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tv   Squawk Box  CNBC  July 15, 2022 6:00am-9:00am EDT

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good morning futures pointing to a higher open as stocks are going to try to snap a five-day losing streak among the tests, more bank earnings. breaking news. china economic growth slowing to .40% in the second quarter. missing estimates. a developing story president biden continues his middle east trip next stop is saudi arabia. it's friday, july 15th, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on
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cnbc live from the nasdaq market site in times square. i'm rebecca quick with joe kernen andrew is off today. you see the dow futures indicated up by 84 points. joe mentioned this is after five down days in a row s&p futures indicated up 6.5%. nasdaq up 20 it is friday we'll see what happens let's look at what is happening in the treasury market the 10-year treasury is yielding 2.941% 30-year treasury at 3.01%. the inversion is there the oil prices are coming down last i looked, it was below $96. $9 $95.83 that is a steep drop from where we have been the last time i had paid attention to this stuff. gas prices have not necessarily come down at the pump. you see high prices everywhere wti at $95.84. dollar joe, you were talking about
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party p parity with the euro 1.037. >> wow >> a lot cheaper in davos right now. >> davos davos has its own issues i don't want to stay in those hotels they used to cost and you get your bill and it's bad you get home and it's 30% higher than it was. the interesting thing and there is a piece in the journal. a couple of interesting things in the journal it might be -- we don't want to hope for that. it is not worth it to get a cheap hotel room if europe imp implodes we are seeing lagarde is hesitant to raise rates. there is conjecture she is abandoning policy. it is unclear if that stays the idea italy will have the
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same structure as germany is insane. >> we tested this before there have been times in the not too distant past when people said the euro block would not hold together. >> it is -- it can't have these as multispeed economies if you don't have a central fiscal authority. it's not going to work with the same monetary policy >> it is an experiment we got closer to testing these in the past. >> we did. we may test it again with italy right now and a lot of stress on the system for the euro. the other thing which is interesting is you were -- i know you were watching we're still 3800 on the s&p. we went through another week of inflation numbers that no one has seen in 50 years >> almost ever >> yeah. somehow we're at 3800 and called higher today this is an interesting piece
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at full employment, but probably have back-to-back gdp negative we will have a tight session it is unlike any recession and not like a recession if you are 3.6% unemployment. >> jay was saying this is very different. it is not like 2008. if you have the pull back in the recession, people say we're in a recession right now. >> people are flush. another article today that people saved money they didn't go on date night during the -- these are young people i read about young people. 27 years old saved money. didn't go on date nights or vacation they bought a peloton and have money and they are flush and now wondering if you need a rainy day fund given what we talk about and what they hear on the news >> good thing we have bank earnings today >> we did that i talked about how excited i get
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about bank earnings. nothing like talking about interest income and yield curves. >> what jamie dimon said yesterday was interesting. jamie made it sound like things are pretty bad >> not as bad as you would think. credit card losses weren't bad it did add to some reserves. i think loan growth would slow, too. >> potentially >> we'll get more next week sdpweek >> and today >> i like forward if we didn't have to report on all immediately. dow just hitting bertha coombs here with us someone who knows what they're talking about. give it to us. i'll look at it while are you tal talking about it
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>> cfrom the division here in minneapolis. united health beating the top and bottom line. 13% year over year compared to the estimate of $79.6 billion. they were up 19% year over year. adjusted per share is 557. big beat there the company raising guidance by 20 cents per share now adjusted 21.40 to 21.90. the consensus is for 21.68 full year interesting highlights here as far as the insurance hside sales up 12% they added 280,000 members so they are well on the way to adding a million members this year interesting there is medical
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cost ratio, how much they had to spend on medical 81.5%. down 7 points from last quarter. we have seen the omicron surge during the summer. that is an interesting issue that people will talk about on the call uptum is the services side revenue up 18% year over year. it was well above the estimate we will watch during the call what is going on with covid and the covid impact and medical use and how they got that much lower medical cost ratio also an update on their pending litigation on the big deal with change health care which goes to trial with anti-trust proceedings in august. back to you. wait, one more thing i forgot one more thing
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i'm doing the steve jobs we are talking with the ceo andrew witty today on "squawk on the street" at 10:45 a.m now back to you. >> i thought you would say there's a lot of lakes around here we knew that we already knew that it is a dow component. that's a nice gain of united health maybe that is the place to hide, bertha >> everyone has been talking about health care. one of the things that particularly for the services side in terms of the insurers, we saw this during the pandemic. in 2008, they lost a lot of members. with the affordable care act and expansion of medicare in states, people have a safety net if you see employers pull back which we haven't seen yet, if
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you see employers pull back, they have the option of going on to the affordable care act exchange or medicaid depending on income. we may not necessarily see that big loss of membership >> all right bertha, very good. we got other things to do here we'll do blackrock stock's not doing well at all on this do we have a clean number? >> we don't have the release headlines are showing. >> we'll do these first. i can tell you 569 who knows. it closed at 588 for blk other key reports, citigroup and wells fargo and jpmorgan chase and morgan stanley kicked us off yesterday shares of jpm ending the day down more than 3%. that did not help the dow. do we -- >> i'll tell you the blackrock
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headlines. adjusted number of $7.36 they were expecting $7.90. assets under management. $8.5 trillion at the end of the second quarter a year ago. there was a story yesterday that suggested blackrock was slowing hiring of concerns of what is coming i know they commented on the story. they said there had been no firm wide hiring restrictions, but always managing the expense space to be prudent and evaluate the level of spend we are awaitingon the release. joe said the bid ask is below where the stock closed yesterday. >> adjusted operating income 1 $1.73 billion. it is not a great time for asset. >> and markets >> we'll get more details on
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blackrock which has been in the news for other reasons lately. guys railing yesterday tom cotton senator cotton the whole esg effect on oil prices a cartel it's a cartel. i don't know he was talking about civil or even other penalties for i engaging in the behavior to defund the fossil fuel industry. we have seen it. larry is keeping a low profile we haven't seen larry lately >> we will get more details on this. also among the big market stories. china's gdp growing .4% in the second quarter that is short of the 1% economists expected. this is the weakest gdp since the first quarter of 2020. china retail sales topped
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expectations. and hong kong listed tech stocks under pressure. alibaba down .50%. wall street journal reporting alibaba shares dropping 6% in hong kong trading. down by .50% right now other tech stocks tencent and meituan closing lower. and president biden met with president abbas showing support for the two-state solution for the is ralraeli conconflict. he will then continue in the middle east and meet with saudi crown prince muhammad bin salman he did not say if he will bring up khashoggi i know khashoggi's wife was imploring him to do that he punted on whether that would
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be something he actually brought up >> he will mend fences kicking off to a strong start. >> we need mended fences. >> a rogue state >> we've got interest in the middle east that the other side -- we have enemies of the enemies of my friends are what we have. you need oil we need a push back on iran and its intentions >> it will be a complicated meeting. >> the journal, they should pay me for this. just so far there is positive things happening versus when president biden was vice president and i guess it was the treatment of israel in the way it was perceived by the wall street journal wasn't positive they insist on the solution they
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had for that situation it was never going to happen john kerry and president obama came up with >> and president biden coming directly from israel >> not insisting on the same things and maybe we'll make progress. coming up, what investors want to hear from companies this earnings season. before we head to break, check out the morning's winners and losers some of them there you go you are watching "squawk box" on cnbc at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect.
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the futures right now up 80 points it's up. it is not something you think at 4:00 will end higher joining us now is gabriela santos and serat sephy gabriela, we talked about the s&p under 3,800 after the troubling weak inflation data. that is probably ailing the markets most at this point with the fed's reaction to the hot inflation data any silver lining the market is kind of hanging in there at
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3,800? >> it all begins and ends with inflation for every asset class. that is what has driven performance for the first half of the year and what we expect to continuing being the driver in the second half not in terms of pricing in higher inflation that process happened in the first quarter. really feed through higher ngs a inflation. we are still waiting for the second quarter earnings season we are in the early days investors waiting for analysts research the pessimism and feel earnings better reflect the environment. inflation will be the buzz word for the season is demand starting to slow down for sectors and companies?
