Yesterday, but again we were talking about Massive Gains not just through the month of july but year to date as well well continue to keep an eye on this if youre watching treasury yields, this is where you would anticipate seeing moves if there were a downgrade if people were afraid of rushing into this. But it turns out u. S. Treasuries are still a safe haven and why the yields are still a bit lower. The 2year note trading at 4. 86 . Of course, all that related to what were seeing. Talk about the downgrade because it is our top story. Theyre citing what theyre calling an erosion of governance Emily Wilkins joining us now good morning to you. Good morning, andrew. Yes, shocking news yesterday at least for some of those in the Biden Administration seeing that downgrade in the u. S. Credit ratings from a aaa to a aplus this is only the second time the u. S. Credit rating has been downgraded like this treasury secretary janet yellen is quickly depending the Biden Administration she says the data they were using is outdated data and calls the numbers arbitrary. Its not only yelin pushing back against these numbers. Other democrats are pointing the finger at donald trump and the republicans saying theyre the ones to blame. Taking a look at the ways and means committee, theyre saying the gop is responsible for the downgrade and the American People will be forced to bear the consequences from the debt crisis and tax cuts for the wealthy, although, if you look in fitchs report, they say the recent debt crisis is really the only latest incident in a dysfunctional government they say theres been deterioration for to years in the u. S. s government and other things that contribute to the rating is the rising deficits, mediumterm fiscal challenges unaddressed, and recession fierce we expect them to discuss it this morning well be following her remarks very closely. The question i have for you, and i dont know if anybodys got on the the bottom of it, what was the timing . I mean what really led fitch to do this now . I think the reason why youre hearing janet yellen and others push back so hard, is if you really look at the model i dont know if you fully read it, emily. The economy looks better. It looks like its on a better trajectory than where they were three years ago. To say it happened on the Trump Administration or Biden Administration, if you look at the chart it was much worse at the end of the Trump Administration and progressively Getting Better now, fitch, if i remember correctly, put the u. S. On a negative ratings watch just a couple of months ago, and so the question is what would have put them on a negative ratings watch a couple of months ago and you would have thought would have gotten worse, not actually gotten better. This is a real big shock to the Biden Administration they said, hey, we solved the debt in a bipartisan way. We got it close but we got it done youve seen concerns about recession mostly go away at this point and youve seen some really strong numbers. So i think the Biden Administration is asking a lot of questions about timing, and, remember, too, this is happening as theyre going across the country to help biden onlyics, so this is not going to be a good look for biden and his team it has the potential to put in a strong message that the economy is doing much better than two years ago. There are more people with a soft landing but fitch is right in saying this wasnt really resolved you may have gotten past the debt ceiling crisis at this point, but we dont have a way to kind of get past the funding disagreements youre going to have that pick up over the next year you dont have anything to deal with with Social Security and other issues that have come up, so fitch is right from that perspective. Absolutely. I mean we know the debt limit, were going to have to deal with it in 2025 there is absolutely a chance were headed toward a Government Shutdown at this point and what we are able to get to these problems, figure out a solution and move on, they keep occurring. I think thats what fitch is trying to get at they even pointing out this isnt something that happened in the last year or two years or four years this is something thats been gone going on for the last 20 years. It crosses both parties. It crosses a number of years, and you really cant pin the blame on any particular administration. Emily, we want to thank you meantime i want to get some reaction from market participates in a treatment thats called, quote, strange. He says hes puzzled by the many aspects of the announcement and the timing and hes likely not the only one this goes to what the chart and model says and what fitch seems to be saying separately. Similar stand by Goldman Sachs saying it should have little or direct impact on the market, claiming there are those who would be forced to sell based on the ratings change. Again, if you look this morning, yeeds are down, which means prices have gone up. What does this actually mean about fitch though if fitch is a private company, its owned by hearst its people who make these decisions. Does it put prash on other agencies to downgrade . Do they say, these guys dont know what theyre talking about . Aaa is the top raying for u. S. Debt. I dont think theres a question about raising some of sthees things. We should be 100 honest. So much is sustainable. Dysfunctional