tv Squawk on the Street CNBC September 9, 2022 9:00am-11:00am EDT
>> very good victoria fernandez, thank you for the brief answer, that will give us 15 minutes to say what >> 15 seconds. >> 15 seconds. >> to look at the futures this morning. or just to say, hey, it's good to have everybody back on set. >> the whole team. >> that does it for us have a great weekend, everyone see you monday right now, time for "squawk on the street." good friday morning, welcome to "squawk on the street." eight carl quintanilla with david faber and sara eisen the nasdaq is trying for three days up as we've got some cooler inflation numbers out of china, some decent tech and retail results. we begin with stocks looking to snap that loss over the last few weeks. gugg
guggenheim's scott miner says a 20% drop is still in the cards plus failure is not an option former vice chair richard clarida says it will come hell or high water. kroger shares up ahead of the open ppi two three instead of the prior four two, the first time ppi has come in below cpi in a couple of years. >> it reflects what's happening with china's economy which is basically stalled and continuing to go through these rolling shutdowns for millions of people but for those in the markets, and there is a growing camp of people, investors saying we've peaked on inflation, it's coming down very quickly, the fed should be looking at these forward looking indicators, it's more proof that that's happening around the world and it's good news lot fed is singing a completely didn't tune.
it almost doesn't matter who you hear from now, the biggest doffs, label brainard is talkinu getting up higher rates to fight inflation and not leaving until the job is done. they're not really paying attention to some of these forward looking indicators like china, like what we're seeing in commodities, oil prices coming down >> china's cpi was up 2.5%, i think 2.8 was expected they seem to be lightening covid protocols, some sense maybe ahead of the big congressional meeting next month then your favorite, japan, sara, continues to add stimulus, not helping the yen, or maybe a little bit >> a little bit. the way to determine the market mood right now is looking at the u.s. dollar, it's become the center ever the world. when it weakens, it's a green light for stocks because it has been strengthening the steady march higher against so many other currencies, that really does tighten financial
conditions, hurts spexports for the u.s., hurts earnings it's that time to continue, theoretically it could be good for stocks >> there's some commentary this morning about weakening indicators in breadth and momentum and trading partners, which is why it feels like it's worth taking a shot on a call to go lower we're getting decent news on ukraine's counteroffensive, some of the units are outpacing their artillery report you had milley and burns yesterday saying putin's objectives have failed >> the russians certainly don't admit that in their broader communications the move in the east has gone better than the move in the south in ukraine it was imperative that they show
progress in part as we line up a ways away. we know the pressure europe is under. obviously europe has been a big supporter and certainly willing to not acquiesce to putin and to the lack of gas which is virtually nothing at this point that's coming from russia. so important for zelenskyy and the ukraine to show real progress, carl, they do appear to be doing that >> good news for europe, i guess, which holds an emergency meeting on what to do about energy nearly every single day, whether it's taxing the energy companies which really won't help them very much. they'll have to spend a lot, basically, to help people deal with sky high energy bills as it relates to inflation, crude oil has come down pretty sharply, it's up a bunch today, up 3%. but at 8621, it's only up 10% or so year to date. just add it to the list. i mean, i keep coming back to this theme, i saw a redfin report on the housing market, 21% of home sellers across the u.s. dropped their asking price in july, the highest share since
redfin began tracking the data in 2012. more and more cities, metro areas, i should say, are also seeing home price decline, more evidence that the inflation story is buying. whether it's positive for the market -- it used to be, before jackson hole, then we got used to the idea that fed chair powell, it wasn't enough for him, he wasn't to see more evidence >> which is where the clarida comments were so fascinating his other comment is that the central bank, the fed, is largely a single mandate central bank, at least in the short term here is what he said >> the message i got is very clear. failure is not an option to jay powell i think the uncertainty is how high will rates have to go and how long will they have to stay there to bring inflation down into the twos. you have to believe the fed now, they've made it clear. i'm surprised how unified the
messaging is among other members, you have to watch the fed. >> projections for job growth next year, we're looking at job losses for pretty much the first two-thirds of the year with unemployment close to 5, it will be much higher than the fed expects. >> this is the core debate, what is the pain point for the fed. the fed has a green light to keep fighting inflation. and we're continuing to see some good news on that front, jobless claims came in a little bit better than expected this week it's a tight, tight labor market you do wonder when we start to see the pain, because they're coming at us it's starting to hit at full force. so can the economy hold up >> that's the key question
obviously housing is an important component of that. we noted those comments from gary friedman, who is usually outspoken, restoration hardware now it's rh, he was willing to criticize powell and yellen for being slow and the impact inflation has on the housing market >> that's why powell was wrong in the beginning, janet yellen was massively blind and wrong, and fed moved too slow, quite frankly. now because they moved too slow, we're going to see higher interest rates than we would have if they would have moved faster and we're going to have interest rates go higher, it's going to shift the housing market first the housing market is the biggest part of the u.s. economy and it's going to drag down everything if i'm wrong, that's okay. but the data is there. >> it's okay if he's wrong
do you think the data is there, sara >> the data is there, that's what the fed is doing, and they're late in doing it he's telling the truth, and this is his second time bashing powell and yellen. he also is delaying a store opening in london and compared himself to elon musk who never met delivery times and thomas edison who took forever to invent thebulb he's a colorful character. we joined by megan shue and jim paulson. jim, can the economy hold up in the face of what fed chair powell is doing and what is ahead of us and how much is reflected in the market? >> i think if the fed is bent on inverting the funds to ten-year yield curve, then the odds really go up on a recession at
that point i really think the fed, the case for tightening, sara, is fading away rapidly, i think. real growth is slow, very sluggish, maybe 1.5%, and as you say and have been talking, i think inflation has been coming down rapidly and there's enough tightening policy already in the pipe from slow money growth, slower fiscal stimulus, a big rise in the dollar, big rise in yields, that's going to push downward well into next spring i think the fed will be done after another 50 or 75, myself, overall. and i do think the economy is in a lot better shape than we think compared to past cycles, primarily because balance sheets are so much stronger than they used to be had the debt to income ratio in the household sector hasn't been this low since 1990. net worth is strong, cash levels
and liquidity are ample everywhere, the corporate sector is good. housing is being hit hard. the corporate junk spreads are not. they're not signaling the recession. i think that reflects the fact that corporate america is in really good shape. so i would guess we will weather this although we'll grow very sluggishly in the coming year. >> megan, do you agree with that i would say somewhat rosy view because in that assumption you make, jim, it's that inflation comes down quickly, the fed pauses as growth slows but we escape the worst of the recession. megan, is that something you buy into >> i think what the market got a lot of juice from through the summer was the idea that we would reach a peak fed funds rate south of 4% and actually start to move lower. and that is i don't think a risk that the fed is willing to take. we do expect inflation to come
down pretty dramatically the tricky part is that even a year out we see the cpi on a year over year basis at around 3, maybe a little bit north of 3% and that is not the fed's target as we look at inflationary forces going forward, the housing market is encouraging. the tricky part there is we tend to see the housing market play into the cpi with a lag of anywhere from 12 to 18 months, which is incredibly long and i think the market has gotten a lot of support as well. and there i think there's an upside risk, when you think about opec not willing to let oil prices stay too low. china's propensity to relax their covid manmandates.
