Transcripts For CNBC Squawk 20240704

On pharma. Eli lilly with earnings. Novo nordisk, the drug cutting risk of heart attack and stroke by 20 well talk to mr. Irgin and echo star ceo a day after s p and nasdaq broke the fourday losing streak, stocks back in the red financials in focus among laggards after moodys talking about Interest Rate and asset liability risk. Whats incredible is we just went through the quarters. With the exception of, honestly, key, the quarters were good. A lot of them had inflows. People thought there would be outflows david, when you see these kinds of downgrades, dont you see yes, yes, yes. Good, good, good. Done, done, done move on, move on, move on. You cant pay for this kind of analysis. No, you really cant. Its important because financials represent a huge part of the market, and if were going to have blending, we cant have as much lending thats kind of what were saying my problem with it is it doesnt jive with the facts. It was entirely possible, entirely possible we could have been in a situation where all these banks did poorly lets say jpmorgan, bank of america, goldman sachs, citi leaving out citi because i wasnt sure about citi, fams fargo, all better than expected. Talking about m and ts here. Zion was good, schwab was good a lot of people didnt like schwab i like Huntington Bank these are guys ive all had on First Horizon i had on, theyre not fatuous, but every one of those is lending and almost all of them had big inflows. This would be fine if comerica had big outputs. I would buy it but they didnt im saying the problem is that what was supposed to happen supposed to be big outflows and youre supposed to be worried about them they didnt. Speaking of the Broader Market before we get to some of this Important News that we want to talk about as well from novo nordisk and the like, china concern you at all the turnaround, the action weve had in the last few trading days. China is challenged. More than challenged. Those export numbers other than russia i mean obviously overseas dropped 14. 5 . Imports down 12. 4 carl, look, i look at this and i think why do we not put two and two together we had a president , president trump, who told you get out of the way, stop making things there. It takes a long time to wean yourself off making things, but weve succeeded. David is right russia and china are good partners russia is small and they need to raise money. France and germany have gone away from them car sales down a couple months in a row. July down 2. 6. Morgan stanley cuts china to equal weight they up india to overweight. This is a firm that was going the beginning of the year they thought china was going to be up 7. Youre not going to get that. There was a miserable piece about tesla, chinese deliveries down 31 month over month. Consumer demand isnt what was expected when they opened up dealing with a property sector thats debilitated, trying to figure out ways to continue to stimulate there. Property, when thats going well, thats good for the municipalities in china which are selling the land thats a revenue stream thats been cut off at this point youve got high levels of debt on personal Balance Sheets, incredible high levels of youth unemployment i think its one of the more important and unexpected stories of the year has been the decline in the chinese economy by the way, not to get too far here its still growing there still isnt deflation, although there is concern about it. The plan was become more of a service economy. All the stimulus is bogus. Second largest economy in the world. You dont think as it slows significantly thats going to have an impact overall i think theyre demographically challenged no u. S. Company that i know thats put a new plant there what happens if a president who has been president becomes president again and looks and sees who built more factories there, i dont want to be one of those companies. I dont want to even have that conversation. Can we have that a year from now maybe . First things first. I was the first to predict he would be president i was wrong about the nobel prize. I said he would be president but i also said he would bin the nobel prize. Todays big pharma movers, eli lilly, betterthanexpected profit revenue another name in the space, novo nordisk was up 16 after the anti obesity drugs exceeded expectations in the late stage trial on reduced risk of major cardiovascular drug. Jim and i were talking about this this is one of the trials out there, trying to get a sense for the Broader Health implications of the Weight Reduction drugs. They had been originally for diabetes glp 1 is what theyre called novo nordisk, wegovy well get to the earnings as well i dont want to state the importance of this, jim. Were talking about 18,000 patient study over five years, average duration of wegovy use was about 30 months. Top end of Market Expectations in terms of how meaningful it was clinically all three components of the primary end points contributed positively were talking about, again, to give you some sense here, were talking about for heart attack, obviously, for stroke and any number of other important implications we havent gotten things like osteoporosis, some other things that may over time sleep apnea. Bigby next year. You take these drugs, lose weight and also have beneficial things that occur as a result of doing so beyond just losing the weight, not to mention this probably strengthens the case for payers, that is, the insurers, having to cover these drugs. One of the things people forget, the disease that kills the most people that is stoppable other than, of course, smoking is cardiovascular. Theres 928,000 deaths in the u. S. Alone in 2020, a Million Deaths now this would make it so there would be 800,000 deaths, rather amazing. Just in case people dont understand how it works, it lowers your Blood Pressure dramatically lets say youre 140 over 90, probably go to 125 70. If youre 150 100, you would ge back to 130. If youre on the verge of stroking or dying, it will get you to 150 this is monumental ive been saying its monumental i said the biggest drug of all time this class of drugs right lily shares are up on this the expectation is it will have the i have the ceo of lily on tonight. The one they want to try post covid, heavy drinker it makes it so that gatorade tastes better than alcohol when do the vaccine players come back if youre looking at pfizer and moderna lately . I dont know. Moderna has been quiet, pfizer has been quiet the company most up against is amgen because the rapatha, it does do more for the heart, david, but doesnt have these other characteristics. Speaking of amgen, the horizon deal, horizon had good numbers, too that would be beneficial i want to move on because this is a moment youre jumping around. Im not jumping around. Im sticking with what we actually can i go listen, you move that interview to 10 00 so i cant be a guest. Youre not playing that not a chance you said it biggest drug of all time eli lilly has a market cap that far exceeds any other pharma company. Remember, they have giant facilities coming on medicare going to cover all these drugs . Thats a great question i think that this is certainly better look, ive been with the success of the alzheimers drugs. Somebody reminded me of history. Bristolmyers bought amylin in 2012 amylin had the first glp17 called buy etta. Amylin was one of the first there. So you take the shot once a week can you imagine when they make this a pill . Ive got to tell you, these drugs are remarkable you cant get them youre going to run out of wegovy by the way, this horizon, for the first time last night, really its a question that the ftc is blocking this as someone who is the head of the American Migraine foundation spokesperson, you cant get the word out about the eye bulge and the drugs without amgens money. Yet, lina kahn, the ftc head hasnt included the notion of awareness being stopped. Jim, again, we will see based on those who have a lot more experience than i do and have read the complaint from the ftc when it comes to their objection, they dont think theres much of a case there hence, theres still a belief that there will be some sort of settlement prior to it getting to trial. She says theres examples that amgen has tied drugs. We cant find them we cant find any examples listen, good day for pharma overall. It shows the value to a certain extent of all the science. You dont like the ira act which they stuck this in so the government can negotiate pricing of drugs in certain instances it makes sense. Theyre still smoothing some of that out. Merck is really aggressive on that ups this morning down 3 after the company cuts its forecast it is a beat, but