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tv   Squawk on the Street  CNBC  August 26, 2022 9:00am-11:00am EDT

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talked about that. >> "the new york times" just posted a story that moderna is suing pfizer, alleging their covid vaccine copied its groundbreaking technologies. >> let the wars begin. someone said let the yacht wars begin. jim, thanks, sorry to cut you off, that was great stuff. >> it was. bye, everybody time for "squawk on the street." join us on monday. bye. good friday morning. welcome to "squawk on the street, i'm david faber with jim cramer we're live from the new york stock exchange carl has the morning off let's give you a look at futures as we get ready on this jackson hole friday to begin trading in 30 minutes our roadmap, as you might expect, starts with the fed watch, we're reading the tea leaves with chairman powell in
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jackson hole, about the rate of inflation. the company said it's optimistic for the rest of the year we have shares of electronic arts up in the premarket on rumors out of a swedish gaming publication, shared my reporting earlier on "squawk box." we'll come back to electronic arts as well given that's not happening let's start, jim, with what we might be expected to start with, of course, the big event, fed chair powell going to be delivering a speech in the next hour at the jackson hole economic symposium markets of course will be listening for any hints about the path forward for interest rates and the economy. we'll bring that you to, as you might expect, live
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steve liesman, any thoughts going in >> they've done a remarkable job making us feel gloomy, that the people who want to hire shouldn't hire because 2023 will be very bad. it's actually very effective i'm not being facetious. it's a very effective way to talk the economy down and perhaps stop the willy-nilly price increases rather than just say, look, there's going to be a storm coming to you in 2023, so why don't you docaddress it accordingly. a lot of companies are not hiring >> to go back to the storm analogy, which takes me back to
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jamie dimon, remember that week? >> don't sit, don't stand, all that no he's offering a bottle of 1942 to newman. >> you're going to have to explain all the different references one was to a story about people coming back to the office. the other is working at newman in which he was very involved. >> the reason i say that -- >> say that wwhat i don't know what you just said. >> one day he says everything is great and the next day he says everything is horrible i don't which jamie dimon, i'm taking him off the table what i'm focused on is the parade of people, including steve liesman, who has basically made a plethora of ceos say, i'm going to cut back, my customers are going to cut back, 2023 is
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going to be a bad year >> we got that from your man marc benioff yesterday, saying the customers are more measured, playing into that idea >> yes, i think so what's interesting is that your man and neal bushry was saying -- >> like everybody else, you've taken him and made him -- >> i have. but "measured" was not in the language, not one bit. >> what did he say >> the kind of technology they're offering to companies really has allowed them to be able to do more with less. and what's happened is that you might want to bring in them if you think it can help you deliver. >> why would it be such a contrast from workday and salesforce >> salesforce is trying to augment your business and workday is about how to preserve your business and make it work more effectively, meaning if you have ten people, you might only need nine.
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i've seen workday in action, it's very effective. >> you're not going to cut back in any way >> workday allows you to cut back very big win, by the way, with a company, i saw it on peacock, it's a big company, oil company. exxon, they got exxon for planning, which is interesting >> that's got to be a big win for them >> a benchmark win they're doing very well. frank sluten said when times get tough, you want to rent software over service, you want to rent sas, you want to have the data done by the engineers at snowflake. these two play into the fed's hands. by the way, david, over and over again, something i hear. >> tell me >> the weaknesses in this
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economy is not silicon valley. so many companies have come public in software that they're not doing anything, that you can hire easily. the price of an engineer is coming down in this country. >> that's interesting. >> isn't that interesting? >> and important >> it's all west coast, so we don't know about it here >> coming back to the economy, rafael bostick comes across as honest >> honest and cogent >> steve liesman had an opportunity to speak to him at jackson home, this is the atlanta fed president. take a listen. >> this is a sign that the economy is starting to respond to our policy in ways that we hoped. there's still a long way to go, we're going to try to get to 2%. we want the policy to move closer to the restrictive range to make sure we solidify this
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trajectory and keep us moving in the right direction. >> people are responding but they haven't done enough >> anything on your radar that powell can say one way or the other that will have significant impact on the market or will deviate from what participants are expecting? >> yes i think you could say that as long as we have many more job openings than we have people, we're going to have to work very hard to close that gap and since they can't create more people because of issues like dna, we talk about that when we talk about the pfizer lawsuit that i've worked on all morning, because you can't create people, you have to tamp the desire to hire more people and that's the way to do it. and i think he's going to make us feel like, you know what, if there aren't more people, then we should do less hiring, not, well, we'll keep hiring and bid the pool of labor up that's where you're going to run into a real problem, if you do
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that let's say, there's a place called goldberg's in the hamptons, it's fabulous. you'll talk to them, they talk about -- why did cream cheese go up $100? what propelled kraft to raise the price of cream cheese? >> because of the pandemic, i remember talking about gary gr greengrass about that. >> another great source. why is that -- a lot of us feel like we raise more for our waste collection, how come it hasn't come down? chairman powell has to address the idea of cream cheese and waste collection those are metaphors, obviously >> isn't there a sense, jim, that once prices -- they never seem to come down. it's just slowing the rate of inflation, it's just not reversing it >> then jay powell has lost. he doesn't win until there's a reversal >> a reversal?
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>> yes and the way you reverse it is by having a glut and you have too much on hand i was surprised that gap stores did not have a glut. nord nordstrom, huge glut you can by their stuff at t.j. maxx for fraction. >> this morning, gap, you can see it's responding pretty well. >> without a ceo they do much better >> apparently. interim ceo. >> sales where down 8.4% year over year, adjusted gross margin down 330 basis points. they seem to be saying more or less positive things about their cost-cutting initiatives and their overall views. >> i think they're an outlier, david. >> they are reducing inventory levels and continue to rebalance. >> a new ceo came in it maynot be the right market.
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a new ceo came in and changed things rather radically, rather than bringing in a lot of inventory when they had done willy-nilly. they don't address the issue, which is driving me crazy. i was trying on a sweater in gap, there was a guy next to me trying on a sweater, he walked out with the sweater >> i want to spend time on pfizer and moderna >> let's go dell because dell's consumer. >> and dell is going to be down. >> the stock is being read wrong, the stock was at 55 last night, it's going to open at 53, it's going to trade up
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dell, on the other hand, is consumer, and they talk about consumer weakness. it's the single digit consumer with marvel. i did not know dell had as much enterprise >> you hit it all. we have a lot to get to. i want to talk to you about moderna and pfizer and this lawsuit. i'm going to hit electronic arts, simply put it's not happening. >> serena. >> serena's ringing the opening bell >> an idol of mine >> we have chairman gensler coming on. >> that's going to be seminal. >> that's because of news involving china, remember, they reached that deal. we'll have an exclusive with the chairman of the sec, after this break.