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and also inflation hitting the bottom line with fuel and labor and strengthening dollar it can be a painful few weeks ago we adjust earnings expectations lower to reflect reality. it can be a bit of a can cathartic moment with the slowdown once we're there, we can feel comfortable and get off the sidelines. >> we talked about how much of the overall inflation number is tied to energy prices and even food prices that energy trickles through to all areas of the economy. oil prices are down significantly. we were at 120 now at 95. i'm wondering would you say that's a great thing if you were the administration
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and say look we have oil prices down to 95 down $25 it has nothing to do with increase of supply, does it? it has to do with what the fed is doing and perhaps ushering in a sharp slowdown and on the demand side? it is demand destruction and possibility of recession that is not something you want to brag about. sarat, go ahead. >> i think you are right there, joe. this is more demand side you see that in copper and iron. this is much more of a demand issue and you see where you get inflation is the wages and rents. those are big parts of the cpi number as these go down and gabriela said this is watch for
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you were asking about silver linings. you see what happened with morgan stanley the expectation of the companies have been built in the whisper numbers are lower than the earnings. as we bring down expectations, there will be a silver lining and companies can price through this and actually have strong balance sheets will do well. >> gabriela now. what were you going to tell me about oil? regardless of it being down there, it is down. 9 95 is not cheap. it is higher than year over year it is some relief. is it trickling through and help he ease some of the stress >> it is interesting looking at gas prices down every day for the last 30 days now down 40 cents. this is a really important indicator for inflation
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suggesting that inflation should be significantly lower in july and in the months ahead if we continue to see more stable or lower oil prices the issue, i think, the bond market is having and the reason the move index or bond volatility is still hovering near the highest level of march of 2020 is there is no conviction about how the fed is going to react to this if they he were focused on leader indicators, they would take over this and slow down the pace of rate hikes as we are getting close torr to neutral this is a fed interested in lagging like the hot cpi we got last week because they are worried how it feeds into the inflation expectation which we get later this morning every day there is a whip saw with the market trying to figure out the fed reaction function.
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is it focused on leading indicators or lagging indicates indicators good or bad the one thing we look about the bond market is it has started to trade more about recession probability rather than pricing in higher inflation. that is a good thing it means that bonds work against that diversifier this is the moment we have been thinking about adding to duration and specifically to core bonds as a diversifier for recession risk the wrong time to abandon 60/40 and get excited about bonds. >> sarat, there are times in the past where you say the united states, thank god. with we have a consumer led economy we don't have to worry about the rest of the world, but you look at europe at this point. number one, closer to the
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horrific situation in ukraine. the way it is filtering through to energy prices in germany. germany had a trade deficit they haven't had in 30 years. now the euro at parity there is concerns that maybe that could destabilize the continent itself then we have china which we do care about we never know what covid headline will emerge we have problems around the world in addition to our problems here. >> yeah, joe, you are seeing that with the multinationals s&p earnings of 30% overseas although we are on an island, we will have factors that will affect earnings as companies grow with businesses in europe and asia that will be something we have to watch maybe this is closer to a bottoming process.
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how much worse can it get there? we have to watch for that. you look at sectors and you had health at the top of the hour. health care is a safety port in the storm here a lot of the earnings not reflective of what is happening in the macro level there is opportunity there we have to watch what is happening overseas as the dollar gets stronger as well. >> all right happy friday gabriela, thank you. sarat, you won't be there long today. i have a feeling >> heading out >> he has his own thing going on are you going to hit it today or watch it i'm talking about golf. >> i'm in the office, but i'll watch it i think rory might be doing something terrific >> i love that course. how cool is that it is so different because after the ball lands on the drive it goes another 100 yards if there is anything in the way -- any of the pot bunkers, you will be in there and you
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might be playing backwards coming out it's so cool that's the way it used to be played so much history. i love watching it >> which course? >> st andrews. the old course at st andrews i played it more than a few times. that tournament over there it was a privilege really a privilege r&a is right there really cool. i don't deserve it thank you, both. see you later. i don't. pebble beach st andrews >> i agree >> you agree i definitely do not. not worthy. all right. when we come back, amazon slashing the number of items it sells under its own brand names. we've got the reason when "squawk box" comes back. with col cer rising in adults under 50, the american cancer society recommends starting to screen earlier, at age 45. i'm cologuard, a noninvasive way to screen at home,
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welcome back to "squawk box. it's time for the executive edge pinterest shares jump piing aft elliott management is taking a 9% stake in the death company. the investor is said to be talking about unspecified matters in the last week the social media company has struggled to keep users after everybody went back after the lockdown it is up 15% this morning. this would not be the first time that elliott got into the social media companies. investing in twitter in the past >> right >> elliott phone home amazon starting to cut the number of items -- i can't help it this comes as sales fall and
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wall street journal reports amazon discussed exiting most of the private label business because the division has drawn scrutiny european regulators saying amazon using the size and data to push its own products gaining an unfair advantage over rival merchants that use its platform. that movie is timeless. >> "et." >> phone home. people look at it in wonderment. it happened 30 years ago >> more than >> the actor has been -- he is an adult actor playing grandfathers >> to tie it back to the business angle on that remember, this was the marketing opportunity of mm&ms blue.
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they didn't do it. they went with reese's pieces. that's when reese's pieces took off. >> you said reese's pieces and reese's peanut butter cup and the rest is history. use your imagination with peanut butter >> keep plucking those chickens. when we come back, china's economy slowing in the last quarter. ave a live report from beijing. we'll be back after a quick break. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened!
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good morning welcome back to "squawk box. we are live from the nasdaq market site in times square. check this out friday morning things are looking up. green arrows after five down days in a row. we will see if this holds. dow futures indicated up 94
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points s&p up 7 nasdaq up by 20. china's economy slowing more than expected in the second quarter. eunice yoon is joining us live interest beijing eunice, we do it differently in terms of analyzing things what can we do to compare apples to apples? if you didn't do 6% or 7%. >> reporter: joe, this is interesting you are talking about people raising eyebrows. it is striking how many economists have been raising eyebrows about this particular set of numbers more so than any other time. the second quarter figure contracted on quarter. it managed to eek out an expansion of 0.4% from last year, but a lot of people have been wondering exactly how
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they're able to do that. the main problem has been, of course, the lockdowns. covid lockdowns in shanghai especially the problems are so much more than that. one of the biggest worries is the property sector. if you remember about a year ago the big headline was about the property giant evergrand and the debt problems. debt problems have not gone away and reflected in this set of numbers for june property investment clocked a decline and straining growth and the financial sector local media have been reporting what is described as a mortgage strike movement. that is that people across the country have started to refuse to pay their mortgages and so far about 100 developments obviously this is a big concern for authorities. regulators are working with local officials to make sure homes are delivered on time.
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also, banks pushed to make statements in the past couple days saying that all of the financial risk is what they describe as controllable this is also showing up in the unemployment figures figures for china, the government says, overall improved in june youth unemployment is heading toward 20% these are the official numbers so banks are cutting growth forecast for the year. goldman says it is downgrading its outlook for 2022 from 4% to 3%. soc gen not as optimistic as before guys >> staggering numbers. gdp numbers and growth and unemployment numbers that's rough that's social stability has to be serious questions as we have seen in other countries with youth unemployment gets near
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there. >> eunice, out of curiosity, how is china reacting? do they give people checks like the united states was doing with the lockdowns? how does it work >> reporter: right now, for the authorities in terms of the bigger picture and what they're trying to do in terms of trying to stabilize the economy, one answer is behind me. they are building infrastructure which is also rehe flekted in the numbers with the fai which had the most meaningful growth in terms of individual people, i m mean, the government announces new measures they have a 33-point plan to estab stabilize any plan that could h happen giving voucher to people who lost jobs and talked about tax breaks i spoke to businesses. they said tax breaks would be great if i had income.
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the problem is if they are not making profits with the lockdowns, the tax breaks are not meaningful >> okay. thanks, eunice how long have we been talking about infrastructure built there just for the sake of being built. >> decades >> decades coming up, why energy traders are closely watching president biden's trip to saudi arabia today because of the oil i don't know it's a guess later, intel ceo pat gelsinger on the importance of ay tedips act. stun you are watching "squawk box" on cnbc
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welcome back to "squawk box. oil prices are back down to the level they were before the war in ukraine began this comes as president biden travels to saudi arabia today to speak with the crown prince about high energy costs. joining us now is amrita sen amrita, the good news is oil prices are coming down the bad news is why they are coming down. it is not because we have done anything to solve our problems with having enough supply. this is about demand and the global picture at this point looking more like recession
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around the globe how should we look with the meeting with president biden today? what are you watching? had. >> i keep my expectations low. that's for one we are not expecting any wholesale change in the opec policy as a result of the visit. mainly because as a group of capacity is limited and they have not been able to keep up with the current increases i think saudi arabia in particular is very keen to make sure spare capacity is left when things could get worse we still don't have the embargo that's kicked in yet that is later on in the year and february for the products next year sbr is in october. china is yet to open up. we are at around $1,200 without any of the three factors things will only tighten up from here saudi arabia particularly wants to keep the powder dry rather
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than release the spare capacity now. >> why do they want to do that >> because let's see you bring all of the spare capacity right now and call oil prices for argument sake $10. when china opens up and you don't have sbr left and russian embargo kicks in, what else do you have >> just the interest of keeping prices slightly lower now or not catching up with it later, they want some stability in oil prices is it bad for them when things move all over the place? >> of course that's what i am saying. you lose control afterwards and it could be 150 or 200 and they bo won't control that with nothing spare to left. you have nigeria and latin american disruption. none of the countries are stable
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with production anyway >> even though you have low expectation for the meeting, what is important? what needs to happen relations with these two countries has been pretty rough. >> absolutely. look, oil is not going to be the only thing on the agenda regional stability will feature there as well. i'm sure they will talk about not just crude, but refined products ultimately, refining is a big bottleneck increasing crowd production might not do the trick some exports from the region again, the challenge is going to be when there is not much spare capacity to begin with, what can the group bring back i think that is what ministers around the world, not just biden, have to understand that if you look at the physical market, brent is over $4 you have north sea trading close to $125 and $130 the market is incredibly tight what we are seeing on the price
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on the screen is just pure sentiment and liquidity. that doesn't tell us what the true price of crude oil is >> you think that we are more likely this is a repite. we are likely to go high sner. >> it is summer holiday. you never catch a falling knife. there are more trading we need to let this play out ultimately into the winter, we remain constructive on crude pr prices we still have demand growing by under 1 bilmillion barrels a da. even with that global demand should increase by 2.5 million barrel a day because of the effect we have seen plus asia de demand growth. >> what growth target for wti by the end of the year? >> we think 120 and close to 130
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by year end. >> amrita, thank you we will check in with you. we appreciate your time. >> thank you coming up, president biden making a controversial trip to saudi arabia today looking for help in bringing down oil prices. he is not the only one looking for help from the saudis we'll talk about the big money saudi backed liv tour and how it is disrupting the pga tour and sports world in general. that's up next
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. president biden visits saudi arabia today, but the real palace intrigue is unfolding on the golf course as that saudi-based liv tournament is disrupting the sports world.
