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tv   Squawk Box  CNBC  July 11, 2022 6:00am-9:00am EDT

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and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm andrew ross sorkin with kejoe ke kernen becky is off today let's show you futures at this hour dow off 160 points nasdaq looking to open lower as well off 104 points nasdaq or s&p 500 down 25 points treasury yields as we flip the screen around. 10-year treasury is 3.071, joe coming down a little bit >> not great >> big jump on friday. >> good number good jobs number
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very interesting sort of dynamic in the economy right now we talked to roger ferguson. we will talk to him again in a moment we talked about going back to the '70s and the fed tried to manage inflation amid the recessions that occurred in the '70s raise rates and rise of unemployment they stop raising rates. inflation wasn't cured it would come back quickly >> right. >> jay powell and the current fed studied all of that closely. arthur burns and the policy mistakes they don't want to do it again. >> you think the answer is you keep going >> i think when we talk to roger ferguson and i took that number on friday as a positive. it gives the fed more breathing room to do what it needs to do when it was all said and done,
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dow closed down and s&p closed down it sold off sharply. nasdaq closed higher you were doing your thing last week markets were trying to find a bottom without the vix getting near 30. cramer and we keep pointing out how many stocks hit -- death of 1,000 cuts -- down 50% do you not get a vix at 40 can you make a bottom without that capitulation because it has been so bloody >> i don't know. back to the question about powell and i heard economists make a comment it is like antibiotics. an o lot of people don't take t full course. 7 or 8 pills instead of 10 days because you think you are better then what? >> not only do you not get totally cured, but add to the
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antibiotic resistance. >> think of that for what happens? >> it would be easy to happen. the cure for inflation is a crappy cure. recession. i think in the high -- i think we talk to roger what happened with the good jobs number and that allows them to orchestrate a soft landing who crude prices have helped they were under $100 for a while. this is ahead of president biden's trip to saudi arabia we'll talk about that in a moment there has been some stabilization in cryptocurrency with those markets with the back drop of the companies with the
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financial stress it is amazing it hasn't gotten worse. i don't know it could get worse with cryptocurrency to the soap opera that never ends update on the drama from late friday with elon musk and twitter. musk's lauwyer sending a lawyer with the claim to end the offer to buy twitter twitter plans to enforce the merger agreement we will prevail in the delaware court of chancery. shares aretanking this morning right now at $34.20. they go to court and already reporting that twitter hired a law firm used to be the chief justice of
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the chancery court he may argue the case in front of the court how quickly does this happen is this a larger negotiations and interestingly, can the delaware court to decide if they need to enforce merger agreements we need to tell elon musk to close this deal. if that is the result, and elon musk were to try to snub his nose at the court and say i'm not doing it, what recourse does the court really have? could they send him to jail? could they try to take his -- >> it would be more than civil >> this is the issue >> people don't go to jail >> this is the point what is the credibility of the court? >> money >> usually money if the court were to say you have to do this and he would say i'm not doing it i'm not buying the company
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then what would happen would they take his shares of sp spacex or tesla? there is an argument he is playing chicken with the court to see how far they push it for their credibility. we talked about the $1 billion break-up fee there is a potential of $1 billion limited cap on damages depending how you read the contract if you were to force musk to buy the companies, are the damaging capped at $1 billion is it higher has there been $20 billion of damages? the flip side is is it possible that elon is right about the bots and twitter has been participating on the fraud in the shareholders which is what musk would say for the last five or ten years >> if he said i don't need to know that to sign the deal,
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would it be egregious enough the $34.20 where it is right now, do you think there is a bottom on that based on him coming back with another offer if we knew for sure he didn't want it at all, what would the real price of twitter be >> i'm thinking market cap $44 billion, most people in the business would say this is a company worth half that. $22 billion. >> that would be 26 then >> right >> for him what would he pay 34 he might take 34 that's $20 off >> you see the legal filings and you will start to see the beginning of a court case. we'll have a better sense depending on what the judge says and the briefs say part of it is almost seeking
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discovery. part of it is three allegations. one of which is i just don't have enough information which is also an unusual thing to say typically he waved the dil diligence. there are a lot of judges say you waved diligence. it is not just an offer, you agreed to a deal this is not like an opportunity that you now have to look at new stuff. >> was it a giant illusion on what their business was? is it big enough >> that's the question they provided, as you know, a spigot of information to elon musk he now says based on that spigot that he was misled i don't know there is nothing in the letter of evidence of being misled. it says he has a suspicion he is being misled a judge could say your suspicion? that doesn't matter. is that a legal term a technical term
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not a legal term. >> we'll talk more we'll talk to jay clayton. former s.e.c. chair in the next hour that's a new tie >> you haven't seen that tie i was thinking it was more of a fall tie it is a brown color. >> it is july. >> i should start to liven it u in the summer with more color. fashion police the night before call >> text. >> take pictures of the ties >> don't call? text >> tell me hethe colors people accepsend email and say s sent you an email with the follow-up text >> you don't have the email sound. i can get an email and not know for a while. >> now it is backwards email and text message and the
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what's app >> it is where we are headed as a society. i blame social media almost entirely. president biden will travel to saudi arabia later this week. he defended the trip in the o op-ed. saying i'll aim to strengthen the strategic partnership going forward that's based on mutual interests and responsibilities while also holding true to fundamental american values. looking to end the neighboring war in yemen president biden announced a halt to the operations in yemen in february of last year.
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including relevant arm sales that position is softening as the u.s. appeals to saudi arabia for more oil to offset the russian supplies we can talk about this until the end of the show. phil mickelson taking hundreds of millions from the saudis. we do need the saudis to pump more oil for the world for a lot of reasons do we have a different sort of standards for saudi arabia than china? and we know how important china is. >> this is the great philosophical debate. >> what they did to the journalist it is unbelievable what goes on in china day in and day out and the camps.
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and some of the stuff the united states does. they point back at us. >> here we have two countries that have leverage over us they just do then you have to decide does your moral compass have leverage over them? i don't know the answer. >> we don't. you go one step further. look at this guy running russia. look at the apartment buildings. we have no idea. it is already on the back burner we're not thinking about it or reporting on it and we're not showing it day in and day out. the world is a place of -- certainly our values, which we he hope to spread around. i still believe we wear a white hat in the global world.
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>> i like to believe it all the time >> there are places where they are not waving white hats. >> do you want to play with those in the black hats? >> if it comes home to roost. > we will discuss this and so much more. coming up, a big week ahead for the markets. key read on inflation and the kickoff to earnings season next. later, white house economic adviser jared buernstein is talking about it we'll discuss. you are watching "squawk box" on cnbc
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advanced security that helps protect your devices in and out of the home. i mean, can i have a bite? only from xfinity. nah. unbeatable internet. made to do anything so you can do anything. time for the squawk planner. earnings season is going to kickoff this week. pepsi reports tomorrow and delta airlines on wednesday. thursday, jpmorgan chase and morgan stanley on friday, wells fargo, citigroup, blackrock and united health on the data, we get the read on inflation on wednesday with the june consumer price index. we get producer price index and jobless claims on thursday retail sales and import/export prices on friday joining us now is roger ferguson we will talk about all of the things jay powell and company
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are trying to figure out he is the distinguished fellow we know that he is an officially distinguished fellow on the council of foreign relations and former vice chairman of the federal reserve. roger, the number on friday, it makes it harder or easier for the fed to orchestrate a soft landing? >> you know, i think it does both which is not the answer you want let me tell you why. we know that the economy is going in with more power to create jobs which is the net positive thing i think it clearly says to them that 75 basis points is on the table at the next meeting. i think overall, it will make it harder for them to develop a soft landing only because there is so much forward momentum on the economy. you have to tap on the brakes even harder.
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i think risk overtightening and getting to what one hopes is a mild recession on balance, this strength is slowly getting inflation under control. that means perhaps tightening more than the markets expect and higher risk of harder landing. >> do you view the current situation as an aberration in terms of historical precedent in that we have seen in the past where we've had relatively high unemployment and solid output in terms of gdp and it has been pointed out to have such strong employment right now with the possibility of back-to-back negative quarters of gdp is something you don't usually see. you don't usually see low unemployment and meh output.
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>> look, i think the aberration of what you talked about and particularly the notion of what might be described as an a technical recession with negative gdp and net exports what is interesting is how the situation has historic precedence going back to the end of the second world war and korean war supply-side disruption that led to inflation fed had to fight it then as you know, a lot of reporting on the 1970s and that historic precedence we have the situation of strong labor markets and other elements showing weakness and a situation with many people looking at the precedence to see what the fed is likely to do. >> the stop and start nature of the arthur burns bet
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it looked like it was resolved to take on inflation and the resolve would be weakened with a slowdown that is natural. do you think that the current fed has studied that period to the point where they don't want to make that mistake they would have the opposite they are firmly resolved to see this through even if there is a significant amount of pain to the economy and to the american public >> i think they are resolved to see it through partially because they have studied the mistakes of the fed at that point with the stop and start they have studied and talked a great deal of a problem of the fed then which is an absence of credibility on inflation fighting they know that back then the fed did not have numerical inflation target now they do.