sales missed, jim. Some of the margins after the teamsters deal are now in focus. Did you know ford and gm went down immediately when that happened people realized the power shift is real. This is the teamsters versus the uaw. Teamsters have always been very well financed and teamsters can take the strike. I think there are a lot of people who feel like really . Meaning what, jim bad number. When youre paying your people more and youre not doing the revenues, it does hurt the bottom line. It was pretty ugly. We know ecommerce is booming. Avoided a strike, though. David, you can avoid a strike if you give the teamsters lets just say you cave. That would be the word, and then your revenues dont keep up, that spells disaster. This quarter is not reflective in any way of the new deal. I think people are looking at the revs and saying theyre not that great. And heading into higher wages. Now, i think fedex is in better shape i think they can cut back. Remember the plane issue when he came in and lowered expectations a big dropoff hes handled this Company Playing it like a fiddle fantastic work. Remember when he came in and blamed the macro economy, remember he did that on mad money. That was wrong. Okay. He lowered he lowered expectations. As fedex likes to do. And then he crushed the expectations thats called u pod. I remember your eagle speech from a few years ago they wouldnt let me give my take no prisoners speech this time underpromise and over deliver, we went all the day. You picked the wrong day to go to practice hell be back, no doubt still to come, charlie irgin. Lets take a look at the premarket. Well get to the media names with New York Times, fox, paramount, disney news data dog guidance. Downgrade of home depot when we come back. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Welcome back about 15 years or so after they split, dish and echo star, dish will reacquire its onetime partner, so to speak, or part of its company in an allstock transaction. We havent talked about dish that often these days other than in terms of its inability to potentially raise the necessary capital that it needs to fund its rollout of nationwide Wireless Service remember all the money dish spent . Charlie ergen spent, acquiring spectrum over many, many years now the process is under way by which theyre building out the business the question, of course, continues to be how much do they need and how much can they raise, and how much will this deal help is the key question. It is in many ways designedto give them access to echo stars Balance Sheet, additional Borrowing Capacity and things of that nature. It combines everything that once had been the same company and then got split apart and will now come together again. Expect it to close by the end of the year that said, jim, the key question remain, without having great access to the Capital Markets, how do you fund this term . Obviously we get a chance to ask mr. Ergen in the next hour you have taught me that Charlie Ergen is money good. Ergen is one of the pioneers. I happen to personally like him. Very impressive man. Some people would say he has not taken advantage of opportunities to truly reward shareholderers over a long period of time. Im sorry we didnt sell ourselves to at t for a big number we could have bought ourselves back at a much lower number. Really, what a terrible company. What what did i say i told the truth carl, you mentioned New York Times and you mentioned fox on the other side of dish they were good numbers. Dish continues to lose subscribers. 294,000 in the Second Quarter down that keeps getting worse. Can you get that darn dish off my roof now that im switching to youtube for football i dont need a dish. Im still worried about the stability of youtube. You got youtube replacing cable . I cut down a 200yearold tree to get that stupid dish now i cant get it down. It looks horrible. Youtube, i got the package for a good deal. David and i will come over be my guest ill hold the ladder. Get up there and get rid of that darn dish its hideous i have a beautiful house. How about an air gun. My wife has four dishes we have more dishes on our roof than we have in our cupboard. Thats a lot of media consumption. Yes. A lot of satellites. Well get cramers mad dash. Futures looking weak as attention is being paid at least to the bksan in china today. Back in a moment want more from your vitamins . Get more with natures bounty. From the firstever triple action sleep supplement. To daily digestive support. To more Wellness Solutions every day. Get more with natures bounty. This is cynthia suarez, cfo of gogo foodco. , an Online Food Delivery service. Business was steady, until. Gogofoodco. Go check it out. Whaatt . overnight, users tripled. Which meant hiring 20 new employees and buying 20 new laptops. So she used her American Express business card, which gives her more membership rewards points on her business purchases. Somebody ordered some laptops . Cynthia suarez. Cfo. Mvp. Built for cynthias business. Built for your business. Amex business. Down 25 again this morning as they cut their sales guide, and some banks, as we said, are reacting to these Credit Rating moves out of moodys on some of the regionals and some of the watchers of the larger banks you can catch us any time anywhere just listen to and follow the sawonhetrtpengquk t see oni bell podcast upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. New projects means new project managers. You need to hire. I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Lets get to mad dash with jim. Ive been so busy i dont even know what were doing. Were going to do data dog. This is important because i never actually cared for the name but very Good Management what data dog does lets call it first of all under the category of enterprise software. Most of our viewers would never come in contact with data dog. They do cloudbased monitoring it sounds a little like new reliction. Everyone likes their analytics that i know in the business. They did a good number, but gave you a very weak revenue guide. In a world where revenue guides are everything and blarkark lay said theres no clear fix. You have a company with an incredibly high multiple its going to sell 80 times next years earnings. This market has no appetite for a company like that. Before it became public, there were many bidders, folks that wanted to buy it its important to point out that its a 34 billion company it was loved, and this is a shock to people. Its bringing down some other companies. Did they give a clear sense as to why i didnt think so. I sensed kind of an unrealistic view of their own previous trajectory. Yes. Now theyve corrected yeah. Again, i want to emphasize, theres a whole world of Companies Like data dog, month mongo db unless youre in the game, you dont understand them. Enterprise software has been where most of the Venture Capital money has gone to. You get the service now and the salesforces have been so successful. Name that guides above on eps despite the revenue guide. People dont care its a Revenue Company if you want fast growers [ cheers and applause ]. They were in disarray on the Conference Call. At one point, look, were not happy with ourselves a lot of where the analysts are caught bysurprise. Those kinds of calls are very jarring. Its like wow, they hate it. They loved it the other day. Kind of like agi jilted relationship. Meridian link celebrating th second anniversary jim, at least weve got harker saying thank heavens we do have a lot of negative news i thought yesterday was a true good market. This is more reacting to china harkers comments make me feel like, look, were going to wait and see. Dont take the fed out of the equation it is unfortunate that there are so many huge disappointments today. There are a lot led by iff. Jesus, a once pristine company. So many years. What has happened there . I can detail a number of accusations they did they clearly have not gone well at least as judged by the performance of the company the news this morning is after reporting earnings it was the guidance reduction, jim, much worse than expectations. David, third time since the december Analyst Meeting they guide down that was not long ago . When a company puts in a release amid the current operating environment, iff has performed zero expectations across majority of the portfolio. You know youve got trouble. Zero expectations. Lucas meyer is a company for beauty ingredients it was considered a brilliant accusation now frantically trying to sell thats very jarring. I think its worse even if you go back. They have a relatively new ceo, too. Yes just so you know, they had to reduce guidance. They raised the price of their