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director of wash. u, president of sportsamatics and npr weekend edition saturday sports correspondent, i haven't talked to you about this, patrick. we check in with you on all these things i thought that the department of justice, i thought that was interesting. because they didn't automatically side with the pga tour i wonder what jay monahan thinks >> well, joe, again, very interesting issue. i explain it to people this way. if i were the agent of one these young golfers who are in their prime, i would advise them not to join this tour, because of the pr ramifications but as an economist and someone who believes in fair competitive play, the pga tour suspending these players in my mind seems very anti-competitive, and i know, again, we're dealing with
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very authoritarian regime that has a very ugly history. but the economics issue of it is, i do believe that there's an ain't anti-trust issue, and i think we're going to have a very colorful year on the course. >> i'm so unlike a professional golfer that it's hard for me that's duly noted by phil mickelson. he feels sorry for me. he does. he says i know joe wants to be good, it's just never going to happen for him. >> it's never going happen for you. >> it's never go to happen for me so phil is 52, i understand got $200 million for your family, howard, is it anything other than like "godfather one"? is it business, sonny?
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he's got years of goodwill he did a lot for the pga tour. do you think he's being treated farrell fairly at this point >> you should be able to play wherever you want to play, but let's not forget about the history here this has been happening for a century. you can go back to a hundred years to when there was a rival league in major league baseball, when there was the federal league, what did major league baseball do? whoever played in the federal league got banned from major league baseball to make you think. we saw this in the 1950s and 1960s with poncho gonzalez and all those who wanted to be professional players so those guys were banned from playing. so until you had open tennis in 1968 do you have a right to play?
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sure what these tournaments are going to do, the pga, is they're going to rely on their name. they're going to rely on the prestige of those tournaments and say, okay, this is a lot of money, this is a lot of competition, but don't you want your name associated with the p british open and the u.s. open apar and the pga tour >> the whole notion of what do we want to call it dirty money, blood money, money that you don't like how the sovereign fund, they're tainted with what goes on in saudi arabia have you thought about, we can't connect the dots with china directly to the nba, but we certainly know that china is not completely without blame in terms of some of the human rights abuses. we can't connect it directly to players, you know, in the nba, but whether you got 600 million
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fans in one country, it's a very important country for the nba. aren't they kind of -- isn't the nba looking the other way on dealing with being so close to china? >> well, it's also a labor issue. this is the league issue, and then we're going to put it on the players, because the players are the most visible and as we've seen across the board, this has usually been an olympics question, whether you are going back to the olympics during the nazis and then the feng shui sexual assault case, that got the tour off china and they back ed of o. you do have to think about this from a league standpoint and napolitano just a player standpoint the world is getting a lot more complicated. it's not just we play the game,
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now people are looking at you and how you live your life >> i don't know thohow it happe. we got to go, it's not a perfect world. gray areas it's it not just yes or no on these answers. >> at the end of the day we know the pressure from liv golf was going to raise the stakes. the pga is going to be playing out more money next year you got to look at all the companies that do business with china and saudi arabia >> it's obglal we got to go thank you, guys. i know we're late. we'll be right back. >> thanks. of
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. good morning futures pointing to a hire gher open as stocks try to snap a losing streak. the president's pitch to saudi arabia we will preview today's big meeting and talk energy policy here in the united states. plus, with just over three months until the congressional elections, the latest cnbc all america economic survey looks at what issues are motivating americans, and which party has the edge results just moments away. the second hour of "squawk box"
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begins right now good morning, and welcome back 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 is off this morning. but u.s. equity futures are up they're in the triple digits at one point. we are up 128 points now on the dow. s&p indicated up 12. this is after five straight losing sessions. but we had a pretty good week, midland last week. but we in the soup monday through thursday, but green at reis in the premarket session this morning, even after the c and the producer price index the two-year now, 3.12
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the ten-year, 2.93 oil also has been weak which play plays into that notion that maybe we on the precipice of a slow down and the fed has a stated intention of slowing down demand then we have crypto. crypto up about 1% on bitcoin. let's get right over to dom chu. he has a look at what's moving in the premarket what are you checking out is this. >> we're checking out earnings it is this idea that morgan st stanley and j.p. morgan had commentary wells fargo down 2.5%. this is a big mortgage lender. people look for signs with what's going to happen
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let's get to the numbers 74 cents in earnings missing estimates of roughly 80, 81 cents per share. also $17 billion in total revenues that misses analyst estimates that were looking for $17.5 billion in total revenues. they also point out that they expect to see credit losses increase, although from very low levels that they're currently at right now, and they do not see any meaningful deterioration yet in either the consumer or commercial portfolios, but on balance, the earnings and revenue miss there was a miss on the net income interest, a 2.5% decline for wells fargo. financials have been on a down turn we'll keep an eye on that. another big earnings report out earlier this morning was united health those shares are up, $508 a share right now. that $5.50 per share gain is
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roughly equal to the implied gain those shares up, united health comes out with better than expected profits, they boost their full-year forecast and their optum business does things like health services, doing well for united health. those shares up 1% and we'll end on one that's getting a lot of attention from yesterday's closing bell afterwards, that was on that wall wall "wall street journal" report this is a stock that's lost nearly three quarters of its value. right now that's what's drive the shares, becky. and that's why pinterest is up 15% in the premarket >> thank, dom. we'll check in with you in a
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little bit blackrock out with quarterly earnings adjusted. came in at 736 a share revenue of 4.53 billion slightly below the 4.65 billion that was expected profits are down 30% from a year ago amid the global market turmoil during the third quarter. we don't have a trade to show you at this point. i can tell you, 576 to 584 that's narrowed and improve add littimproved a little bit >> let's get to stephanie link, a cnbc contributor what do you think? let's start with blackrock these numbers a little weaker than anticipated but maybe not a huge surprise given market turmoil. >> yeah, that's the theme from the banks so far
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it's been all about lower fee income, investment banking we saw it yesterday at j.p. morgan, down 54% year-over-year. morgan stanley down 30% year-over-year you're seeing also at black rock as well. wells fargo the same thing it's the theme, it's not one company's specific issue it's the over arching markets are in turmoil, and these companies are unfortunately seeing the implications of that. so i think you have to pick your spots within the banks i actually add ed to morgan stanley yesterday. because i did think under the surface the numbers were pretty good total trading revenues were better you assets were up 53 billion. and this company now yields 4% wells fargo this morning, that stock also, getting hit from not only the markets but then
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mortgages, right and so that is kind of the double whammy, but they actually did a good job in expenses i was just looking at the numbers. down 3%. loans up 8%, and trades at .9 times books. you have to peick your spots, bu longer term, they are so much better than 2008, 2009 or even 2020 >> you own wells fargo >> i do. i do own it, because it is a restructuring story, right and you have kind of, not new management any longer. the ceo's been there for over two years, but they are focussing on cost cuts i want to hear them say this morning that they are committed to $51.5 billion in expenses that would be a good thing and i just think that tahere's a lot that they can do to turn it around and the asset cap is a head on
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the name that is certainly something that i'm looking forward at some point. but at .9 times book, that stock is pretty attractive >> your largest position is united health, and they were out with earnings this morning as well they came in with earnings that were $5.34 a share what are you thinking? >> sigh of relief, because it is my largest position. but this one is just, you know, it's just a behemoth they're doing such a good job across the board they are the dominant payer of scale in commercial, medicare, medicaid, optum, pbms, health care information technology and services so today they actually beat, and they raised. so they're seeing the benefits of the covid costs also coming down for them. and then they also indicate d that membership was higher than
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expected and optum is the big behemoth for them and continues to grow double digits and will continue to do so for some time for a company that consistently delivers, i'll nay pay that kind of multiple. >> you do have futures positive this morning what do you think going into a weekend, especially after the really hot inflation numbers we got this week as well. >> we have to get through retail sales and university of michigan sentiment, which is not going to be good. it's a tough wyke, eek, a tough. commodities have rolled over and i believe it, too, but there are other parts of inflation that we have to deal with. as a result, the fed is going to continue to be tight, and as long as they're tight, it's going to be hard tfor the market
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to really push forward we can get pack toback to some high the highs. we can get back to some of the lows we kind of have this murky time in the next couple months. >> retail sales, if that number is really strong, is that something the fed reacts negatively to? what does the hamarket want at this point >> i think good news is good news that's the way i subscribe to life i think good news is good news we want the consumer to be healthy. we want them to be spending. they are spending, we know that. you've heard that from all the banks, by the way. and there's no deterioration at all in the net chargeoffs or delinquencies so far we have to wait and watch.
