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tv   Squawk on the Street  CNBC  July 8, 2022 9:00am-11:00am EDT

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cheerleader, but it was a good report. we have four days of gains on the s&p, which we haven't had for a while. we have all been subject to some pretty bad market action for the first half of the year, so i don't feel bad saying, what's ot to like about jobs and wage gains? >> have a good weekend. >> i will miss you. make sure to join us next for squawk on the street. good friday morning. welcome to squawk on the street. june jobs ahead of expectations. 372,000, although revisions were lower. the two-year shoots up to 312. futures go red as markets now nearly fully price in 75 basis points this month.
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we begin with the jobs number holding strong. it is defying some recession fears. we will get the first reaction with the white house. >> plus, twitter shares sinking on reports that the elon musk deal to buy the social network may be in jeopardy. >> and a crypto comeback. bitcoin rallying more than 20% we begin with the better than-expected number for june jobs. 372, average hourly earnings for the third straight month. maybe no acceleration is good news. >> it is good news. good news is bad news is the mantra in this economy. it comes in an interesting week with more optimism in the markets in the equity markets and more volatility in the treasury markets. that leads to this uncertainty with the jobs report. cpi next week as well.
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>> tremendous volatility in the bond market has been the story. stocks have been slowly following that. after the jobs report, you saw the yield pop up decidedly about 3% again. slightly exceeding the 10 year yield. is the same story. i don't know if the market wanted bad news, but a softer goldilocks like jobs report the somehow confirmed the slowdown story more than this one does what have suggested the fed was closer to that point where it is achieving what it needs to do, which is often up employment demand. it is worth noting that all the recession talk and, in a sense, arguably, a short-term overshoot in recession expectations, was never coming from the job site, it was coming from manufacturing, personal spending hiccups, housing data, the yield curve flattening out, but also, from the fed itself.
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they are saying it might be necessary to risk a recession to do what we need to do. therefore, people took that as, they want it. i don't think that is necessarily true. today's a number says the economy itself can handle more tightening, as jay powell has been saying consistently for months. >> leisure and hospitality wages up to tenths, moving in the right direction. movement in the manufacturing. the one possible puzzle is laborforce participation. prime age laborforce down as well. that doesn't make a lot of sense. >> not much. it's tough to necessarily parse what is going on, except to say that, went the fed and the markets would prefer is greater laborforce participation. you want the impression that there is more labor slack than
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we have been thinking. you know, it is one of these deals where the household survey is not as strong as the establishment survey where you get the headline jobs number. the market is taking back a small measure of what it gains this week. nasdaq underperforming in the premarket, as you would expect when you unwind the lower yields. >> when you look at a number like today, though, with all the talk about recession, can you even have that on the table? is it possible to have a recession with a number like this? >> it is not possible to say we are in it, but it is still possible to say employment is a lagging indicator, very low unemployment is something that precedes every recession. i don't know that the market is ever really in a moment, a lot of people are saying we are been one for two months or two
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quarters, but it is an unorthodox one. i think it will be unorthodox. you can't separate out this massive recoil of fact from supercharged goods demand now coming off all the supply chain stuff, and really, a labor shortage situation it may be stated corporate behavior in a way that won't have numbers line up by the textbook storyline. >> we will get more on the layoff reports. out of twitter yesterday, game stop, and others. i don't know if they asked about atlanta fed, still at -1.9 for the quarter. >> these numbers, much like what i am hearing across the district, really suggest that we are starting to see signs of slowing, but just minor signs. what we're going to have to
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see, and what i will look forward to over the next several months, is evidence that slowing is becoming much more sustained and significant across-the-board. we are starting to inch in the right direction, but there is still a lot more to do. a lot more we have to see if we are going to get inflation numbers much closer to the 2% target we have as the goal. >> a lot of echoes they are between him and others yesterday, arguing you have to ratify with the market already expects. the market economy remains strong, even with guesses about what today's number brought us. >> that's right. the hawkish commentary over the last few days is partially why you see the reaction in the equity market today, given that the jobs market came in stronger-than-expected. it provides further basis for the potential 75 basis point hike this month. obviously, cpi next week seems to be the more critical indicator as we look to parse
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through where we are in the economy. >> especially since the fed has anchored its review to how much tightening will be necessary, much more to headline cpi inflation as opposed to its own inflation measure. that means it is anchoring itself more to gasoline prices. there is a silver lining. gas has come off the high pretty significantly. we will see if that is reflected soon. clearly the market has been positioning for the turn in the story, which is, i guess what? inflation is no longer the concerned, it is actually more about slowing growth. we know markets overshoot in both directions in the short-term. >> oil is set for a losing week. we got those crazy inventory builds yesterday, which shows
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there will be an offset to the tight supply. shocking news out of japan. shinzo abe was assassinated in a campaign event. it was shot while delivering a speech ahead of the parliamentary elections. the suspect has been arrested. the white house issued a statement saying that it is shocked and saddened about the attack on shinzo abe, the longest-serving prime minister in japan. he was 67 years old. very influential in the politics of the country. some speculations that he could have made a run again on the premiership. shocking news for a country where gun crime is practically nonexistent. >> based on our community, trying to jumpstart their economy, also known for an
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offensive stance in terms of national security and getting their military ready in case anything were to happen with north korea or other neighboring countries. there has also been some statements out of the investor community, which has had much more of a tie up with japan in recent years, as it has become more open to even activists investing. dam logan made a statement saying the murder is as devastating, we had numerous meetings with him personally. you have seen that take place over the past few years. a tie up with trump as well. >> we don't know much of anything about what might be behind us, but he was identified with his tremendous shift in political culture in japan. this idea that you can revitalize things and maybe take more control over the financial market, something being tested in general by the
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policies over there with the yield curve control and everything else. not really his job today, not being in office, but identifying with that general activist stance of government trying to revitalize the corporate sector. >> there have been headlines this morning from police that the gun was handmade. they're unsure whether the bullet itself is handmade. as we learn more, we will pass it along. twitter shares arlo. the washington but repost reported yesterday that the deal with elon musk may be in jeopardy. sources say elon musk it doesn't take the numbers on span accounts are reliable, although twitter officials defended their numbers that they delete 1 million span accounts per day. we are back to the ongoing debate about what the original intentions of elon musk were and what the options are now. >> at the end of the day come at this deal does not come down to elon musk. there is a merger agreement in place . it is pretty iron cloud. there is no out. it is not as simple as walking away. deals don't work that way. and so, if there is, you know,