product, inflationbased pricing. They have two big competitors. The customers didnt go for it, so they lost a lot of business but youre right, this is a really Excellent Company this was at one point one of the great bluechips of america. I know. Significant volume declines in functional ingredients. It started when they bought the outfit in israel where there was a lot of chicanery paid a lot more than they should have for that Company Almost every great smell has come from them, so many great tastes have come from them, whether it be the hot taste from a dorito or the amazing diamond which was the liz taylor smell, long after she passed away it was the number one perfume. What was the oscar laf vant line, always a bride, never a bridesmaid what was the line . National velvet unbelievable short story butterfield eight was the exchange bu 8 i was adam 3518. I was looking to see what underperforms well, el or iff . El was one of the greatest performers i know this quarter is bad. Youre still a believer at what point do you finally say, neh the key is not just the buying the key is the selling. Thats absolutely true. Ive been very candid with club members that i dont think its going to go up i think this quarter is bad. But i dont know when the quarter is good whether you can get back in. Thats how quickly the stock runs you can see, if you look at a longer term chart, you can see this can be a rocket ship. N now, they made a bet on china and made a bet on dutyfree. Still five years until the early part of 22, it was one of the great stock picks. But china didnt open a lot of companies, the numbers we see, david, on china reflect just a huge botching of the economy by lifetime president xi who takes no heat because hes president for life he is guys, paramount reported it was okay it was okay market agrees with you, jim. The stock is not up much, but certainly not down. 200 million in cash flow, david. Many viewers are aware of some of the issues facing these companies. Weve discussed them a lot of it part of weeks ago my interview with bob iger. Well get disney earnings later in the week which will not be good. They did pretty well given the original deal was rejected by antitrust regulators and they lost in court. When you add in the break they got from the original deal, you get close to the price they were going to get from the random housepenguin deal it takes a half turn off leverage which is important for these companies at this point. The big question, of course, remains unanswered as it does for so many of these companies what does it look like for streaming services versus what theyre losing every day which is the foothold in the business that produced such high operating margins. So, karnak, what stock am i thinking of that did better . That did better on paramount on an ad basis . I love the times. Talk about an unheralded, fantastic web presence, and merit levy, the ceo they did the Digital Transformation theyre the winner. Theyre the one you subscribe to, you dont think about it. Puzzles. Do you do wordle . I did it in three seconds i did it in three seconds. If my family misses it, theres a riot. My wife is just wow, how is the day going wordle i like the athletic ive got to tell you i want to go back for a second i thought Warner Brothers with the huge cash flow was fantastic. You continue to warm up to zaslav because youre trying to get him for an interview im completely transparent. If i was covering you, i would have you wouldnt catch a pass. You got me. I see you in the zones of wyoming soon but times was the best. I met the ceo at one of the 72,000 events that marc benioff throws it was a remarkable revelation about how humble she is about a site that really did turn into the one that was the winner. When i started in the street we had a joint newsroom with the New York Times. They took every bit of knowledge we had not that we were brilliant, but they havetaken this thing and made it to be the Gold Standard of sites we get. Its also beautiful. The late rich mizely who was a brilliant man, did so much great stuff on the engineering part that is interesting. Some consumer names. Kelsey cut home depot and lowes underarmor, inventories were up 38, stock hasnt moved on much of the results. They cut their fullyear im sorry. The inventory number, they do beat despite the estimate for a loss. At one time i thought they could rival nike no maybe theyre rivaling not even crocs theyre ahead of crocs Roger Federer a lot of different models. Hoku is better. Mine squeak i sound like squidward when im walking down the block. What skreek my ahns. Well get antipebble stuff. My pick for the best stock of the year look at that thing. Qsv, jim, with a beat pretty good comps out of burger king, up 12 that was an amazing quarter david, i have Patrick Doyle on tonight, want to completely crush you have Charlie Ergen. I do. First time ill talk to him in quite some time. We used to do interviews regularly. Lilly is up 15 market value is up talk about who you have on tonight. I like to have a big show its a really big show. Probably half a trillion dollars. These very impressive results from novo nordisk, Weight Reduction drugs. Think all cardiovascular events. This drug is used there are many, many drugs both for pain and for schizophrenia, for mental issues that put weight on this is now given in conjunction with it. If you put weight on, people dont want to take them. I look forward to hearing from mr. Ricks david is one of the least promotional people on earth. His cfo is so closedlipped, every time i speak to her, she switches the conversation to the salad. Somehow the salad balsamic. Amc did swing to a break b even they were looking for a loss highest quarterly attendance in four years as weve gotten conflicting signals on domestic box office. All we have to do is talk about barbie. Oh, my people talk about barbie. Its like raiders of the lost arc or something. The first one not the most recent one. Okay, the original star wars. Can we give a little more credit, ynon ceo of mattel and the benefits they got from it which wasnt from the sale of movie tickets. The guy who really made the money in warners brothers. Zaslav. We know who youre talking about. Barbie with a b you want to just ask him . Ill ask him. Ill ask him. Ive got him on super speed dial remember when i called noto . That was crazy he picked up it was like 4 00 a. M. There. He was getting ready for our interview that you werent a part of. Thats why i called him i was pantsed. I dont like to be pantsed by my own team i need to talk about an outofbody conference kpaul where the first thing he says is were going to save the world, were the worlds best company it was like i dont know. I read it and i said, guys, youre a software company. Youre not lowering heart attacks. It was a horrible Conference Call ive been on board the day when they did billion dollar buybacks, the Conference Call was jarring. There were no curse words, so its a little step up. You cant just come on and say were the best, were the best, were fabulous, were the best. Introducing themselves strongly in terms of at the forefront of ai. Yeah, theyre ai. Everybody is ai. You know what Restaurant Brands is ai theyre trying to figure out had a big year. Jensen huangs speech today who do you want me to mention . I dont know. Ill mention all the automakers including tesla, of course ill see you and raise you a john stankey. Down 1. 