process. The truth is if you look at the ray ratings have been done at least historically, it ooh whaes is a country on a relative basis. Meaning how does this country compare to this country compare to this country compare to this country and you look at the timing and say, you have to say to yourself its a little weird here its not a question of raising questions. Its an issue of if you really were going to downgrade the country, according to their model, you would have done it 3 1 2 years ago. You just would have. You wouldnt have done it now. Thiss what doesnt make any sense. I think the Market Reaction is telling you that too. This is not people being scared of buying out of treasuries. I want to get to another developing story a grand jury indicting former President Donald Trump on attempting to overturn the 2020 president ial election. The indictment unsealed late yesterday. Former President Trump is expected in Court Tomorrow eamon javers joins us with more on that. Eamon, good morning. Reporter jack smith explained why he moved forward with the indictment of former president of the United States donald trump heres what he said. The attack on our nations capitol on january 6th, 20 21 ws an unprecedented assault on the u. S. Democracy it was fueled by lies. Now the 45page indictment charges trump with conspiracy to defraud the United States, conspiracy to obstruct a proceeding, obstruction of a proceeding and conspiracy against rights, that is, peoples Voting Rights in general in this country. Jack smith says he wants a speedy trial in this kasem the former president has been summoned to appear in federal court on thursday here in washington, dc, at 4 00 p. M. That is tomorrow the Trump Campaign issued a statement denouncing smith in the wake of all this, saying this is nothing more than the latest corrupt chapter in the continued pathetic attempt by the Biden Crime Family and the department of justice to interfere with the 2024 president ial election. In a document filed late yesterday afternoon, were learning more about the closed Door Communications between the former president and his former president mike pence who, remember, testified before this grand jury and took contemporaneous notes of his conversations in real time with donald trump in one exchange detailed in the document, trump berated pence because the Vice President opposed an effort to establish pence had the authority to reject president ial votes. Heres what they say about that the Vice President respondnd he thought there was no constitutional basis for such authority and it was improper. In response the defendant told the Vice President , quote, youre too honest. Now, in his remarks yesterday, special counsel smith said the men and women of Law Enforcement who defended the capitol against violent attackers on january 6th are heroes and think did more than defend the building and the people in it they defended who we are as a country. Ameamon, also yesterday mike pence coming out with his strongest statement against former President Trump saying he doesnt think he should ever be president again. He is himself now running for president , but this is the strongest statement he made today. He said no man should be above the constitution, that anybody who puts themselves there sbhould ineligible for the presidency its fascinating moment where mike pence who rarely stood askance of donald trump at all nene way during his vice presidency on the last day, on january 6th, did stand against donald trump, did testify against him in this proceeding, and is now running against him so theres this as nating conflict of interest hes now running himself and is running against trump and provided keynotes to special counsel smith. All of this against constitutional stakes. Theres some real question if trump were to win in 2024 and overseeing the department of justice that has gone through with this case, what would that mean for american jurisprudence and Law Enforcement. Were in totally uncharted territory, becky. Eamon, thank you. Eamon javers. When we come back, were going to talk strategy after the downgrading by fitch the futures this morning in the red. Futures off by 163 nasdaq down by 155 later, well be joined about the latest push for crypto regulation youre watching squawk on the street d is ianths cnbc and we would experience turbulence. I would watch the Flight Attendants. If theyre not nervous, then im not going to be nervous. Financially, im the Flight Attendant in that situation. The relief that comes over people once they know theyve got a guide to help them through, i definitely feel privileged to be in that position. vo Verizon Small Business days are coming. I definitely feel privileged from august 7th to the 13th. Now is the time to partner with our experts. Get started today with verizon business. Its your business. Its your verizon. What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. 