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if the twitter board is compelled to say, you know what? this is too much noise, we're having issues with employees and stakeholders because of the uncertainty, maybe they could come to the table renegotiate a price lower, but they don't have to. they have this agreement in place. bots are not a material adverse cause. >> the board has a legal advantage. the company can enforce that. it is a question of the cost benefit analysis of doing so if it comes down to going to court and fighting it out with a prolonged process. in a market where the stock traded around 37, the deal price for cash is 54.20. there is a massive spread already, massive implied uncertainty about the fact that this deal was going to be finalized as it was, even before the news yesterday. clearly, there is walk away risk on some level or something
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else that could come along the way. also, as you know, when you decide how much you will pay for company that has a merger agreement, you have to input what you think that stock would trade for in the absence of a deal. if that has gone down, the standalone twitter valuation gone down a lot since the deal was struck because of the overall markets, that feeds into the weighted price it is trading for right now. >> presumably, much lower than what it is trading for now. >> make a number. of the number is 20, then you have massive downside in the absence of a deal with limited up site. >> this deal has committed equity financing and debt financing. it is not like the financing -- the financing markets have changed, but they do have agreements in place. >> and they have plans to get
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the financing in place. >> exactly. although delaware's nice this time of year. >> we may find out more about the weather in delaware. [ laughter ] when we return, apple on the rebound. shares up double digits from the mid june lows. we will explore whether now is the time to get in on that stock. let's take a look at the futures this hour after the hotter than expected jobs report. you can see the market is still in the red more squawk on the street ahead.
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checking in on apple, the stock up about 10% since the mid june lows. here to talk about this is the bank of america senior i.t. analyst. apple has retained a lot of the outperformance of built up through last year, i say. still slightly ahead of the s&p. is that just essentially a quality and safety benefit of the great balance sheet and predictability, or are things going on with an apple that is driving that? >> thanks for having me. i think it is really both of those elements. when you look at some of the stocks, ibm, for instance, has
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materially outperformed. that is being treated more as a safe haven stock. in the case of apple, people are recognizing a lot of headwinds associated with what is happening in china in terms of the shutdown, potentially, another round of that coming. the supply chain issues apple alluded to. people have been today to all those issues and discounting some of that. at the same time, we are getting a lot of data points supporting a pretty decent quarter here for apple, giving that supply availability has been very good. all the products are pretty much available to buy. on the other hand, there is a case here to be made that china might reopen much more strongly. it looks like iphone 14 is pretty much on time, which is a net positive looking into the september quarter. positioning is actually fairly negative, in the sense that, on the margin, people are concerned
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there will be a hardware cost that is yet to come. it is not much of a safe haven trade. a lot of apple specific things are going on. the earnings power will not deteriorate as much as people worry about. >> so you don't expect there to be one of these rounds f estimate cuts, presumably. what about the app store income stream perceived motor ability? at times, people have ordered if they have over earned from app store and services. is that something people have to lower expectations for in the long term? >> i think on the services side, it is a very complicated basket of a lot of things. if you look at the app store, the headline numbers are decelerating, but if you look at the quarter to quarter basis, third-party data sources grew about roughly 5% in the second quarter. in the first quarter, it was 6%. the materiality of the
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deceleration is only a point. when you look at the broader picture, the bigger deceleration and tougher counts come from the google licensing revenue. that licensing revenue is what is causing immaterial deceleration in the june quarter. when you think about the 70% last quarter, but that is largely coming from the much tougher google. that starts to get easier. also, the app store gets easier in the back half of the year. we think there will be a material acceleration. the deceleration is transitory and temporary and will be a bottom in terms of services growth rate over the next several quarters. >> there is a, don't over think it, thesis to apple. warren buffett isn't selling.
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they buy back an enormous amount of stock every year. the company has moved out the upgrade cycle. it is no longer as hit driven as it used to be. i say that has merit with a lot of investors, but is it reflected in the valuation? it still hold the premium relative to where it has traded on the free cash flow basis in the prior decade. >> when you look at the valuation over longer-term, you mention a decade, apple created multiples 10 years ago commences then, it has expanded significantly. apple is in a really unique position. it is better than consumer staples in some ways. first of all, you have option out of the of new products. you don't have that with healthcare or the broader car market.
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there is all this optionality that is not being counted. the second part of the story, different from staples, gross margin expansion, you are seeing services becoming a larger piece of the mix, you have this real secular shift of gross margins moving higher. it is inappropriate to compare it to prior valuations. i think the premium apple gets to the s&p valuation has expanded, and will continue to expand over time, just because you have this structural case to be made were products and services can increase with gross margins moving higher, which is atypical for a company of this size and scale. we actually like the valuation pieces. if you look at tam expansion, it is a compelling long-term case for the story. >> do you see a $200 price target? >> very much so. there is always going to be
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fluctuations and temporary dislocations, and those of the opportunities, the best opportunities. >> appreciate your thoughts today. thank you. >> thanks for having me. coming up, we will get the first reaction from the white house to the jobs number. we will talk to chair of the council of economic advisers meantime, keep your eye on futures on this friday. yields actually come off of the knee-jerk bounds on the heels of the print. more squawk on the street in a moment. >>
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take a look at the nasdaq. got some tech in tre ahes the jobs number leads to a spike in heals and is taking a toll on technology, although, we should point out a lot of the names and their, especially chips, have had a pretty good five days. opening bell in just a minutes. >>
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levi strauss up sharply in the premarket. the company posted a quarterly beat, announcing a 20% hike. >> when we went public, it was priced at 17, and we opened at north of $22 per share. unfortunately, we have been pummeled with the rest of the industry, but the business, there is no question, we are a far stronger, far better
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company today than we were when we went public in march 2019. the valuation is a real opportunity for smart investors. >> of course, the valuation explained largely by what has happened to apparel inventories and the fear of markdowns for back-to-school and holiday. >> levi has outperformed over that span. it has been another troubled stock in terms of the macro, but if you look across apparel retail, the market values that as if it is and shrink a month at this point. all of the apparel geared retailers are like that. in that context, 10 times forward earnings for levi seems cheap, but not that much more so than how people view the over under. that is the reality of the industry. >> another interesting thing from that conversation is when he talked about the value of
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consumers feeling the squeeze in their purchasing decisions. we sought with their sales with target, amazon, and walmart. >> the is just when you thought pricing came back into things like bluejeans. >> here is the opening bell. [ cheering and applause it is the fresh air friend providing outdoor summer experiences for kids in new york city underserved communities. relatively balanced at the open as we take stock of the week. outsized political news with boris johnson and shinzo abe, at but overall, how much momentum is built into this? it is all leading up to a big print on wednesday with cpi. >> it is.