75 gm is down, ford is down. The september 14th strike is for real i really believe it. Ive gone on record with carl. I think its going to be a strike and think think theyre back to a class warfare situation. I see the ftc with amazon which i dont think is going go well jassy reports an amazing number. People absolutely love prime day. Hes lowered the price of pretty much everything. No, hes in front of the ftc for doing i dont know what monopolistic characteristics. What they talk about what is that meeting going to be like . Their ability to suppress things that otherwise would occur the ftcs view is we should not just be focusing on Consumer Price there are broader implications the guidelines are about competition. Look, i think amazon is great. Its unlike estee lauder amazon is in a very good position i would tell you i think that meeting is going to go very badly for Amazon Amazon is a Large Company that lina kahn, head of the ftc, believes abuses its market power and wipes competition. Its right in her crosshairs. After amazons comments about north american retail, walmart with a new 52week high. Walmart is at this point in the Economic Cycle when people feel like they have to cut back, they go to Walmart Walmart has unbelievable prices. David, you and i have to go to walmart. You will not believe the apparel. Youve been saying this are they moving into targets i think they are. We went into walmart, expected to go in and buy a couple things we ended up spending a couple hundred bucks. What i love is there are countries this is something they dont talk about but i wish they were. There are companies where theyre a huge factor, in poor countries. Theyve got to buy america and thats a lot of grocery they are a changed company where im sure if we could get doug on to talk about what hes doing worldwide buying stuff instead of china, it is remarkable they are one of the reasons why china exports are weak as weve pointed out through the years, a lot of the shelves were filled with products that were made in china they came back and talked about arts and crafts aisles. How are you able use sources from other countries. Sri lanka, pakistan. But tends to be more expensive. The prices they have, i cant believe they have these prices i found myself buying in the pencil and pen aisle buying everything they had. I bought everything they had they were made in countries that were i felt great about supporting the dow down 318 which is going to take us back to maybe 80 points above fridays close weve given back most of mondays action. Almost every sector is red health care is the only exception. Financials, energy all down 1. 5 to 2 . Watch bonds today. 103 billion in treasury auctions begin for the week. Thats going to be very important for the markets obviously with the tenyear sub 4. Back in a moment ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com early session lows dow down 350 led by financials, industrials, goldman your biggest loser down 3 a lot of attention paid to the banks in the wake of this by moodys last night stop trading with jim after a short break. Dont goway. Opportunity is using data to create a competitive advantage. Its raising capital that helps companies change the world. Its making complicated Financial Concepts seem simple. Opportunity is making the dream of Home Ownership a reality. Writing new rules and redefining the game. And driving the world forward to a Greener Energy future. applause opportunity is setting a goal. And charting a course to get there. Sometimes the only thing standing between you and opportunity. Is someone who can make the connection. At ice, we connect people to opportunity. Lets get to jim and it stop trading. My hat off to martin sh rober who worked at ibm and then took care of the spinoff which does Great Consulting and theyre running off contracts that were very negative. Left overf from ibm, and he sell the stuff everywhere martin is a good plan and doing a lot will he be accenture one day . Whats amazing is hes turned that around and next year i think is going to be big earnings so my hat is off to martin good job. Tackle lily tonight yeah. And also a qsr, which is burger king and then ive got really interesting we dont talk about it enough, merging with one oak and i had enbridge last night. People can get good yield from the pipelines. Rather than go the southern or dominion, people should pivot towards enbridge or one oak. Looking forward to saying goodbye. We did get west texas below 80 for a moment. I know. This morning. Look, i have to tell you, we are swimming in russian oil. Its hard what to do every time you see china down, you think they have too much. Trades on china. Retail gas topping out here we had the highest gains in gasoline prices in a long time its good. Makes it for the fed easier, harker being our hero today. Why not . Yeah. Another company we covered s p up 480. We missed warehouse. Chegg. Chegg up 3. Victim of generative a. I. They have their own generative a. I. They have it. But the quarter that was where they got i think [ inaudible ]. Jim, well see you tonight on mad money. 6 00 p. M. Eastern. When we come back, Charlie Ergen, merging dish and echostar as the markets are in selloff mode the market is down 375 now erge good Tuesday Morning welcome to another hour of squawk on the street. Im sara eisen with Carl Quintanilla and david faber. We are live for you at post nine of the New York Stock Exchange take a look at stocks here in the early action declines were down 358 on the dow. The s p 500 down a full percent as well, and the nasdaq under performing as it has been as weve seen these rising yields over the last week and a half down 1. 25 this comes after yesterdays rebound in stocks. 30 minutes into the trading session. Here are three big movers we are watching for you right now earnings is the theme. Ups is under pressure this morning. Missing revenue estimates, lowering its Forward Guidance due to, quote, the Volume Impact from those labor negotiations and costs associated with the tentative teamsters agreement. Look at International Flavors and fragrances, slashing guidance after consumers pulled back during the quarter. That Company Warning that destocking could continue for the rest of the year stock is getting absolutely hammered then on the plus side, eli lilly, one of the top gainers on the s p as novo nordisk heads higher. Getting data on wholesale inventory. Lets get to Rick Santelli hey, rick. Hi, carl, good morning. Wholesale inventories in june final which means we take the midmonth read and toss it what was the midmonth read, minus 0. 3 that comes down half of 1 , down 0. 5 heres the thing, okay, down 0. 5 is now the fourth remains the fourth negative month in a row, five out of six have been negative and you have to go all the way back to november of last year to have a positive number its the second worst number of the year at 0. 5. January minus 0. 6. If we look at the trade numbers, this is a fresh june number, down 0. 7 multiples of what we were expecting, looking for a number down 0. 2 in the Rearview Mirror, down 0. 2 becomes down 0. 5 as well and this is the worst number since march when it was minus 2. 7 back to you. Rick santelli, thank you very much as we look at stocks continuing their declines down 354 on the dow, guys, theres fed speak this morning to digest, which is good. Ive been gone for a while so im happy to be back at it philly fed president harker, a voting president , signaling hes cool with not raising Interest Rates anymore. We have sound from an event he did in philadelphia. Listen. Absent any alarming new data between now and midseptember, i believe we may be at the point where we can be patient and hold rates steady and let Monetary Policy actions, actions we have taken, do their work. Patient and hold rates steady as the chatter continues over whether the fed is going to have to do more rate hikes. I will say, if you were excited about that, that he signaleded we might not have to do more he did add, i do not foresee any likely circumstance for an immediate easing of the policy rate dont get excited about cuts, higher for longer is still the mantra and basically where the market is, not now expecting a hike in september or november even though the odds are higher for november then september and starting to cut in spring of next year. Still observers dont think november will be a move. Goldman among them and certainly this paper from the San Francisco fed yesterday about shelter inflation will add to the doves hopes. Zero, right. Potentially going negative by mid24, potentially deflationary effect in rents comparable to the gfc. Sounds a little bit ominous but would help ease concerns there are more hikes ahead. Theres a good chart, which theyre projecting the decline in shelter inflation you know, the debate still, thursday is going to be very important. Thursday the cpi report, and Energy Prices are back up, which is not a good sign it doesnt necessarily feed into core inflation, but were going to need to see some moderation in Core Services because all the moderation from the peak last fall in inflation in core, has been in goods, not in services the biggest battle here for the fed is going to be on wages because we still have a very tight and hot labor market, even if it is cooling on the headline numbers, 3. 