we are fully allocated, and i think the reason behind that is that it is really hard to get back in. and all it will take for the market to find a bottom is one or two really encouraging cpi reports potentially. and if we're looking at a recession next year, then we could have a little bit of a rally at the end of the year >> that's interesting. i guess, you know, clear and convincing, we keep talking about that, jim, especially as it pertains to cpi what do you think clear and convincing could be? could you front load clear and convincing to year on year in the sixes is convincing even though it doesn't give a lot of duration >> i think the data to me, carl, is already becoming pretty clear and convincing i just think when you look across the spectrum, wage inflation, six-month annualized base, the last year, peaked out at 6.1%, delegal decelerated alo
4.7. >> you can see there king charles and the queen consort have arrived in buckingham palace in the heart of london. >> he's going to be formally proclaimed tomorrow morning and expected to address the nation and really the world later on tonight. but what a remarkable 24 hours it's been all around the world, the tributes from musicians and rock stars to the new york stock exchange, the empire state building the president is expected to attend the funeral and even the b of e and premier league postponing events in the coming weeks >> this kicks off the mourning people in the uk the first time the british
people are meeting their monarch, king charles, he flew back today from scotland to london there's been a gun salute in hyde park. he's going to address the country. you mentioned british prime minister liz truss is expected to attend the service at st. paul's cathedral today he's visiting parliament, as i understand it, as well, where the senior ministers will swear an oath to him saturday, tomorrow a ceremony will take place in st. james in london to formally proclaim him as monarch. >> the uk will begin a period of national mourning for the queen. >> reporter: good morning, guys. a real sense of solemnness and grief is prevailing as all of the uk enters a period of
mourning we are here in scotland because it is in this country where the queen took her last breaths yesterday. she was residing at balmoral castle, 100 miles from where i'm standing right now when it emerged her health had been deteriorating, senior members of the royal family flew up to be by her side, including the now king charles iii and her other sons, prince andrew, prince edward, princess anne and her grandchildren, prince harry and prince william the king is expected to have a first audience with british prime minister liz truss the queen's body is still residing at balmoral it will make its way by hearse to the official monarchal
residence in scotland. i just want to draw your attention to the huge number of people that have been showing up, hundreds of people have been walking behind me, tributes, signs of respect, flowers, in front of the palace in honor of her majesty, who will really mark her place in history and these commemorations are, dare i say, fit for a queen >> thank you, quite a picture there. can you imagine being in line greeting the new king? simply incredible. >> more handshakes than selfies, actually the country's last king was queen elizabeth's father, king george, 1952 >> unbelievable. still to come this morning, some movers including kroger, interesting private label today. we'll take a look at the prelabel market as "squawk on the street" comes back on a friday
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it's always one of the saddest days of the year down here, the new york stock exchange, nasdaq, each about to observe a moment of silence to recognize the anniversary of 9/11 and honor the victims, survivors, and their families. you're about to hear one single strike of the nyc bell and the beginning of the moment of silence. david, 21 years. and it's remarkable for people who remember it in this country, this city, and certainly this
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queen consort viewing some flowers, meeting people in line. well wishers are singing and shouting "god save the king" ahead of his formal proclamation tomorrow morning >> it's about two different things, right? it's the mourning of queen elizabeth ii and today kicks off a ten-day period of that where no laws, for instance, will be passed in parliament and the new king, who immediately takes over, basically, as the king there is a lot of ceremonies and pomp and circumstance. the king is going to address the nation at 6:00 p.m. local time, just at the top of the hour. he'll meet with the prime minister and all sorts of ceremonies, sworn in, for instance, as he becomes king >> it's interesting, the layers of transition. this is obviously truly historic after the queen's reign, longest
serving monarch in history changes in prime minister, going into a winter, obviously severe inflation pressures in a winter that is truly uncertain. >> it was one of her last or maybe the last public photo of the queen. >> meeting truss >> yes, taking the meeting with the brand-new prime minister liz truss. >> there goes the king into the palace we'll get the opening bell in five pins. don't go anywhere.