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another one of these rallies that has raised up to the point of, you know, a make or break as to whether it will be something more than just another bounce or countertrend rally. we do have energy, again, energy stocks leading. that has been some of the most violent whipsaw action. it is a huge gut check in energy stocks after they got very crowded and became synonymous with momentum in this market. it kind of swept away, maybe, the last pocket of overconfidence in the market. everybody is back on that, we don't know and don't have this figured out yet, which is a net positive. but again, credit spreads really came in yesterday. that had been a problem with the yield curve flattening. with the fed, the recession anticipation energy, back got a little bit of a break this
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week. >> the whole geopolitical situation and the dollar strengthen it, despite the concerns around inflation. the euro has an imminent sense of recession worries and fears surrounding their economy there. you see that with what is going on with the energy complex and the rationing of electricity. i experienced it firsthand when i was in germany a few weeks ago. air conditioning, basically, they turned it off. even though we will with a ton of people at a big conference with a heat wave. the hotel rooms were rationing air conditioning. >> ft a big piece this morning. germany dimming streetlights, shutting swimming pools, all an attempt to go into the winter with as much as they possibly can have. >> as much gas storage. we have been in these scenarios
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before when it was, you know, the u.s. on a relative basis with more resilient growth wise. usually, there was a dis inflationary overlay to that. and in the last 10 years, the debt crisis, the economy struggling, the out was a disinflation the right episode, and therefore, we have low rates. that is the tricky part of this environment, figuring out whether the economy here can power through. >> certainly, regarding energy, it leads you to buffett. another 700 million with the steak now approaching 19%. clearly not at all bothered by the dip we saw in recent days. >> in fact, he is probably encouraged. but you have seen the strain.
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inflation signals, commodities and energy, disinflation, tech. today it was interesting, the biggest out performer from a sector basis is financials. next week is earnings season. you have seen a large swath of analysts lowering estimates, and some pretty significantly at the end of the quarter. despite that, you have relative pockets of strength and financials on the basis of this jobs report in the sense that we don't feel like we're in a recession right now. therefore, perhaps, the second quarter numbers and up a little better. >> at least, concerned about investment banking and underwriting will be offset by interest income. we are all waiting to hear about reserves. the roadmap for 2023. >> we saw mixed picture on the
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last quarter on the reserves front. j.p. morgan taking reserves down looking ahead to the future. it will be interesting to see what happens in q2. >> the credit piece has been swinging the stocks around more than anything else. the anticipation of a weaker economy. is talking about financials and credit, on the fringes, upstart holdings down 23% this morning. already a very tough road. it is 93% off its high. this was a widely embraced new age leader. they had a better ai driven credit underwriting process. actually, a downgrade from morgan stanley last week with the stock of any down. basically saying, they would have a hard time meeting their numbers. part of the issue is, of the capital markets where they sell their loans that funds the business, that is become less generous. your see the results.
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but the $2.2 billion market cap with one of the hottest acts last year. >> prior guidance down. they say it, our spaces funding constraint. a lot of loans are moved to cash. that is impacting revenue negatively. >> but on the positive side, you look at the big banks exposed to fixed trading. people are very excited about that, given the recent volatility and the prospect that could be a boon to their earnings, probably not in the second quarter, but at least from a guided stand point looking forward. >> sticking with money stuff, bitcoin gets to 20 2.5, up 20% from the lows a couple of weekends ago. >> i always thought you had to use commodity futures, mental scales with the moves in bitcoin being forgetting about
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the bull market. it swings wildly. again, still in sync, generally speaking, with nasdaq 100 type buy and sell binary action. hard to know what this says. if it says we have purged enough of the leverage from the system and have taken our lumps in terms of who has to sell, or basically, but the customer flight you might have seen. but 21, a long way from 60, but also, you know, double the 10,000 level a lot of people have been targeting on the downside as the ultimate sell targets. >> potential capitulation. >> short-term, may be. we will see. it looks like there is a lot of rebuild but has to happen. of a lot of weeks where you would like to buy where it is quiet. >> overall, most sectors lower.