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back to "squawk on the street." news out involving the sec and china. sec chair gary gensler joins us now exclusively. mr. chairman, welcome to "squawk on the street. what have we got >> good to be with you, jim is a and david. this morning officials from the chinese security registration commission signed an unprecedented agreement with our colleagues over at the public company accounting oversight board. what this means for investors is, this is a step toward
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compliance for 200 chinese companies in the u.s it's not the end of the road, there's still the chinese audau auditing firms, the chinese officials need to let american officials in the pcob look at the work papers and ensure for compliance with our laws that protect investors. at the core of this is investors having trust in financial statements it is also about a level playing field to ensure that the rules of the road for the u.s.- issues are complied with. it's a step along the way, we hope that the chinese will supply with the agreements the next few months will tell us whether that's true or as my
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family used to say, the proof is in the pudding we'll see what happens >> so mr. chairman, before this agreement, would there be situations where you had felt and the commission had felt that the disclosure was improper and that the disclosure rules in china were quite different from the disclosure rules in this country? >> so there is an agreement by congress 20 years ago embedded in sarbanes/oxley, after a lot of big accounting failures like enron and worldcom and the like, many viewers may not remember that congress said, we need to have a new organization to check on the auditing it's auditing the auditors 20 years later, 50 jurisdictions around the globe allow that to happen and two do not.
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congress a year and a half ago said, you have to comply completely i want to thank congress, senators ben h-- senator van hollen and senator kennedy who said this has got to happen and they put a clock on it to answer your question, for 18 or so years we have not been able to look at the work papers, look to see whether the various auditing firms, the big four auditing firms are also in china, and to look at those work papers and see whether they've properly met the support for the financials, and they've got the proper internal controls, and that the auditors are looking at those internal controls and documenting what's called auditor opinion. >> so mr. chairman, let's use a specific example and it's past tense, so we can
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do that. luckett, a deal where people lost millions in this country. would a lucken be -- fraud is very difficult to detect but would a lucken have been exposed and there would have been more risk factors had they allowed the u.s. in to look at the auditing >> it's hard to tell in any one company. but our system is, is that companies present their disclosure to you, the american investor and they present it but they have financials looked at by auditors and the auditors attest to certain things through auditing standards it might sound a little boring, but it's really important because you have to trust the numbers. then we have a second group, somebody looking at the auditors and those people looking at the auditors are overseen by the sec and that's called the public company accounting oversight board. in your example, lucken was an
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investigation that we brought and the pcob he bb helped us on several years ago, but a chinese-related company and the numbers that weren't kept up to snuff. but this is a more general thing. can you trust the numbers, and is there a level playing field why would 200 chinese companies be able to issue here in the u.s. and not comply with their laws it's a great privilege to be in the u.s. we have the most liquid capital markets. if you want to issue here in the u.s. and tap into the investors in the u.s., comply with our laws and i think congress spoke with a clear voice, and we're effectuating the will of congress but again, the proof will be in the pudding, we have to see over the next few months how
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compliance goes. >> chairman gensler, it's david. you've said twice the proof is in the pudding you're going to have on-the-ground inspectors in hong kong, or inspectors on the ground in hong kong as soon as mid-september. will you get a sense then on whether the chinese will follow through on the promises they've made >> it's a great question sending those inspectors in, a normal inspection period can take up to three months. but we'll start to know in october or november. let me remind the congress, congress said there has to be an annual determination, an annual determination whether there's compliance and the first year, last december, it was a no. there was a negative determination for hong kong and china. this annual determination needs to be made by this december. that's why it was so important to get people on the ground by
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mid-september, really looking at those work papers, and in addition to doing interviews with the people that actually did the audits and thirdly, that the pcob can select whichever firms they want to look at, whichever firms, whichever engagements based on risk management, pcob can select any company and take a look. but yes, david, we'll probably know by -- certainly by early december because we have to, the pcobs, to make their next annual determination. and if it's thumbs down again, a negative determination, it may well be that these companies would have to delist if it's a thumbs up, that would be real progress and i think, look, our u.s. capital markets have been the destination of choice, the competitive destination of choice for decades for large
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companies around the globe so if there's compliance, this would keep some of those companies in our market. so it's really important to have the compliance so investors can trust the numbers and we have a level playing field. >> yeah. you've mentioned those roughly 200 companies, obviously market caps vary, but as much as a trillion to $2 trillion. nonetheless, they're still under separate pressures from the chinese government to perhaps come back home or delist what's your sense, if this is successful, in terms of this tie that some u.s. investors have seen of an unwillingness of chinese companies to list here and even those who are listed here to still choose to have a listing in hong kong or make it their sole listing >> i still think we've got the deepest, most liquid capital markets. they're not perfect. we're looking at other reforms to enhance our capital markets, enhance our stock markets. but i think that we're the
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competitive destination of choice for companies from europe, asia, from africa, from south america, australia, around the globe. and i want to continue to focus on that and ensure that we're the gold standard. if the chinese authorities allow for compliance, then that will continue, company by company, to make a choice. if there's not compliance then of course we'll protect the investing public and these companies will have to leave >> mr. chairman, we are indeed the gold standard. i want to bring three companies to your attention. magic empire global, base id in hong kong, shares open at 50, close at 97. 3,325% at ipo. stock is now back to 7 star box which is based in malaysia, opens in 27, reaches
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46 that first day then goes back to 7 instantly and then the most egregious one, amt global, amtd global, based in hong kong, ipo priced at $7.80, stock rallies on august 2nd. these do not seem to me to be situations that are warranted to be able to say that we're the gold standard. and i urge you to look into how these things can happen. because to me, they are violative of the kind of standards that you want in our country. >> jim, we do want those standards. and we have standards, the support of congress, the excellent, remarkable staff at the sec, we're the cop on the beat we've got disclosure standards and of course antifraud and antimanipulation, we oversee the
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markets. auditing and accounting is one piece of that. again, choice will be of the chinese authorities. but if there is compliance over these next few months, companies could remain here. if not, they would need to leave. i would be remiss if i didn't do a little shoutout to chair erica williams who runs pcob, it's been terrific working with her staff and just a remarkable group of folks at the sec. and also our u.s. ambassador to china, nick burns, who has been a really good adviser here but we'll continue on and we'll be looking out for u.s. investors and u.s. issuers >> excellent i hope you look into the disclosure of those three companies. mr. chairman, this weekend david
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faber and i, if we wanted to get together and create a new coin and, i don't know, let's call it dollar base, and we had a coin, and we suggested, you know what, let's leak this coin to some of our friends, and then we'll release it and then we'll open it 40% higher. i would regard that as not unlike bistix, the security created in "the sopranos." this goes on every day, 200 at a time how are we going to continue to let this continued activity occur, there's blatant front running and people get hurt and it seems like they don't even let you interfere because congress doesn't want you to be the cop on the beat. >> i would suggest if you and david want to create a coin, get good lawyers who i hope would advise you the public would be investing based on your and david's entrepreneurial efforts.