5 unemployment this morning we got the Small Business optimism survey overall headline, a little more optimistic, still pessimistic. What i pulled out is the jobs number this is a chart that indicates there are a lot of businesses out there that still have unfilled jobs and openings an just to put a finer point on it in terms of the numbers, owners plan to fill positions remains elevated 17 planning to create new jobs in the next three months up from june, down from a record high, but its still very high. We still have more openings than we have workers essentially. Exactly. Which to your point conceivably will keep pressure on wages and, therefore, the fed sticky inflation and therefore fed higher for longer. Does it go even higher continues to be the question. I am curious about this San Francisco fed seeing housing inflation not just slowing but going zero. Do we know what is going on there or what they see happening as to what would cause that . Its just a model they plug in their models. Weve heard that shelter inflation is coming down, and the reason we havent seen it yet, because it hits with a lag. Dont know their exact methodology, but it suggests its going to come down sharply. Sharply and then go we have [ inaudible ] on the show this morning and ask him about it i think the overall question for the market, why thursday is going to be important, jackson hole on august 24th through 26th which is ahead of the september meeting is important, how sticky inflation will remain, right will they get down to the 2 so far its come down pretty dramatically, but there are signs that the economy is not collapsing and that wage pressure certainly and services pressures remain in this economy. On the other side, moodys downgraded the banks and cut the outlook on a number of banks, which is another reminder that have we fully dealt with the problems in the regional Banking Sector including commercial real estate which moodys is sure to highlight. When it comes to saying commercial real estate you have to distinguish between warehouses, for example, which are doing just fine and office space which is really what were talking about in terms of weakness no were going to see it. Will it take time . Will it be over a longer period time where the banks are capable of taking a hit. The big banks are. The question for the smaller or regionals where they have more concentration in office space in particular in their particular areas, where theyre going to get the keys back from certain developers and or have to extend and pretend. Yeah. By the way, worse day here for the kre since early may, so thats going to take you back a bit. Also the report on revolving credit balances down for the first time in 28 months. Typically not a great signal if youre looking at recession, recession signals, when it tends to fall. Were going to get Consumer Credit numbers at the top of next hour. I did note in the moodys, its always interesting the debate whether these downgrades matter. Im sure they do for the banks im sure you talked about it last week in the United States. Came up once or twice. With this one, it does seem to have an impact on the stock prices, but the stocks have had an incredible run since theyve run. The kre up 30 . So many regionals were the best performers of the month of july the entire list made up of the regionals. Speaking of good performers this morning, take a look at shares of novo nordisk. Eli lilly. Weve got Important News this morning from a study conducted by novo nordisk for its Weight Reduction drug called wegovy 18,000 patient study over five years. Average duration of use of the drug was about 30 months and what they were looking for and what the market was very much focused on was not Weight Reduction we know its doing that but what else it did for you in terms of cutting the risk of heart a tack, stroke, other cardiovascular events, and it ended up being at the very top end of Market Expectations and being very meaningful clinically thats just been huge news, not just for novo nordisk but eli lilly as well. Its entrant in the glp 1s is moderna and lily is now sporting a more than half a trillion market cap which puts it well above j j at about 450 billion. That shows you, and much of that has been due to, of course, the views of and the potential sales for these weight loss drugs, which clearly will have a benefit beyond that, including cutting heart attack risk, stroke risk, and the like. Therefore, enhancing their ability to potentially be paid for by insurance and or even medicare on that front lets get to Bertha Coombs who has a much better sense than i do in terms of that important part of the debate here. Its such an important part of the overall market view of these drugs, ber bertha, in terms of whether they can get insurers to pay for them. Weve heard from other parts of the industry that have reported, whether its mckesson that said they saw huge interest in preauthorization services because of these glp 1s or the insurers who have said employers have started to ask for more qualifying and more preauthorization and more sort of limits on how these drugs get prescribed nonetheless, when you start looking at this data, it does become a question of whether you want to in a sense pay now or pay later. Theyre very expensive drugs, bought lot of folks are pointing to the fact that obesity itself is very expensive. Cardiac issues, high Blood Pressure, theyre all issues that contribute to longterm disease. If these drugs can mitigate that, that is something that a lot of employers are weighing a lot of folks in the Health Care Industry are weighing. Its likely to just galvanize that much more demand for these drugs. David, we saw lily this Morning Report sales of its mounjaro 1. 5 billion in the First Six Months of this year. Wegovy for novo in the First Quarter was 677 million they missed on estimates because they couldnt produce enough there was too much demand. Ozempic they are expecting to be an 11 billion drug already this year i mean, its amazing how fast it sort of permeated society and the culture and these results on heart disease. Thats the holy grail for this country and for the world, bertha what do we know about the study . How definitive are they . What other studies are in the works . There are studies for all sorts of things, not just about heart disease, and thats one of the things that a lot of people talk about i talk to people who are on these drugs, theyve noticed their Blood Pressure has become lower. Obviously, they dont have as much appetite as a result. So some people are looking at it for addiction because it does sort of trigger a sense of sayty in your brain. People are looking at whether it might help with alcoholism and other things because some people who are on these drugs also report they no longer want that as well. So there may be some offshoots, different types of dosages medicare is not covering it because there are concerns for older people if you lose a lot of weight, you lose muscle mass and thats a problem for people much older because fall risks becomes an issue when youre older. Also that lower Blood Pressure for folks who are much older can increase the risk of fall. Its one thing that medicare is still studying, but even without medicare, which is a huge drug buyer in this country, we are seeing these huge numbers. Yeah. Really important study, bertha, appreciate your giving us insight there in terms of what its going to mean longer term Bertha Coombs. Lily top performer on the s p 500 right now. Under armor, the stock is higher, reporting this morning, q1 was a beat on profit and revenue expectations it also maintained the fullyear 2024 outlook citing a challenging Consumer Retail environment in north america the brand new Ceo International and direct consumer business drove the strength, realized solid growth in the quarter, and continued to deliver the story for under armour, its a show me stock and they have to engineer a turnaround in sales and thats what ceo is focused on she spoke to investors on the call today i think theres some anticipation building they might do an investor day into next year to map out a longer term trajectory its in the release. She wants to see brand heat and thats that is something under armour has fallen behind on. How do you generate brand heat better designers and you connect something shes good at you connect the brand and the product and under armour has not done that so well. Thank to jeff golden listening on the call, acknowledges, he says its been an inconsistent journey that has not created the shareholder value that brand is capable of and thats why they need to return to growth so far, going a little bit better than expected on the profitability side, but thats going to be the terror to follow as the stock way down, 20 over the last year and way off its high. As we go to break this morning a road map for the hour. Its been over a year since the chips act was passed and companies are asking, where is the money . Well explain. Charlie ergen merging dish network and echostar hes going to join us. An exclusive interview you will not want to miss thats coming up next. Fears around real estate growing as commercial delinquencies rise and Real Estate Brokerage compass becomes the latest name to report a slowdown were going to break things down with that companys ceo later this hour. We took another 100 point leg lower. Down 425 on the dow. 