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we mentioned the banks, pretty much the only sector that is green, aside from staples. some strength in travel. tsa throughput yesterday to.2 million as people continue to travel. we did get a downgrade of american, they go to hold. they say high debt relative to peers, and the likelihood you can work that off and pay your pilots, and pay for fuel is getting tougher and tougher. >> absolutely. the challenges are tremendous. in today's jobs report, though, hospitality was the second highest editions with 67,000 jobs in june, followed by the professional and businesses services sector, which saw an increase of 64,000. clearly, a lot of hiring going on, but a lot of need in filling those gaps as travel
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has ramped up beyond most management teams expectations. >> getting back to the jobs number, by the way, better-than- expected. in june, 372,000 jobs added, which quells some recession fears. joining us this morning from the white house is the white house counsel of economic advisors chair. happy friday. >> happy friday to you as well. >> fascinating report. a lot in there. is the view from the white house more about sustained strength in job growth or signs that wage growth, for example, is moderating? >> this report reflects the historic gains we have made as we have recovered from the pandemic and the labor market. we have seen continued employment growth. what we learned was that the economy added 372,000 jobs, 381,000 jobs in the private sector, such that now the private sector employment is actually just above where it was in february 2020. this report reflects that there
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are employment opportunities that are broadly based. unemployment remains at 3.6%. there was a takedown in labor force participation, which is a number that does bounce for month-to-month. if you look overall over the past year, we have seen historic gains in labor force participation as well. this report reflects that the labor market remains strong despite the headwinds and challenges. it reflects the u.s. economy has some room to face the challenges as the fed negotiates inflation, and as we deal with the war in ukraine. >> you mentioned participation. there is some noise in there. but i wonder, to the degree there is something going on in the downtick, do you think it is about lingering covid concerns, or is it about the sustainability of excess savings , and not necessarily the need
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to go back to look for work? what is going on? >> again, these numbers are noisy for month-to-month. this fluctuation is not unusual in the labor survey. but you know, we did see a ticket up in the number people who reported they were not in the labor force due to covid, or that they were not at work due to covid. and so, we know that covid is still with us with the subvariants, but fundamentally, we saw in this report that we are learning to live alongside covid, and the labor force and labor economy continues to make historic gains. >> given the backdrop of this unemployment picture, are you surprised that consumer sentiment is at a record low right now? obviously, there is the inflation backdrop, but what does that tell you about the state of the economy and willingness to spend? >> we know that americans are continuing to spend. there was a slight decline in retail sales, but overall, we know consumption and
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expenditures remain rather robust. quite frankly, i suspect the sentiment numbers reflect we have had two really hard years. the pandemic has been a challenge, both personally for many people, in terms of the health emergency, and then the effects it had on the labor market and employment. now what we have is the knock on of inflation, which is a challenge, which is why the president is focused on reducing costs for families through prescription cost, childcare costs, focused on reducing the deficit. i think it has been a really hard two years. but what this report reminds us is that we have a brazilian economy. the labor force and employers are continuing to add jobs, and
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there are opportunities out there across a variety of industries. even leisure and hospitality, which still needs recovery, is still gaining jobs. this report reflects we have the bones that are relatively good, and our economy has the resilience for the challenges we know we will face ahead. >> you did mention the focus by the president on inflation . he is essentially acknowledged the primary role of the fed in trying to restrain inflation. given the fact that fed officials have essentially acknowledged that effort might likely involve softening up consumer demand, perhaps dealing with higher unemployment over the course of the next several quarters, how does the white house view that with the possibility that the economy might actually have to have some kind of a downturn in order to achieve what is necessary on inflation? >> what the fed hopes, and what we certainly hope, is that the fed is able to achieve price
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stability and bring down inflation while maintaining maximum employment as well. again, the robust labor market we see with reports like this come up the robust growth we had last year, suggests there is room for the fed to maneuver. the goal of the president is to make a transition to steady sustainable growth. we want wage gains due to productivity. he understands that involves bringing inflation under control. so that is why he wants to give the fed the room they need and independence they need to bring inflation under control while continuing to make the kinds of investments we know we need to make in order to increase economic capacity in our economy. that is why he is focused on reducing prices, making the investments we need to make to transition to clean energy. that is why the bipartisan infrastructure law is so important, allowing these investments so overdue. and it is why we need to increase taxes for the very wealthy individuals and corporations, so we can pay for
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these investments responsibly. we have our eye on that transition to a study, stable, economic growth because we know that is the kind of growth that will sustain us and be more widely shared. >> finely, i wonder if you will take one question on energy prices. we have watched oil with another losing week this week. we have thousands of gas stationswith gas in the three dollar range. the president has been job owning the gas companies and producers to refine more and produce more, but i wonder what this rollover, is understandable why some of the industry wants to remain cautious? >> we understand, and the president understands, the price of oil and gas and energy prices are priced on the global market. what he was really saying is,
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you have received some assistance during the pandemic, you have been making record profits, you have a decision about what to do with excess gains. he understands it is a global market. that is why he is focused on increasing production to get more oil on the market. he had historic releases working with our allies. we welcome the decrease in gas prices, because we know that is so important to american families. we know that energy prices, not only are they reflective of headlight information, but they seep into other goods as well. this is a welcome development. we look forward to further stabilization in the energy markets. >> we will see where the future leads us. appreciate you as always on the heels of the jobs numbers. have a good weekend. >> thank you. >> she is right about the last part, it has huge ramifications. i wonder whether or not guidance in the q2 earnings if we will hear about moderation. >> it would seem in the may and
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backorder we got a leading edge of that. we are fixated on profit margins. everyone assumes numbers have to come down a lot. remains to be seen. >> everybody says, from the fed to the white house, they don't want to see the worst case scenario. they don't want to see a severe recession. the fed wants to get to a point of raising rates where they have the tools to once again ease. i am curious, with the white house, we have midterm elections this year. it seems like 2023 could be a pretty pivotal time if we did need some sort of fiscal stimulus. if we do have that worst-case scenario in terms of a severe recession. i wonder if people talk more about that. >> it is really interesting, it seems as if that of gotten part of the blame, right or wrong, for the inflation. >> the political capital to do it again. >> it doesn't seem to be there.
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>> would be an uphill climb. start taking a look at bonds this morning. a lot of news in the macro world. looking at how treasuries are very today. two years close to 312. don't go away. your projects done right
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.. busy morning today in sun valley nfl commissioner roger goodell will talk to julia boorstin live from there, talking about streaming rights that is just one of the issues in the meantime, early session lows are down 130. back in a moment
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welcome back to "squawk on the street." hedge fund numbers trickling out a bit later than usual it appears that many of the larger diversified funds are the ones ekeing out nominal gains. citadel's flagship bringing the year-to-date performance about 17.5%, obviously significant alpha over the broader indexes
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all five of the four strategies, equities, and credit were positive in june similarly, the world's largest hedge fund returned 32%, a massive rebound after years of underperformance for the macro-oriented strategy there. contrast that to the more tech-focused funds like tiger global, pershing square, which is also largely exposed to just stocks, was down 26% for june. we should get ago re gatt numbers later today, but it appears that the larger funds are continues to work better this is again more of a reverse into the mean, given the underperformance in recent years. macro is definitely having its day in the sun this year, just
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given the confluence of factors and different asset classes as well. >> in terms of long-term equity, you almost couldn't be short enough to really do anything on an absolute basis this year. >> we have some interest data of s-3 partners earlier this week, where they talked about how it was shorted names this year, that did actually narrow, and it was less of a boon for some of these short manager for june you are seeing it come down as well >> we'll seal if the mean reversion continues into q3. coming up this morning, we'll talk about the jobs number, about the fact they took their
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q2 gdp numb terse down in a moment.