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but the consumer should be okay. and i think that's good news the fed is really just focussed on inflation, becky, and the numbers are just way too high. not only headline numbers but even the core. the core ppi fell yesterday, but it's still quite high. and it's so much further than the 2% number that they really want to see. >> stephanie, thank you. >> thank, becky. coming up, for the cost of living to jobs, to immigration if it matters to americans economically, it's in the latest results of the cnbc all america survey steve liesman will join us next with a look at the issues. vew they could shape the nomber election. "squawk box" coming right back you're an owner. that means that your goals are ours too. and vanguard retirement tools and advice can help you get there.
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that's the value of ownership.
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zf zfr zfrnlts it's just over three months until the election. >> the question is whether other issue, climate change and
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abortion could give democrats a boost here respondents say immigration, border security, jobs and the cost of living are their most important concerns that's the wrong chart there in any event, they have a decided preference, those folks, who are republican congressional control. those most worried about jobs prefer the gop by a 54% to 31% margin but abortion, it ranks at second biggest concern. and those respondents prefer democratic control that's the chart i wanted you to look at. at the bottom there, there's gop control on the left there and those who prefer that. overall, americans prefer republican control by a 44% to 42% margin that actually narrows from a ten-point gap in the last poll pollsters say this could be attributed to abortion as a major issue. climate change breaks in favor of democrats, but our poll found
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support for relaxing environmental rules to help bring down gas prices. we also found strong support for companies who would pay for employees to travel to other states for abortion if needed. given president biden's poor poll numbers we reported yesterday and the negative prevailing economic views, should be a huge number for the gop. the other question, what other issues, what role do they play >> i'm trying to think the climate change thing, that's a huge disparity there 9% that. was the biggest one. but where does climate change rank on a list of concerns maybe with all the, i mean, we do sewe a lot of coverage, obviously, but it's way down
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thaye there, it's like eighth ninth. >> it's down there if you are, so yeah, that, this is not ranked by the order of importance there if i did rank it, that would be cost of living followed by almost everything else is kind of, abortion is one point higher than immigration and climate change would rank about seventh or eighth on our list right now. it's definitely down there what's really interesting, joe, if you look at a particular demographic of women 18-49 for them cost of living is the most important, ranked closely by abortion. they have interesting choices to make this november >> right
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that is definitely, that sdafl somet is definitely something on the radar. >> our pollsters -- >> the economy, stupid >> james carville. >> was that the great president we had, bill clinton >> our poll was done shortly after the supreme court decision and both of our pollsters have a question as to whether or not the intensity of the abortion issue lasts until november obviously, the democrats will try to make that the case. but we did go to the polls or go out into the field with our survey at a time when intensity on this issue was highest. and it is an important question, whether or not economic issues, by the way, there's probably three more inflation reports whether or not, if that starts to come down, could that also change voters' opinions. that's another thing we'll have to wait and see.
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>> can't wait till we're tdone with this month's inflation data oil prices are cooperating, but like everything else, what's the reason that they're cooperating? the cure might be worse than the disease itself depends on how you think about inflation versus a recession steve liesman, thank you friday attire. good look. a good look. i was hoping for some interviews with some of the athletes that you talk to, but you didn't go out in the field this time with the all americans? >> you should explain that, joe, for people who haven't been was watching for 20 years. all america. >> not an all american >> only the athletes who were designated >> you've seen those interviews, what do you think of j. powell to like the football players, and they have some pretty funny.
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you didn't do that >> i didn't do that, but remember darren ravel used to do that >> he's got like a gazillion followers on twitter >> yeah, he signed me up on twitter. >> maybe i'm going to have a thawing of my relations. >> you started this, joe it's like that guy in that movie where like 30 year later, they don't remember what they're fighting about >> i got to think about it give me a weekend. >> really? coming up, president biden going to saudi arabia, meeting with crown prince mohammed bin salman, about oil, try to reset relations, maybe we'll talk about oil prices. we just were referencing them and how much the saudis could supply through market. and as we head to break, what's the largest live tv streaming service in the u.s.?
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that answer when we return the aflac pre-pain show. aflac! paul is about to suffer a shelf-inflicted injury. luckily, aflac will help cover his unexpected medical bills. aflac! maybe you could use the money to buy a step stool. i have a step stool. so why are you climbing a shelf? the stool's on top of the shelf, isn't it paul... (shelf crashing) yeah... ♪ ♪ aflac!
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welcome back to "squawk box. here's the answer to today's aflac trivia question du jour. what is the largest live tv streaming service in the u.s.? the answer youtube. youtube tv youtube's top tech officer revealed the company has more than 5 million paid subscribers, putting it well ahead of hulu which has about 4.1 million subscribers. still to come this morning, the president's pitch to saudi arabia what investors should expect from his meeting with mohammed bin salman and where to put your money during earnings season and a big interview with pat gelsinger d at tanwho expect
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with the chip's app. "squawk box" will be right back.
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president biden meeting with saudi arabia's crown prince to talk about energy supply, human rights and more.
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kayla toushy joins us with more. what can you tell us >> well, becky, we know that president biden will be landing in the coastal city in a matter of hours after about 36 hours on the ground in israel just about a woke ago he told the "washington post" this in an op ed about why he was going to saudi arabia he said its supply chains, its waterways are essential to global trade and the supply chains woe rely on, and a regio coming together is less likely to give rise to violent extremism that threatens our homeland but earlier this week, talking to reporters about what the administration hopes to gain from the trip, jake sullivan acknowledged that lowering gas prices is part of the goal >> he intends to use every tool in his toolbox to try to create
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adequate global energy supplies and bring the price tdown for working american families at the pump can we get that price down, can we keep it down, and i don't think it will be measured on friday or saturday this week but over the weeks and months to come >> but the president is in a peculiar place the price of oil is down about 20% since this trip was first announced. the administration sis optimisti about the fact that prices have fallen and the president's going to be meeting with gulf producers to try to get them to produce more, even more oil than they've already agreed to. but the fact that oil has already come down means that the president has less pressure to actually come home with some deliverable to get these producers to put more oil on the market, and we will see, becky
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and joe, what he comes back with, if anything, after a meeting where the french president suggested that saudi arabia could only put ab about 150,000 more barrels per day on the market. >> we had someone on who was keeping very low expectations. and actually, she's looking for prices to be significantly higher she's looking closer to $120 bit e bieby the end of the year. are they prepared to, it's kind of measured by that standard, if oil prices surge after this. >> yeah, he didn't say the months to come, which is certainly what analysts are expecting in terms of prices rising from here they believe this is just a temporary blip in terms of
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prices falling certainly the goal of the administration is to get more oil on the market for the long term at least from overseas, as certain energy policies here at home are aimed at lowering fossil fuel production i talked to the energy envoy, the senior energy envoy for the administration and he is optimistic that u.s. producers are going to be putting more on the market this fall there's a million barrels per day coming out of the strategic petroleum reserve. there are certainly aims being met here at home to put more oil on the market. but the administration wants to keep telling global producers that they need to be pumping more oil, and we will see whether they do just that. >> kayla, thank you. joining us now to discuss the impact of the president's trip to saudi arabia, kristy is a former president obama official and now with the center for american progress, and vivek
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rahm swaummi i'm getting distracted, kristy, because i'm thinking about, i don't know how you feel about any of this. you're basically talking about going to a cold blood killer, essentially, if you think about what happened to khashoggi i know how you probably feel about that, to beg him to produce more planet-killing fossil fuel oil. and that just seems like there's no winning scenario for you and the folks at the center for american progress in this whole issue. this must, this must be keeping you up at night. >> well, joe, it's certainly not great news, and it's not just me and the center for american progress but everyone that's concerned about climate change and really having a planet that
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all of us can live on. so absolutely it is a complicated situation and certainly no one wanted the president to be in the situation that we have to be in the situation to handle both what's happening in ukraine that really has upset the entire energy picture for the united states and the world and the oil capacity, which is still not up to speed what we're talking about here is what it means to be the president of the free world, which is making tough choices. it is true that in saudi arabia they have a different type of more conventional oil. so it's easier for them to bring more online than it is for us here in the united states where we have more horizontal drilling into shale which takes more to get online so he has committed to the american people that this is not the situation he wants them to be in to feel the pain at the pump but he also knows we need long-term solutions that are going to get us away from this
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situation where we're dealing with petro dictators >> i'm going to refer to your position as the left with vivek. i don't want to make you mad or anything, but vivek, the left is in a tough position to explain this we, we have oil here we could probably be exploiting in this country and we're not doing it to the extent that we could. and here we are, not only asking for more oil, which we, you know, the left doesn't like in the first place, and we're doing it with a dictator and a human rights abusing country so i mean, it's, how do we get here >> the answer of how we got here, joe, is on the basis of intentional policies that this administration adopted i will remind you that in september of 2019, president biden, then candidate, made an explicit promise on the campaign trail. these are his exact words. he says, i guarantee you we are