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i think the odds are the resolve will be there. the opposite, to use your phrase, consequently, the risk of recession is very, very high. the final point i make is we heard them talk about pain being caused we heard them talk about a narrow path to a soft landing. i think they are setting society up, the economy up, individuals up, for the possibility of a rough ride perhaps a hard landing with a soft and shallow recession. >> roger, there have been positive data points with commodities. soft commodities, hard commodities. oil came down. how much of the inflationary fear and concern is there and if it is not there, if it is really more in service and wages and trying to get people back to work after the pandemic, what
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percentage 30% commodities? 70% service inflation? that is the fly in the ointment trying to see an early end to a tightening phase if you can get it under control and permanently be at a lower state of interest rates, that helps businesses keep costs down and helps people open businesses you don't want high interest rates. you don't want them to choke off the economy. >> look, absolutely right. what they want is low and stable inflation which would, as you point out, allow nominal rates be lower to answer the first part of your question is the focus here is on the wage side of the equation. it is more likely on the service side of the equation if we looked at the job side and one looked at the hourly
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earnings which is an important subset, that also showed quite a bit of strength and no slacking of material levels in terms of increase or the inflation there. that's, i think, where folks are looking. it is interesting that some commodity prices have come down. you know those prices are volatile and driven by geopolitical developments, et cetera the fed's eye or eyes, collectively, should be permanently or focused on the wage number. what they are worried about is the wage crisis spiral we are certainly seeing no weakening in increases for wages if i look at last friday's numbers correctly. >> that is something we wanted we wanted that for years wages to start rising. it would be nice if they were real wages against inflation it is all paradoxical.
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it has to do with the pandemic you see the netherlands, it wants to make it law, to work from home. >> yup >> the environment we're in, roger, it's different. it is hard to get people to come back to work there are other issues in new york some people might not want to come back until it is safe there is another variant lurking. i don't know it really could be different this time in terms of post-pandemic behavior >> possibly. you know, what witis driving onh pap d pandemic side is the supply chain pressures. >> thank you good to have you on, roger very distinguished super distinguished. have you ever been called that >> distinguished. >> distinguished fellow. >> no. >> he is officially a
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distinguished fellow. coming up, how uber used a kill switch to cut off offices after raids by regulators. and starbucks pulling a breakfast sandwich from the stores after days on the menu. we will have both of those stories and more when "squawk box" returns the pursuit is on. the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes, actively managing investments in the world's public and private markets.
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cut off regulators it was part of the dawn raid manual of how to respond to regulators and moving authorities into a room that doesn't contain files or i.t. access and never leaving them alone. emails show travis kalanik told employees to hit the kill switch to cut off the office from the internal network effectively preventing them from seeing it and making data inaccessible as they raided the european headquarters. cutting off data is an illegal gray area and not considered an obstruction of justice before the request of documents was done we are talking about a media report that happened five years ago. a statement from his spokesperson said he never authorized anything to obstruct justice in any country
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it adds to the narrative around travis and how he approved doing business and the evasiveness the company approached regulation. of course, a separate question about whether if they hadn't done these things, i'm not saying they should, the creation of the company is to out maneuver regulators to escape where they had to deal with them it is possible the company would have been killed in infancy by the regulatory community given both the approach they were taking and the power of the taxicab industry and driver community in places. >> they were at the time thinking they were fighting the good fight to get this through the entrenched legacy taxi business which has regulators -- you never know who is rubbing whose back
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>> the corruption in so many cities around the world aroundinaround the driving community. >> in some countries it is a gray area. for him to say he never did anything that would be obstruction of justice is probably a true statement based on the wiggle room you are allowed to do. i don't know that's aggressive, but sometimes start-up companies that are facing a very difficult time will uber ever charge enough money to be a profitable company if it didn't have all of the other stuff? just a taxicab business? >> in some cities. one reason they are losing money is investing and building in uber eats. >> charge $60 to go on a 20-minute ride >> i think in many cities, they
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are cash flow positive it is looking unprofitable because they are taking that money and investing in uber eats or other parts of the world. they shutdown any growth prospect, there probably would be a profitable business. >> it's a good service i've come around. >> finally wow. uber over lyft or lyft over uber >> it is a lot easier than a car service. it's the same thing. same nice suburban i don't have -- >> i will say and i used it successfully for the first time. you can reserve a car to show up at a certain time. sometimes it is do it instantly. like the old school car service you call before you go to the airport. now you say i need it at 8:00 a.m. and it will show.
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coming up, a report card for hedge funds in the first half. out performing the broader markets. was it enough to earn the fees shutdown the old ones and get new ones. as we head to break, here is the look at the biggest pre market winners and losers in the s&p 500. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone.
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good morning welcome back to "squawk box" here live from the nasdaq market site in times square look at futures. opening in the red dow off 75 points nasdaq looking down 94 points let's check on the hedge funds and if they are earning their fees leslie picker is looking at the data for the first half scorecard.
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leslie, what are you finding >> reporter: andrew, when it comes to hedge funds returns in 2022, they are doing better lost 5.9% in the first six months of the year on the asset weighted basis, larger aum, they had gains of 1.6% this according to the figures from hfr which releases data some of the world's largest, bridgewater and scitadel with a number of geopolitical events and volatility especially on the intraday basis they have franchises to follow these have served them well in the current environment, but contrast that with the firms heavily exposed to equities. those which have seen out sized gains like tiger global and
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pershing squaring. despite the kwiewide disparity d all that they track is beating the s&p, including dividends at least the hedge fund part of hedge funds is paying off. andrew >> leslie, the likes of bridgewater doing well after a period of time by the way, they were challenged this goes to the mix of how people think about equities over bonds and the like you look at the tigers of the world. off 50%. what is the sense from talking to investors and lps, limited partners in the funds. they look at the fund down 20%, 30%, 50%, is there a throw your hands up and give up is there a sense they can claw
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back we talked over the years of high water marks of getting back to zero before you net fees again what do you think happens? >> reporter: i think it depends on the manager if you look at melvin capital. they were restructuring and doing away with the high water mark and charging fees on the fund that was smaller. investors balked and said you lost us so much money. you are not charging the inn incentive fee of 20% melvin threw in the towel once those lps were upset and showed dis distaste it depends on the manager. you see others, pershing square came roaring back and said we will stick with you and continue this it really does depend on the managers and what they will do.
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>> leslie picker, thank you for joining us fascinating look at the fees and hedge fund world when we come back, bitcoin bouncing back above $20,000. we will look at the cryptocurrency next. and legal battle brewing with elon musk and twitter it is just getting started we may have to move the show to delaware, joe, for a while a lot of action. we will ask former s.e.c. chair jay clayton if the company can force musk to honor the deal you can watch or listen to us live anytime on the cnbc app. look at the beautiful shot of new york city this morning as the sun comes out. what a beautiful big apple we're back after this. hi l alex from u.s. bank! can she help? how about a comprehensive point of sale system... that can track inventory, manage schedules- and customize orders? that's what u.s. bank business essentials is for. (oven explosion) what about a new oven, can u.s. bank help us there?
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welcome back to "squawk box. let's show you cryptocurrency prices we got a little bit of a bounce. little bit in bitcoin right now. it has come down a little bit. still over $20,000 $20 $20,577. ethereum at $1,146 dogecoin why is solana not up there we have the chief managing officer with us here good morning to you. we are trying to figure out what is happening here. it is the question we ask every
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time what is happening? i know we're living through a crypto winter in summer. i think everyone is asking if it will reverse in winter when we get to our own winter, do we have some kind of reversal here what do you think? >> for us, coinshare, we will stay where we are for a while. there are no near-term upside catalysts. we have yet to see bitcoin in a recession. are we in a recession? we don't know. with the eurozone and around the world and the fed hiking rates and cutting back on the open market activities means we expect more pain ahead for stocks and equities and crypto we obviously had a lot of liquidation and insolinsolvency
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we had capital which evaporated overnight. liquidity out of the system. we have not seen the full impact because some of the companies are not publicly listed. we don't get that transparency >> what is the down side for those looking at -- let's think about it like this, before it felt like a run away train people wanted to get on the train before it ran away it ran away briefly and came back to earth. what do you see over the next 24 months i don't know if you should look at five years. is this where people are resetting expectations and maybe 20,000 in the next for our five years to 40,000? is it $1 million a coin on bitcoin? how do you look at that versus the potential down side risk >> that's a great question i think that is the right
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framing for a long-term in investor bitcoin has been a secular trade. it is a cyclical asset it goes through cycles of ups and downs and highs and lows drawdown has been 80%. we are sitting at 65% currently from the all-time highs in november of last year. there is still room for downward correction we don't see bitcoin going below the 14k threshold. we have strong support at 20k. in the next 24 months, we will see all-time highs in bitcoin. you made the point earlier and let's get that solana ticker they are looking at ethereum and solana which no longer have evaded up to bitcoin there is a long asset that will go to zero which doesn't have
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long-term prospect. >> when you think about a period of time where people said look where the engineers are going. if the engineers are spending time on that crypto coin, that is where you should put your money. what do you see where engineers are going or engineers fleeing you are hearing that part as well >> i think the important thing is it is no longer engineers i'm a try girl it is fundamentals about the businesses tech stocks and coinbase and others or a protocol you industill need money to pay people the sad fact is the protocols are running out of money to pay engineers and many who raised valuations will have problems attracting top talent. they are looking for the risk/reward. we are seeing new people coming
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in and they are choosing to start new companies or upstarts or taking the risks with a later stage company with high valuation. not nearly as much upside. >> looking forward to seeing you again as we continue to follow the progress of the world of crypto thanks coming up, the latest read on inflation is due this week. we get cpi, but not for a couple days that's on wednesday. up next, we talk to a congressman who wants to end the fed dual mandate and fusoc solely on inflation. "squawk box" will be right back. >> announcer: squawk coin is sponsored by bitwise the world's leader in crypto index funds.