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Only on verizon. Keeping an eye on shares of dish network as you see there, echostar as well this after Charlie Ergen announced he will be reuniting these two businesses, almost 15 years since echostar was spun off from dish. The deal bringing together the paid tv, satellite service, 5g network, with Echostar Satellite Communication Infrastructure joining me in an exclusive is Charlie Ergen, chairman of dish and echostar and hamid, the ceo of echostar. Good to have you both. Charlie, its been a long time sorry were not in person, but im happy to see you 15 years ago, you said, let me look here, when you spun off echostar, that it would enable the companies to pursue the strategies that best suits their respective longterm interests and allow employee incen tifrs and the like to be tied to the companys performance. Now youre saying that its compelling because its all about growth and building longterm sustainable businesses what changed so youre bringing these two back together . Good morning, david a lot has changed. The biggest thing is we can really build a new a new athlete for telecom. There has been a lot of Technology Changes since we spun off. Theres a lot of companies that do satellite well and a lot of companies that do telecom well, but not really a company that combines connectivity in a way you can use both together. With the advent of lower satellites and lower cost launches and of 5g standards, you now can put those things together we built this that has a tremendous amount of resources, worldwide spectrum, expertise in both telco and satellite, Network Management skills, it all comes together and so while that didnt exist 15 years ago when we spun the companies off, but now it makes sense to put them back together. Charlie, what i hear from many investors is the continued question of how much capital youre going to need to successfully build out your wireless business, and many would view this deal potentially under that perspective as giving you access to echostars Balance Sheet, one saying to me its almost a disguised equity raise. How do you respond to those questions and or concerns . Well, theres no question that this deal, one of the benefits of this deal it strengthens our Balance Sheet and the runway for the next couple years, but there will be more to do on that we know we have a lot of capability and assets and we know that we have to continue investing in the future. Its always a mistake for companies to not invest in the future because eventually that catches up with you. Weve been investing for over a decade and where we think connectivity is going and i think thats going to position us well for the future but certainly were in a stronger position today than we were yesterday. Yeah. I mean, you spent almost 40 billion buying spectrum and the question is, do you have enough money . You dont seem to have access to the Capital Markets at least at a level you would like to be able to borrow at. Citi saying youre going to need between 8. 5 and 9 billion by 2025 what are you going to do to raise the capital to build out this wireless business you spent so much money acquiring the spectrum for first of all, maybe the market doesnt totally understand the capital that we need that may be partly our fault but we have a tremendous amount of assets. The company allows us to grow parts of our business and maybe hamid can talk about echostar and some of the things that theyre doing because they are cash flow positive, ebitda positive, so they bring a lot of skill sets when you put the companies together there are some synergies and Business Opportunities we otherwise wouldnt have. Hamid, well come to you. Youre going to be running a company thats challenged in some of the core businesses, the satellite tv business, you just reported lost 294,000 subscribers. I think youre below half of your previous size ebitda burden from the wireless build out. Revenues running at a rate of 8. 6 decline a year. Your leverage ratio is 7. 2 thats for dish im talking about. I dont want to i dont know the combined companies what do you do when you run this company . So heres where we have Technology Meeting opportunity i think we have a unique portfolio of assets here that provide us with almost any form connectivity we have anything from engineering and manufacturing and, you know, content delivery and mobile wireless. We ought to bring this together in a synergistic way theres synergies to be created and more importantly, bringing products to market bundled properly theres 17 million households in the United States that do not have proper Broadband Connectivity thats a requirement to participate in Digital Economy we have 18 million subscribers spread across three or four lines of business in the combined company i think this opens up a lot of doors for us to bring new products to market, bundle products in the market and satisfy the needs of the consumer i expect to, you know, take advantage of that unique differentiation. I think charlie referred to it as an telecom and we put that to use. You talk about a lack of broadband. I wonder, you have a competitor in starlink from elon musk, putting up so many satellites so often, not to mention 45 billion in government subsidies for rural buildout is that a concern for you given the competitive breadth that both those things represent . Listen, im always concerned about competition. Thats my job. I consider the market much larger and ever since ive been in telecom 40 years ago, i have never heard that theres been enough bandwidth and connectivity today, after all those years with all the investments that have been made, the demand is far higher than the supply i think the market is large enough if you look at how many subscribers starlink has to date and how many we have and how much the market has been taken, 60 share of the market, were still serving a couple million customers and still 17 million households that dont have connectivity theres room for both. I think that more than doubles our capacity to date, and thats the largest commercial satellite for Broadband Connectivity put up there were looking forward to having that capex holiday and serving the consumers. I might add as you kind of looked in the Rearview Mirror when you talk about some of the statistics you put out there, but as hamid said, weve been starved for bandwidth in our business from satellite. Weve now more than doubled that capacity with the successful launch of jupiter 3. We have already demand youre going to see those trends dramatically change, and then on the dish side, weve only been in the prepaid business on somebody elses network. Thats probably the least economic place you can be in the wireless business and weve just now really met our Critical Mass of our 73 of population build out with the most modern network in the world with 5g open Cloud Native Network and were entering the post space which is the sweet spot, so those trends are all going to change. I think if people look in the Rearview Mirror they wont understand where we go as a company. Its our job to articulate a little bit better where were going and the opportunities that we have, but its not the dim picture that you painted. I dont mean to paint a dim picture, charlie its you have enormous capital needs, perhaps not as great as some would estimate, and its unclear where the money comes from its as simple as that you have a put call option deadline coming up this friday on tmobile 800 megahertz spectrum, cost you 3. 