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going to end fossil fuels. that is exactly what he said that is one campaign promise he has seemed intent on tldeliverig on let's look at the things he's done in the last three months since russia invaded ukraine in may, there's a million-acre project for oil and gas in alaska that was completely cance canceled by the interior department a few days later, they cancel an expansion in the u.s. virgin islands. erisa is adopting plans to favor the esg movement so from the treasury department to the department of labor to the sec to the interior, this is a full-court press, a domestic war by this administration on the u.s. energy industry and now, as we see the disastrous consequences of those policies, the predictable consequences of those policies,
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what biden has to do in the short run is go hat in hand to dictators around the world, from venezuela last month to now today, later today, i'm sorry to say, licking the feet of mbs, the very country he had pledged to turn into a pariah. if you look at the one administration that was opposing the eu ban on russian oil imports, it was none other than the biden administration, who with one hand is giving $40 billion to ukraine to fight russia but yet with the other hand is lobbying against a russian oil import ban which allows putin to finance his war machine. america is left holding the bag. the american people are left holding the bag as they pay $5 gas at the pump. and he seems intent on keeping >> kristy, maybe you can't really admit it, but you're in a
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tough position to explain this was this your point that, do you view saudi oil as cleaner or easier to get, so it's the lesser of two evils? i can't understand any other reason why you wouldn't want to try and do it domestically how does that apiece the pres appease the base. if we want more oil and it's something you have to concede we need why not do it domestically why cuddle toup to a dictator i the middle east? >> my point is it is faster to bring online vivek loves to do this to done fconfuse what is done qy we're talking two to four years to bring online. and it is just not true that the
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policies that we are discussing here and the decisions that the administration made earlier are impacting what we are talking about right now. the biden administration, and this pains me, is permitting month over month more than the trump administration so we hear from the oil and gas industry that they are making decisions that are about making money. and that is what we're talking about right here they make it clear that they are doing the best that they can to return to their stockholders that's what their job is but what we're talking about this terms of long term versus where we need to be on the end of the tecdecade for climate change, these are two different things, and it is absolutely true that we need to do both and the president has committed to looking at every single tool that he has to relieve the pressure that people are feeling at the pump. and that means he's going to be able and have to talk to really un, you know, unfavorable people and i mean, i don't even know
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how to explain this better to vivek, but he has committed that he is going to do everything he can and really make sure that he is doing what he can to relieve the pain at the pump >> let me be helpful here. i think you know as well as anyone that that oil from venezuela is not going to come online for another two years >> we're talking saudi arabia today. >> if i may quickly to make a clear point in biden's favor, he is releasing oil from the strategic petroleum reserves, but it was reported that 5 million of those barrels are going to china and other countries. ask yourself why, u.s. refinery capacity is at a maximum over 94% and ask yourself why that's the case biden in may of this year canceled one of the largest refinery expansions that could
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have relieve td that pressure in the u.s. virgin islands. so at the end of the day, you have to acknowledge with open eyes and honesty to the american people, this was the intentional policy consequence of a president who made a campaign pledge to say that i guarantee you we're going to end fossil fuels. those were not mine, not yours, the words of the president of the united states. he was begging everyone around the world including the opec cartel to drill more oil abroad as they cause those at home to produce less oil i see that as an irony that you have a president now groveling in front of every other major nation begging them to produce oil when america could have been doing it right here. four years ago, america was the largest oil producer in the world. it's not just bad policy it is an american travesty to
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watch the american president, the leader of the free world have to be the one begging everyone else except producers here in the united states to secure america's energy security and end independence if this president isn't going to do it, i hope the next one and other policymaker also step in that void. >> kristy, when he said ending the fossil fuel industry, do you think he meant figuratively, in 50 years or something? that's what i don't understand the democrats are making progress leaving oil in the ground and when it didn't matter, they were proud to say that they were harassing the majors here for not cutting production as much as the oil company also done in europe and now when it sort of backfired and inflation's 9%, it's like no, nothing we did, we weren't successful in trying to shut down the oil very
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tindustry that wasn't us and it seems disingenuous. >> new yo >> no, the number one change is the war in ukraine it is just a fact. tho now, how quickly we're going to do it depends on politics and what the american people and people around the world can actually accommodate, given that people need to live their lives. so everything changed on at that day that putin started the war in ukraine, and that actually changed the timeline of what we're talking about. >> we're going to have to end it there. appreciate having both of you on and ithink we'll take this on the road you're doing good together and maybe we'll do it again in a couple weeks or a month or so. god willing. thank you. >> thanks for having me. >> okay. when we come back, we've already heard from wells fargo this morning on deck we have citigroup.
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those numbers are expected at the top of the hour. wells fargo shares right now down by 1.25%. citi shares down by 14 cents ahead of their numbers later intel ceo pat gelsinger will jn oius for a very special interview. "squawk box" will be right back. we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary. and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim® web. because platforms this innovative aren't just made for traders -they're made by them. thinkorswim® by td ameritrade
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check on the markets right now. almost 150 points of upward momentum for the dow jones the s&p if it were to open there close to 3800, back above 3800, and the nasdaq up about 26 or so coming up, sara malik. and later, pat gelsinger joins us for a very special interview. chips. how important are chips to the entire economic picture at this point? where they're made and whether re have them and supply chain. so gat to have him on. "squawk box" will be right pack.
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disappointing bank earnings and talks of a more-aggressive fed have investors wary once again. saira, watching the earnings coming in, what's happening with cpi and ppi coming in much hotter than expected, have you changed your take on the market this is week >> we have, we have two kea concerns that's the recession and
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earnings estimates recession may be inevitable at this point what is the degree of that recession. if the fomc raises by fewer points, people may feel there is a handle on it >> have you felt better about markets, thinking that the fed's going to raise by 100 basis points or worse that the earnings could be much tougher than anticipated >> it's the latter the earnings are the next shoe to drop. we need to get past those. when you see rallies, it's been mostly short covering. that's not a sign of resiliency. if you see another 75 to
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100-basis point, i don't think we are going to see another to that degree. it's going to be a few more months of these headwinds before we can clear the decks and say okay, let's ricprice in that. >> are you expecting a big drop? or you think we move along at the pace we have been. >> if anything, the risks are greater to the down side here. if anything, we're breaking on inflation to the down side so there's still more down side risk for the markets, and i think 3800, if you look at valuations, they're at average versus history i don't think valuations are really accurate right now. you can't reilly rely on those for the s&p. >> what do we do in the meantime
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where do you siee opportunities >> dividend growers, these companies tend to do better in higher inflation and interest rates. we like growth stocks. they're less, leveraged to economic growth. and rlook outside of equities high-yield credit looks attractive can you get more bang for your buck and that's our theme for the second half. we need to invest in places where you're getting paid to take risks, because there are a lot of risks out there >> you get paid for the risk because the risk is higher you're not worried about any of these municipalities getting into trouble >> municipalities are very strong on the high-yield credit side, companies with strong balance sheets are resilient you're getting yields of 7 % plus you're getting compensated for
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taking those risks that's the areas you need to focus on and not doing a risk because this is a different environment. money isn't as easy to come by we're in a tightening environment that we haven't seen in decades. >> and you have a strategy where you look at assets what type of assets are you recommending >> farm land is a great inflation hedge. it has cpi escalators built in food prices are increasing that's another great inflation hedge. and that's the types of asset classes that we're looking for either very strong risk-reward or where can you hedge inflation. >> saira, we heard from wells fargo this morning citi group is going to be hitting too. what do you think based on what we heard from morgan stanley and jpm? >> it's capital market versus trading. trading's strong, but it's not necessarily a resilient business
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given the markets, and capital market strong declines we like the companies that have less-volatile businesses now this is right now morgan stanley in that camp is the most attractive and they have their crown jewel, which is the wealth management business the theme across all of these companies is estimates citi group has other operating issues i wouldn't be surprise the to see a challenging number out of them we prefer the regional bank like fifth third. they pay higher than industry average wages, so they're more resilient to inflation and their investment banking is a nice growth for them we're avoiding most lit big mosg banks and looking at the regionals. >> it was really bad if we were
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to continue the trend for the year even investor whose weren't watching on a day-by-day basis have seen it at this point they've got their first half statements they've been able to look through and see where they are versus where they were what kind of questions do you get from investors at that point? >> people are concerned. they're looking for when is this market going to bottom it's challenging because we do have a couple large headwinds still out there. our earnings are still at risk you see earnings rising and that's the challenge we need inflation to break instead t's continuing to accelerate that's why that aggressive fed can probably help nip the inflation and get us over the hump but you need those to happen for equities to look more attractive we like from a pricing point of view, equities are down. we are being very selective in not only looking across asset
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classes but reminding people that market timing has tended to be a loser's game. so it's challenging. make sure your portfolio's resilient. >> saira, thank you. cassidy, coming up, and pat gelsinger will boue r special guest. the importance of the chips act in congress. "squawk box" will be right back.