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good friday morning. welcome to another hour of "squawk on the street. i'm here with leslie picker and mike santoli david faber has the morning off. morgan brennan is on maternity leave. the dow is down 134, and back to 3875 rick >> our may final read on post-sale inventories moves from 2% to 1.8. 1.8 is the second lightest of the year outside of january when it was 1.2 as far as wholesale trade sales go, they're up half of 1%. we see that the sales number is definitely a disappointment. it's half the expectations, and 0.5 is by far the lightest
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number of the year as a matter of fact it's the lightest since december of last year when tiffs up 0.1%, and we do see interest rates are up a bit on the day, but very large on the week. leslie, back to you. >> thank you, rick you can see the broader indexes moves lower on that. we're already 30 minutes into the trading session. here are three big mover, starting with twitter sliding on a report that musk's deal to buy the company is falling through plus gamestop giving up some of yesterday's gains after it fired the cfo, and told employees it's cutting staff as it tries to turn around its business levi strauss shares are moving higher, helping by higher prices and strong demand for denim, a more casual workplace, though that stock has turned around a bit now that it opened, down about a half percentage point.
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the job numbers this morning, accelerating at a faster pace. even with the revisions, steve liesman has more on the numbers. hey, steve. >> good morning, carl, strong jobs report that allay us for no, but doing little to ease inflation concerns atlanta fed president rafael bostic reacted to the jobs report just after it came out on cnbc. >> this report just reamuches that the economy is strong, and that is a good thing.
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april and may were revised down by 74,000 you have to keep an eye on that. sometimes revisions lead the way toward weakness. >> a 5.1% year on year growth, and that labor fierce participation rate allowed people, ticked down by a tenth let's look at where the jobs are. leisure and hospitality up 74,000 you would expect that. health care 57,000, professional services 42, transportation warehousing, a huge need for jobs there as well 36 thousands in retail up, capital economics. science and wage growth is dooling and both suggest the inflation outlook could improve more quickly than officials had feared separately, fed governor lael brainard in a speech that came out at 10:00, saying the recent
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turmoil shows need for strong regulations. retail investors should be protected from exploitation, manipulation and conflicts of interest also said the fed is closely monitoring and does not see at the moment systemic risk from what's happening in the crypto in the broader financial system. >> steve, thank you. stay with us we want to bring in dave kelly how does the job numbers fit into what you have been anticipating for the economy in the second quarter and how that translates, in turn, to what the fed is likely to be up to? >> it was a good report. it's nice to see over 300,000 jobs created, but remember, employment is a lagging economic indicator. in this particular weird business cycle, it's going to lag even more. we have a huge number of job openings even though final demand is
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weakening --ening here the atlanta fed is running -- our numbers -- we think we can eke out a strong number, but lots of job growth what the federal reserve should recognize is it's going to slow down it will slow down later on this year if you raise rates, you could have a real problem at the end of the year going into 2023. >> you say that's what the fed should recognize we heard from president bostic he's at 75 basis points, he feels like, a couple weeks from now. it doesn't seem as if they're in the mode of trying to preemptively decelerate the tightening process here. yeah, i don't know what they have forgotten about basic make rho economics here we're already seeing commodity
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prices, including gasoline, come down from over -- and we're sees massive fiscal drag, the biggest since the end of world war ii, of the dollar at its highest level since 2002 there's a lot of drag. it's going to slow down, inflation will roll over, and they've got to keep their patience, if they're too aggressive right now, they will regret it later on they think they'll have to ease in ex year i understand week that's been priced into the the markets. this week was kind of interesting leading up to today's report we did see some glimmers of a renew the faith in treasuries, oil ticked down. it's up a bit today. is there a possibly that the market did the job for the fed, and maybe this is good news? >> it is possible. the market has done an awful lot
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of heavy lifting for the fed in order for the fed to maintain its credibility, it has to come through with the bulk of the tight in that that's out there in the market. bostic said 3%, and bullard yesterday said 3.5%, on half a point kind of separating the doves and the hawks right now. i think the fed has an appointment with 3% it's going to make, and the question for the market, which i think is already being discounted is whether or not it has to go further than 3.5 or 4% let me say one other thing about the economy right now. we have so little visibility into the most important aspect of this economy right now, which is the service sector. you have this transition from goods into services. we just do not have good data. i follow jpmorgan credit card spending data. it's showing pretty good spending, and not much klein when it comes to retail.
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this is the seven-day average data i'm not necessarily seeing all of that weakness that some of the bears are picking up on. >> you know -- >> go ahead, yeah. >> you know, i think some of that, though, is a recovery in services spending, as people finally go on the vacation they've been itching for for the last two years, we are seeing a post-covid surge in some service areas that i expect to show up in credit card data. again, later on this year, i think households are getting squeezed they're racking up credit card, but they'll bump into credit limits later on. i do think the economy is okay i think this labor market is acting as a cushion, and the labor market does operate with a lack, so there's sort of a lag on the sag in the economic, but i think still still coming here. the federal reserve has some interesting navigating to do here >> well, you know, certainly
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labor market operates with a lag. you said earlier it may even operate with more of a lag here. no matter how you slice it, in terms of the 12-month average payroll gain has been on the eve of prior recessions. it's a fraction of what we've been seeing. do we chalk that up just to the oddity of this cycle in the sense of labor scarcity? or is there something more durable about the labor story that could support the rest of the economy? david? >> no, i think it's just the post-pandemic bounce back, and this is about leisure/hospitality. government employment can't bounce back, because the government can't raise its wages. it's still in the doldrums, but it was a weird economic a year ago, and that's what's driving these numbers. it's not indicative of the pace of growth, which is a lot softer. >> steve, you were saying --
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>> mike -- >> yeah, go ahead, please. >> just a quick crack at that question it's a weird thing when you taking lagging, lead, indicator, it tells you what the future will hold jobs can be a lagging indicator, but when of when it comes to the dating of a recession, the nbr will go back and look at when employment fell. it would by the coincident dater for the beginning of a recession if they go back to do it the nbr is not, until almost any circumstances i can think of, will go back to this moment when he created 372,000 jobs, and say the recession began now. it can't have begun now. >> there you go. that's essentially just a definitional thing that's kind of almost a tautology.