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i'm thinking somewhere between let's broadly say between 3,000 and 3400, we'll figure out the bottom when we get there. i would say at that point i'm a buyer, because if you believe everything i just said, if you believe that the fed will pause, you know, it's going to be supportive for risk assets and the seasonals turn around. you know, seasonals turn positive in november through march, actually through june so the old adage of sell in may,
go away, come again at labor day. >> scott minerd talking about how low the s&p would have to go before he starts buying again. the "journal" piece says 75. >> i don't think any of it as a surprise the market is now expecting a 75-basis-point hike at the next meeting and is used to hearing this message from the fed that we're not pausing and the job is not done and we're all very hawkish. i think what the market is grappling with, guys, is that inflation is falling fast and the fed doesn't appear to be picking up on it not to get too wonky, the one-year inflation forward is now 1.7% >> powell got to this yesterday, david. >> he did. i mean, it's not as though they don't know that. they've got plenty of economists who can track data
>> they don't want to make another mistake. >> trying to get the participation rate up, to your point, slack in the labor market by the way, when it comes to big bond guys, minerd is a great one. 25% down on the s&p. [ bell ringing ] more mixed when it comes to predicting the equity markets. >> i was going to make the same part these stocks have not exactly panned out, he was super bullish on the market. >> all that said, some decent at the open, goldman sachs, asset management, etfs, nonprofit supporting families of new york city police officers, firefighters, emt's who have a been killed in the line of duty. sara mentioned dollar action today, we're getting more consolidation. that's helping tech. nasdaq, as they put three
straight wins together today, we haven't done that since july, believe it or not. >> even though we've seen a six-week slide for bonds, the nasdaq and tech trade has taken its cue lately from the bond market the slide in bonds reflecting all the hawkish fed speak since jackson hole we have to wonder, one thing the bulls are taking some comfort in is we have not seen the highs on the ten-year yield that we saw back in june and we have not seen the lows in the equity market in june we lost a lot of the ground we gained in summer we're below 330 so we haven't gotten up to that 350 level. perhaps that's why you're seeing some stabilization in tech and also the weaker dollar republicans, no question >> we still have an inverted yield curve which we've had for some time. >> three months. not a good signal for the economy. >> nor for the markets either. >> hasn't been helpful for the
banks. but they have staged a bit of a rebound this week. i was going to bring up kroger, out today with a very strong report sales were better, earnings a lot better same store sales came in strong. and they raised their guidance they raised the i.d. sales outlook from 4 to 4.5% from the 2 to 3% range. just some color here on what's driving the quarter. people are staying home and they're cooking at home and perhaps they're doing it more at the expense of going out to restaurants, just given what's happened with the inflationary environment. i also wanted to highlight the private label business which is r brands and kroger because they saw sales jump 10.2% it's helping the grocer but also reflects the economic environment and the fact that people are trading down, something the ceo has been warning about for the last few quarters they're seeing record numbers in
their fuel program where they offer savings. they're seeing more digital coupon downloads, all of that reflecting a weaker consumer that is still spending a lot and prioritizing groceries because you have to eat and you have to cook at home now >> private label, you said, double digits. prior was in the 6 range we've seen a bunch of charts lately, the percentage of overall food sales that have gone private label as folks look to trade down. all that said, bofa, not only did we see some of their card spend data in august, card spend per household up 5 year on year, last month was 5.3 it's not like card spend is falling off a cliff even as people hunt for bargains >> no, but people are trading down and they're spending more i talk to rodney mcmullen on "closing bell" in an exclusive interview. >> it's always exclusive when you have rodney.
we enjoy that. >> he knows where to come for an interview. >> speaking of other interviews you've done that we wonder why they're not on here, t-mobile announced a significant buyback. stock not doing much there had been talk some time back that this is a company that could buy back as much of a third of its market cap over time the buyback is $14 billion i don't know why we're giving credit to reuters, they announced the buyback. it's $14 billion, it's roughly a year they're not obligated, as is almost always the case when companies announce it, but a significant one, not unexpected by shareholders. again, there will been, even though this is a large number and expectation that you might even see more and perhaps you will see a follow-on announcement of course t-mobile as we pointed out many times has been by far
the best performer when it comes to an overall sector, in a year that's been dreadful they're expanding beyond at&t and verizon to include the likes of our parent company comcast. charter, another one of the larger connectivity plays in the country, moving aggressively into wireless as well. t-mobile up 25%. and as we pointed out a couple of weeks ago, its market cap now far exceeds that of verizon. we kind of like to keep track of that they've won that war at least for now, obviously a reflection on their ability to garner new customers and what is a great spectrum position that many would point to >> bernstein's reaction today on the buyback is, quote, finally and they point out that they guided free cash flow to 13, 14, basically giving all of that back in the next year. they say, some may argue it's
not a news event but there are plenty of investors out there waiting for them to get involved >> there was an expectation of a large buyback, perhaps even one that would be larger than 14 certainly given the increase in market cap it's not as large as the percentage might have been some time back. but still a large one. by the way, the 1% tax, 140 million bucks on this overtime, doesn't seem to be stopping corporate america with buyback announcements. >> it sounds like buybacks are back in vogue, i was going to say. i just wanted to check on that stock, kind of a mixed outlook, rh is higher today, up about 3%. some of the reason for blame, you heard jerry friedman talking about the macro environment, the housing environment starting to weaken they do not do discounts and he was very clear about that on the call. and they want to preserve their margins and stay a luxury brand.
that has helped certainly the financial performance of this company, even though outlook a little mixed, delaying a big opening in the uk. >> we mentioned some of the tech results. not enormous companies but v. scaler did beat by a nickel, that's about a three-week high on zscaler docusign on as well, above the 50-day for the first time in about three weeks or a month so directionally at least some of the tech earnings we've been getting, late part of the earnings season. >> docusign has been an interesting one of course because it comes after a string of bad quarters, right, where the stock was down double digits i've been going through some of the analysts' reports. the feeling appears to be, a step in the right direction, good to see the billing today turn around. maybe the bottom is in for the stock and the performance but we'll wait on the sidelines to