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good morning bank earnings take two we have results coming from some of wall street's biggest firms that's straight ahead. president biden about to depart israel for saudi arabia what could his trip mean for the global flow of oil and the saudi record on human rights and with the white house making a big push for billions of dollars in semi-conductor funding, we're going to speak exclusively with intel ceo pat gelsinger. the final hour of "squawk box" begins right now
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good morning welcome back to "squawk box" right here on cnbc we're live tfrom the nasdaq market site in times square. i'm becky quick with joe kernen. andrew is off today. you are looking at the dow futures up by about 133 points nasdaq up by 20. >> second quarter numbers from citigroup just out >> higher rate volatility al loud the firm to beat estimate on both the top and bottom line. as a result, citi shares trading up about 1%. fixed income trading was the
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key. and a slow down in wealth manman management fees. however, net income declined 27%, thanks to a jump in allowance for credit losses. jane frazier said in a challenging macro apogee yoe political environment our team delivered solid results. wells fargo also reporting this morning. it was the best performer of its big bank tier so far this year, missing top line estimates and seeing the income cut in half on a year on year basis you can see it down about .6% right now. earnings shares beat that's related to private equity investment the firm updated its guidance for net interest income to be 20% higher versus previous
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expectations of the mid teens. this is the profitability metric that benefits from higher rate because banks are able to charge more for loan making that could be offsetting some of the concerns of the downside surprise in missing top line estimates. home lending earnings were about half the level that they were last year, due to lower mortgage income from higher rates executives speak ing on a call that just ended a few moments ago. they spoke about the state of businesses, noting that right now they're in good shape, while predicting that this could change as we see an impact from rates rising and inflation persisting however consumer, small business banking and credit card were all higher >> 45 seems okay for citi group,
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ex-se except it's really four. remember, leslie it was a long time ago i didn't think it was that long ago. but it was at this point leslie, take saturday and sunda off. >> i'll try. >> you all right >> i'll be back monday because we got more of these bank of america and goldman still to go. >> if you don't feel good on saturday, don't think about coming in on sunday. let's talk a little more about the earnings and how the broader market is interpreting them what are you thinking so far about the bank earnings? >> you know, i think it's harha largely as expected, just like with the overall consumer economy. everyone's worried about what's to come and bracing for erosion of corporate and consumer
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credit that's why the financial stocks have basically moved right in synch with the s&p remember, outperformed at the beginning of the year. people were excited about rate hikes. now that has changed and essentially, all theis bank num these ban numbers are being watched. citi over the last couple years has really traded apart from the other big u.s. banks this is citigroup against deutsche bank. looks a whole lot closer than the u.s. bank sector it is viewed much more as kind of a global corporate and capital market, banking franchise, the international exposure not as much of that support have a u.s. consumer deposit base we'll see if that changes. it is certain lit cheapest statistically. look at the sub component of the financial sector and how they performed so far this year
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it really does tell you what we're mostly worried about what's held up the best is regional banks kre is the regional banks' etf that has done a lot better than the overall s&p banks. that's a little better here is the broker this is private equity the closer you are to deals, to the capital markets, to needing to fund things and to transaction type stuff on a wholesale level the worse you've done thus far, becky >> in terms of what we've heard from some of the ceos, there were some people speculating that look, jamie dimon sounded pretty gloomy about what he sees coming, but maybe that's just the nature of the business and risk management. what do you think? >> i think there's a big element of that. that sense out there that part of j.p. morgan's brand is to be ready to withstand tough times and to have the capital to do that and be opportunistic down
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the road i feel that's an element, and that's just what the conclusions would you draw from this moment right now. when you sighee what the market are telling you. inflation is throwing everybody's models off i don't think it's some kind of warning that says the ceos or jamie dimon sees something that we're not looking at, but the economic outlook would keep you a little wary. morgan stanley, it's pretty solid except for the markets coming down and hurting their account balances it's not v it's not >> they were talking about not hiring as much but they did see assets under management drop from a year ago
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>> they absolutely did it's almost all what the pa market's doing the stock has been punished for that it's very easy to see what's happening in the public market they did undershoot that i think the thing we're looking for is results that are better than feared and having the stocks show that they discounted that and maybe not yet in blackrock. >> mike, thank you we'll see you a little later another earnings mover to share. dow component unitedhealth rising after it beat estimates on the street for the top and bottom results were helped by strong performance by optum don't miss an exclusive interview with andrew witty.
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elliot hold as 9% stake in the social image company and has been in talks about unspecified issues for several weeks that stock now up by more than 13%. and on the economic front, we are getting a new look at the impact of this year's covid lockdowns in china the country's economy slowed sharply in the second quarter. gdp grew 0.4% from a year ago. that's right, 0.4% and that's something when you consider the growth we generally see out of china outside of the quarter when the pandemic had china's worst showing since the early 1990s. coming up with some potential movement in congress toward billions of dollars in aid for the u.s. chip sector we're going to speak exclusively with pat gelsinger you don't want to miss this interview. but next we'll talk energy, u.s.
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oil production and president biden's trip to saudi arabia with louisiana senator bill cassidy. check out the price of crude this morning yesterday it hit its lowest level since late february. you're watching "squawk box" on cnbc welcome to your world. your why. what drives you? what do you want to leave behind? that's your why. it's your purpose, and we will work with you every step of the way to achieve it.
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president biden heading from israel to saudi arabia today, scheduled to meet with both the country's king and crown prince, mohammed bin salman. while supplies are in focus, but bloomberg is reporting that biden is expected to leave the middle east with no announcements on increased production here to talk about biden's middle east trip and share his views on the white house's approach to energy is senator bill cassidy we're so well versed in the talking points on both sides we did have the pandemic and a lot of the majors in the oil companies pulled in their horns, rightly so
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oil went negative at one point then to reopen, there are supply chain considerations it's hard to get labor, hard to get rig guys there's lots of things that make it difficult for us to get back to peak production in this country. so i don't know if everything can be blamed on what joe biden said, president biden about what he said about fossil fuels but is there anything domestically that the president is just too stubborn to do in your view and instead heading to saudi arabia and venezuela, not headed there, but asking for increased oil production >> is the rig count has increased 58% over the last year, on private land. that's good. but now we have refinery capacity at 95%. so companies that buy out of
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strategic petroleum resir erve don't have the capacity to put it in the pipeline we have refineries shuttering or converting to other products this coming year, there will be another 400,000 barrels or gallons per day of domestic refinery capacity going offline. now the administration, i've called for an operation warp speed. if you want to lower price at the pump, you don't have to just look at oil. you have to look at every step in between, think refinery capacity one thing that they could do, they're requiring smaller refineries to purchase rins. your audience know what is those are. and they are closing the administration has things they could do to take advantage of increased supply to now increase the refinery capacity
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or at least thhold it even >> i can't imagine that they wouldn't do that with an election coming up and where the price at the pump s although it's come down quite a bit and you can answer that. but also the refinery problem goes back how many years, senator? and it's not the biden administration it's esg it's the green lobby it's the whole environment that we've been in where oil companies or refining companies don't want to spend any money on five and ten-year projects or even two-year projects, because they're under attack, by flnot just the biden administration but people globally worried about climate change >> i'm totally with you on that. it's estimated there's been about 2.2 million gallons offline a taday in europe. if you're concerned about the climate you want your fossil
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fuel derivatives done in the united states because our standards are the highest. when you go to valero's refine any louisiana, you're so impressed by how much they do to control emissions. that's not the dcase in china. if our greenies want to have the fuel that everybody in the world needs, it's predicted that there will be increasing need through 2050 we should be refining in the united states. as regards the rins, they are using corn for making ethanol. it could be infused into the grocery supply complhain to low the price on groceries i think the policy on rins is way off.