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i get that gets us back to is this just going to be an ebbing of output and spending and productivity perhaps that's what we might be in. >> i think that's right. remember, if we have a recession, somebody earlier said can we talk about the "r" word it's not that scary. it won't by like the agree finance crisis tech be like the mild recession we've had. so all this demand for workers, the lack of, you know, excesses in terms of home building, our auto production, all of that means -- and if we have a recession, it should be pretty mild >> yeah, and that early '90s recession, barely a 20% drop in the s&p 500, in the 2000, mild recession got cut in half. whatever the markets think about this, it may not be about whether it's a recession or a
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bad one or not thank you david and steve. talk to you soon. >> anytime meanwhile, in sun valley, the media conference is underway, a lot of chatter around nfl rights and who will win that sunday ticket bid the stream es seem tore leading the charge there julia boorstin joins us with a guest in a cnbc exclusive. hi, julia. >> reporter: thanks so much, carl i'm joined by nfl commissioner roger goodell to talk to us about everything that's going on in sun valleyand his visit thank you for being here. >> great to be with you, julia. >> there's a lot of interest in who will be buying the next round the rights nfl sunday ticket highly coveted rights they're all interested it happens those players are all here in sun valley what is going on with the talks? >> we're continues them. the discussion has been going on well over a year
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it's an important decision, because the assets are really valuable to us i clearly believe we will move to a streaming service i think that's best for the consumers at this stage, but we have so much interest right now, so much innovation around that and how we'll be able to change the way people watch football. i think we'll probably have some decision by the fall. >> reporter: apple is considered the front runner you're saying you think you'll clearly move to a streaming service. what will it mean to be partnered with the likes of an apple or amazon, with those rights going to the tech giant and not the likes of espn plus >> right now we're on a linear service through directv. it's worked well for us, but we believe these new platforms give us an ability to innovate beyond where we are, and make the experience for our consumers so much better. obviously it makes it more available to our consumers particularly the younger demographic, which is one we
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really want to get to. i think this will make it more accessible for fans. i think it will be a better experience for fans, and we're excited about it. >> reporter: it's interesting, you continue to see more and more of your games available in addition to the games on amazon are more games going on to peacock, the cbs games on paramount plus as we see more of the games shift to streaming, what do you think that will do to linear tv ratings, overall ratings and ad dollars? >> we had quite a bit of this last year. nbc would have their games on peacock. cbs on paramonth plus, and espn on espn plus and abc we think that's consistent with our philosophy, to have the broader platforms as possible, to engage our fans in the deepest way. we haven't seen it hurt any of those platforms. we think they're different yours. the people on the streaming service aren't watching on
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television, we think, so it's adding to our audience for amazon prime, this is the first time in 35 years we changed our major carrier on a thursday night package that's only available on amazon prime except in markets where it's free television we're very excited about it. you flow, there also have been many reports you're working on neuroown direct-to-consumer streams service. you haven't weighed in on this why are you working on going direct to consumer >> we think it's important to have a relationship directly with the consumer. we believe we have a lot of contents and ability to do that. consumers want it. we're very excited about what the nfl mrs. plus will be i think over the years you'll see that continue to grow, and it would be an important
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opportunity for us to speak to our fans directly. that's an important strategy for us going forward. >> no details on timing or pricing? >> timing will be for the season, at least in the initial phase. the details we'll wait and let you know in a few weeks. >> carl? >> i'm thinking back to the super bowl where we talked to nfl folks who argued that blockchain technology did offer some advantages, and you guys were looking into that we obviously track crypto and bitcoin pretty closely on that where are you on that? >> we think the blockchain technology is here to stay it's changing the way we're going to sell tickets, i believe, it's going to change the way we're communicating with our fans we think there's an enormous potential there. we're spending an awful lot of time on the blockchain. >> reporter: one other thing i know you're working on is
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international expansion. are you looking at having a team in london? what is the potential outside the u.s. >> we think it's our greatest potential for growth other game is not a global game, but you may have seen just last week, we began our he efforts in africa with a big event in ghana. we think, as we play our games over there, as we bring our games to media, we bring all of our assets to bear, we see an incredible reaction. the uk has led the way this year the first game will mark the 100th regular-season game we have played. we think the potential is enormous in the uk i believe th could support it, and we're also going to germany this year, for the first time a regular-season game we think that will be in munich,
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and we'll also move to frankfurt at some point. i think it will be enormously popular. 500,000 people have already signed up for it we can't fit them all in the stadium, but we'll certainly entertain them. >> reporter: i know you recently testified before congress for allegations of harassment at the washington xharchders, and there's a separate investigation into desean watson how are you addressing the issues and thinking more broadly? >> the most important thing is we have to make sure or workplaces are safe and professional and the right vince for all of our employees to be successful we were clear after the investigation in washington, that it was not an acceptable workplace. we took unprecedented discipline more important lid we made the changes in the organization to where we're now 5ud iing on a
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regular base it's doing the things we wanted to do. the commanders have changed that workplace to be one that's very professional and we think is the right type of standard for the nfl and for others desean watson, that's a separate matter, investigated by our staff, we have an independent disciplinary officer who is looking at that. we'll make that decision sometime very soon. >> reporter: just a final question on this the conversation that's really dominating this wean here in sun valley, i know you're about to go listen to larry summers speak. what is your perspective on the health of the consumer and whether or not we are heading into a recession >> listen, the experts i listen to, larry summers being one, it certainly seems like we're in no rocky road the next 12 to 18 months we're preparing that how it affects or partners, advertising is maybe the leading
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indicator for us as we go into the season, but the advertising market for football in general, nfl in particular is quite strong, but we keep our eye on that it can affect our consumers. >> reporter: well, we will let you go down to that conversation we hope you'll keep us posted on everything, including what's next for him for the sunday ticket rites you but was nfl plus thank you for joining us, nfl commissioner roger goodell. julia, thanks. up next, the ongoing drama with twitter we'll stay on top of the markets on the jobs friday the dow is down 85 we are back to 3883. don't go ssor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner
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. the deal drama continues around twitter an article said that musk's bid to buy the company is on thin ice. joining us now to discuss is brian fitzgerald from wells fargo. how on thin ice do you think this deal is you still have a $54 price target, which is basically a deal price and hold rating how seriously are you taking these reports? >> thank you i think we're at an increasingly tough impasse here.