see if they get a new ceo. the previous one stepped down and there is an interim ceo and share. there is a quote from her saying, we enter this next phase with a clear set of vital -- >> too fast, it moved. >> too fast. $50 billion opportunity. they got some new customers. >> this was seen as a pandemic play at one period of time, many of the stocks have declined dramatically from the highs. but the first time it had actually seen some positive news in quite some time there you get a look at that round trip that carl is more common than not for these one-time darlings. >> of course a lot of that is a remote work sort of remote commerce dynamic i don't know, david, you and i watch this a lot, long islan railroad ridership, back to march 2020 levels for the first
time over 3.4 million people rode the subway on wednesday, 10% over last week's numbers. so maybe we are getting some post-labor-day effects on commuting. who knows where to >> i know, traffic is as bad as ever, my god, in terms of cars >> but more people own cars now. >> right, although you would hope they would start to use mass transit the subway has been a bit more crowded. i don't know if you've seen that as well. i definitely noticed it. we're moving into next week as well >> harder to get a uber. >> for many employers, this was a transitional week. next week is when they really expect people to be back, if they've said three days or even four what i continue to hear from every leader i come into contact with, "i asked for four, i'll get three. if i asked for three, i would get two. so it's a reduction, but moving in perhaps the right direction, so to speak, for those who want
to see their offices full again. >> certainly code conference was busy with not a lot of covid friction, so to speak. it's a big month for conference, we have salt next week in new york city, brings to mind this investment from sam bankman fried into sky bridge. what crypto has done, defending 19 k >> about 21 k now, it's come back crypto has been bullied around by the macro environment yes, it's got its own share of problems with all these companies in the ecosystem halting withdrawals and facing liquidity issues, but look at the dollar when it weakens, that's good for crypto it's really become sort of like gold in that way it's got an inverse relationship and it's got a close relationship with the nasdaq as well not maybe as close as when we saw at the height of the bear market when there was much more liquidation in bitcoin, unwinding some of that leverage. clearly the relief we saw in the
dollar has helped a lot of assets including bitcoin this week, including stocks s&p now looking at a 3% gain on the week >> after three losing weeks. we mentioned ftx and the sky bridge deal. and overall discussion about that and the point at which we are in a so-called crypto winter here is what he said >> the digital office will start to gain more adoption in market structure, you know, in on-chain social media apps, in other things that will actually start to change life for people, that will be huge and secondly, regulatory clarity. having a world where, you know, simultaneously customers are protected and, you know, there's a clean path for businesses to move their liquidity onshore >> programming note, be sure to watch tonight's cnbc special "crypto night," 6:00 p.m. eastern time
we have a judgment on -- update on bitcoin >> tapestry has been a loser this year along with other retailers in the luxury space, but up today, double digit earnings growth. we'll talk to the ceo of this company as well later today on "closing bell" about the consumer environment and how she's shifting some of these iconic brands like coach and dealing with some of the global slowdowns in places like china >> in retail it's been a lot about inventory. one thing, sara, that kind of got glossed over this week was brainerd talking about the role margins have had in driving inflation. we talked earlier in the week about trying to goose pricing while they can one argument in retail is those
margins are going to collapse as inventories have gotten so bloated. will that be a negative effect on overall cpi >> right, because it's deflationary if you're having to get rid of all this inventory, you have to mark it down you hear a number of ceos talking about a promotional environment. you're already seeing weakness in apparel categories in terms of pricing it comes down to brand, who has the power and who doesn't. rh is not going to lower prices. but you hear about lululemon not going to lower prices. but in their categories you are seeing weaker prices it has to do with categories we consumed during the pandemic which were so hard to get which stores have stocked up on so much and now they have a ton of them, i keep coming back to the air fryer. >> you can pick up an air fryer for very cheap right now target took the hit and said we'll take the pain and has tried to get through a lot of
their inventory as quickly as possible if you have a product that people want, lululemon, you don't have to cut the price. >> that's what we're hearing from the food companies, you talked to the unilever ceo their costs are very high and they're not trying to scam consumers by raising prices but they're protecting margins and that's telling >> it's weird, they have to be noticing gas, at least wholesale gas down to january levels >> shipping rates are down all the transportation issues are down i think what the story is, they're down but still up from where they were, i don't know, in the last year or two years. that gives them the room to raise prices again companies will be scrutinized, kroger, margins were flat from last year, doesn't speak to the fact that they're passing it on but perhaps it's coming earlier in the food supply chain >> overall, as sara says, sort
of a risk-on day 30 points on the s&p utilities went green let's get to bob pisani, hey, bob. >> hey, carl, good to see you. 2% gains for the week, 2.8% for the s&p 500. take a look at the sectors all 11 sectors up at the open. china's cpi, by the way, was weaker than expected that helped all the asian stocks here ark is up today. energy is flat, down for the week, but it's up today. banks are doing well consumer staples are sort of underperforming. general mills, campbell soup, the usual names underperforming on a generally up day. take a look for the week, this is what you see when you get choppy markets they call this hammering out a bottom here. it's kind of strange here. ark had a good week. health care has had a good week. yet semiconductors, 3.2%, sort of underperforming some of the
growthier parts of the market. energy essentially flat, that's very good news, everybody watches that as a proxy for inflation. where are we for markets for the week i would say tilting on the bullish side right now the dollar index down three days in a row, two-year yield, that's a proxy for what the fed is doing, that's looking a littles to a little totoppy here i'll stick with my comment here, hammering out a bottom overall you guys were mentioning the t-mobile buyback buybacks are still very strong had. in fact the second quarter there, the first quarter of 2021, 281 billion. that is a record, that is an all time record we saw for the first quarter. second quarter here is down a little bit to $226 billion that is down a little bit because financials weren't buying back as much stock.
i think that will probably change in the third quarter. but don't kid yourself, these are still really strong. in fact if you put the fourth quarters from the second quarter of 2022 backwards, four quarters, it's a trillion dollars, that's an all time record we've never had $4 trillion in four consecutive quartersbough back before. we were talking about the 1% tax, guess who's going to pay it, the people who had the biggest buybacks, and the king of all buybacks is apple their bill will be quite strong here, $877 million these are estimates by s&p global that just came out. alphabet, $500 million, meta platforms, 500 microsoft, 275 million berkshire is down there at 271 billion. some people, carl, believe that tax will pull forward some of the buybacks into the fourth quarter of 2024 because this comes -- of '22 because this comes into effect in 2023. we'll keep an eye on that.
