, stephanie. right? >> earplugs. >> join us tomorrow. see ya "squawk on the street" is next >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with paula creamer live at post 9 of the new york stock exchange. david faber has the morning off. a bit of a back-and-forth on futures this morning, a cooler than expected s ed german infla. but final gdp consumption gets cut in half here
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