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Right now its time for the squawk planner on todays earnings calendar, were going to be hearing from cvs health, also yum brands and kraft heinz. All of that coming after opening bell and qualcomm and doordash then well be getting adp private payroll report a lot happening. Joining us to talk about that and much more is carol before we get to earnings or the rest of this, i have to ask you about what you think about fitch you up grading the u. S. Credit rating is. That appropriate what would you mean . What would you advise investors. I think the interesting thing youve already alluded to is the timing of it, but its not necessarily unprecedented. Theyre stating everything we know and mounting debt and also the Interest Rates the u. S. Government is going to have the pay on that debt. Thats not unexpected as we take it off the table lets pull back on some of the risk stance weve taken. So you dont think the decline in the future this morning is related to the downgrade as much as its weve come a long way, weve seen big advances in the equities market and its time to take a little risk off the table youve got weakening data, and labor markets softening as well you are seeing some softening. Youre seeing that willingness you start taking those things all in order, and weve been in the camp of expecting a soft landing for well over a year and now that a lot of the rest of them are coming to that position, there are a lot of potential risks especially if the fed looks at things, at how optimistic they are staying and decides to keep the rates higher for longer and feels like it has wiggle room because they dont want optimism to keep driving things too aggressively and keep raising rates. So youve been long on the markets to this point, but now youre a little more neutral i think weve been a balanced risk exposure all the way along in terms of wanting to play some of the growth, but also wanting to participate as the rally broadens out into mid and small kap. The debt balanced exposure means weve never driven all the way in on lets g aggressive thwart the growth but cognizant of the fact there are a lot of potential tail risks and those are the ones that fight the hardest. Im sorry im trying to parse through it youve been surprised by the strength of the equity markets to this point . A bit surprised at how strong they came up off the bottom, but it was legit in terms of looking at the economic promise weve made so far. Some of that was legitimate if you will but our overall allocation hasnt changed much. We focused on the United States. Weve been in the mid and fall cap relative to large cap all along and so hoping at really bending. Also we dont want to get too optimistic when youre too far into that growth mode. It might be an opportune time. Some have gotten more trim as they cycled back into the broader markets. Okay. Carol, thank you for your time today. Carol schleif. Meantime coming up on the other side, Summer Travel season, it is in very full swing, but will the surge continue into the fall that is the question were going to talk to one of our favorite people, the points guy for those of you trying to use your miles to get around hopefully hes going to help us ja and latter Frontier Airlines ceo is going to join us in an exclusive interview a well that stock is up slighaftly ter earnings well talk about it after this sl in the true iconic notion of what america is all about. this is our task. This is our mission. We have a clear focus, and we have the ability to be agile and innovate. It takes years of dedication to get us to this milestone. It is all because of you. Never doubt that a small group of thoughtful, committed citizens can change the world. It is the only thing that ever has. to be a woman leader, its not so easy. But its easy if the passion and the love is coming from your heart. The New York Stock Exchange is the symbol of what america is all about. The potential of capitalism, the potential of the american dream. The only way you can move a Society Forward is a true expression of freedom. sfx Stock Exchange bell ringing welcome back to squawk box. I want to bring in one of my favorite guys, the points guy. How are you . Great great to see you. The real question is what do you think its going to look like in the fall and i want to get into the whole points game. Yeah, so i mean summer stravl really strong. Were seeing consistently, were beating 2019 psa numbers some days by a lot up to 100,000 more than to2019 people are in the skies. The biggest has been international. Were seeing all the Major Airlines making a huge portion of their profits ive never seen flights to europe, 5,000 minimum Business Class and up if you go to parising youre looking at 8,000 fares across the board. However, i do think things are slowing down you see softening from direct airlines i still think its going to be a busy fall, but i think were nation the end of the post pandemic boon with trarchlt there have been a lot of meltdowns, myself include. I didnt travel this july because of how bad things were earlier this summer. I have to say i use your website consist intelligently, dare i say, to game the system the airways is gaming us. At least in my mind its impossible the use the miles in a meaningful way. Im shocked you have to be a little savvy. Im going to mykonos in a few weeks. I just start checking a couple of days ago. Emirates is now releasing Business Class i booked two tickets and i checked the loads on that flight in two weeks normally in august flights were sold out last summer, and theres still a lot of business and first kras avaclass availaby what i would say to people with points is look at others virgin atlantic, i was checking yesterday, theyve got Business Class almost every day fr