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you probably have a website, you would probably be marketing it in some way that meets the test. and yes, and you david would need to register and if there was a platform, trading platform or an exchange that listed your token, the david/cramer token, that platform, listing your token, needs to register as an exchange that's the plain and simple truth of it. congress passed these laws to protect the public it's about raising money from the public it is also about the trading venues, the exchanges. and we have benefitted for 88 years by this regime i think it's helped economic growth, it's helped the investing public, it's helped issuers tap into the best capital markets.
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i do ask, if you and david start that token, to get good legal advice and follow the securities laws >> i'm going to call at it cramer coin anyway, his visage is a lot more recognizable than mine it's friday in august, you seem to be home are you guys working i'm one of these, i think people are better in the office people. i don't know where you stand on that is the sec back to the office? >> i think it's remarkable how well society writ large, but let me do a shoutout and compliment to the sec staff, 4,500 people have been able to be a cop on the beat, effective oversight of the markets, in these times. we're largely remote when i came on board in april of last year, we were still actually mandatory remote. we worked with our bargaining
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unit, with the union representatives, we moved to voluntary remote that's where we are. i think there is a benefit to being in the office. i do think there's a benefit but just a big shoutout to -- >> really? i don't know, i just -- i just read that book, everybody's wandering into everybody's office talking about enforcement actions, it's years ago, but sharing ideas, sharing where they are in investigations it seems more effective to me than being on zoom >> are you talking about the fire fireplace >> the fireplace is behind him take the wide shot final thought before the opening bell, chairman gensler >> i think it's important, this agreement we reached today with the chinese to keep our eye on the ball as to investor protection i want to thank, again, my colleagues at pcob
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but i think this is an unprecedented agreement. it's tough but very specific it will hold them accountable. it effectuates the will of congress now the decisions will be on the authorities there whether these work papers and inspections and investigations will continue [ bell ringing ] and we'll see where it comes out in a few months. >> chair gensler, always great to have you with us, thank you, enjoy your weekend sec chairman gary gensler joining us very important agreement it's early days, he says the proof is in the pudding, but the pcaob agreement with china on inspectors >> i hope that allows our individual investors to do better and maybe even warn them away from deals that are suspect. >> we just heard the opening bell here. you can take a look at the real
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time exchange. you can see tennis legend, serena williams, founder of serena ventures, celebrating her retirement last tournament, u.s. open, and over at the nasdaq, the national disaster search dog foundation all right. where do you want to go on the markets? >> i would like to go to twitter, if you don't mind >> you would >> forget that you want me to go to -- >> you know what, hold on, i should probably come back and refresh on this electronic arts story for a second >> oh, okay. >> because we didn't get to it at the top if you're just joining us, electronic arts had been up as much as 12% in the premarket on reports out of a swedish gaming
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publication. good luck, have fun. >> oh, that's the name of the publication. >> yes this is the quote, rumors have been circling online for a few weeks about a potential ea buyout and they said amazon will announce today it has put in a former offer to acquire electronic arts. that, amazingly enough, is still why the stock is up as much as it is although not nearly what it was when we reported the following, which is, in speaking to people who are familiar with the company, who were involved previously when it was in talks about a potential deal, interestingly enough, with our parent company comcast, they're not aware of anything going on if something's happening, something they're unaware of, the idea that amazon would launch a bear hug or unsolicited offer for electronic arts seems almost impossible to imagine and, you know, you could argue for the strategic logic perhaps of them bundling, one would imagine the ftc might have some issues there, all of which is to say, no one i've spoken to who
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would be in a position to potentially know if there was in fact anything going on here has said that there's anything going on put another way, nothing going on but you can see, jim, still having an impact it's one of those days swedish gaming publication publishes something and gets the stock moving >> the last quarter, the forecast was terrible. is this a pump and dump? >> i don't think so, but i don't know i don't know i don't know what's going on in swedish investing circles or in swedish game be circles. >> he didn't think my reference was funny, i couldn't get a rise out of him those three companies that i mentioned have cost people fortunes >> yes, the three chinese companies you mentioned. i think it was interesting, at the very end, it's a completely separate issue, they're not going back to the office >> no, they're not did you also notice he's saying
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these nefarious coins that are created are actual securities and people should register or he's going to go after them? >> get a good lawyer >> maybe the pump and dump period in crypto is nearing its conclusion >> what i want to come to you on is this moderna's lawsuit against pfizer >> quite surprising. >> again, if you haven't heard the news, moderna has filed patent infringement lawsuits against pfizer and its partner, biontech, in the district of massachusetts as well as in germany. moderna believes pfizer and biontech's vaccine infringes moderna's patents between 2010 and 2016 you had told me during the break that you had some thoughts on it share them >> yes first of all, a lot of what
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is -- what he had created between 2010 and 2016, out of nowhere, perhaps, biontech had the same technology. they did not cooperate at all. so it's not like one took the other's. notice they did not go retrospective. moderna is not trying to throw a monkey wrench into the incredible work they've done as has biontech/pfizer with the actual pandemic. however, david, going forward, they've spoken many times about personal cancer vaccines using mrna >> the ceo of moderna. >> yes, trying to put an end of the idea that this -- they're not asking for an injunction they are hoping perhaps maybe to get a chunk of money when pfizer continues, if they do, to abuse or use the technology that
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mrna -- >> these things can take a very long time to wind through the courts if they even get there. >> right >> obviously pfizer's vaccine and its antiviral paxlovid despite a lot of rebound infections, have contributed to an enormous revenue boost for pfizer >> right >> and we've talked a lot about that, how they're using those newfound profits to potentially diversify some of their pipeline with various acquisitions. is this really a threat to them? >> yes absolutely and i think a lot of people who felt these two companies get along well, have a relationship, share data, no, there was nothing to be shared here. from all i can tell, i don't have dr. bourla sitting here, but moderna is concerned they're going to lose everything they
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have at the conference i talked about the mrna vaccines he's ready to tee off, and i'm sure he's concerned that biontech will borrow that technology >> i think the word was very neutral, "borrow." you want to talk twitter did you have questions for me? something on your mind >> yes, because you know this court very well. >> i know the court well >> it's good that you do >> i'm following the story closely, it's fair to say. >> i'm always trying to get a read, at one point the chancellor says -- >> by the way, we shouldn't fast forward so quickly without bringing our viewers along this is other decision based on the hearing the other day where musk's legal team asked for voluminous data requests and this was her response in terms of what she's allowing for >> right what i want to ask you is, does the judge play his or her hand because she says, defendants'
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data requests are absurdly broad. read literalry, it would require the plaintiff to provide trillions of data points i read that and i think she basically has said musk is -- fill in the blank. >> i think simply put, she gave the musk team nothing. >> she gave them the hand. >> nothing that twitter didn't want to already give them. twitter volunteered during the hearing they could offer these 9,000 separate accounts but it would take them a while and it would be work to do it but they kind of offered it and she said, okay, give that to them. that was it. so people are reading it as, she is continuing to be fair but not in any way showing a great deal of generosity towards the musk side's requests. >> i want to do a hypothetical and i'm also asking for a tad bit of imagination you are with musk's lawyers.