the more important thing is overall ceo sentiment about how they feel about whether the economy is going into a serious slowdown carl, back to you. >> bob, thank you. bob pisani as we go to break, let's take a look at the bond reports. treasuries, we're essentially entering the fed speak blackout wind, 'lheowwel ad to the upcoming meeting ten-year, 3.3. we'll be right back. what if you were an iconic tournament that wanted to keep millions of fans on the edge of their seats? so, you partner with ibm consulting and use ai to analyze millions of data points to help predict player performance and bring fans closer to the action. now you're serving up head-turning insights and transforming your business into the top seed. let's create experiences that ace it with your fans. ibm. let's create
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>> that was the treasury secretary highlighting key legislation yesterday, including the chips act, which the president signed into law exactly a month ago. kristina partsinevelos, good morning. >> this is the single private investment in ohio industry. it's there will be two manufacturing hubs, the marching band is here to celebrate, but it's stuck they have promised to spend billions while cutting back on billions for investors, $2.1 billion just in ohio, 100% tax abatement not even include the potential of 6 billion coming from the chips act, so the pressure is on for intel to build quickly. the goal is to get these fabs by
2025, but this morning pat gelsinger said it could be later, 2026, about 3 1/2 years or so that puts intel in a position where they have to spend billions, but also cut back i asked him that this morning. he said, though they are cutting knelt capital by $4 billion, all of the incentives they're getting will offset that a little listen in. >> that's allows you to keep our capital just down 1 mill on, but keep the net capital down 4 billion. however, you say you're still down a billion most of that is related to equipment delays, where we could spend the money that fast, because the supply chan chain has been challenge as well. >> reporter: but he promised they're not exiting any
businesses anytime soon. new products are coming. >> kristina partsinevelos, thank you. we're back after a short break. businesses have to find new ways to compete in order to thrive in an ever-changing market. the right relationship with a bank who understands your industry, as well as the local markets where you do business, can help lay a solid foundation for the future. pnc provides the resources of one of the nation's largest banks and local leaders with a focus on customized insights to help your business achieve its goals. that's how we make a difference. ♪♪
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good friday morning. welcome to another hour of "squawk on the street. we're trying to put together a winning week for stocks, first time in several weeks, as you have the dow up 200-plus we are 30 minutes into the trading session. here are three big movers we are watching z defend scaler shares are popping. the ceo joins us next hour on "techcheck" to break down the numbers. docusign is surging on positive results. interim ceo telling investors, the company has a, quote, $50 billion market opportunity finally eccheck out shares of kroger.
don't miss the c oh, rodney mcmullen with me this afternoon. >> right now, though, as you said, the market looking fairly strong, s&p up about 1%, looking to add to those gains from yesterday, despite what are ongoing macro headwinds. some are warning that it could go lower >> the message i got is very clear, failure is not an option for jay powell the uncertainty will how high ratings have to go, and how long will they stay there, but you've got to believe the fed now i think they've made that very clear. i've been surprised how unified the messaging is, so you've got to believe the fed.
>> got to believe the fed. >> i don't know if you do. if inflation is coming down rapidly and starting to see pain in the economy, that's the question that's what the market hag wavering with, and should you buy? should you put money to work on the idea that the fed eventually will pause in early 2023 that's what the bond market is telling you. we just heard clarida. >> though brainard this week did say -- at some point the risking will become more two-sided some doves are like, finally, at least they're talking about the other side >> we just have not seen enough weakness for the fed to stop we also don't know where
inflation will settle. we know it's coming down rapidly. is 4% good enough for the fed? or is it coming down to 2%, which is their man dade, which feels hard to believe, considering all the commentary i think the dollar is at the center of the action it's weakening off a very, very strong level, but that's providing some relief to equities today after the ecb this week, the bank of england, everyone is forced to raise rates. the energy crisis and inflation expectations, even though i think it was interesting, peet are orzeig thought it was a mistake, they're over-tightening. >> speaking of all of this, joining us this morning, barry bannister, and andrew slimmen
joining us barry, i'll just ask you first, your note last week at least sounds short-term constructive. >> yeah, we think the s&p 500 will end the year at 4,400 we do think obviously a lot of that will be in the fourth quarter. so we have to get through this summer choppiness, but sara just nailed it a second ago energy, food, goods and services is how you make up inflation prices will come down very fast. all the leading indicators we have point to that services are topping out so the question is how much damage the fed wants to do to the stock market when that inflation would have come down anyway that's really what the market is trying to determine. >> that's interesting. andrew, can you help on that for example, bullard just crossed on the tape and said that, yeah, next week's cpi, even if it's good, the fed will
look past it. >> well, yeah, i think the point is the stock market will get in front of any reduction invite bearish outlook from the fed i think what is going on here is what's fascinating, david pointed out what clarida said, but sara, previous to that, mentioned three companies that all beat estimates so that's the battle that we're undergoing this year, is that the earnings story hasn't been as bad as what the bears expected, but the fed had certainly weighed a lot on the s&p, so i think that's the tug we are seeing. i suspect the fed will end higher than where we are, simply because companies are not affirming this very negative outlook that many of the bears have been expecting. >> the bearing would say, yeah, not yet, not yet, but they will.
what gives you the confidence that perhaps that they won't. >> that's been the opinion all year long. not yet, not yesterday factually earnings are higher than where they were -- if that's an opinion, i'm giving you fact i think the yield curve is telling you we're going to have problems, but i don't think it's this year. corporate balance sheets and consumer balance sheets are too strong we have been able to withstand the shock, and so that opinion that is out there, yeah, at some point. it's just not happening yet this year i think there's a bigger risk next year, but not this year >> what's happening overseas yes, the u.s. economy is doing
well, but the situation in europe, uk, china is getting more dire. can we avoid not getting dragged into a recession or something worse, with all of that happening? >> the u.s. and europe are going to have to sit down and talk with russia. the terms of trade, combined with the rate differentials are driving european and japanese currencies right through the floor. they're already at subbasement level 3 headed to the core of the center of the earth. they're going to burn up winter is going to be brutal for europe with gas and oil, and terms of trade, as i said, is weakening currencies they have to buy oil in dollars, and their currencies are pretty much worthless from britain to eurozone to japanese yen, it's tragic. that said, we have to rely on
fed guidance as well as the diplomatic, as it affects oil. oil prices will be a huge factor in the market going forward. if the stock market a not outperforming oil, it will not go up. so we have to figure out what's going to happen to oil. >> andrew, driven your -- at least sort of less defensive position, are you actually moving out less defensive names? for example, energy and looking at things that will benefit from what you believe will be a relatively safe earnings picture? >> absolutely. first of all, let me say, look, i think it will be a lackluster year, but that's off 4778. i don't think i'm wildly bullish, because i would have to face the reality of the fed. but what i would say, you make the most money buying fear and
selling greed. two years ago you could give oil away and now everyone loves it i think the fear trade right now a consumer sentiment sentiment is horrible. that's reflected, i think in consumer discretionary stocks, so i think the fear is to buy consumer discretionary, come up by the money by selling energy, which everyone seems to love right now. on the floor time, that's the way i've made my money -- buy fear and sell greed. fear is consumer right now >> barry, one last question. you mentioned oil. yesterday the energy secretary did say another spr release is not impossible as they fear a spike in oil in the winter if the uk provides real fiscal support for households on energy costs, i wonder, to what degree can policy throw a wrench in what central banks think will happen to inflation?