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we have extensive human reviews. it's always been an issue with twitter. in response to that, twitter gave, in response to elon putting the deal on hold, they gave elon and his times the data it's missing the linchpin, pii data to tie it all together so we're at an impasse, where the company will tell you we're rest assured it's less than 5%, and we're giving data to people. so team musk is confident
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there's no way we can verify that figure without that pii data so we're really stuck. it looks like it's heading to court. >> it's an impasse, but one with a binding contract so it all kind of comes down to the motivations of each side and whether there is some sort of one that appears -- i'm curious, though, kind of reading it the tea leaves and the incentives, laying off about a third of their talent acquisition staff laid off several executives, several managers, are they pivoting this comfort, as a potential stand alone if that is the ultimate outcome for this company? >> leslie, it's a great
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question they're operating as business as usual. across the valley we've seen tightening of belts, pausing hiring you had the layoff yesterday of 30% of its acquisition team. that will affect about 100 people so all these companies are operating business as usual if we're going into a recessionary environment, and getting thinner. does that make twitter more attractive to musk it should does it make it more attractive to -- should this one fall through yes at the end of the day, it's not about the bots i'm going to fix it up and make is it a better platform. it's obviously about thinking to get a lower price, bud there are few precedents for getting that
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lower price. if they come to a 5% discount, but, you know i think if you step down off that 54.20 price by more than 5%, 10%, you'll end up in court, because your shareholders will be upset you're going for a lower price, when you have a deal in hand, to your point. >> and if, by whatever turn, this deal is broken up, where do you think twitter as a stand-alone company, with whatever potential m&a interest might be out there would trade down to? >> it was the low 30s before he disclosed his stake initial lip, right? >> right mike, that is a good question. if you had 50-50 deal price, 54-20 in that $32 figure you just said, where it was trading, that comes out to roughly $43.
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if you change probabilities a bit, 20% that the deal gets done, 80% that it doesn't, that's amazingly about a $36, $37 target where the stock is trading. i think that's what the street is telling us. we think the likelihood of a deal getting done is starting to wane you have to filter in, could another suitor step up and fundamentally, how is the company performing on an ongoing basis. they're doing the right things to try to grow, to try to -- you know -- i think its goal is by 2025 they would have to grow at a 27% figure to hit that figure. they've never grown 20%
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consecutively year over year >> this dream scenario, how did the street process those projections? >> yeah, to hit that billion user bogey at 28, that's the 23% kegger the problem with the platform is it's a balancing act between free speech and monetization yes, free speech is important to twitter, it's its principle, but you have to weigh the tone of conversations versus brand safety and suitability there are tool sets. one of the companies we cover, interactive sciences is -- is a tool set that advertisers can use to verify audiences, verify
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you're go ahead the roaz to throw out those bogeys of a billion mous by 2028, i think the street think that's really aggressive >> brian, we will see what happens, we'll see if it ultimately does go to court, and the drama continues. thank you for joining us. >> thanks, guys. as we head to a break. shares of upstart holdings cuts its targets for the second quarter, citing a constrained lending marketplace among the reasons. you've seen the stock down 20%, down more than 90% from its highs in 20121 we'll be right back. stay with us comprehensive wealtn for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect.
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it is still the best-performing sector year to date, but energy definitely feeling the pain, down more than 20%, off the highs one name trying to rally is
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occi though -- you can see shares have come down, as oil as well did come down. after the break, don't miss or confers withan j hatzius we're 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? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
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i'm kristina partsinevelos here is your cnbc news update at this hour. shinzo abe is dead after being shot at a campaign event in nara antony blinken calling abe an extraordinary ally >> abe was an extraordinary
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partner, someone who clearly was a great leader for the japanese people, but also globally, and one during his time in office brought up our relationship to new heights. president biden is expected to sign an executive order shortly to protect access to abortion the order aims to gain access to probability patients ease privacy and promote the safety and security of patients, providers and clinics it is. former trump white house counsel pat cipollone is behind closed doors on the hill this morning, speaking with the house select committee investigating the january 6th capitol attack cipollone was in the oval office when i attack occurred carl, back over to you. let's get back to the jobs number, as the markets go green here
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372,000 jobs in june that does beat consensus joining us is jan hatzius. happy jobs friday, jan you do write today, indicates an overheated labor market that's only beginning to slow you're certainly not in the september pause camp. >> definitely not. it's nice to see you, too. i think 75 in july is highly likely, as we've heard from a number of fed speakers there's nothing here to persuade them from that in september we're looking at another 50, and then another 25 at each of the last two readings, so i don't think there's anything in this report that would dissuade us or the fed from that. >> some tried to argue, a look at average hours worked, backed to so-called normally levels, is that the beginning of something?
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>> i do think that the labor market is beginning to slow, and we're seeing that not as much in the payroll numbers, but household employment has on the soft side. we've seen weakness in the ism employment indices, so i do think the labor market is decelerating that is, i think going to get the fed to step down the pace of rate increases after the july meeting. >> as for your gdp number, i think you were around 1.9, right? now you're to 7/10 how does that fit even though it's a q2 figure >> yeah, we have generally been cutting our q2 tracking number we made another significant downward adjustment after the trade numbers came in softer than we thought.