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to expand the fed's mandate to address socioeconomic disparities, our next guest introduced a bill that focuses the fed solely fighting on inflation. joining us now republican congressman french hill of arkansas he's a member of the financial services committee, and it's not a perfect world, congressman and when you think about the dual mandate, you don't have to think that long to realize that they almost seem mutually exclusive. it's almost something that can't be done. it's asking a lot of the fed to try to orchestrate full employment and low inflation or dollar stability and we're seeing the effects of that right now, because they're going to try to slow the economy, which would be raising unemployment to tackle inflation. so they can't do both at the
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same time. but you see why there is a dual mandate. >> i do. good morning, joe. it's good to be with you yes, i first met paul volcker as a young staffer during 1983 where he was celebrating the fact the economy was better than it had been in 1980 and 1981 he told the committee it's hard to have more than one mandate. what the fed needs to focus on is price stability i think adding full employment to the concept of sound money made their job tougher because if someone doesn't set the priority, then what is the priority i think the priority for the central bank should be sound money and, therefore, price development. >> it almost looks like they get there's eventually, you know, kicking and screaming, because we've made that point again and again and again that if you
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acknowledge you might cause a business slowdown or a recession and you say, well, we need to do that because inflation is the most important thing we need to deal with, it's the most insidious sort of negative effect that you can have, that you can let happen to an economy, so we're willing to slow down the economy. so it almost looks like even the current fed, maybe it didn't all along, but it looks like now, fighting the dollar stability is number one, and full employment is kind of a number two in terms of emphasis. >> well, i'd like to think that's true, but they also waited too long to get started on normalizing monetary policy and don't forget, joe, right in the middle of the pandemic in august of 2020, the fed changed its long-standing policy of almost four decades, which is they were going to let inflation run ahead of its target because they felt like there with us no
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r risk to inflation running away here we are two years later with high inflation, due to my view very fast m-2 growth, policies, and combined with the administration's bad fiscal policy since coming into office. >> what are the chances that this ever actually happened, and it's nice to introduce things like this to get the conversation going, but it's not going to happen. >> well, look. what had happened back in 1977, it took them 30 years of hubert humphrey driving the messaging from world war ii to 1977 to add that mandate during the '70s where you had secular stagflation, you had labor union challenges, you were looking backward toward the economy of the 1950s i think we have to look forward. we know inflation is a thief and so sound money should be our
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principal objective and price stability should be the sole effort of the fed. i work with my colleagues to make that case in the house and make that case in the senate, but this is a long battle to focus the fed on its core mission. i'm not even sure they're doing a great job on that in the past couple of years. so for the house democrats to propose a new mandate, a mandate of having the fed try to solve all socioeconomic challenges, that's not the right approach. >> all right, congressman. i was thinking chicken-and-the-egg-type thing if you do get full employment, that sounds great. but if you get full employment and no one is keeping up with inflation, that doesn't help anyone, and sooner or later, it's going to come around and affect employment. it's hard to figure. i don't envy the fed very much i appreciate your time, and we'll keep an eye on this discussion as it's one we've been having for years and years
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and years. maybe there should be eight mandates got to get the stockmarket up. you've got to do climate change. i mean, you could have a lot of mandates >> there are a lot of mandates that the world needs, but is there a mandate what to do with elon musk and twitter? >> yes. >> we're going to discuss that dw twitter shares falling we're going to talk about what is going to be a legal battle, a big one, and it is brewi ingbre. former s.e.c. chair jay clayton is going to be with us "squawk box" will be right back. and other valuable investment information. before you invest,
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good morning twitter shares dropping after elon musk terminated the $44 billion deal to buy the company, but this story is just getting started. the battle is acomin'. former s.e.c. chairman jay clayton is going to join us and discuss the legal obstacle course we're likely going to see. wall street, what they may be telling us about the virus. dr. scott gottlieb is going to be our special guest. plus earnings, economic data and so much more the big stories likely to drive the markets this week as the
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second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin. becky is off today the dow futures are down about 112 after a pretty volatile session on friday after that stronger-than-expected dobbs number which paired the loss down to a 50-point loss on friday s s&p, a small loz the nasdaq traded higher overall it was not a bad week for the markets. i mean it's all relative, but compared to what we've been through in the first half of the year, we know it was the worst
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first half of the year since 1977, about 50 years katie stockton called and said, we'll have a little respite. >> but she says the fall -- >> it's playing out exactly like -- will we or will we not have new lows we don't know. >> that is the question. meantime let's talk about the economy after friday's strong report. has the outlook for growth improved at all, and what is the fed thinking about this? your economics reporter steve liesman joins us with a cnbc wrap wrap-it-up >> we're going to ski an expended period of below trend growth and high inflation, and that extends into 2024 take a look here there's a downward trend for the
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gdp. gdp is apparently topping 1% next year and bouncing back a bit, 1.5% in 2024. all three numbers are below what's considered to be trend or potential growth of 1.8% on a quarterly basis t average forecast is below 1.4% this quarter with only three forecasters estimating another quarter of negative growth gdp bounces back and trends back early next year. it's worth noting there's something about the debate of the third quarter. a nice rebound 14rk, 14% or aboe jpmorgan says just 1%. it's something economists find tough to nail down it comes along with higher inflation. headline pce seen a point higher compared with march this year and a half point higher for next year still doesn't come down to the
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fed's 2% target into 2024. so while these forecasts are just slow growth and slower growth, most economists looked at that jobs report on friday and said, hey, it's hard to assess with this kind of recession and job growth we're going to watch cpi on wednesday, and then we've got the retail sales on friday both of those are going to help shape the view of the health of the economy. andrew >> steve, given the numbers, take us inside -- you know, i think of you as a fed whisperer or fed tea leaf reader or something. what do you think the fed is thinking we were talking about this sort of issue almost like antibiotics. there was an economist talking about this too a lot of people don't take their full dois of antibiotics because they think everything is good and instead of going to day ten, they ease up how do you think this shifts the
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balance, if it does at all >> well, you know, i think they look at one side of these forecasts, the gdp i would think they would think they would be lucky to get away with those kinds of numbers. if we look at the quarterly chart again, if we end up at 1%, 1.5% for the year with the fed hiking rates like they're planning to hike them, i would think they got off cheap on that, with something of a modest rise in unemployment go along with that. i think they'd still be frustrated with the inflation side of it if they're going to go below trend growth, you would think they would come down faster. there's frustration on their part, which is why, to get back to your question, andrew, i don't think they're going to let off until they get to that 3%, 3.5% rate. >> think how great it would be,
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steve, if they got the inflation down and kept going with the good employment numbers. i'm trying to take friday as helping the fed orchestrate a soft landing in other words, they're going to try to slow the economy -- they're going to try to tackle inflation. they wish they didn't have to slow economy, obviously. that would be the perfect world. but if the labor picture stays wrong while they're raising rates to harness inflation, that would be great because maybe it's only 4.5% unemployment that we need to slow. >> yeah. >> but then on the other hand, if the inflation we're talking about is in the employment sector, the service sector and not the commodities sector, then it just -- then it stays stubborn because people are still allowed to ask for more money. i could argue either side. do you know which is right >> i don't, joe. what i do know is they're
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somewhat separate. look, we have a democratic issue with a number of issues needed we have to start thinking about that you know, we've had large retirements of older americans we've eased off on immigration coming into the country. all of that are going to be significant for trying to -- there was one comment this year -- this weekend i read that said, we're just going to run out of workers by the end of the year, which is kind of crazy to think about. there are all these people on the sidelines that for whatever reason aren't working. we tried to get to that in our survey we don't know whether they're going to come back we can't do numbers on jobs because we're going the run out of workers, which manifests itself in lower growth or higher wages. that's something to think about. one more thing i know it's a bit of a downer here you can't look at numbers of lower potential growth and say, well, earnings are going to be
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part of that if we're going to do lower gdp and lower growth, we're going to probably have to see earnings and forecasts come down. >> yeah. well, maybe the stockmarket already told us that's what's happening in terms of earning. >> maybe, yeah. >> thanks, steve. speaking of which, earning season begins this week. joining us now, kristen bitterly, head of north american city global wealth we've seen so much tumult in the stockmarket. don't we know that earnings probably aren't going to be great at this point? how much is in the averages already, would you say, kristen? >> yeah. they're extremely important here as are q3 earnings i think what the stockmarket is doing right now is really this dancearound. are we in a recessionary market or recessionary bear market.