>> i just got back from three days in continental europe and the u.s. i can tell you that subsidizing the energy billings in europe is not going to lead to less demand 28 lead to more demand it won't solve the problem burning down the strategic petroleum reserve will not leave us prepared if there is a true conflict involving u.s these are just palliative measures, not solutions. the only solution is to come to terms with the fact that the iran deal is inflaming opec, particularly gcc members, and come to terms with the self-destructive energy sanctions placed on russia, and the need for a more orderly transition, if that's the goal, on energy from hydrocarbons to something else. >> difficult transitions we're in all around the world. >> really good stuff we appreciate it
>> take care. a look at our road map for the rest of the hour, more on the fed amid a slew of hawk ish kem -- comment this week. and we continue to stint, especially when it comes to food prices. football is back what live sports mean for media, with drew rosenhaus. the dow is up almost 300 do you want some more? wait till you see me on the downhill. see you at home. enjoy it. with the advanced safety features of a lexus es. ♪♪ ♪♪ ♪♪
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welcome back the united kingdom is in mourning following the passing of the queen joumanna bercetche joins us. >> reporter: the uninthed kingdom is expected to be mourning until the day after she's bury it's here in scotland where the queen took her last breath surrounding her she had her daughter, princess now and now king charles king charles was by the queen's side when she died yesterday afternoon. he spent the night here in
scotland early today, went back down to london and a short while ago made the move across buckingham palace, greeted by thousands of fans, so much so that some of the bystanders attempted to give him a kiss, which is a break from protocol, but you could hear chance of "got save the king" for the first time in decades. he will be delivering his first televised speech as king of the monarch. tomorrow king charles proclaims at the council at 10:00 a.m. local time this will occurred in state department, with the process all televised for the first time in history. after that, he will then depart on a tour of all of the united kingdom, which teams him to
scotland, northern ireland and wales. the queen's body is still resting in a coffin as balmoral. she will make a move over the weekend after which there is expected to be a ceremony held at st. charles's attended by senior members of the royal family, then her body returned to london and significant events will continue through the course of the week, culminating in a profession at westminster abbey. the mood here is one of real grief, a sense of mourning, and a real sense of loss for a monarch who has provided over the united kingdom and the commonwealth for 70 years. >> joumanna, we appreciate that. the whole world thinking of the you can. in fact a uk flag is flying outside the nyse here this
morning. we'll get more on kroger, the quarter sending things higher a lot of travel and retail pvh, regeneron not far away on the list don't go anywhere. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was. (air tool sound) to help you stay ahead of the curve... or you could use workday. the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world.
let's give you a quick check on consumer demand, an updated one. the sector xlp outperforming the s&p this month one helping the better than expected results is kroger, also -- the stock is jumping up 3% it's up for the year we'll unpack the quarter with chairman and ceo rodney mcmullen later today on "closing bell." they also lifted guidance on sales. what they are seeing is strong demand people are prioritizing their groceries, and yet $signs in there that the consumer is suffering from high inflation and trying to save money, 10.2%
increase in same-store sales for the private label brand. that's a trade down, cheaper that some of the branded products, which we have heard from some other ceos, in fact, the fact that they're enlisting in the digital coupon and fuel rewards programs despite that, we are see people cutting back on restaurants and cooking at home. that's also helping -- >> we have seen some opentable data that restaurants are hanging in. >> i think in the big cities i think it's all where you come from it's not falling off a cliff, but people are making choices as it relates to inflation, one of the comments i heard from kroger is people are not eating out as
much we'll get into that a bit stock's up 9% this year. still to come right here, more on inflation, of course, we'll talk with the ceo of another grocer, spartan gnash. that will be after the break p 1%. s&up.1 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 investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
to the queen on the floor of parliament >> in an instant yesterday, our lives changed forever. today, we show the world that we do not fear what lies ahead. we send or deepest sympathy to all members of the royal family. we pay tribute to our late queen, and we offer loyal service to our new king. >> even people who are paid to go fast have slowed down to remember queen elizabeth form ula one teams held a moment of silence ahead of a practice session. the uk soccer teams have postponed their weekend matches because of the somber moment there throughout the united kingdom. sara thank you, contessa brewer well, while the cost of gasoline
gas prices may be getting cheaper, food prices are still high diving into all of this with one of the nation's biggest grocery chains and distributors, tony sarsum joins us. we got a strong report from kroger talk us where exactly you fit in the food supply chain. you're a large distributor as well, and what you are seeing in terms of consumer demand. >> happy friday, sara. we are a combination of a wholesale and retailer we run 148 retail stores we supply about 2100 independent grocery supplies of the majority of military commissaries worldwide and a handful of other national accounts. we're in that space, and we're seeing the same things you just talked about
we are looking at both the disruptions that resonated, but also seeing rapid inflation that has been an interesting challenge not only for shoppers and consumers, but for us trying to serve them as best we can i also was curious what you said about supply chain is it not getting better at all? marginally better, but it's been a long road. it's been a continuing saga of an extraordinary time to recover from a disruption. we had the disruption of baby formula in february, and we're still struggle to get back to normal a peanut company has problems in one of their plants, and we're now in month 30 of the wet cat foot supply crisis forcing cats all over america forcing them to
the streets looking for mice >> really? >> so it's a telling element of this. >> the wet cat food cries. our team is doing well we have implemented a supply chain transformation that we started about two years ago. we found ways to build in processes, put technology in place so we can start leveling this for our customers, ensure they get their supplies. we get about 50% of deliveries on time, but we are 97% on time supplying to our customers what's happening on pricing? your stock has been a big outperformer this year do you pass on those higher
prices, then, to the retailers who pass them to consumers explain how that works and what's going on now and in the coming months? >> yeah, the pricing has been a really big concern, the overall inflation, as you have noted we've had now 47,000 price increase requests. that's about eight times the normal amount, to put it in perspective. the average price increase has about 12%, so we're dealing with just an exponential effect in pricing some of our contracts we pass on price, oats we have other mechanismses we know we have to be protective of the shopper they're doing the same thing we're doing, so we're passing on some of that pricing,
and finding ways to be efficiency, and pass on less of that >> you know, it's not unlike things we have heard from other grocers and consumer packaged food companies, but i wonder, aluminum for cans, gasoline, fuel, freight shipping costs, is the industry not feeling those declines at all? >> it's a great point. a bit of a delay on some of those things, but it speaks of other transportation we're putting in place, and it's about merchandising transformation, working on ways to protect the consumer we know when the consumer wins, we all win, and we pass on the pricing in as limited a way as possible we're seeing cost questions from our suppliers, they're asking for more pricing than any way
you slice or dice so wire investing in this process. we're looking to partner with our food supplier such that we can work together to make sure we limit they things and they adopt -- the. >> tony, the worry with some of the grocers and packaged food companies during the pandemic was they're experiencing this huge surge in demand and it didn't really happen people kept eating at home,
the -- and now we're going into an economic period where people are watching their budgets, and dealing with inflation, and that's helping the group as well where does all of this settle? where does it go in terms of new consumers trends >> they're a little more stable it's a fundamental priority of every person's life. they're looking for ways to do that as effectively as possible. there's a big shift towards a private brand. we're seeing about 2 1/2 times our growth you suffering a bits less money, and they're looking to save pennies in a lot of spaces while they're doing that s. they are not discontinuing the need for a pumpkin spice latte on the
way out of the store the meat department, for example, a big part of our category in groceries, our number one growth item right now is the large packs of hamburger. it makes sense, right? we've seen corresponding sidelines in steak sales number two and three are interesting. two are the store-made bratwursts, which are awesome, by the way, and number three is k kebobs people are finding a way to save where they can, but they still want some indulgence, some joy out of food, and you're seeing that behavior. and we're trying to make sure to provide things that can provide that joy. >> that is really good color appreciate that, tony. good to see you. >> good to see you see you soon. there was a lot of color there.