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this comes down. do you high five or do you ask that your shoe laces and ties be taken away because this seems like a bitter, bitter beginning >> you're not encouraged you're not encouraged. >> thank you >> but i don't know what it amounts to at this point, listen, they're on a fishing expedition. that fishing expedition was greatly enhanced by the whistle-blower complaint, no doubt about that, redacted or unredacted whether anything comes of it remains very much unclear specifically because it's not really very specific to the argument musk has been making about the presence of bots on the platform being so much higher again, to refresh here, it's not just that they would have to prove that that was not correct. but they would have to prove that it was fraud, that it was intentionally misled and that it represents a material adverse effect that said, another line some
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people are watching is, did they lie to regulators, did they lie to regulators. and they bring up acorn. very much unclear that that would be the case. thompson was here the other day, pointed out that the sec's recent audit ended in may, long after mr. zatko left the company. so we'll see right now you still have to say the state of play is favoring twitter. >> that's where i wanted to go after this, i'm wondering whether someone in musk's camp goes to musk, perhaps someone less fearful of this man, and says we do feel perhaps we have to open talks, the price of twitter is far below where this started, maybe we should get something done >> i always wonder that as well. and i'm always trying to make sure to listen for that possibility of settlement talks really advancing to some stage where it's something that is reportable haven't heard a thing yet. doesn't mean somebody else won't
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who will report it but you're certainly right to wonder about that. it doesn't appear they're there yet. >> could they walk away and then come back? that would be a total violation, right? because the stock would go to 20 >> what do you mean, walk away >> twitter's true value might be 20 >> yes okay >> so if musk's decision is we're not going to do it >> he would have to have the court agree to let him out >> that presumes musk is one of us >> that gets to a whole different line >> i think we have to have a whole different line when the guy is putting up satellites in dead zones >> let's talk about that shares are down. they showed up in brownsville, it was a star link announcement, in 2023, the possibility of offering text messages in remote areas and work up from there not getting great bandwidth. but the point is, together, using star link and t-mobile's
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capacity, spectrum, they're going to -- you're going to be able to be anywhere. if you're lost in the woods in the middle of alaska, you might be able to at least say where you are. >> i thought it was amazing. i remember we had that motorola phone years and years ago, i'm on the tarmac. once again, i think musk surprises us, full circle, what i'm saying is not that he walks away, just saying if musk actually leaves, i think the thing is worth 20 if i walk away, then maybe -- >> you have to stop talking about walking away musk is not going to be able to walk away. he would have walked away already. the point you're making is the downside for twitter is probably far greater if they lose in court. >> right does that put pressure on twitter? >> to say we'll settle >> thank you >> yes it does. >> that's all i really wanted. i was not articulate enough. >> to be in some form of disarray
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you want to hear musk and seibert talk in brownsville, texas? >> yes very much. look, t-mobile is a gigantic -- >> bigger market cap than verizon. >> hands down. >> take a listen >> the kind of bandwidth that a star link terminal will have but it will enable texting, it will enable images. and if there aren't too many people in the cell zone, you could even potentially have a little bit of video. so the important thing about this is that it means there's no dead zones anywhere in the world for your cellphone and we're incredibly excited to do this with t-mobile, it's great to do this >> there he was, elon musk, always good to see him thanks for being on the show, elon i want to talk about two potential takeovers, c-gen first. this is not a story i reported
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on at all. >> you talked endlessly about how expensive it is. >> it's true it is expensive. they did resolve negatively. neither one of them went their way, the price has been reduced, now bloomberg saying the talks with merck have kind of stalled and that stock is getting hit, jim. >> yeah, and look, there is great science there. they kind of lack a ceo, not unlike gap, these companies without a ceo are doing better than the ones with ceos. i think that merck has a product, that keytruda may have reached its outer pounds c-gen has some incredible technology >> at the right price. >> at the right price. >> finally, ncr is a name that keeps coming around, i've talked about about it, the veritas is interested in trying to take the company public there's some reports yesterday
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that had ncr stock up, indicating in some way they've gotten financing that's not what i'm hearing at all. i continue to hear, let's play it forward a few weeks, let's look after labor day, let's see how the financing markets look then but nothing indicates that they are near putting together the financing package, for what would be a large leveraged buyout, jim. that stock was up yesterday on those reports. doesn't mean they've given up at all. and after labor day, things in the high yield market may look a bit different. but not what i'm hearing in terms of them being able to put that together as of yet. >> i know with have to go to bob. the star last night, the readthrough is so definitive to estée lauder >> shares are up 2.6%. it was good. >> excellent quarter >> all right let's get to bob for more on that broader market of course as we await chair powell's remarks out of jackson hole. bob?
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>> david, sort of a flat-ish open take a look here, banks flat-ish, industrials flat-ish, semiconductors during a little better health care lagging today. we had a nice rally on the pce numbers better than expected, that will help the making progress on inflation argument but it hasn't translated to the market once it opened. china tech stocks are up today, great to see gary gensler on the air with jim and david here talking about that agreement between u.s. and china regulators, nice move up in chinese tech stocks today. alibaba has had a nice run, it's 102 today. these stocks have definitely moved in reaction to that. as for jay powell, the question is, it's very simple, what will he say to make stocks go down and what would he say to make stocks go up we'll deal with stocks going down right now any indication that the terminal fed funds rate would be above
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what the market expects, currently 3.5% if he clearly implies up 100 basis points, which no one expects in september, or we'll even be more aggressive, or we don't care about a recession, we're going to fight inflation no matter what it takes, if we have a recession, so be it, if he's aggressive on that. the other side of the coin, what will make stocks move up when powell gives his speech? people will be focusing on any signs that they're very sensitive to a severe downturn, possibly ending the rate hike program next year, any reference to substantial progress in inflation reduction. the markets had a big rally in anticipation of exactly what you're seeing right here the s&p is up 15% since the june bottom valuations have gotten very rich they were at 16 times forward, quite reasonable given the market situation now we're at 18.1, that's
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getting towards rich territory and earnings are holding up fine for 2022 they were 9.5% july 1st, now it's 7.9%, that's down but it's still really nicely on the upside so david, powell is in a tough spot it's reasonable to assume the fed officials aren't delighted to see this big valuation reset for the stock market and they want to dampen those expectations because we know why it's happening and yet they can't dampen the expectations too much. it's a very fine line to hoe here and he can't really change the rules too much in the middle without getting some kind ofster recollection one way or the other. david, back to you >> thank you, bob pisani, leaving us in a good place to take a look at the bond market before we head to break and before chair powell's remarks at jackson hole we're at 3.045, the two-year note is still well above the yield of 3.372%.