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it's different depending upon those two outcomes we've already done the work, so we tend to see a drawdown of about 25% and a time horizon of around 200 days. if you tip over into a recessionary bear market, the average drawdown is a duration of 365 days. >> so with that in mind, what did friday -- what do we want in terms of employment? were you happy about friday's numbers, or did they just make the fed's job harder because, you know, if we still have solid employment, it's hard to see the latter case that you just described. >> the fed does not have an easy job at all, and this feels very uncomfortable to your point, this idea that output is slowing
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and we're seeing a decline in economic growth. so the labor market is strong, not just in jobs reports, but when you look at the lay jeff numbers, we're at an all-time high in terms of quit rates. people are quitting their jobs layoffs are at an all-time low, and we're seeing job creation. that balancing out with the consequence of the fed tightening into an economic decline is very confusing. i would say one thing that helps add some clarity to this, everything points back to the con suchler. so consumer spending is 65% of gdp. which hasn't kept pace with inflation is wage growth we're still seeing real turns, a decline in wages we'll start to see some cracks in terms of the economic backdrop we're starting from healthy levels, but that's something that could ultimately create that difference whether we tip over into a recession or not.
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>> the two scenarios you described at the beginning, do you have a probability for which is more likely at this point >> we do, we do. so we still are in the resilient. when you look at it's roughly 50/50, we have a strong edge essentially you're going to see slowing growth but not tip over into a recession the reason for that, we're starting off the strength of the consumer is still relatively strong. we're coming into this year based on economics growth. some of this change we're seeing, we still favor in terms of seeing a soft landing, but it's going to depend upon the fed's trajectory here, which is why we're looking at diverse portfolios it depends on one of the two scenarios that happens from here on out. >> put a put in the water. like a whole foot? four toes?
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it sounds like you definitely want to hedge your bets and you're very select active about what you do, but you're not going to wait for a bottom and a fall you would be buying right now selectively. >> i think what you have to do is dependant on how you're allocated. last year we shifted our partn portfolio away to high quality stocks you had ranges from 2.5% to 4% that have consistently been growing dividended then in march we started balancing that out with quality fixed income we added some of that exposure as a diversifier you can see from both equities and fixed income, while we're still invested, we're still invested in the quality and stretching the yield. >> thanks, kristen it all makes sense
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thank you. >> thank you. coming up, you are going to head to delaware we 're all going to delaware, i feels like jay clayton on the legal battle that's about to break out between twitter and elon musk. you don't want to go anywhere. we're coming right back with the soap opera and the drama, right after this >> announcer: "squawk box" is sponsored by bitwise, the world's leader in crypto index funds.
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welcome back to "squawk box. here we go elon musk terminated the deal to buy twitter and setting up what could now be an intense legal battle premarket this morning you're down to about 34.86% joining us now, former s.e.c. chair, jay clayton it appears wachtell lipton is going to take this battle to court. what do you say happens? handicap it. play it out. >> we talked about the various const constituencies, the buyer, mr. musk, the shareholders around regulators now enter a fifth onstituency, the delaware courts. let me say, the delaware courts.
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why do people choose delaware? they choose delaware because they're experienced, they understand commercial matters, and there's certainty with it. the delaware courts are going to take this matter extremely seriously. like you said, there are very, very well-qualified, experienced -- >> i'm making you the judge and jury right now what do you say? you read the contract. you're a lawyer. you're a counselor you read the contract. it's a pretty tight contract i'll put out the range of options for you. you can either force elon musk to buy the company that's one option. you could look at this and say elon muchc is right, there's too many bots, there's been a fraud put upon the public shareholders this is almost like a discovery process. i don't know if you think that's something the courts are likely to do. of course, there's always the possibility there could be a
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renegotiation. there's a question, by the way, about damages in this case if you did enforce the deal, this specific performance, saying you have to buy the company, there is this idea damages are capped at $1 million. do you believe that? the floor is yours. >> you just laid it out very well now we have a range of outcomes that is very wide. >> but i'm asking you to handicap them, jay. >> what i'm going to tell you is as we see the share price, right now it's pretty difficult to handicap because on the one hand you have mr. musk saying, look, i thought i was buying something with a limited amount of bot activity, and it's much greater than it was. that's a factual matter. we're going to see whether that develops >> let me ask you this, jay. as law wherever, you read the letter elon musk published on friday effectively, there's no evidence in the letter as far as i can tell that there's more than 5% of the bots.
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it says we have a suspicion that there is if you're the judge, would that move you to say, okay, let's play the discovery out on the facts of that, or would you say, we've got nothing here beyond your suspicion, i'm making you do this deal >> there's a little bit in between there, andrew. there's the claim that the bots are greater than was disclosed, and then there's the claim, i didn't get enough information to actually verify that and one of the things that may play out in court over time is there additional information if you had additional information, would you be able to show mr. musk's claim has merit and merit to the extent it has an adverse effect. >> do you believe that -- there are some lawyers that say if you waive the diligence and you have nothing to show -- you have no evidence of this, this is not like some kind of diligence process. when you actually make an agreement, it's an agreement. >> well, there's a little bit of
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a difference there when you waive diligence, you say, i'm not going to investigate at this time but there are still representations made to a buyer. and if those representations are untrue to a very, very high standard, you haven't waived that. >> i've got a different one for you, and i think you dealt with this a little bit inside the s.e.c. when you were thinking about the take-private issue with elon musk a couple of years ago. you have the credibility of the courts and the s.e.c if you have a judge who's inclined to say i'm going to force you, there's a specific performance requirement, you have to buy this company, there's a question mark about whether actually the delaware court can actually do that, or not whether they can do it, but how and whether they can enforce it if they couldn't enforce it, meaning, if elon musk were to snub his nose and say i'm not going to do that, what could they actually do to enforce it
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and if they could enforce it, what sort of political construct is the delaware court? >> this is where i started andrew the delaware courts are concerned not just about this case let's note there's a lot of emotion around this case, but they're very concerned around the longevity and predictability of delaware to resolve judicial disputes you're right to focus on that. as the facts play out, delaware will draw on their precedent let's go to one indiana of the spectrum mr. musk's claims have no merit. they're going to order a specific performance you're saying, what happens then well, when you order specific performance, that's an order of the court. courts have various powers to enforce their orders over time, whether it's contempt and the like these things will play out at the other end of the spectrum if the claims have merit, we will see one of the things that could
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happen here, as the facts develop, right now there's a widespread that shows the dangers of a merger an trauj and the like and it starts to settle and the parties reach a settlement. >> is that your best guess of where this lands >> i hate to tell you, it's so wide it's too early to tell. that factual record around mr. musk's claims, people are looking at it. what i would say is you're getting a wide variety of opinions around the spectrum they seem to hold questionable merit, but we'll see if this develops. >> i've got to ask you about this elon -- i don't know if you saw this two things i don't know who his lawyers are. he's tweeting last night first he's got a picture of a chessboard and says "check mate." then there's a meme where he says -- it's four pictures of him where it says they say i
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couldn't buy twitter, there's bot info now they're trying to expose it. what does the judge effectively say? it's like, they're trying to use the court for a discovery process and some judges may look askance at that. >> if it's -- judges are very good at discerning what people are using the powers of the court for. but you bring up one of the c constituencies we've talked about in the past, which is regulators we're talking about a big spread here and the thifrt for the market for new information that may indicate where this is headed we have rules around communications with the market in times like this, but i think you're going to see some regulatory scrutiny here around that type of communication you need to have fair
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dissemination like this. >> you're an independent operator at this point who would you prefer to be scatlin representing elon or wachtell representing twitter sh. >> i'm not going to pick one over the other i have friends, colleagues in the bar at both places what i will tell you is there's going to be no doubt with the players as i've seen them that this is going to be an incredibly well-briefed exercise there's no doubt the legal talent on both sides is the best money can buy. >> jay is always down the middle i appreciate that. donald trump says it's a ron contract elon musk has called it a b.s. contract over the weekend. >> i love it. >> like i said, there's a wide range. >> he claimed elon told him
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personally that he had voted for him even though elon's been out there saying he hasn't voted for a republican in forever, even though now in the midterms he plans to. >> right what a world yeah i copped the voting for jimmy carter the first time. >> i know you have. >> i think of all the things we did in our youth. coming u sp,tarbucks running into trouble with a new product. we'll have the details coming up next
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box. starbucks has introduced a chicken sandwich from the menu they failed to meet their standards for quality, but any claims that they caused specific illness are simply false also is due to unverified claims on social media that said the sandwich made a few people sick. starbucks said the quality of
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the sandwich would not lead to food-borne sandwich. it's, according to starbucks' words, white chicken, fluffy eggs, and maple butter bread on a biscuit roll. >> only 420 calories. >> i'm trying to figure out where the weak link in those ingredients would be and how skeeved out i should really be about it the way they're copping to the quality issue, but not that it could make you sick. >> i don't know. >> they cop to the quality -- what does copping to the quality issue mean where is the weak link >> i do not know. >> number one, i do not -- it's either white meat or it's not. i hope it's not the chicken. nobody likes a chicken from chernobyl farms or salmonella,
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gross chicken. maple butter squares me because that could be rancid, you know where does the quality issue mean i don't want that sandwich i don't want to eat it. >> it's unavailable to you. >> i don't care if they tell me it's not going to make me sick if there's a quality issue, i don't want -- >> you know -- >> what do i want you to say, i'm not sure. >> what do you want me to say? are you back at chipotle >> nope. >> you're not. >> nope. i'm currently searching -- >> would you go to a taco bell >> if there was one near me, i'd go three times a day there's no quality issue at tac bell, my friend, except it might be too high. i wonder what dr. scott gottlieb thinks about eating taco bell. >> maybe he can identify the
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weak link and the quality. >> we'll add that to the list of questions. we're going to talk to him about the rising counts of covid in new york and eewrelshe and what's going to happen with vaccines come this fall. you're watching "squawk box" on cnbc
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the spread of a new omicron strain, "the washington post" writing, the worst variant has just arrived this event is not over it comes as some stocks are seeing gains with moderna up 23%, novavax up 48%. joining us now dr. scott gottlieb, a cnb contributor. he also serves on the boards of alumina and pfizer g-3, they pull me back in. every time you're on, we said covid one time now we're fully back, doc. let's talk tell me about the variant. tell me about its -- how contagious is it, how virulent is it, and how widespread you
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expect it to become once we head into fall and winter. >> well, i don't think we're fully back look, b.5 is up there's about 33 cases per 100,000 people per day we're starting to see cases build, parts of the southwest, pacific southwest. you've seen cases build around the tri-state area as well, but not as rapidly places that had b.2 waves seemed in inper srious to it given the fact that some parts of the country had some waves of the b.2 infection, that may be a backstop against a very rapid stop of the b.5 variant
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in terms of how virulent it is, it appears to be on par with b.1 and b.2. it's spreading through immunization b.2 affords a better bit of protection since's a descendant from b.2 it does seem to pierce that immunity as well as the immunity offered by the vaccine the final point is the vaccine appears to be protective against serious disease. being updated is still critical in terms of protecting yourself from the full consequences of it. >> immunity probably is approaching some kind of herd immunity am i up to date on my vaccines.