6 billion. I would imagine youre not going to exercise that option, for example . We wont discuss that, but we have been in negotiations with tmobile we dont know what that resolution is going to be. Theres not a hard deadline this week, and, obviously, theres a lot of opportunity for us. Were not going to stretch our Balance Sheet to were i think weve been prudent capital stewards and were not going to do anything that would risk what were trying to do i might add that when we put the companies together, outside people, Financial Advisors did a lot of stress tests and this company is not going together if what you said was true. Under stood would you sell spectrum to help you fund the buildout . I think theres look, we certainly, between the two companies v an awful lot of assets one of the things that i think is interesting is, echostar has s band around the world and we have the same frequency in north america. You cant do a worldwide system without economically without making sure that you have a business around the world. So theres tremendous synergy there in the fact that you have a ubiquitous spectrum around the world that happens to be a spectrum thats ideal for iot and devices and sensors but also for handsets youve seen reports of people saying thats a 25 billion plus dollar business in the future. Suddenly, you know, together we have some of those assets in place, and so i think when you have when you have the kind of portfolio we have as a company, whether it be assets or technology or management, i think theres a lot of opportunity for us look, youll have to standby and wait. I will. I will your shareholders are not happy having waited and watched the stock decline so much. Years ago you talked about being a poker player and you had a hand that you felt was a great hand because you had so many different options. Do you still feel like you have any options here others would say you should have taken the opportunities to sell or to do other things that could have created shareholder value at 50, at 60, instead of at where is the stock a lot lower. I think the skeptics are certainly that would be their position im a bit more of a half full person because im on the inside and the way i look at it is, weve been building and investing for 15 years for connectivity and were now in the position, were finally in the position to reap those rewards with the things that we need to go build our business and build it i think our investors will see that im a big investor in our company, so certainly im disappointed in our performance, but i also have the confidence to know that thats short term and that youre going to see the culmination of the things that weve put together and start seeing all of that pay dividends for us our investors will be rewarded for that. All right ill be watching closely i certainly hope that it is good news and that we can be together as well at some point and talk about it but i certainly appreciate you both joining me today. Charlie ergen and hamid. Thank you both. David, always a pleasure. Thank you. Coming up after the break, a look at the chips act one year later. Kristina partsinevelos is live in North Carolina with a preview of whats still ahead. Hi, christina. Billions of dollars spent on chips manufacturing hubs here in the United States, even though the chips act funding has yet to be dispersed im Kristina Partsinevelos at a North Carolina facility ill have all the daietls on the progress of the chips act coming up next. 53 billion chips act passed through capitol hill a little over a year ago. Companies still waiting on Government Funds to be dispersed. Kristina partsinevelos joins us with a Progress Report hi. Youre right. You have the chips act, its been a year, but not 1 has been dispersed yet. Companies like wolfe where i am right now are already spending money, despite not getting any funding. Thats not the case, though, for all chip companies, Companies Like skywater have said they have to put their plans on hold until they receive that federal aid. Weve been building coalitions with the Construction Industry so that once funding does start flowing, we can begin to start that process as quickly as possible, so, you know, in terms of industry speed, made its not as fast as we would like. Reporter that finding isnt expected to arrive until the earliest at the end of this year and that 53 be there is going to be split over the course of the next five years. You know, im pushing the team to go fast, but even more important, to get it right reporter but getting it right is going to be tough companies are not only going to have to spend money on construction, they have to work with local schools, educate and find the qualified staff, and then hope when they build these massive facilities, that the customers will come. The second thing is about making sure we dont build capacity ahead of demand that we go and make sure customers are signed up to use that demand. The worst thing we could do for the industry and government funded perhaps is to create empty factories. Reporter promises being made by micron, intel, globalfoundries, a long list of companies that want to build manufacturing hubs here in the United States, just over the next little while, but this is, in turn, going to help our National Security and reduce our reliance on Foreign Countries like china its not an easy job because the Commerce Department has 140 Staff Members sifting through 400 applications right now that Means Companies are going to have to continue to wait. Sara never easy to disperse hundreds of millions of dollars. Thank you. Kristina partsinevelos looking at the chips act still to come, moodys out with a warning on the banks, cutting ratings for ten smaller lenders and putting more on watch. Bob diamond joins us after the break with his take. A programming note, tune in for a big exclusive interview later this week, the ceo of x, talking about the companys rebranding and the platform. She will join us thursdaony squawk on the street. Were down 450 on the dow. Feel the power of osteo biflex®. Taken every day, its clinically shown to improve joint comfort in 7 days, with significant improvement over time. i got the cabin for three days. Its gonna be sweet with significant improvement over time. What . Im 12 hours short. Have a fun weekend. Unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. Welcome back heres your cnbc news update seven people were killed in a deadly double attack overnight in Eastern Ukraine Officials Say the first Russian Missile hit apartments and then as emergency crews responded to the scene, another missile hit a nearby empty Hotel Authorities say two rescuers were among those who died in the attack theres a special election in ohio today that could change the states constitution and definition of majority rule. Issue 1, as its called work raise the threshold of support required to pass state constitutional amendments to 60 instead of a simple majority while it doesnt explicitly mention abortion f its passed it is likely to affect a November Ballot amendment that seeks to enshrine abortion rights into ohios constitution. Georgia kids might need to get their parents to sign off if they want to sign on to social media. Two republicans in the state said they plan to push for a law requiring parental permission to use apps including tiktok or instagram. Arkansas, texas and utah have passed similar laws. Back to you. Thanks so much. Moodys cutting the ratings of ten u. S. Banks adopting a negative outlook for 11 others and putting big names on downgrade watch. Joining us today former barclays ceo bob diamond, now the manager of atlas merchant capital. Its good to see you again i think it was bill gross yesterday who said, you look at some of the long yields that caused all the trouble in march, theyre just as high or maybe higher now were these banks able to reduce duration, in his words, is the situation better or not . I dont think its worse than it was, you know, six months ago, carl, when we had the collapse of svb. We recognized that part of it was higher funding costs, part of it was mark to market portfolio, part of it was a concern about the portfolio in many cases commercial real estate, and regulatory capital was affected by all of those things, so i didnt find that announcement this morning particularly surprising. I think its kind of following the trend. There wasnt a huge jump in the etf for regional banks i think down around 4 in march the index for regionals was down quite heavily, 30, 35 . It hasnt really recovered eartthat much, so not a big surprise in my mind. Is it all about inflows, and will that be the important data from here on out i think you know our view. Weve talked about it, we feel that worst of peoples fears of recession are probably behind us the cyclicals are beginning to rebound. Manufacturing and housing. So weve been a bit more positive on kind of a longer correction, rather than a deep and dark correction, and were starting to see some progress in the Inflation Numbers as well. Well see the cpi this thursday, and see if the trend from june continues. I think that, you know, the important thing for me is we all recognize the importance to our economy and to the Capital Markets of these smaller banks, the regional banks, the specialist banks, and what are the impacts of the takeover of svb and First Republic by larger banks, is many of the Small Businesses that were doing business there, have already seen reduced services in terms of how many days it takes to do a Foreign Exchange transaction, the ability to get serious inventory financing, so i am a big believer in the importance of the regional, smaller, specialist banks and the impact that has on our Capital Markets and the economic recovery. I think this is