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not bad for a cd rate if you want to get one. >> i did, i bought a lot of two and three-year >> did you >> absolutely. we're back right after this. another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities.
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.. well, it is official the agreement with china on audit inspections, you heard from chair gensler of the s.e.c., and look at the week there had been some advance reporting about the possibility. >> jpmorgan reported on that. >> jpmorgan reported on that. we're back after this. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq,
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. all right. you got any further thoughts as we head into powell? >> the chairman should say the following -- we're not done until you're paying less for cream cheese in this country [ laughter ] >> specifically, what he needs to say is we're going to break the cycle. you can hear what level we have to take rates or how much we
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have to talk down, but we're going to break the cycle, and if you bet against us, you'll be sorely -- cream cheese is the focus. >> yes. i have to find out >> i worked today, because i are we going to register the coin? >> call it the cramer coin i'll be your silent partner, like i normally am. >> have a great weekend. really investmentors around the globe have been waiting for this event, the speech from chair powell don't go anywhere.
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all right. you're looking at a live shot of beautiful jackson hole, wyoming, where in a few moments chair powell will address the economy and more we'll take you there live as soon as we begins to speak good morning, everybody. i'm david faber with leslie picker and mike santoli.
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we'll get headlines from steve -- actually, we're going to take it right now. >> i have discussed broad topics such as the ever-changing structure of the economy until high uncertainty today my remarks will be shorter, my focus narrower, and my message more direct the federal open market committee's overarching focus is to bring inflation back down to our 2% goal. price stability is the responsibility of the federal reserve and serves as the bedrock of our economy without price stability, the economy does not work for anyone in particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. the burdens of high inflation fall heaviest on those who are least able to bear them. restoring price stability will take some time and requires
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using our tools forcefully to bring demand and supply into better balance reducing inflation is likely to require a sustained period of below-trend growth moreover, there will very likely be some softening of labor market conditions. while higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses these are the unfortunate costs of reducing inflation, but a failure to restore price stability would mean far greater pain the u.s. economy is clearly slowing from the historically high growth rates of 2021, which reflected the opening of the economy following the pandemic recession. while the latest economic data had been mixed, in my view our economy continues to show strong underlying momentum. the labor market is particularly
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strong, but clearly out of balance with demand for workers substantially exceeding the supply of available workers. inflation is running well above 2%, and high inflation has continued to spread through the economy. while the lower inflation readings for july are certainly welcome, a single month's improvement falls far short of what the committee will need to see before we are confident that inflation is moving down so, we are moving our policy assistants purposefully to a level that would be sufficiently restrictive to return inflation to 2%. at our most recent meeting in july, the fomc raised the target range to 2.25, to 2.5% projected to settle from the longer run. in current circumstances with inflation running far above 2% and a labor market extremely
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tight, estimates are not a place to pause or stop july's increase in the target range was the second 75 basis-point increase, and i said then another unusually large increase could be appropriate. we are now about halfway through the intervening period our decision at the septembe meeting will depend on the evolving outlook at some point it likely will become appropriate to slow the pace of increases. restoring price stability will likely requires maintaining a restrictive policy stance for quite some time. it cautions strongly against prematurely loosening policy committees participants' from the june s.e.p. showed the funds rate slightly below 4% through 2023
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participants will update their projections at the september meeting. our monetary policy deliberations and decisions build on what we have learned about inflation dynamics both from the high and volatile inflation of the 1970s and 1980s, and low and stable inflation from the last quarter of a century today we're drawing on three important lessons. the first lesson is that central banks can and should take responsibility for delivering low and stable inflation it may seem strange that stable bankers once needed convincing on the two fronts, but as ben bernanke has shown, both propositions were widely questioned today we regard these questions as settled our responsibility to provide price stability is unconditional. it's a global phenomenon, and many economies around the world
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face inflation as high or higher than seen here in the united states it's also true, in my view, that the current high inflation in the united states is the product of strong demand and strained supply, and that the fed's tools work principally on aggregate demand none of this diminishes our assigned task of achieves price stability. we are committed to doing that job. the second lesson is that the public's expectations about future inflation can play an important role in setting the path of inflation over time. today, by system measures, longer-term inflations remain while long anchored. that's broadly true of market-based measures as well, but that is not grounds to complacency with inflation have been run well above our goal for quite some time. if the public expects that
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inflation will remain low and stable over time, then absent major shocks, it likely will unfortunately, the same is true of expectations of high and volatile inflation during the 1970s, as inflation climbed, the anticipation of high inflation became entrenched in the economic decisionmaking of businesses and households the more people came to expect it to remain high. they built that belief into wage and price decisions. as former chairman paul volcker put it at the height of the great inflation in 1979 -- inflation feeds in part on itself, so part of the job of returning to a more stable and productive economy must be to break the grip of inflationary expectations one useful insight into how actual inflation may affect expectations is based in the concept of rational inattention. when inflation is persistently high, households and businesses
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must pay close attention when inflation is low and stable, they are freer to focus their attention elsewhere. former chairman alan greenspan put it this way -- for all practical purposes, price stability means expected changes in the average price level are small enough and gradual enough that they do not materially enter business and household financial decisions. of course, inflation has been just about everyone's attention now, which highlights a particular risk today. the longer the current bout of higher inflation continues, the greatest of chance of higher inflation will become entrenched that brings me to the third lesson we must keep at it independent the job is done. history shows that the employment costs are likely to increase with delay, as high inflation becomes more entrenched in way and price setting. the successful voelker
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disinflation followed multiple failed attempts to lower inflation over the previous 15 years. a lengthy pertain of restrictive policy started the process of getting inflation down to the low and stable levels that were the norm until the spring of last year. our aim is to avoid that outcome by acting with resolve now so these lessons are guiding us, as we use our tools to bring inflation down we are taking forceful and rapid steps to moderate demand, so that it comes into better alignment with supply, and to keep inflation expectations anchored we are will keep at it until we are confident the job is done. thank you. [ applause ] that was at the chair powell delivers his remarks, and let's just getting right to it on the desk mike and leslie, the market
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taking a reaction, again, saying we're going to stay at it until the job is done, perhaps hawkish for longer. >> the emphasis certainly on the restrictive nature and how the fed feels like it needs to be much more resolute a restrictive policy stance for some time. it's going to require some pain. the labor market he pointed out, again, is strong but out of balance, means he feels as if the fed's tools which attack consumer demand have to be applied on that side on the other hand, it's not out of the range of the messages we've been getting already >> right. >> so there was not a lot of speci specificity. he said we don't stop at neutral, and the rates are in the range of neutral. >> and he said restory price stability will take some time and requires uses our tools forcefully to bring supply and
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demand into better balance he brought historical context into what he was thinking about, like not making the same mistakes from the '70s and '80s, the central bank engaging to make sure bringing prices in control are clearly paramount. he said the issues could be far worse. >> during his speech, the two-year note used popped back up it's not a huge -- >> now we're back up, mike >> the stock market continues to stare down these conditions in the bond market, and in the currency markets that suggests a hawkish fed, but it doesn't answer the ultimate question of, okay, so we know we're in this several-month period where they want to get rates into a restrictive place that may mean 0.75 in september. he didn't commit to that he said we're going to figure that out but if we're talking about 3.5%