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>> i've had -- what did i have i had the first one t second one, the booster i've had three it was six months ago. and i had covid in january do i need to -- i don't worry. i don't wear a mask. i don't ever think about it anymore. am i wrong >> look, i think a lot of people see this pandemic and covid as a consequence of modern living in some respects, that's a recalibration of risk on the part of some individuals, and there's very few immune-naive people most people have immunity from vaccination, infection, or both, and i think that affords a high protection from having a bad outcome. up to date means if you're above the age of 50 and you haven't had a dose of vaccine this year, you should get one that seems to be the guidance coming out of federal health officials right now. some white house officials were
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talking about that as a metric over the weekend if you haven't had a booster this year, six months out from your last booster, you should get one heading into what's like to be a slowly building of infection as we head into the fall some parts of the country are in it right now others are in the thick of it. and others will get it as we come back to work, school, things like that. >> here's the question joe and i look at this marginally different. >> if 100 degrees is marginal. it's not 360. >> right i'm of the view, and maybe i'm wrong, sort of after three months or so, you know -- and i got it about a month, month and a half ago i'm thinking come september -- right now i feel very comfortable, i'm free to the world. but i kind of feel come september i'm going to want to be more careful and think about masking up an maybe not do as much indoor stuff and things like that. how do you look at those sort of
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two thought processes? >> yeah, look. people have different tolerances for risk people who either vulnerable themselves or have young children are going to be more cautious about going into settings where they could get infected and being a link to the infection. they don't want to bring it back into their homes they're also thinking about their health those who have been vaccinated and infected as well, you're seeing a tall wall of immunity with the exception of a few countries like portugal, you saw far fewer hospitalizations and death as regards this infection. hopefully that's what we see in the united states as well. so far we don't seem to be having rising icu admission or deaths there's a bump-up of hospitalizations but not on par
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with the rise of infections. it does seem to be something that's of less and less consequence, but you have to weigh your own risk. >> what's your own sort of risk tolerance of getting sick unto itself, right? i'm one of those people who hates being sick i don't want to get sick. >> look it i'm trying to avoid getting covid as well. i don't want to get the infection. i also don't want to be out of work for a week. it would be inconvenient whenever i catch it. i wore a mask through the airport this weekend. >> scott, you haven't had it yet? >> you haven't had covid yet >> i don't think so. >> oh, my god. so you have zero friends basically. >> as far as i know. >> as far as you know, you have zero friends or as far as you know you have -- >> oh. >> that was bill maher's line. >> look, i've lost a lot of
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friends during this, as you know. >> i've known people who've had it i've been careful. >> i'm telling you, i'm not anti-vax i got my second shingles shot. man, my arm, i still feel it a little bit maybe pneumonia is next. i'm going to get a vax du jour can we do that at some point should i get a pneumonia vax i think i'm healthy. >> i think you're indicated for it by age, but the shingles was a good call. >> shingles can't kill you, but you wish you were dead if you get it i got that i got that it scares you a little they told me, look, probably on the second one, you're probably growing to get a fever it could last for three days if it does, see a doctor i had nothing. nothing happened but -- for anyone out there -- a sore arm
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good experience, andrew. >> yeah. >> you had chicken pox, right? if you had chicken pox, you could get shingles, is that the way it works >> that's right. we saw a rise when people were a lot of stress during the pandemic >> neither one of us are under real stress with this job. we're good there. >> you don't think this is stressful every morning? for you it is. thank you, dr. gottlieb. if we're not smiling and laughing, we're not living, are we we need to be -- coming up, a new report on the world's most powerful wealthy families stay tuned you're watching "squawk box" on cnbc go to today to learn about compound interest
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and other valuable investment information. before you invest,
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box. they're called family offices. robert frank joins us this morning.
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good morning. >> good morning. great to see you family offices, larger than all the hedge funds in the world, and they're competing directly with private equity and management firms they manage more than $6 trillion in assets there are about 10,000 family offices in the world today that's up ten-fold from the early 2000s. this is all being driven by more wealth at the top, and it's shifted away from management firms and more direct control and direct investing by the wealthy. you look at morgan stanley they're funding a growing number of deals directly. right now with inflation and rising rates, many family offices are building cash and moving away from hedge funds and
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publicly traded stocks a third are in equities. 20% are in private equity that's far and away ahead for most family offices wall street is chasing a gold mine of fees morgan stanley already has $25 billion in assets. and as you mentioned this morning, it's very exciting because the first of our family office investor interviews -- that's where we talk to top family ceos is live on cnbc pro. andrew >> how much, though, is there double counting here because most family offices -- and you mentioned michael dell's family office but most family offices are not doing what might be described as direct investing what they're really doing -- you talked about morgan stanley. they're turning it over to hedge funds and private equity firms
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to effectively manage so they almost look much more like, you know, even like squarcaramucci s doing, handing over funds. >> funds to funds. >> yeah. >> family office starts at $100 million. that's when it started to make economic sense most of those do some direct investing, but some use outside managers, and they do some hedge funds. you're right let's say $6 trillion for family offices, there's some 4 million into hedge funds that amount is falling quite quickly because more of these family offices want to invest directly in buying companies or buying stakes in companies. >> robert frank, appreciate it. >> thanks. >> i've got a home office, and sometimes the family joins me in the office, and then we say --
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>> i guess we have a family office it's a room where anybody who needs to use an office would need to go you still could one day. >> we're working on it it's an aspiration. coming up, president biden making a controversial trip to saudi arabia this week as the white house looks to battle high energy prices here at home we're going to to talk to to an industry expert. back after this.