a bit of trend from the regulators, and i hope it creates an opportunity for private capital to come in to some of the stronger regional banks. I know youre sort of dismissing the moodys downgrade this morning, but we are seeing a pretty big impact on the banks. The overall market is down pnc down 5 . They were put on the warning for a downgrade. One of the issues that was flagged was this idea of unrealized losses, which is what got svb into trouble have we really figured that out in an era where the fed and some key members, including michelle bowman, just on monday, is talking multiple rate increases still needed and those that arent are talking about higher for a longer period . Sara, i absolutely agree with higher for longer period of time i think theres a very, very high bar for the fed to actually reverse course i dont see that coming any time soon but i think were there or thereabouts in terms of rates, and i think, you know, the banks have had many of the regional banks have had six almost six months, five months, since the svb collapse to address some of those issues thats why i say its unsurprising in the sense that it has followed the trend. I think it is an opportunity there is an opportunity in the market for many of the stronger regional banks to continue to build their capital buffers, particularly around regulatory capital, but i dont see this as like a new trend, but more continuation of what weve seen since march. Well keep our eye on it. Worst day for the kre since early may. Bob, thanks. Good to see you. Good to see you, carl. Well, one earnings name amongst quite a few this morning that is slumping is compass. As the company does reach positive Free Cash Flow for the quarter, but revenues down 26 year over year compass ceo will join us next. Banks holding commercial real estate loans facing a looming threat as delinquencies ride higher, valuations fall diana is here with new numbers. Hey, carl. Office is a major component of stress right now, but its not all of it and i want to show new data delinquencies and commercial Mortgage Backed securities are rising when you take out office, hitting 4. 16 in july. When you put office back in, the rate is 4. 14 which is the highest since the end of 2021. A big chunk is defaults on hotels in San Francisco but four out of five saw default increases only industrial continues to do well office where delinquencies have more than doubled since the start of 2022 and hit 4. 96 and many loans havent come due yet, which is often when they go delinquent because their values are plummets properties have shown signs of distressed, missed a loan payment, missed a maturity date, values on new property down 52 and Older Properties down 60 according to trep who told me the cre dispress will leave marks on some banks. That was part of the moodys downgrade this morning thank you. Diana olick. Sticking with real estate, compass reaching their goal of positive cash flow in the Second Quarter despite major drop in sales. Revenue falling 26 from a year ago. Compass cofounder and Ceo Robert Reffkin joins us now. Not that impressed, down 14 its had a nice run up this year what was your main message i cant control the stock market but i can control our expenses in the Second Quarter we grew market share and ebitda and proven in the worst of markets we can be Free Cash Flow positive, generating over 50 million in Free Cash Flow. We turned promises into results and said we would bring on x to 950, and now were saying that were going to bring opx to 900 million in 2024 and 2025 and when the market recovers our expenses and results will be significant Free Cash Flow to inventories. Investigators. Where are the cuts coming from vendor management a lot of vendors we have we dont need, more offshoring and outsourcing roles in the past. The revenue declines, is that Sales Volumes falling . Is it prices what explains that both transactions and price, but more transactions. Transactions are down approximately 20 year over year and the other delta is price thats the weighted average price of a listing, although price in the country has gone up every month this year. For the compass portfolio we tend to be weighted towards high end markets like california that havent been doing as well. We talk about people with these velvet handcuffs with low fixed mortgages, but there has been survey work that suggests theyre interested in maybe listing one day. What do you think cracks that . Unemployment where they have no choice or Something Else buyers have accepted 7 as the new normal but sellers havent. 30 locking in 3 or below, 70 locked in at 4 or below, they consider that a financial asset and dont want to lose it. The delta between 4 and 7 is too much for too many people the current view once it gets around 5, 5. 5, well see a significant 5. 5 well see a significant unlock of inventory. When you talk about the market going sideways for some period of time, which is not exciting investors, is it just rates that is going to change the dynamic . Rates are the key issue that will change the dynamic. I believe once Mortgage Rates get below 5. 5 in a sustainable way, thats when the market will really recover. Were pushing 8 now. Going the wrong way. You could be waiting a long time. We could be i think thats what the market is realizing next year it could look a lot like this year. Which markets are hot and which ones are getting particularly hit, especially after all the weird covid dynamics i would say the hottest markets are still the warm weather, low tax states. Carolina, texas, florida but new developments continues to be the hottest of the hot people want things movein ready. They want to pack their bags and go from new york, texas, florida. Can financing get what they need to put up the apartments, for example . Its a great time to be a developer or home builder and rates are increasing theres not enough invinner to in the market so buyers need to pay the right price to get the seller to list so, we saw two months ago the home Builder Sentiment turned positive they had the largest number of Housing Starts since 2016. Although the journal has a piece out today about mortgage real estate trusts turning off the spigot in terms of new loans. Is that worrisome . It is but developers are also giving buy downs to home buyers, in some cases two points from existing Mortgage Rates. Its such an odd phenomenon, the Mortgage Rates have gone up and theyre still locked into these rates. Theres a view they are prisoners to their homes people moved in covid and they thought they wanted to live in a certain market the world came back and they want to come back to new york but theyre locked into their homes. You see that a lot in the market if they have the funds to move, theyll buy their new home instead of selling their existing home, they rent it out and take the financial arbitrage between high rent and low Mortgage Rates. Can you explain new york to me all these people left and rent has never been higher. Rents in the country have eased but in new york its at record highs i think new york city is a disneyland for people that have the funds to spend. One explanation i read the other day it was the exit and return that gave landlords the keys on that huge bull whip effect, does that make sense it makes sense. Also, new york has been a leader in return to office relative to some other markets thats also driving activity and its new york and its new york robert, thank you robert reffkin. Coming up on the next hour of squawk on the street, pilray and anheuserbusch as they sign a deal to sell eight beer and Beverage Companies to a Cannabis Company were back in two minutes. 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So, high on the appointments flat from last year but a 92 increase from a decade ago progress, guys i look forward to the day where we dont have to report this i would also note that theres an important story in the wall street journal today about the increasing number of losses and shareholder letters and petitions to the equal Employment Opportunity commission fighting companies for these kind of practices, to advance diversity, equity and inclusion. Theyre using the progressive tactics against them which is something to Pay Attention to in light of the latest Supreme Court ruling. Its the same playbook, right . Exactly were watching that. Our parent company, comcast, just settled a case about this, illegally favoring minorityowned Small Businesses with grants and marketing advice. Illegally. Right that was the accusation, exactly. They settled it. Re ua othmoresqwkn e stet straight ahead en bigger legs on a turkey rude. Who are you . 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