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to 4% destination for the fed funds, the market was already using that assumption. if that remains as a blatto, that may require an adjustment, but it remind me when they said we're staying here until we see a good labor market recovery in evidence, we're not going to anticipate that. now they're going to have to see inflation come toward their target, proving it over multiple months well, let's bring in steve liesman as well. powell front ran you there usually you have headlines for us, but he was on before we thought. please give me your take on the speech and anything else you've been hearing from the various people you've been interviewing as well. >> reporter: yeah, i think it was a pretty clear speech in terms of what he was trying to community indicate there was one line in there for the doves, that maybe it would be possible to slow rates at some point, but pretty well signaling the possibility of a
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75 basis-point hike in september, and then the possibility of the fed reaching a peak level, and then coming back down. they have increased the peak level, as mike said, the two-year has gone up, that has an effect on the fed funds futures market 3.83 is what i saw i think you have to ask yourself question, is this a tactical speech or strategic. is he just trying to convince you right now that indeed we don't have any plans to reduce rates down the road, or will he keep rates down the road >> i think mike knows these people in the market, that say the fed doesn't know what it has to do. and it's going to have to reduce rates later on i get the notes from people who sea the fed is wrong right now, and what is happening is the process of fed officials coming forward, saying, no, the market has this wrong, and the reason
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is bringing forward the tighter financial conditions into space right now. >> steve, you've had the opportunity as well to speak to a number of fed position, harker, bostic this morning. anything you're taking away from those conversations that's worth sort of sharing again in terms of the overall sense we're getting via powell >> it's the same idea that powell gave. if you write down the words "higher for longer" you would have encapsulated what you need to know now. it's again the possibility of rate cuts down the road. there's some difference of where the terminal rate is harker said 3.4, and bullard likes 3.75 to 4. esther george won't say, except she wants it to go higher. so i would pencil in that 3.75 area for where the fed will
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ultimately go. maybe it stays there for a while with a question that, if that doesn't do enough to solve the inflation problem, it would go higher still >> all right i want to bring in the whole gang rick santelli and bob pisani are joining us give me your take, rick. >> definitely the two-year was around 3.36 when this all occurred, now it's around 3 had the 41 it'sic as high as 3.44-plus. if i had to summarize, it spiked up, but it's coming back down, and 3.43 is the he yield close for mid june, and we can argue the terminal rate is around 3.75, and len ate go to the ten-year, that would in a range
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around 3.4%. the current high closed just shy of 3.5 for mid june. 3.03 is where we were before the volatility and the speech. it's exactly where it started. maybe the most interesting aspect is the dollar index moved lower, now it's moving higher. the dollar is the thought of euro recession, so it's a muddy indicator. maybe the best indicator of all, january fed fund futures have had some volatility. in the end, i'm going to keep it simple, folks, it's up on the day one tick up means less fed. obviously only a little less fed, but after going through this entire ordeal to see that contract still up in price on the day speaks volumes about the speech >> bob, i want to come to you, because there's been an overarching disconnect between what's going on with the market and fed policy, kind of speaking
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to what steve was saying earlier, some investors don't buy this idea that the fed will keep rates at a higher level for an extended period of time do you think there was anything in today's speech from chair powell that indicated that that gap could close in >> no. the key question is does the market now believe that the terminal fed funds rate will be dramatically higher. so we're dealing with 3.5%, is there a sudden believe it's going to go towards 3.75, even higher, and i'm not sure it changed minds. he said lower inflation readings recently are welcome, but far short of what the committee will need to do before it's confident inflation is moving down he. so will it be dramatically more than the market already expected >> of? i'm not sure it changed a lot of minds. he also made 'meal ameliorative
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comments, saying it will become appropriate to slow the pace of tightening so there's a soft to the bulls who are out there. look at the s&p here e. we were at 4196 when powell started thinking, dropped down 30-some points, and then we have sort of climbed back up, so people read different things into this i think the point is that powell is in a tough spot he's got to make it clear they're a little unhappy with the market gaming them earnings are not declining at all. i think they're probably not happy about that so they've got to attack that narrative, but they can't attack it too much. i think he threaded the line
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here pretty clear. the university of michigan consumer sentiment numbers were better than expected and maybe that helped the market absorb whatever the intended message was of the fed pricing in some probability of everybody agrees to whatever the destination is then, you know, life happens there's a range of probabilities, and the economy can respond in certain ways, to that possibility of a cut just means at that moment, it might be more likely than an immediate hike. >> mike, i think we would be a bit remit if we glossed over some new stuff in this speech. it content of addresses what bob was saying, whether or not -- what is powell's sensitivity to
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the potential pain out there i just want to get it exactly right. he talks about the idea there will be pain in households higher rates will bring some pain to households and businesses so the idea he's allege knowledging there would be pain, it sort of speaks to the resoluteness of the fed in racing rates despite what could be fairly neath economic numbers out there.
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>> steve, just to follow up since 2019, you're obviously there on the scene do you think there's any significant benefit from being back in person that's helping inform some of these ideas, you know, things that ester george talked about, making a cute metaphor there, but anything that helps this conference restore credibility, think creatively about things, anything that's happening this year >> first of all, i'm glad you're not -- z of the conspiracy group that think this is a virtual background we get that conspiracy stuff about being in a fake place, but the one thing that's important that may be missed about the conference, it's the opportunity
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for the international banking community to get together. last night i spoke to people from britain, japan, a variety of folks, and what is being discussed quite a bit is the possibility of what happens to national gas prices that's a big topic that's out there i think there's way more ground covered when you're ability to sit down, and we'll see if that leads perhaps to a little more community indication rick always has his eagle eye on the dollar, and part of that dollar has different yays in possibles, so perhaps there had be some can kite nation or mace it's the way things ought to go. you can major they're going to be talking to each other
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some may think it's a positive outcome. and i guess my addition here would be that they hate to dispoint, but it's not symmetric, apparently, because if the market thinking the ultimate intermingling, inflation domestically and globally, a jobs market in the u.s. that's unbelievably strong, but we're all scratching our head, all of those things are making the market have a bit of a different view of the fed, but in that instance, the fed's
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pushing back ultimately, the fed in that case can give the market what it wants, too that, to me, is inherent if you're trying to strategize your next trade >> thanks to steve, bob and rick here is what the fed chair had to say about the challenge that his institution is facing. take a listen. >> the federal open market committee's overarching focus is to bring inflation back down to our 2% goal. price stability is the responsibility of the federal reserve, and serves as the bedrock of our economy without price stability, the economy does not work for anyone in particular, without price stability we will not achieve a sustained period of strong lake market conditions that benefit all. >> for more let's bring in form
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er -- >> you're focused on the right issues the message -- we're going to fight inflation, keep at it even if the economy slows he talked about how it may be some time that they will need to keep rates in their restrictive area, talking about below trend growth you really wanted to try to get the markets to believe that they're going to raise rates, gets to around 4% or so, and they're going to keep them there. >> all right did it deviate at all from what your expectations were, going into the speech? >> it was spot on. since the last ned meeting, you've had service single fed speaker, including people like neal kashkari, all saying the
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exact thing. we're going to keep at it and keep rates up. i think he tried to get that message across whether the markets are listening, i'm not so sure we haven't seen much movement in the ten-year they're still not buying it. >> do you think, randy, the markets are not buying the fed's intent, or do they simply think that circumstances are in the process of changing? in other words, some of the leading indicators of where inflation will track from here might in fact give a tailwind to them getting to neutral and not having to do a lot more. >> inflation is so far above their 2% goal, this is not something that come down in three, four months he said they need to feel confident that inflation is actually down. it wasn't by accident that he and both paul volcker, and the mistake made just before voelker got into office, that the fed pivoted too early.