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when you get 4 lines. switch to xfinity mobile today. welcome back to "squawk box" this morning president biden is traveling to saudi arabia this week he defended to make that trip. he said, quote, as president, it is myjob to keep our country stong and secure we have to counter russia's aggression and put ourselves in the best position to outcompete china, and work for greater stability in a consequential region of the world. it's an interesting decision to put that editorial there in "the washington post" given the murder of khashoggi and his relationship with "the washington post. there's a tightrope that the
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president is walking here, one of sort of around that murder of khashoggi. i don't know what kind of penalty you think sort of on a human rights basis he's supposed to be making and then the leverage. i made this comment the last hour and got a lot of feedback on twitter they said, what leverage are you talking about? look, there's an economic piece that saudi has on us you have the moral piece and economic leverage and then the moral piece on that end saying what kind of leverage and impact it has on the whole country. what you do think about that >> absolutely. the biden administration would say it's beyond oil. they would say we're seeking a strategic reset with countries like saudi arabia. we essentially need their help right now because we have this war with russia, this war on commodity prices, and, yes, they
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raised human rights concerns in conversations with the heads of state, but right now the im imperative is they need the help the sanctions with russia, we're going to need 2.2 billion barrels of oil who's going to supply europe when that happens? they need saudi arabia volumes right now they're putting the issue front and center, but they're also saying it's strategic relationships as well. >> we're looking at $100, $102 per barrel i haven't seen what it is in the past couple of days now at the pump i think we're somewhere in the mid-4s, closing in on 5, depending where you are, state by state what do you think is realistic in terms of the next, call it, three months. >> right now the biden administration is getting a breather because of the recession concerns that is certainly putting a lid
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on oil prices. again, i would be watching what's happening in the coming months russia is going to be hit with serious energy sanctions come december, and the question is do they start looking at that pay very close attention on that with gas pricesle look at what's happening with nord stream 1, the all important pipeline that feeds russian gas to europe. there's real concerns that russia will not restart those pipelines, essentially making europe pay a very, very heavy price for the sanctions. >> you're betting energy prices move higher. >> my bet is we're going to see further russian action in the back half of this year that will push prices higher again, the recession concerns could be a tailwind for oil, but i'm looking at russian action and they're going to be more aggressive when those sanctions take effect. >> i want to thank you for your
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perspective. coming up, what wall street analysts are saying about twitter's fate as elon musk moves to terminate his $44 billion acquisition of the social media company stay tuned you're watching "squawk box" on cnbc wealth is shutting down the office for mike's retirement party. worth is giving the employee who spent half his life with you, the party of a lifetime. ♪ ♪ wealth is watching your business grow. worth is watching your employees grow with it. ♪ ♪
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good morning futures pointing lower, some of the worst levels we've seen this morning as we get set to kick off a new trading week on wall street it's a big one with new inflation data on the way, and the start of corporate earnings season. twitter termination. elon musk wants out of his $44 billion deal, but things might not be so easy for the tech billionaire. >> and president biden about to head overseas including saudi arabia, a country he once labeled a pariah we're going to talk about what the president hopes to gain from this trip and what it means for energy prices and human rights concerns as the final hour of "squawk box" begins right now.
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good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site andrew ross sorkin along with joe joe kernen becky is off look at the dow, off by 176 points, and treasury yields right now, sitting on the ten-year note, about 3.058 after that jobs report on friday, a little bit of pressure this morning, but we'll see. shares of asian gaming companies dropping as the china ruled city of macau shutting down its casinos to slow down the spread of the crohn's. macau has had about 115 covid infections since mid-june. 90% of the population
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vaccinated, but the city hasn't had to deal with the only krahn variant yet. we're looking at sands down, look at that 8% wynn, 6%. hong kong is getting hit today. china's market regulator says alibaba and tencent and others were fined due to anti-monopoly rules. this is the latest in a string of regulatory crackdowns. let's talk movies this weekend. "thor" showing superhuman strength $143 million that's in addition to $159 million internationally. this is the biggest opening yet. "minions" distributed by universal pictures which is a
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unit of nbcuniversal, which is a unit of comcast. what it does show you is that windowing matters. there is money to be had in the windowing of films. >> in the release. >> in the release. and it suggests to me that long term when you look at the likes of a net flick, which, of course, has lived in the bingeing world, lived in just trying to be online, at some point people are looking at the model saying look how much money is being left on the table could you window a film for two, three, or four weeks and then move it to a streaming service how much money is being left on the table? >> i had different thoughts. >> what was your thought >> pining for jimmy condive. i was thinking, okay, it's the fourth "thor." it's got to be two hours long. you go to the writers. write me a plot for "thor" and
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make it for two hours and something people actually want to go see. >> they did. >> i didn't. i don't want to see a bunch of cgi grab i have no idea what the plot -- you won't see that thing. >> there's a public out there. >> go play a video game or something instead of going to watch cgi with -- i'm sorry. i think the writers are like -- the writers are like, okay, write me a fourth "thor," but make me a plot that will keep the people's interest. they go, no. and then they go, it's going to be a piece of crap that's fine. "minions" on the other hand, i would see that -- "minions" are just so funny and cute i think there's endless plots you could write for "minions."
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the s&p 500 -- >> who writes your material? >> who writes your material? >> think about that. nobody somebody told me, to be on tv, you have to have a lot to say. you do you have a lot to say. >> not enough. >> we're going to get to twitter. how much do you have to say about twitter and the delaware chancery court if you were to have a word, you'd have a family office. >> i would. the s&p 500 is up from its mid-june lows. if it feels like we've been here before, it's because we have i want to hear about this. and then i need you to weigh in on what we keep asking everyone. if we start out with this great jobs number on friday, why isn't that a good thing for the fed, that it can maybe raise rates and start from an even lower level of unemployment so that, you know, it could be a soft landing if things are still
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going well you raise rate as little, but you still have a good employment picture. whoo isn't that good enough? >> i'm not clear that it's not good i'm not sure the market is even saying that's not good it leaves us on this kind of treadmill for a little bit longer perhaps last week the market did add back future expected rate hikes. one thing you want to see is labor market participation c comeback that was friday's one little wrinkle. i think you're right it's not yet determinative of what we're seeing here in terms of the market, you have the 7% gain on the midterm lows. we've had a few of these about a half dozen, 5% rallies the notable ones started in march. you've got another one in may. has anything changed not clearly just yet i would say you need another few
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percent to say maybe it has a shot of doing that the mid-june lows, i think one of the positives is you find very few people that express a lot of conviction that those lows would be the lows that doesn't get you very far. you are still looking at that. it's a down trend. take a look at how the very largest stocks in the index have done relative to the typical stock over the last month. this is a slightly new wrinkle here these are the top 50 stocks on a one-month basis. you see a good performance spread that's a lot of the huge mega cap stocks you see the highs. it seems they're less crowded. you see speculative tech get a bounce too you keep it on a short leash, but you observe maybe the character of the market is changing, we get a rolling recovery like we got a rolling bear market. expectations, this is a little
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different, which is the low level of implied five-year inflation that's imbedded in the bond market here 2.6, this is a one-year chart. you see the inflation of the panic of the spring. that fever has broke we're not worried about much more grouc, but this is one thing that has the market looking toward the next challenge as opposed to sort of staying consumed with the gas-driven inflation story that we were dealing with a few months ago, joe. >> thanks. this will be an interesting week, though, mike it should be interesting in the coming weeks >> we've got a lot going on. >> maybe we still won't know at least we'll have things to talk about. let's talk elon musk here's the question. elon musk was wrong if he thought that deciding to cancel his $44 billion deal for twitter would end things turns out the saga is just getting started in the delaware
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courts julia boorstin has the latest. >> reporter: twitter has hired wachtell, lipton and could file a lawsuit early this week. twitter consistently underestimates the end of spam bots in the platform twitter, they say, is withholding information about the bots, and twitter is undermining the value of its business by hiring key employees and freezing hiring. in response to these allegations, they say, the twitter board is committed to closing the transaction on the price and terms agreed upon with mr. musk and plans to pursue legal action to enforce the merger agreement we're confident we will prevail in the delaware court. now, as we wade to see whether the court will accept musk's argument to end the deal, whether he'll have to go through
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or pay a termination fee or whether he'll negotiate a fee, now analysts are speculating about the impact of all this on the company. true wifist says this makes the investment case for twitter hard to make at this point. it's as much as 30% lower from current leverier jeffries wright says musk's concerns are warranted they say in absence of the deal, the stock is finding the floor at $23.50. as core fundamentals, they believe it's been rattled by the whole process. musk came out with a response that he didn't probably run by his legal team a meme of laughing with texts, quote, i couldn't buy twitter. then they wouldn't disclose bot info now they want to force me to buy
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twitter in court now they have to disclose bot info in court. >> give me your read on. this there's two sort of binary things that could happen and lots of other things that could happen in between. there's a specific performance provision that means the judge could say, you have to buy this company and there's a question of what he would do in this case and how you would enforce this there's another issue that if you weren't going to force him to buy the company, technically it appears not only is there a termination of a billion dollars, but there's a damages cap that also looks luke a billion dollars depending on your read of this. there's others who say you can force damages much higher. what are you thinking? >> i think that twitter is going to either be looking for much higher damages or to get him to close this deal. certainly with more than that
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billion-dollar breakup fee the key i keep coming back to is that elon musk waived the right to due diligence, and in doing that, waiving that right, he exposed himself to a lot more legal risk here, at least from what i'm seeing. and there's also this idea that all of the analysts have pointed out. elon musk has left this company in perhaps a worse situation than when he first made that offer in terms of exposing issues and just general sort of negativity surrounding the company right now with all the departures, et cetera. so i do think that twitter does have a case to be made for why they should get more in damages, but one thing we don't know is exactly how much musk is right about that bot issue twitter has said repeatedly they have been even tirely transparent with them. so that's the other unknown here. >> julia, by the way, if twitter -- if elon musk is right about the bot issue, it seems to me that twitter would have a real
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problem not just about the current disclosures that have been made, but, frankly, disclosiere ie discloseures that have been made in the past five years >> as you said, andrew, it could be somewhere in between. musk says 20% bots twitter says 5% bots of course, there's all these different ways you can measure and manage these things, so it may be somewhere in between there as well. >> we should note, by the way, if if you read the twitter filings, they call it an estimate, and then they say the estimate could be wrong, which gives them a lot of wiggle room across the board julia boorstin, great to see you this morning as we mentioned, when it comes to the contract, you know who knows about contracts and getting out of contracts, donald trump. he says it's a rotten contract
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he read the contract he said, i read the contract it's a rotten contract. >> i still like when he said elon musk was good at rockets. >> good at rockets. >> that was a quote. good at rockets. it's true. darn good. council of economics advisers jared bernstein gives us a take on the economy and the latest jobs report how the fed will decide on the data when it decides its next fed rate hikes stay tuned you're watching "squawk box" on cnbc live from the market site in times square. ♪♪ you try it. ♪♪ better. ♪♪ oh, you gotta move your feet. charles.