wet cat food crisis continues. economists are raising their expectations when the fomc meets later this month steve liesman has the latest one of the most important questions for investors has been whether to believe the fed they're going to hike rates to a level that will slow the economy and raise the interest rates that was the advice this morning from former fed vice chair richard clarida. >> the message i got is very clear -- failure is not an option to jay powell the uncertainty is how high will rates have to go and how long will they have to stay there, but you've got to believe the fed now. i think they've made that clear. i've been surprised how unified the messaging is among other members of the committee on this point. so you've got to believe the
fed. >> his comments following the landmark speech in jackson hole, where powell delayed that he would keep at it until the job is done. fed funds future markets increasingly gravitate toward the -- it's an 80% chance of a 75 basis-point hike. ultimately the peak rate is priced for near 4%, a peak mentioned by several fed officials. a major point is to convince markets the fed will not flinch even in unemployment rises and the economy slows to a crawl without their forecast, carl, maybe not their will. >> fascinating and incredible stuff with clarida thank you. meantime, kayla tausche has
wor news out of the g-7. >> to cap the price of russian oil as well as high and low-value refined products that it ships around the world. i'm told the coalition of countries has not yet begun discussing the specific prices to cap the sales of those products, and will likely not reach that point of discussions until several months from now. that's a technical detail that, according to u.s. and european officials, they're just simply not there yesterday. the g-7 is still recruiting more countries to join in this efforts and expects by the g-20 summit in november, the positions of critical partners like china, india and turkey, will be much clearer i'm told it's premature to
discuss the price until the coalition comes together guys, back to you. >> nobody thinking this can work, do they, unless china is on board >> i think there's some speculation that perhaps china doesn't necessarily have to overtly buy in and seen as taking the signed of the west votes russia, but even if the western nations put this in place, it allows china to strike a side deal with russia at a lower price, which is a win for china, and a win for the west still limiting the revenues that russia is getting. so the administration has begin talking about this as a win-win either way lowering the price overall, they still seal that as a good thing. >> kayla, thank you. all right. live sports, the future of
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intel just breaking ground at a new plant in ohio, in what the president has called part of the future of the u.s. economy our kristina partsinevelos is live on the scene and joins us with more. >> reporter: good morning, carl, this is the biggest investment here in ohio from one corporation. that's $20 billion that's going to happen right behind me. right now they're celebrating, but these fabs are expected to be built by 2025 pat gelsinger spoke with me this morning and said that could be pushed back a bit, but promised $100 billion here. we know intel stock has done 20%. it's near it's 52-week low, weakening demand we're seeing it across a lot of the earned users.
just recently this morning, pat gelsinger also told me yes, they are losing market share to amd when it comes to data center at the same time they're promising to cut net capital by $4 billion that's why the chips act is so important to intel it helps them offset the cheaper costs when it comes to building in asia. listen to what pat had to say about that >> this is a mega site this is one of the largest sites in the world if we build it out, i hope it becomes the largest site on the planet for semiconductor manufacturing. what we build here must be competitive in the world that's the nature of the chips act. it's about closing that competitive gap so that these buildings we are building here, the most advanced manufacturing in the planet can compete in the world. >> reporter: so when you're hiring 7,000 construction workers, 3,000 technicians and engineers, that means there's a
lot of people that will be needed here which requires more tax incentives >> we've made clear to intel, when suppliers come in here, we'll give them a favorable deem we want them to come in here it's not just about intel. >> reporter: well, the president is expected to arrive here in, what, less than an hour. he'll be on the stage speaking about the chips act, most likely about the implementation plan for that, which they plan to start giving out money in subsidies this springs, but they have to fact check to make sure the companies are spending it correctly. >> the budget for commerce is definitely something to watch. meantime, bc's thursday night football kicked off last night, the bills defeat the rams the season kicking into high
gear this weekend morgan stanley comes along morning and says the leakage into streaming is eroting the traditional appeal >> i'm pretty certain that first of all, linear tv, cable, satellite is marching in a constant direction toward a great precipice and will be purpose off. a lot of people subscribe to cable and satellite television because of the certain programming. talk about the landscape, happy friday, great to see you >> good morning. >> great to have the season back. >> sure is. >> since sports is considered the glue that is holding together what's left of legacy media, how does the league think about this incredible industry
leverage they have right now >> well, it's really very lucrative. the money is unbelievable. you know, listen, the nfl made the fox network, right when the fox network got the nfl rights, it took off. it's really kept cbs and abc and espn and nbc all their highest rated programs are basically nfl football games so now you bring in apple tv and you bring in amazon, wow, it's going to be a game changer again. i don't see the nfl moving away. so to places like amazon and apple, that is the future, that's the present, but don't worry, you'll still catch your games on the big networks. >> only if the big networks can afford to outbit the other
players you just mentioned, which may become more and more difficult. well, they all have the streamic services now, right? that's pretty obvious. so i'm sure the ratings last night were off the chart haven't seen the numbers yet, but it's done a masterful job of creating leverage, and this should be unprecedented. the nfl sunday ticket, which is the sunday package, it's been a bidding war, you know, we've heard everything from disney plus to apple tv, amazon again we know for sure that's going to a streaming service, maybe espn plus, et cetera, but the future is now you're watching games on your