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it wasn't random he quoted paul volcker. >> randy, how much collateral damage do you think the fed can tolerate he was pretty resolute, saying price stability is the most important thing in the economy and the pain would be a lot worse if we don't get this under control. is there a risk that there are some sort of exogenous event that could cause more pain, or caught a pivot or something different from what we heard from him today. >> certainly mr. putin could do things that really upend the global economy putting that aside, i think they're resolute on that if there's some sort of extremist escalation in the conflict and there's other areas as well, and they're going to
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tolerate that if not. >> how much are they going to tolerate >> of course, that's the magic question fortunately they're starting at 50-year record lows. that's very different from where voelker started things the market could go up and still not be in extreme bterritory. if the unemployment rate gets the to 5% to 6%, that's still not historic highs >> randy, thanks for your insight. have a great weekend >> bye-bye we're going to take a quick break here of course, you can see the markets have started to sell off a bit. the nasdaq is the low of the session, with the broader s&p
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basis point increase in as many meetings it could be appropriate at our next meeting our rescission will depend on the totality of the incoming data will likely become appropriate to slow the pace of increases. >> he said we have to keep at it until the job is done. is that what you wanted to hear? >> yeah. i'll be joining the chorus, i think of your other commentators i think he did a good job of laying out the strategy and
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tactics of where they're going forward. they're going to move into restrictive territory. as they do that, they will likely slow the pace of tightening, but they left it open they'll slow the pace as they get to the terminal level. most important, they're going to maintain the terminal level for an extended period to bear down. i loot at that as the hat trick of essentially what he's laying out probably best summarize d. >> how long they're going to stay there you want to give anybody any guesses? >> i think it will be 3.5 to 4, and i would lean toward 4 as opposed to 3, particularly if they pull back to 50 instead of
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75 in september. i'm thinking in terms of 3.5 to 4, leaning towards 4 i would think of terms of at least 6 to 12 months, which is your biggest disagreement with where market-forward pricing is. >> all right that pretty much -- even at the shorter end of that takes us probably through most of next year, paul i wonder if there's another way to characterize the message. could you take that speech and say that, any kind of a soft landing isn't even explicitly the goal anymore >> i think it's still the goal i don't think they want a recession. they're not expiringto a recession. i think they're still trying to achieve a softish landing, but
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he didn't really pound the table about that today, and i think wisely so. he wanted to communicate, using the word "pain" on main street associated with this he didn't want to ring a bell on soft landing today he had other things to put markers down, notably the higher for longer marker. >> just to be clear, paul, why do you believe it's wise for the fed to communicate to the public they should expect in spsome pa here. >> it's a federal institution with a mandate from congress i think it's imminently reasonable that chair powell would be speaking to the public. most of the action in the media associated with fed policy is related to what we're talking
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about in markets and so forth. i think it's important for the chair to speak directly to the public at times, telling them that he feels what's going on in the economy and recognizes that he needs to do whathe needs to do, and it's going to hurt a bit. so i think it's important that the fed speak to main street, not just to wall street all the time >> well, at least those -- paul, thank you. >> my pleasure yeah taking a closer look at that market reaction to fed chair powell's speech, down at the lows of the day, now down about 1.4% it's kind of a deepening its losses for the week. the nasdaq you see is the underperformer there, as often is the case when we're reacting to perceived hawkishness from the fed. let bring in art cashin. he's on the news line. great to check in with you
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today. it seemed coming into today's session you could have made the arguments that stocks are putting in a stiff upper today, does it mean there's a rethink of that in their mind? i think there's a rethink, and there's a purpose that powell had. hoe spoke more briefly than in inhad expected, and he hit on the key points he wanted to make he wanted to use of the word "neutral" in his prior comments. he said he had reached a neutral point, saying, okay, we have reached a point we might be ready to push. neutral simply meant to the
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level where her helping or hurting. he wanted to get away from the concept -- he had said the soft ish then he invoked saint paul volcker, and those were the things he wanted to accomplish and then took on more and some hope when he did say at some point we might reach a level where we slow down, or whatever his phrase was i think that was the case. very briefly, i think he
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accomplished exactly what he wouldn'ted and poured some cold water on some of the stock market bulls. >> without a doubt, injecting more reason for pause, for people to assume this tightening phase is almost done and it's going to reverse on the other hand, i wonder where it they have stock markets in terms of positioning. there's still been a pretty lively back-and-forth of whether we interpret this as the end of the bear market in june, or just another temporary relief rally did we get any fresh information on that? i think we'll find, as we progress, we're approaching the month of september, and we've been doing this 60-odd years seasonality is a fact, so i think the bulls are going down
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with a bit tougher time, particularly if they're able to push above the average in the s&p. they hit it like the third rail on a subway the last time. if they stay below that, i think the bulls may wind up on the defensive. i don't know if we retest the lows, but getting ready for a choppy september, i think. >> we will brace to that, art. powell did spend half of his speech that historically records gave three examples of lessons learned, and that he said central banks should engage in responsibility to deliver low inflation. he said the public's expectations can set a path of inflation over time, and he said they must keep at it until the job is done. as someone who studies financial
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history closely, do you believe he's looking at the right historical analogy here? >> well, certainly there are differences, but you have to remember, leslie, he has to worked on his personality credibility. the world transitory has hung around his neck almost since the time he uttered it so i think he wanted to invoke arthur burns without citing him, saying i am not like arthur burns, i will not step away from this too early and allow it. i will follow saint paul volcker and be as strong as i need to be i think the differences clearly
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are things like the high level of the oil price in those days that was a major factor. we had just come off the guns and butter policy of lyndon johnson with the vietnam war, so there's certain key historic disparities here, but he's dead right about one thing. you can't do touch and go when you're fighting inflation. you have to grind about it he has a big problem facing him, much of this inflation is global you're starting to see agricultural prices creep up again. some of that is due to the war, and some is due to drought he has a local market to talk to, but he has some punishment from outside. >> absolutely he's not counting
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on just getting lucky for sure art, great to talk with you. thank you. >> my pleasure. as we head to a break here are the biggest laggards for the week, led by dollar tree, advance auto parts are not far behind we have briefly in the green right after the comments, but now we're down s. some like strategic diversification. some like a little comfort, to balance out the risk. others want immediate gratification... and long-term gratification,too. they have their own interests, but at the end of the day there's nothing like being... a gold-owner. visit to see why gold is everyone's asset.