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alright, alright, i'm going. i'm going.
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[ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app. welcome back to "squawk box. cnbc has a new poll out regarding adults making 100,000 in income. a third say they're worse off financially than they were a year ago 42% said things are about the same and a quarter says they're better off how do they square with friday's better-than-expected jobs report we bring in jared bernstein. you've seen numbers like this before, jared. what do you think?
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>> doing a little bit of arithmetic, it looks like a third of the respondents said they were better off or holding steady, so that's actually a decent number. sorry about all the noise in the background. >> what were you saying? >> the fact that prices are so elevated is weighing on every consumer poll i've seen and probably this one as well. >> okay. let me show you something else, though, and this is in "the new york times." here it is on the front page in the lead democrats sour on biden citing age and economy. polls show pessimism becoming pervasive, and most wanting over candidates what do you do about this? >> i take you right to zwrob markets and the president's fingerprints and one of the strongest job markets in history. again, we know a lot of stressors are affecting family budgets, energy costs, other
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prices, other commodities. what we also know is this president has been fighting on behalf of the american middle class since he's gotten here, and he has a lot to show for it. an unemployment rate that's been 6.4% for four months in a rogue, stellar job growth and a backdrop to these inflationary pressures. let's talk about the gas prices. gas is down. it has to do with the initiatives the white house has taken, including measures to increase the supply of oil so i think if you actually look at what the president has done, keep your head down, that's our assignment, and that's what we're trying to do. >> hey, jared. you mentioned oil. the president headed to saudi arabia defending that decision in "the washington post" in an op-ed. interesting to do it there given the murder of khashoggi and "the
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washington post. can you speak to the economic issue and also the moral issue around -- what kind of relationship the united states should have with saudi arabia. it's a philosophical one to some degree you could have moral questions and issues with saudi arabia given what clearly it appears they have done but at the same time, there's a moral issue given the economic impact and leverage they have, you could argue, and what leverage they have over us, and more broadly for the country. >> let me start with the economics. obviously that's the lane where i'm most comfortable the president has consistently talked about trying to make sure producers are hitting or su surpassing their quotas. now, as we transition from where we are to much more investment and sustainable renewable energy, we have to walk and chew gum at the same time the walking means doing things like releasing 240 barrels with
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our partners from the strategic reserve, increasing the supply of e-15 ethanol, and recognizing that both wholesale and retail gas prices have come down quite sharply over the past few weeks. we're also working, as i suspect you've reported, a cap on russian oil prices while we keep it on the market now, when it comes to the geo politics, you know, it's just not really useful for me to weigh in on an issue this you have lots of other people you can talk to about. that but the president himself talked about normalizing relations, and he's going -- we'll have to watch what comes out of the summit as we go to the coming days. >> okay. i hear that. that is kind of loud, jared. i don't -- i don't envy your job at all you always are positive and
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putting everything in a pretty good light it must be a little bit difficult. the market has had a tough stretch, and i know, you know, we did come out of a pandemic, and we lost a lot of workers and a lot of comeback. maybe we're up a little bit from where we were prepandemic at this point what do you think of the stockmarket having a worst first half of the year since 1970? it's a forward looking accounter th accounter theoretically. isn't that saying something about inflation, or did the fed overstimulate? did the american rescue plan, did that overstimulate i mean, you must see there are some -- there's some troubling things that are on the horizon you know, otherwise those polls wouldn't be like that. i'm surprised he's still got 70% of democrats
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"the new york times" writes a piece like that. they're ready to throw in the towel. >> let me try to throw those themes together. you start out talking about my sunny disposition. maybe that's congenital. when i look at the economy, it's a pretty nuanced story no one is hiding from the fact that the prices are at a 40-year high every time the president talks about the economy, he talks about the affordability stressors on working families, and maybe that's where many poll results have their origins you can't ignore the fact we have the strongest market in generations with 11 million openings with 375,000 jobs per month over the past three months created. so it's an extremely welcoming job market with rising nominal wages that provides an essential backdrop to the price pressures. family balance sheets are in good shape getting back to the president's
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r role in this, he has his finger on the benefits. you ask if it contributed to overheating. look, i think the inflation story can be broken down into strong demand. it's constrained supply, and now it's putin's invasion. the demand part is actually trailing off, and that makes sense if you look at some of the cooling sectors of the economy housing is a big example the supply chains are still in place. they're easing significantly, which also has to do with some of our work at the ports, but the putin price hike is very much in the mix and is kwweighig on the trade market. >> patent that you use it again and again and again. >> it's real. >> you're at 33% approval at this point, jared.
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i don't know. >> i thought the first poll you showed, it went by quickly i thought it said 60-plus percent. >> we were on "the new york times." >> okay. >> the slide up there. >> 60-plus percent of -- >> i trust "the new york times"ism explicitly. >> me too. >> 60-plus percent of the respondents said they were doing the same or better there it is. 6% that's adults making $100,000 or more, so that's a pretty flush group, but, you know, i think that probably reflects strong balance sheets, the tight labor market. >> coming out of a pandemic, a once-in-100-year pandemic. we all feel better off about that. >> that's something. something more positive. >> i want to ask you about the state of the chips act and what
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you think is happening i think in the next couple of years, semi-conductors matter a lot. the chips act put in place -- or has been on the table for quite some time, and there's a risk at this moment that if congress at least before the summer is out doesn't deal with it or votes in favor of it, come september, i think intel may have to say to themselves, you know what? i'm going to invest my money in europe or go elsewhere. >> it's a real concern. >> what's happening here and what is the president doing about it we have not heard the president talking about it publicly. >> all right it is a real concern and you said something about the long term. i don't consider september all that long term, and i don't suspect you don't either we could make a difference to the production of semi-conductors in the near term if congress would act.
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i guarantee you the president is pushing hard for the hill to do the right thing to pass this act. 68% of the senators voted for the earlier version of this plan and it ping-ponged over at the house. they ought to be able to pinpoint it. what i say about that is i know we're in this hyper-- everything knows we're in this hyperpartisan era when members of congress agree, when there's bipartisanship about a measure that will so clearly help the american economy in an area critical to our future, microchip production, put aside your partisanship, get together, and pass this damn bill today. >> fighting words. jared bernstein, good to see you. thank the nice folks mowing the lawn behind you for us, and we'll look forward to seeing you. >> we're always glad to see people at work at the white
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house, even if it's in my earpiece. >> absolutely. coming up, we're going to talk more about president biden's saudi arabia trip. we'll debate it with former senator heidi dheitkamp and former senator judd gregg. craig jell nick is on at 9:00 a.m we're coming right back.
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coming up, we're going to talk about the needle that president biden is going to attempt to thread on his upcoming trip to saudi arabia. on the one hand saudi is a global energy giant. on the other it's facing intense criticism for the killing of a "washington post" columnist. we'll get into all of that next when "squawk box" returns.
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welcome back to "squawk box" right here on cnbc the dow looks like it would open down 172 points. the s&p 500 down 27. you put some of this in perspective. the nasdaq on a five-day winning streak that's the longest ever since the last time, 11 days president biden is said to head to saudi arabia later this week saudi is opec's most important
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member, but the president also labeled it a pariah when he was running for president because of the brutal killing of "washington post" columnist jamal khashoggi. he said he needs to engage with saudi arabia to help with the engagement of russia and help bring stability to the middle east for more on what's stake overseas, let's welcome in heidi heitkamp of north dakota, a former member of one country project and cnbc contributor and judd gregg, governor of new hampshire. on the world stage, heidi, i'll start with you what is ooh ther a country like united states or companies, what are we supposed to do? how are we supposed to do with countries that have all this baggage like saudi arabia and
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even china in terms of human rights it's almost essential that we engage, but certainly we wish we could put pressure on them to adhere more to what we think is the way you should behave. >> well, it's a tough balancing act, and we saw president batru basically saying, look, we're going to go to north korea no one thought that was possible either i disagree with how he handled north korea, but i don't disagree that we need to engage. the problem with saudi arabia, e especially, joe, as it relates to oil prices, he's forgetting that one of the reasons why shale in our country experienced such challenges is because saudi arabia and the other opec countries really tried to drive down prices to basically eliminate production from shale production so to go there with the idea you're going to encourage them to help solve the oil crisis, i
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think, is a little, maybe, not as -- not as thought out as what it should be but i will tell you that the other factor on saudi arabia is when you look at 91/11, the majority of the bombers came from saudi arabia. this is not a country that is our friend i understand the need to engage and talk about how saudi arabia can help stabilize the mid-east. i think this is a play-around more than anything else because saudi arabia is seen as balance against the iranian/russian idea there. you need to be part of the global reorder which means the reforms you promised all along, whether it's women and children or look actionet the broo talty of your country.