phone. >> given that and the incredible success of the nfl, i was wondering about player salaries. we see some of the big numbers in the nfl, but i wonder how much is guaranteed given the difficulty to stay in the game compare it to baseball, not popular as football, but they have longer-term contracts it's odd to ask, but are you not getting good enough deals, giving the profitability of that league >> i think there's a valid question there's no doubt that the biggest negative in the nfl pay structure is the lack of fully guaranteed contracts in the nfl, compared to major league baseball, the nba, it's got to change. it does start with us, as agents you know, our top players, we've
got to fight for guaranteed contracts and fully guaranteed desean watson was the first to do it. we had the highest guarantees, as a non-quarterback, t tyreke hill,. it's inevitable, especially when you see the salary cam going up and the amazing deals that the nfl is massing with streaming tv now they're partnering with casinos, gambling. it's just a matter of time until the nfl and all the top players have fully guarantee contracts like the other major sport leagues. >> i know you're excited about the big money behind the streamers. i'm wondering, though, what, if
any, are the challenges. for instance it's getting crowded out there when it comes to streamers they're going to have to pay a lot of money i wonder if people now where to find these games. >> i think there's going to be some partnerships between the traditional network and streaming services you're right about advertising and cross-promotion on various networks, but it's the wave of the future, and people will adapt and will adjust when it comes to the nfl this country loves their national football games. they obviously love college football that is coming as well to streaming. i think it's just something that everybody's going to have to make the adjustment. it's the wave of the future. just like we adjust to do cell
phones, watching that you can talk through, earpieces you can talk there, football games on streaming is coming next >> it's not like even a decade ago with long-lasting dynastiesy tampa bay, chargers, rams. i wonder if you think it's the bills year. >> i do think it's the bills' year, the bills are my pick to win the anc and ultimately win the championship assuming they can stay healthy, they look like they're the best team he have the best overall player in josh allen, their quarterback, and they were so close to making it to the championship game last year. and then they added von miller, one of the great defensive players in the game. and they look ferocious on defense to going with that dynamic offense. the bills are the prohibitive
favorite to be world champs this year it will be fun to see if anyone can stop them. >> josh looked crazy last night. von miller, amazing game drew, it's going to be fun to talk through the season with you as we go through it. thanks so much. >> look forward to it anytime, have a great weekend. >> i thought joe burrow was the best player. that was last year >> that's what i mean, there's a bunch. >> i'm hoping the bengals go back to the super bowl. quick programming note as we head to break, do not miss, a check on the retail landscape. the ceo of tapestry on the company's investor day today, sending shares higher. 3:00 p.m. eastern time, don't miss it, more "squawk on the street" eight after this we've got a nice rally going, highs of the day almost up 400 points but it is now time for us to work even harder, searching for meaningful experiences and new adventures for you to embark upon.
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let's get to brian sullivan with the latest on a volatile energy market. energy stocks are up today along with the price of oil, it's been not really where we've been lately, brian, tell us the latest. >> a couple things going on. i'll get to oil in a second. first off eu ministers meeting today talking about solutions to the growing energy crisis. nothing decided, but there are proposals on the table including a price cap on oil, what that
price may be, how it will be implemented, taxes on kpexcess profits from energy companies in europe on the table. the belgian prime minister yesterday in an interview saying social unrest could happen and the continent could shut down if they don't figure this out the price of oil is up today because there are some reports, and this is from interfax, that kazakhstan's energy minister has said their largest oil field will go off line for, get this, maintenance. does that sound familiar, sara, for about a month coming up in october, again just one report on that, kazakhstan, not hunl, but not small, a million barrels plus per day if that goes offline that will tighten the market as well seeing the price of crude oil up today, european energy stocks, you've got to watch them if this is a tax on excess profits that could take a hit as well by the way, leave you with this, carl, good news for u.s. companies if they establish that on europe, you wonder if it's going to ship more over there.
>> as much as we possibly can, brian, pretty amazing. brian sullivan, thanks. meantime, z scaler shares popping this morning after the strong numbers the ceo is joining us to break down those numbers in five minutes on "techcheck. highest level here since about august 15th. we've got a 9-1 update dow is up 350. chaud re
a strong rally, sector in s&p is higher, technology is playing a role in the rally today, it's notable because tech has been under under pressure basically ever since the jackson hole spieth by fed chair powell when he talked tough on inflation and said higher rates were going to be here to stay, david, the nasdaq is up 2% today. i know you're watching some of these bellwethers in technology, like a meta , staging a bit of a turnaround. >> more than the broader market, or even so-called peers, we have strength as you might expect on a day when the nasdaq is up as much as it is. amazon and microsoft, and alphabet, but metashare is up 3.5% a pretty good week as well still down 50% so amongst the mega caps, certainly one of the worst performers over the course of the year by far, sara, but a bit
of a bounce there. ad market becomes important there, comments earlier this week, from even spiegel, the challenge that tiktok has meant for snap, for example, interesting as well. jim cramer sits here and talks about the potential prospect of great success coming from reels for meta, again we are seeing that stock up nicely that's going to do it for us here on "squawk on the street. "techcheck" starts now good friday morning, welcome to "techcheck," i'm carl kwint nil la with jon fortt, deirdre has the morning off. 2% gains on the nasdaq docusign, zscaler surging. we'll dive deeper into the numbers when zscaler's jay chaudhry joins us in a couple of moments. crypto on the rise ftx continuing its buying spree. is this a bear market bounce or the start of a real rally. intel, breakin