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powell's speech this hour impacting interest rates, but what might that mean for the housing sector our diana olick has a look at that for us. >> hi, mike. the housing market is all about interest rates right now while powell didn't say anything about housing specifically, he did talk about maintaining restrictive policies for some
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time that means higher rates. mortgage rates don't follow the fed exactly, but they are influenced by fed policy they for mortgage bond yields, which follow the yield, and now it's up again, so we're in a bit of a fluid situation take a look, though, we saw rates pull back in july and the first part of august, but began climbing sharply again last week, in anticipation of this speech, the fear that powell would still be aggressive. obviously rates will be taking demand for the builders, but we did hear the ceo of toll brothers say they saw a pop in demand in august likely due to the rate pullback. affordability improved a bit in july, but 6% seems to be the pain level we've seen home prices react with not only the first monthly decline in three years, but the
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largest monthly decline in over a decade so going forward we're going to have to watch if they settling in the upper 5% range gives home buyers some comfort, and more importantly what happens to home prices that will affect both buyers and sellers. we've seen a sharp pullback in the latter, which doesn't help with the continues housing shortage. >> it's hard to be optimistic when inventory levelssh so low. still to come wee get more reaction we are back in two this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are?
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. remaining under pressure following jay powell's speech. we should emphasize that rates would likely stay elevated for longer than perhaps anticipated, and then it would involve some economic pain, this fight against inflation, the s&p down a percent and a half
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the dow down more than 400
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all on the largest, fastest reliable network. from the company that powers more businesses than anyone else. call and start saving today. comcast business. powering possibilities. markets lower after fed chair powell's speech at jackson hole here's what he had to say on the impact of june's data and july's data on the economic outlook.
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>> inflation is running well above 2%, and high inflation has continued to spread through the economy. while the lower inflation readings for july are certainly welcome, a single month's improvement falls far short of what the committee will need to see before we are confident inflation is moving down so we are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%. >> thomas peterffy joins us now. thomas, thank you very much for taking the time. what are your impressions from the speech, and the subsequent market reaction today? >> well, first off i expected the chairman to say that we will stand -- inflation no matter what he did not say that. what he did say was that he expects the economy to continue to grow, a billow trend.
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he basically hopes to keep the economy growing, but i do not think that will be sufficient. and i don't think that we convince the markets he's going to do away with inflation. besides the fact that he thinks very difficult, it is a very difficult situation because there are several very deep, long-term trends that are inflationary even if he succeeds for a short period of time, these trends will be with us for a very long time and they are deglobalization, short of skilled labor, continued deficit spending and the rising debt service. >> so then thomas -- given, oh, sorry, i just want to say, given those exogenous factors then, is
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there much resolve the fed can have anyway? do you think they should just be kind of pausing where they are >> well, that's the problem, that's exactly how i see it. so i do not think that in the long run, short of really closing the deep recession, they can reduce inflation to the 2% level. >> what do you think the market is indicating with regard to september? obviously today chair powell didn't mention specifics with regard to 50 basis points, 75 basis points the swaps market is pricing in a 50/50 chance that the fed goes either way what's your read from the positioning you see, you know, with regard to what the market expects the fed to do? >> well, i think that we are still hanging on the data that's
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coming out before september 21st, right? so i think that it will either be 50 or 75. i think that they should go 75 i think that, you know, they are late to begin with so i think they should be more determined to really be very strong. >> thomas, what are you seeing right now in terms of your customers' risk appetites? we've obviously had this pretty strong rally in not only the overall market, but in some of the more aggressive parts of the market, options values have come back and things like that. does it seem as if that's back toward 2021 levels or not quite yet? >> no, not quite yet so our customers have been holding back the cash reserves have risen
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and so they are sort of waiting to see what is going to happen now, maybe they were waiting for the speech, and since i'm talking to you, i have no idea what is going on in the market. >> all right well, thank you very much, we really appreciate you joining us today, thomas peterffy, interactive brokerage chairman. >> thank you. what's going on in the market is the s&p is down about 1.5%, the nasdaq almost 2% briefly we were in the green right after the speech. >> yeah. >> obviously it is a friday in late august in terms of liquidity and whatnot. i'm curious to get your take. >> it felt like what the market does to seesaw, quick positioning shock, and then a rethink. what's notable to me is the s&p has kind of just rushed to the lows of the week we kind of were here earlier in the week we'll see if that's all it takes to take a little bit of the -- perhaps hopeful positioning out
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of the market out there, clearly, chair powell was intent on trying to stay as far away from any dovish indications, or indications of maybe his outlook is evolving on the fact that it can stay around the neutral rate and things like that i think he's probably succeeded in doing that. but the bond market is kind of where it is right now beforehand, as you mentioned leslie, i think it's one of those things where, okay, let's not get overexcited. the s&p is still up 12%, 13% from the lows, it didn't change the overall profile of what we've been seeing right here companies look okay. consumer spending and by the way the pce number today, the inflation data this morning was somewhat benign. so that helps as well. >> you can see the risk posture in terms of the sector underperformance today, communication services technology, consumer discretionary, the three biggest laggers, still in the red, but holding up today. >> yeah, exactly sort of an unwind of what we've seen you did have a big -- actually,
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late yesterday there was a real big rally, very end of the day, that kind of got the gains for the s&p up there, and that was a lot of it was in the big growth stocks you're taking some of that back, i don't think unfortunately this has been the most conclusive verdict on what's going to happen next. but clearly it mattered a lot. >> speaking of conclusive, that's it for us have a great weekend, everybody, "techcheck" starts now good friday morning, welcome to "techcheck," i'm deirdre bosa in san francisco with jon fortt back at headquarters, three big stories today, of course the fed and jackson hole, all eyes are on the markets as powell promises to lower inflation, the nasdaq is down about 2% at the moment live in wyoming this hour. later, a suitor for electronic arts, deals that took over the street briefly this morning, but does a deal for amazon actually make sense finally, we're going to look at a firm, the stock is getting crushed this morning, th


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