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>> how would you walk the line, senator gregg? >> to begin with, i would go with leverage. andrew was talking about the saudis having leverage over us, china having leverage over us. the only reason they have leverage over us today is they've tried to basically undermine our capacity to produce oil and gas. we've got more oil and gas than saudi arabia has if were in a position to show we could produce going into the future, they basically would not have leverage over us. we would have leverage over them it was great for a period. for a feared you there, we didn't have to worry about what was going on in the middle east and have the middle east be the tail that was wagging our dog because we had the oil independence now, unfortunately that doesn't exist. we've got a very serious problem with our oil production capability in the future. >> i get that. i get that
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the overriding question, what do we do in a world where there's really bad actors that we need, and how do we approach it and keep our moral heads held up high in your view, judd, who's worse? china or saudi arabia? there's no way -- you can't rank them, i don't think. we have to deal with both of them very to engwe have to engage wit of them. >> i agree i'm not arguing we need to engage going there is appropriate it would be more appropriate if we had the leverage to cause them to come here, which is the way it should have been. unfortunately this admin stralg has spirited away that lever rang and doesn't seem inclined to reinstate it. but, yeah, you've got to engage with this world. the world is not dominated by democracy anymore regrettably. the western culture of democracy
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is unfortunately being undermined by china, by russia, by iran, by saudi arabia so those countries where we have some identity of interest, specifically commercial identity with china and with saudi arabia, we need to work with them, and we can't -- we can't force them to subscribe to values which we have because they're policed states and they're going to do what they want. >> heidi, you're probably going to disagree with some of the things judd said. >> i do. >> are there more -- is there more we could be doing domestically to open up our own vast natural resources even though they happen to be fossil fuels? don't you think there's more we could do >> absolutely. but i do have to say that i think the governor missed one of my comments, which was the saudis literally had more to do with shale being very challenged than anyone.
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and so when you say this is domestic policy, one of the challenges that our domestic industry has had is loi prices, which is kind of ironic. everyone wants to see prices come down and see domestic oil produced, but one of the reasons domestic oil was challenged was low prices that was driven by saudi arabia's lowering the prices and increasing production. one of the things i want to challenge the governor on, if you think saudi arabia and china are equally threatening -- an equal threat to the future of our dominance in this world, i think that's wrong i think china is where we need to focus our attention we need to focus there we need to maintain some peace in the mid east. the mid east isn't just about oil. it's about protecting our friends in israel. it's about stabilizing the important conduit between the east and west.
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so, yes, the oil prices -- we have been less dependent on oil from the northeast, especially at the time you saw a shale boon this is in part because of the iranian knew calory threat so we've got to be engaged not just on the oil policy but the threats to the overall world order. >> what would you do with keystone and all of the above? >> it's very important you know, as to the shale issue,y, the saudis tried to undermine our shaletry but remember in 2019 we had over 1,000 rigs pumping oil at $50 a barrel today we're down to 750 and the price of oil is twice that the fact is production is not
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driving down the price of oil. you have a horizon that's been undermined by green think. they've been called the oil industry criminals, and they're going to saudi arabia, which is ironic you have to drill everywhere where you have the resource. this resource is the single biggest advantage we have in our commercial confrontation with china. if china is our future competitor -- hopefully not militarily, but certainly it is from an eckic standpoint, our biggest advantage over china is to have cheap energy here, and we just don't have it. we need it. >> heidi. >> i think anyone who ignores supply demand kind of economics when you look at what we're doing with the oil industry or any other industry, the other piece of this is we're ignoring the supply chain, whether it's
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getting pipe in the ground or work force which is really challenging, i think, our domestic oil industry as well as the entire country, we have to look downstream on the refineries by the way, joy, e, don't say w haven't built a refinery in 50 yours we have. when the prices went down, the refinery was not profitable, and we had to find other ways to build out by-products. >> heidi, you have to admit that the regulatory interference and the capacity to put in a pipeline and put up refineries has been so strong, people are not wanting to but it in there money is fungible. maybe they're going to put it into widgets or chips, but they're not going to put it into a refinery.
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>> governor, they're also looking to the future and seeing a carbon-constrained world. >> you've got 20 or 30 years we're going to be using carbon as we transition to other energies. >> with policies today, that's a judgment they're making based on kind of where they think the climate movement is moving internationally and where we are in terms of alternative sources. let's not ignore the market. it's not just about government policies it's not just about green think. it is about where they see the market headed. i went through this in the coal industry if you're not at the table when we talk about carbon, you're risking your future. where are we now with coal as a resource for generating elect electricity, they had to get into a discussion about investments on decarbonizing, and i think we could have done it, but i think it's too late. i think the oil and gas industry
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is thinking what is the future how do we decarbonize. how do we continue to use the resource, particularly natural gas. how do we continue to use this resource in a way that makes sense, that gets affordable energy, drives our economy, an makes us competitive. >> judd, do you have a quick last word? >> i would point out i'm glad heidi now is up importants the filibuster the last word is we need more oil and gas and we night our energy to be more important and not be treated as a criminal we need it over our economically competitive neigh neighbors lyi china in order to give our country a stronger prosperity. it's that simple. >> heidi heitkamp and judd
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gregg, thank you it gets part in both parts of the world. i think judd has better maple syrup. >> fascinating story in "the new york times" over the weekend about new hampshire. did you see this >> no. >> unbelievable story in a state that has lived a live free or die kind of way. you should chict out. >> a subscription. >> we're going to get you one. "squawk box" will be back in just a moment.
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ss. who makes these decisions. we're going to go to jim andrew is talking to fans. >> we have >> we have fans. we already have tens of dozens of viewers. that is clint. they run a business by the way zamzaws fourth-generation family there. we've been doing liberating because there is class between us. there is a taco bell gift certificate. you guys have been thinking about us. >> starbucks, i think for becky. >> i preferred the new chicken sandwich. let's get to today's poll.
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are you going to get a microphone? let's get down to the new york stock exchange. jim cramer joins us now. i did talk to you after the jobs numbers, tim. i don't know. i am still in half full mode. if the jobs picture stay strong i guess that is bad for inflation, but it is also good for the economy. it seems resilient and can maybe take a little bit of continue typing by the fed and can still be okay. i guess we will find out with earnings. >> i'm talking about the amazing resilience of the consumer, but maybe they are running out of the money they saved during the pandemic where they did not go anywhere. i agree, i think that there are lots of other parts of inflation. we don't have to crush the consumer. the research is so negative.
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people do not want to be in the market anymore. it is one of those periods where it's like we know because we are representing the stock market. >> we heard one of our guest earlier, jim, looking at the 50/50 hard landing versus soft landing in a nutshell. if it's even a qualify soft landing, maybe we have already had enough fullback. i don't know, it's shorter in duration and less of a top-bottom record levels down to where we are. if it was a hard one, a recession, we have 300+ days and maybe 30% downside. we need to know which it is. if it is the former, we may already be near our bottom. >> i think we are near the bottom.
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we have been going down this november. when i see the downgrades, i mean it's been downgraded over and over again for the same reasons:russia, china, gaming. i think at a certain point it is like, enough. i wish everybody would downgrade all at once so that we can move on. i'm just exhausted by it. >> the cpi's are coming this week. are you more excited about the earnings that we get next week or can we get a lot from the banks this week? >> i think the banks have been very valuable. i mean the stocks have come down tremendously. there is a recommendation from make america today, let's watch that.
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i am just shocked that the banks are just piñata's here. there really are not a lot of bad loans in the system. ll right, jim, we will be back and see you again in about 60 minutes. we will be back in about two minutes.
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>> squaw picks brought to you by wisdom tree. joining us now with more insights on apple and other tech stocks to watch is the senior manager-director of covering the it hardware communications and equipment sector for every core isi. apple has outperformed. the question is are there other value plays in their? what do you think apple holds up at this price? >> listen, i do not think demand is going to fall off. i think you will get investors apprehensive.
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that should do much better. i do think the theory is this high inflation is indeed consumer demand and there is limited data to validate that. within the deeper monetization. >> when you look at apple what you think their value is right now? >> i'm always at the police this is somewhere between a consumer stable high and luxury good. it is somewhere in the high 100. that is where apple should be. >> given china's zero covid policy, supply chain issues and everything else, come this fall, just want to be the big test what are you expecting? >> so far they have managed to covid challenges fairly well. there will be two questions,
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ken apple have enough capacity given all the manufacturing issues. look at the last two years. it should be easier. the bigger thing is is there enough desire to purchase the next generation iphones. can apple incentivize us to purchase the next generation iphones that come out this fall? >> how strong will the consumers become when it comes to buying the iphone 14, which i am sure will cost at least as much as it has in the past if not more? >> every apple cost more than the prior one. you are right, consumers want to keep spending. one are the needs and desires. secondly i think you might get more substantive.
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>> the stock market expected to open down this morning. we will see you all tomorrow morning. maybe we would do it from delaware. when you think? it's nice. i know some folks there. we have an invite? make sure you join us tomorrow. good monday morning, here it comes, q-2 earnings season. futures are week as china sets down and europe braces for a possible shutdown of russian gas. begin with elon


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