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we thought they would get a bigger boost from that trade in the second quarter we haven't really made major changes to the domestic spending numbers, but net trade does not look as positive so, you know, gdp only growing at a slow pace, and, you know, other indicators are also clearly showing some decel deceleration so, you know, we're on track, i think for clearly the growth through the year, and i think that's ultimately going to also lead to lower inflation. >> cpi next week, curious your expectations there's been some commentary this weak that potentially we may have peaked. are you in that camp >> i think headline inflation and our forecast is still going in the 8.5 to 9% range over the
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next few months. i think core inflation has peaked it was at 53925, now 4.75 for a year-on-year basis i think it probably comes down as the economy loses some momentum i would also say that wages have decelerated in 2022, and i think that's an important development. we're running sequential 4 to 4.5% annualized, we were running at about 6% last year. i think that aspect of labor market overheating is getting somewhat better. >> jan, chair powell famously recently said this was not particularly a time for a nuanced reading of inflation it's people feeling it's anchor are the yow look to inflation,
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and things that didn't used to necessarily be front and center. maybe the concern that follows is that they are building up a scenario for them to be late or to perhaps create a mistake by over-tightening, would those hikes you see ahead of us remember that headline inflation remain particularly high what do you place the odds of an overtightening mistake right now? >> that risk is certainly there, when you're working hard to couch up and effectively make up for, you know, being late in 2021, and early 2022 now, again, i think july is highly likely to be -- beyond that, i think it's going to depend on the data. there will always be some degree of nuance involved you know, i think what chair powell is saying, a less degree of nuance than normal, but if we
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were to see, you know, a very deceleration, they would do less, so, you know, it's going to depend on the data. >> we talk to jeff curry often, not as on which as you, but the degree to which we have reached demand destruction how much does that feed into your model >> well, it's clearly been a major factor for higher inflation, especially as far as headlines are concerned. i think that's going to continue to be the case if we see a rebound as, you know, as we're expecting. we've obviously seen a fairly sizable decline in oil and gasoline problems. if that were to stick, i think it probably would increase the potential for ending somewhat earlier, in terms of the hikes,
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so tips down somewhat more yeah, our view is that we will likely see a rebound in commodity prices. >> we'll see 104 today and change jan, as always, our thanks to you, have a good weekend we'll see you soon. >> thanks. don't my a cnbc special tonight, "taking stock." frank holland and job brown will tell you how to protect your portfolio for the stre of the year we'll be right back. stay with us
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you can see lee auto up more than 4%. lee up almost 9% joining is is brendan ahern. thank you so much for being here is it the fact that delivering
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numbers look better than given fear of the reopening, and that whole story, is it supportive of chinese policies what do you think investors are so excited about you're -- up 141%, and you're see the estimate for year i any it's affecting a lot of the on stocks, not just the lee autos and nios, blue even for tesla and byd, greatsh, great deal numbers. solid numbers, and that's --
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>> there's obviously been short discussions. i think there's been two of the bigger weightings ticker darts is it part of it. >> i think since march 14th when i hadded vice premier about providing more communication, transpatterns on community's internet regulation, nio is up lee auto is up so certainly that initial move, leslie i think was an element of the short squeeze. at the same time they very, very strong numbers in june, the anticipation you'll see mo policy support, it's a strong reasons to be long >> brendan, based on what you were saying earlier, it doesn't seem as if tesla's market share
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is particularly thriving at the moment obviously they've had some production issues, >> a lot of what you see from the other players in the space are a mass-market opportunity so i think tesla will continue to do well but when you talk about 20% of all auto sales in china are all ev it will bring in folks from all different demographics.
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>> interesting. and more internet names so quite a distinction from what we see with the chinese. thank you for breaking that down for us. r thweeck out the biggest gain foe ek on the dow and there you see the growth leadership and top three.
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privacy, simplified. a lot more on elon musk and the twitter deal potentially in jeopardy but first we are live in california with a look at what is ahead. good morning. >> reporter: this story has everything. support contracts supply chain d od ilaonanfonfti and drought and all of this with california's largest crop and this year it has been nuts. is a good for you? when we come back.
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port problems are leaving more than 1 billion pounds of california's largest crop waiting to be picked up. we are live with that story. >> reporter: yes. the longshoremen's contract has expired but work continues and growers are terrified with the allman's. oakland is the port the two
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often it is been skipped during the supply chain crisis. it means there is 1 billion pounds of nuts from last year's crop waiting to be exported nearly half of the crop and growers don't get paid until they deliver. >> we have to get that moved to be on track for this year's harvest by the end of july and that product and an ability to move it we saw $2 billion in price degradation on 1.3 billion pounds. >> every two rows is a disappointment and if somebody is promised a container that day, a shipping company, and they didn't deliver. >> 90% of the allman see processes but he has to build extra storage to keep the stuff you can't move and he said the situation is improving but it will take a few years to get back to normal and the reason it improves is they are using truck and rail the ship all of these. >> i think all of us are
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learning some new tricks from this challenge and maybe the port of oakland will notice we are having other opportunities. >> reporter: 80% of the world's almonds are grown in california which is going through a drought and some growers are pulling out old trees and putting in much more efficient irrigation and the good news for you and all of the inflation 12 that is cheaper is allman's and almond milk and i will say that again. it is nuts. back to you. >> it is nuts. i did learn something. i had no idea that so much of the world's almonds were grown in california and facing so many challenges right now and what is the actual price of almonds? is that experiencing the same inflation? >> reporter: on the wholesale level, it is low and maybe about just under two dollars a pound down 20% from year ago
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and retailers who have almond milk and whether they are pacing it -- pass it on to you, maybe. >> all right. maybe i will have to switch to almond milk to bring down the price. thank you so much. that will do it for us and we start right now. welcome to tech check. today stocks are rebounding as investors have the jobs number and we have gains the five straight days and expectations for rates this hour and in a closer look specifically on this week. and why


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