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>> we're back to record use for coal, not here, but in china and india. a lot of these things we're doing, it's hard to really see whether we're going to have a benefit anytime soon on it and if we're going to 2050 with increasing oil, none of this really makes sense, and there's going to have to be some 180-tea1 180-degree moves across a lot of industries and government is going to have to do that, face the facts that you can't get to zero emissions next year or the year after that. >> yeah, so this administration lacks a strategy they hwill focus only oemission but not the energy supply and national security. we need a strategy that recognizes the nexus between climate energy, the economy of a family and the national security if you ignore any of those, you
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don't get any of them if we had that strategy, we would have lower emissions globally, a better economy for the country and a better national security situation. again, i don't want to sound partisan i think you can objectively say, this administration lacks a strategy which addresses those four intertwined issues. >> that's why we have an election if are you a company that builds or operates refineries, why would you have the confidence to risk your capital on a multi, on a billion dollar project that goes out five or ten years is there anything, what would a republican congress or republican president to to en do to ensure that the rug is not pulled out from under you the
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next time you get a democratic administration >> a lot of these companies may be investing in asia. they don't enforce regulatory compliance we need to shut down that incentive. one thing i've argued for is a carbon border adjustment in which you would say china if you're not enforcing your environmental standards you're going to pay us the delta between what we have to pay for compliance and what you're not paying for compliance. that evens the playing field by the way, it changes their incentive to not comply with environmental standards to comply now if we have a well-performing company, again, i mentioned how impressed i was with valero, they would not have to pay either it would be only those who are out a certain kind of comfort zone that would be required to pay a carbon border adjustment
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now i can go further into it on another session, but i think that's something that would change the incentive for companies to locate here, to actually come to our environmental standards as oppose to taking their jobs elsewhere and polluting the global environment more than otherwise. >> senator, we've got pat gelsinger, the ceo of intel joining us in just a little bit to talk about the chips act. it's been held up by mitch mcconnell who doesn't want to take that vote without concessions being given away on other issues there is talk at this point to split out the semi-conductor issue and have a vote on that. a lot of incentives from asian companies to build those plants overseas is it important to have that here and is it worth spending billions of dollars of u.s. taxpayer dollars to have those incentives >> i actually think so
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if you look at our military complex, we use a lot of chips in our military. now you've got to certify that you supply chain integrity that those have not been corrupted as chips have allegedly been corrupted in china before. now we also see taiwan being threatened and so there is this kind of, china's attempting through its asian hegemony to influence that which we are doing here. for our national security's sake, if nothing else, and i think there's other reasons as well, we need to have a robust domestic supply. a lot of these industries need to be reshored or near shored as part of a kind of global strategy as we regard china, which is seeking to undermine our national security but also to increase our national security >> so f if that vote comes to t floor you will vote for it >> if that comes up as a separate bill, absolutely, i will vote for it
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>> smaenator cassidy, let's talk again down the road. if you are an oil company executive you need to think long and hard about deploying assets anywhere considering that you can't count on what's going to happen five or ten years down the road i don't know what's going to change >> i agree with you. a good change is regulatory certainty. i think we're on the same page thayer >> coming up, breaking retail sales data, an important read on the economy after hot inflation numbers that we got this week. one that the fed will be watching closely and then we are live and exclusive with the ceo of intel on the chip industry's push for tens of billions of dollars in federal support. we'll be talking with pat gelsinger in just a little bit stay tuned, are you watching
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"squawk box" on cnbc
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welcome back to "squawk box. future as little less, pulled back 113 on the dow. nasdaq right now negative, in the red. doesn't portend great things, perhaps. coming up, bakreing economic
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welcome back to "squawk box" on cnbc. 30 seconds away from new retail
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sales figures. the futures ahead of that are up this morning after some rough sessions earlier this week inspired by those hotter-than-expected inflation numbers on the consumer end. rick santoli's standing by at the cme in chicago these pretty important numbers to see out consumer's faring in this frinflationary environment >> inflation's going to help the numbers, because it's not adjusted for inflation mfire popping out. it was down 1.2, a surprisingly strong jump. 11.1 all right, let's go through import prices, shall we? if we look at import prices on a month over month basis, they were up .2, about one third the expectations and if we look at export prices month over month, they were
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up .7. about half expectation if we look at import prices ex-petroleum can you see where the push is. it goes down .4. let's hit the important one. the year over year numbers on import prices, 10.7. were expecting 1.4 march was at 13.1. that was a 11-year high. so 10.7 look alooking a bit betr here's retail sales. headline number up 1%, a little bit better than expected and that is the best level since march when it was up 1.2 if we look at ex-autos, it's also up 1%, the best also since march when it was up 2% f we
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l2% if we look ex-autos and gas, it is also better numbers up the food chain like gdp, it's up .8. .8 is the second-best number of the year outside january which was up three that is really good. so i would summarize we know inflation boosts these numbers, so we have to be a bit careful about getting too optimistic export prices are still sticking high, and that's because we have a strong dollar, and we're exporting that on the import side, it's a bit better because our purchasing power goes a little bit farther. re retail sales divisions are coming in. moved last month from down .3 to
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down .1. it helps explain the up .8 almost a give-and-take there in terms of they took a little away, they gave as you little on the current read so, joe, interest rates are coming up a rill little bit on t number, but they've been rather tame it's even easier to see the north side of 3% the two year's on, which means your spread's minus 20, very inverted everybody's talking about cli china's gdp and referencing the good news, up .4 i was roolooking at quarter ove quarter, it was the second worst quarter over quarter drop since the first quarter of 2020, we all know that was covid relate
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trelated. there was a time we imported de-nat de-inflation from china. >> it was covid. last time, is it covid again this time from china >> it definitely seems to be you know, listen i don't really want to speak to covid. all's i can say is you have to look toward all the different strategies employed by all the different countries and states and different areas within countries. i'm not sure that i would proceed exactly as china has, but that's for another discussion >> yeah, maybe not all right, thanks, rick. steve liesman joins us now with more on the economic data, hey, steve. >> morning, joe. the consumer has not totally given it up. i think that's got to be the take away here a little better from the top
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line it will be inflated away but it may not be a negative for the last couple months that's really the question that we have to ask ourselves or at least the combined of both of them and a couple issues here that are out there regarding inflation. first, i'm seeing newspaper-petroleum import prices down 0.4% year-over-year, obviously they're hot at 5.4%. and something caught my eye in the empire state index the prices, the pricing data, prices received, the diffusion in there 43.6 previously. it's now tdown to 31 it's fallen from 78 to still-too-high 68. a little positive inflation data in there retail sales better than expected this is it, joe.
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i think this whole day, we have university of michigan coming up as well as industrial production a major data before the fed makes this call. and it's going to have to figure out, is the market going to have to figure out is it going to be 75 or a hundred. after this data this morning, it's more in the 75 camp but there's day ta to come >> all right, steve, what have we got next week to cheer us up? >> not a lot i saw some housing data. you know, it's interesting, joe. the big story is going to be the earnings we were talking about this i listen to these ceos, because the way this process is going to work if these ceos start cutting back on hiring and investment, that's where you're going to get your recession. these ceos you have coming up in earnings season, i can't think of any more. i'm not teasing for the benefit of the network
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economically, there's a loft inforof information coming >> one of the fed governors said he was watching retail sales numbers today and that would determine whether he would push for 100 or 75 basis points. >> housing will be important we know what's happening with the housing market it's cooling off a bit and that's really what i'm, i sort of talk to myself to the place where very ti have to ansa question that i didn't have the answer to in my head it is really the lack of a framework from the federal reserve on this hiking cycle it's very difficult to put it in it's really, becky, you missed an exciting week remember on my cpi day, it came
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out and all of a sudden 100 was baked in right after the number came out everything -- >> yeah. everything, yeah the interest rates and everything and it wasn't 10.3 wasn't that what the tweet said the night before it was bad enough. we had to wait for the ppi to get the double digit. they are crazy numbers boy, we, be careful what you wish for we thought japan wanted to get out of that basement for 20 years, and this is what happen when is you do, steve, not so great. >> it's a tough thing to do. and japan did not do it successfully actually, this morning, i'm looking, i'm not seeing much change at all. it's down to 40% it had been as high as 80% we had it around 60, so i'm not seeing much change there little hard to process
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import prices were good. total prices should come down a little bit, and that better inflation number in the empire state is something we're thinking about the trajectory. >> when was the last time we did 100 basis points up or down? >> i think it was voluker. very i have to go back and look >> this is like, this would be an unprecedented, probably, on a percentage basis >> you're going to double by september, the way the market's priced, joe, you're at 3.5, 3.25 by september >> too bad we're not talking about my 401(k). thanks, steve. coming up, the interview of the morning. pat gelsinger will join us on why his industry pushing washington to tomorrcome togetha
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plan to keep chips competitive by the way, the smh semi-conduct ir-etf tracking for its second week positive in a row if it can get there, that ulwod be the second time it's happened since march. this is cnbc welcome to your world. your why. what drives you? what do you want to leave behind? what do you want to give back? what do you want to be remembered for? that's your why. it's your purpose, and we will work with you every step of the way to achieve it. at pnc private bank, we'll help you take care of the how. so tell us - what's your why?
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the investment management business of prudential. after a long delay, voting could get under way early next
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week on a bill to provide billions in support for the u.s. semi-conductor industry. that's according to multiple published reports. that would help american makers to be competitive. right now joining us is pat gelsinger, the ceo of intel. thanks for being here this morning. >> thanks, becky >> we've been talking a lot about the chips act this morning and where things stand it sounds like there could be a separate stand-alone vote just on this part of the bill, not wrapping up other things is that your understanding of things as well >> yeah, i think there are three pathways right now they have the skinny version of the competitive act. or third, they pull the two pieces out that are related to chips and just vote on those and clearly the second and third options have been getting a lot more mention in the last couple
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days, and we're starting to see, you know, both the house and senate leadership lining up behind one of those two paths. but my message to our congressional leaders is hey, if i am not done with the job i don't get to go home, neither should you do not go home for august recess until you have passed the chips act, because i and others in the industry will make investment decisions. do you want those investments in the u.s. or are we simply not competitive enough to to ido it here and wed to go to europe or asia. get the job done do not go home for august recess without getting this passed. >> gina raimondo thinks if it doesn't get done before they leave it won't get done at all is that your view, too >> what happens thousnow is we l
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lose momentum. i want to do groundbreaking. i want to get those shovels moving the complex, 27-member european nation has accomplished what we're trying to get done in less than half the time and they're ready to put the incentives in place right now for us to get under way. you know, others that i've spoken to of my ceo peers, they're going to make these decisions. and now the senate passed this over a year ago, becky i came into this job with the expectation, the promise that we were getting this done and now we have to make these investments, and we're making those decisions now. and, again, the u.s. has been defining in 30 years in the manufacturing. we have been declining
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if we want to change the shape of this industry for the rest of this decade, do not go home for august recess. get this finished. because passing it next year, we're going to have made a bunch of decisions on fabrication and manufacturing investments that are not good for the united states, and think about the situation we're in, becky. a large portion of inflation, a shortage in chips. the economic impact of these jobs that we want to create and how that is the heartland. our national defense and intelligence community have woken up and realized, man, there are 100 chips in every javelin missile, thousands of chips in every vehicle we're putting out there. do we want to be the ones building the chips for our own national defense of course we do. so economy, impact on inflation, impact on jobs national security, this is just
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so critical for our nation it's implausible that our congress wouldn't get theis don. this is the most important thing for them to finish before august recess >> hey, pat, i know's about 30 for30% to 40% cheaper for to you put a fabrication plant in asia than here but you deal with your own issues trying to get chips back. what's the advantage with putting things in the united states and how much of a premium is worth it? what does this money mean, and how much money do you need to make it more affordable? my guess is it's not going to be parity no matter what even if the funding comes from the government >> yeah, what we saw from the covid situation is that our supply chains have become very pro karius we need to go from just in time to just in case. we need to build a
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globally-balanced, resilient supply chain what aspect of your life, becky or of any listener today isn't brkin becoming more digital? everything runs on as semi conductors our health care, we need the supply chains to be more resilient. and obviously, a huge piece of this in asia, taiwan, these are geographically precarious situations where we are building in a way that we're confident for these supply chains. obviously, the chip acts itself doesn't solve the problem. it creates incentive to build in the u.s. if it's close, we're going to build in u.s. and europe we're an american company. we believe deeply in the benefits of r&d and manufacturing. but we need to take steps to
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bring more of the supply chain, and clearly the shanghai port shutdowns showed how precarious the situation is good balanced supply chains is better for the economy, better for the national security and geopolitics. where the oil reserves have been have defined geopolitics for five decades where the fabs are is more and more important let's build theis of ming where we twapt, need it. >> understood, but if you are deciding where to put your next plants between us and germany, what is germany offering how much cheaper is it there, what kind of incentives would you need to see here to say we're doing this instead of that >> the chips act is well designed we feel very comfortable about 30%.
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so as it's designed now, it makes us competitive that's all we're suggesting. if we're going to make these kind of $20 billion investments, they have to be competitive. and the benefits that germany and eu, you know, i the world. it is very similar. it really is to bring parity to the world and allow the investments to flow where we want. we will build a substantial portion of manufacturing in the u.s. we will build a substantial portion of manufacturing in the u.s. that is who we are. we are at 53-year-old company. a leading r&d firm on the planet. this is an industry created in america and we are excited for the opportunity to revive that industry on our soil with our people, as well as with our allies in europe. they stepped up in a big way
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recently and if we had a nice balance, 50% u.s. and europe, 50s% in asia. that would be a huge collective accomplishment for a government and for industry.>> if this does not pass and congress does not pass it does that mean you're not going to build the $20 billion facility in ohio >> we committed to build in ohio. i announced in january, i said congress has committed they will get this done. if they get it done, i will be big and bold. $20 billion is a starting point. we will scale that to a larger facility. potentially $80 billion or $800 million for eight manufacturing locations. if not, it will be sold small and i will end up delaying the buildout until we get started with the next year.
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we will put more of the immediate investment in germany. it is in congress his hands right now whether we will go slow in small or big, bold and fast. they get to decide.>> governor duhon said you are trying to gain leverage with congress. how do you respond to those charges? >> i am asking congress to live up to the commitments they make. when they passed this out of senate last year, there was excitement and enthusiasm and expectations. leader said we will get this done. they are saying do what you say you would. when i took over as ceo i came to wall street and i will take one third out of our ebit intake free cash flow negatives for the first time. we will more than double our capital investment cycle. we have put our chips on the table. i cannot be investing more aggressively for the benefit of
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this company, as well as the industry, as well as our nation. i simply need them to do their part. and obviously, i am an engineer by trade and i build products and companies. i am not a political meter. but we do expect our political leaders to get done what they said they would. they have indicated multiple years of effort now that they will pass this chips act. we and others have started plans and we want them to live up to the commitment. get it done and don't go home for august recess. finish the job otherwise stay and work and do whatever political stuff or any pathways we have outlined, any work for us, do your political job. the president is anxious to have this on his desk so we can sign it into law and put the shovels in the ground and build
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back the most important industry furnishes feature. >> i realize you cannot talk about the company, ahead of your earnings. we thank you for talking about this. the odds that this gets passed? watching the movement of the last 48 hours, what you think? >> greater than 50%. i am an optimist. i find it a better way to live. i believe when all options are exhausted they will do the right thing. i believe that will happen. we are waiting for the leadership to come along and it clear he is. secretary said the white house is putting every effort on the table to make sure this gets done. i believe they will do the right thing and i'm looking forward to having groundbreaking and shovels in ground and a big celebration in ohio. it will be a great thing for our nation and we are looking forward to making that happen. >> thank you for your time today. when we come back.
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top stocks to watch as we make our way toward the opening bell wall street. a reminder, you can watch or listen to us live using the cnbc app. we will be right back. compre ive solutions, and shows me how to get the most out of my workplace benefits. what's the wi-fi password again? here... you... go. cool, thanks. no problem. voya helps me feel like i got it all under control. because i do. oh, she is good. voya. well planned. well invested. well protected. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work.
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futures have moved sharply higher after retail sales, and manufacturing data. we are at session highs. dow futures are up by 336 points. the nasdaq is in positive territory up 104. if you take a look at some of the biggest retail names, retail sales number of 1%. >> more now. we have a quick comment on the open championships. that is not what you're doing. >> i will say that for the end >> i am with laurie in the st. andrews pub, that will be cool. we just threw that in. >> that would be very cool
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>> i will talk stocks quickly. we'll talk about banks and financial services earnings. we start with citigroup. up 4%. it is pretty much a good story. the big bank reported profits and revenues that talk estimates. even though they set aside money for loan losses, strengthen institutional business. city ship up. wells fargo, moving the opposite direction down a half a percent. it made adjustments for the high equity valuations. that made earnings better. revenues were short of expectations but they expect wells fargo credit losses to move higher from current low levels, but they are not seeing a deterioration in consumer and commercial businesses. black hawk down about 2%. thin volumes. it is the world's biggest asset manager. assets under management came in lower amid market turmoil. that reason you got profits and
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revenues coming in lower. i will say that blackrock says inflows were better than they thought. people are still putting money in. how cool would it be, dustin johnson is in the lead at the british open. right now. rory mcelroy is creeping. what happens if they are in the same group >> pulling for dustin. >> i just tweeted you the photo. make sure you join us. good friday morning. features look to get back more this losing week as retail sales come in solid. shares of city will open up.


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