Transcripts For CNBC Squawk 20240704

Magnificent seven are in correction territory but nvidias getting a boost ahead of its earnings. And were going to keep focused on those economic challenges in china. The countrys central bank cutting a key Interest Rate by less, though, than many had been anticipating. Oh, yeah, who is many anymore . Slew of press over the weekend as well. The journal writing kind of a devastating headline. Is it over after 40 years . Yes, definitely over. Who can say this stuff . We were here. We were lucky enough to witness the fundamental change in the chinese economy. It happened over the weekend. Happened over the weekend. Theyre trying to be a service economy. That was it. Done. Maybe president xi has just said, you know what . Every bankrupt artist, every ridiculous guy who built too much and every ridiculous person who tried to get extra yield, sorry. Why not . Why not clean up the excess . Well, but the question, of course, is, contagion. Oh, contagion. Yeah, some of the huge promote companies that are not paying in their theyre not paying interest on certain apts amounts of their indebtedness. The enormous trusts that are relying on that and paying the high yield. The people who are no longer buying property as a result of the fact that its gone down in value and its their largest source of net worth. Are you talking about gun belt savings and glen fed and cal fed . Youre talking about 1990 in america, right . Im talking about you werent . Residential trust company. I had a piece this weekend for the club. He is the Herbert Hoover of china. That kind of rhymes with some of the stories on the tape this morning that hes running cold on purpose. Wasnt that a great article . Trying to break the defense on empty calories. Bloomberg piece, that was brilliant. I read that, and i said, thats the secret. I mean, hes just not cutting a brake. Well, he needs a resolution trust, but everybody who is a shoddy banker at glen fed and cal fed should read this. This is countrywide. Its countrywide. By the way, they even have the same kind of names over there. Country garden. Country garden, i mean, whats the difference . Tell me. They have a very different system than we do. Its communist and were capitals. There are certain benefits to capitalism. Was there a primary coming up for xi . Is he going to iowa . No. You cant president xis not going anywhere. He knows iowa. He does. He spent time in iowa. Yeah. He had a bogus vaccine that he insists on giving to people. I was with dr. Porla who was happy to give the pfizer vaccine, but no, he said, no. Talk to the hand. President xi. What is he, like einstein . Who is he . Louis pasteur . He gives them the bogus vaccine and locks them up, which, of course, does nothing. Meanwhile, like, didnt didnt trump say he invented the vaccine . Where are you going, man . Where are you headed here . That leads me to conclude that hes there for life and that the bloomberg piece about how he wants a cool climate, not a hot, made sense to me. Macao just overtook vegas once again as the Worlds Largest gambling hub, so some things are going right. Theyre starting to sell cheaper things on their different amazonlike entities. And by the way, david, i dont know if you read my memo that comes out, i have a memo that comes out in the morning, everyone in america reads it except for you. But it did say everyone in america except for me . About 320 million people. Upgraded to buy at bank of america. Yeah. That now this one. David, those are all evs. They are all evs. The leader in evs, the leader in solar in china leader in coal plants. Yes, they are. They also build a lot of coal plants, that is true, too, but t they are are you saying this is being overdone about china . The great intelligentsia are now opining on this. Are you thinking about Larry Summers . I didnt want to mention anybody. You want to pick on people . Fine. Were going to talk about whether or not we can be poised for a bounce, but just to put a coda on china, of course, they did cut one of the prime rates this morning on the oneyear. Eunice yoon is in china with the latest on rates and china. Reporter hey, carl. Well, yeah, the central bank trimmed the peg thats used for most household as well as corporate loans by ten basis points. This is smaller than expected and what was really interesting was that they didnt move at all on the reference rate for mortgages. That was a big surprise. Left a lot of people puzzled as to what beijing has in store for the property crisis. As you well know, investors should care a lot about chinese real estate, because its a huge driver for growth, not only here in china but also throughout the rest of the world. About 25 of gdp is due to real estate as well as real estaterelated activities. And its a store of wealth for the middle class, making up 70 of household wealth, so a decline in real estate hits growth, if it does so, that not only hits growth directly because of the Property Market but also it affects the wealth effect, so people feel poorer and then they dont spend as much. In addition to that, its a big has abig impact on the financial industry. Property accounts for 40 , citi says, of collateral held by the banks. From the leadership perspective, though, they might not have a whole lot of policy options at their disposal because of the massive runup of debt over the past several years. In fact, over president xi jinpings time in office, chinas debt to gdp ratio soared from 2012, 195 to 297 just as of last year. Guys . Okay, so, eunice, its jim. Evergreen group gets in trouble. Country carbongarden gets in tr. In our country, they file chapter 11, people come in and buy them or their liquidated and perhaps a bank gets very hurt and the bank gets seized. I never hear what happens after the failure. I mean, to me, these are an opportunity to clean up the system and get rid of the debt. Yeah, it would be an opportunity to try to clean up the debt, but what the authorities here do worry about is the ramifications for the political system. So, a lot of times, we kind of hear about these big players that kind of struggle along. One thing that has been interesting this time is that the private developers seem to be allowed to have more trouble, some of the smaller ones have been going over and more and more of the stateowned developers are taking up a bigger market share. So, were kind of seeing a big change here of the state still having much more control over the property sector, as opposed to the private sector. Let me just push back a little. In 1990, we pretty much wiped out the savings and loan industry. Huge number of banks had to merge because they were broke. And then, we had one of the great booms of all time once we got rid of the people who didnt have any discipline. Is there any way, a possibility that after this is through, that they could actually have a boom . Well, i mean, its difficult i think the way the Real Estate Market operates is really different, and in that people here view real estate as pretty much the only option that an average chinese can invest their money. In the u. S. , for example, you have the stock market. People think thats a story of value. In china, people really dont think that the stock markets much of a store of value. We have these kind of Wealth Management products that are kind of in the shadow of banking stuff that people are driven to because theyre just looking for yields, and then they think, well, okay, i have some money and most of my money is wrapped up in the Real Estate Market but i really dont have many other options here because i cant invest overseas. We have capital controls here. So, people will look at these kind of shadow Banking Options and, you know, kind of, you dont know exactly where all of that money goes, so it is quite different, i think, compared to the way the american that americans think of their own Real Estate Market. Eunice, thanks. Obviously, huge global story. Were going to follow it with your help. Thats our eunice yoon in beijing. Lets talk some markets this morning back here in the u. S. , specifically tech. Nvidia is going to be one of the key events of the week. Speaking of keys, key today goes to 620 and they argue they might be getting some addition capacity as, say, amd products get pushed out. If you go back to when jensen huang, the godfather of a. I. , dan ives called him. Did he . Was it michael corleone, his father . Don corleone, perhaps . One of the things thats very important is that jensen said, look, it might take to the end of the year to get all that we need. The end of the year, that would mean they cant make more than the number they preannounced. Its always possible that somehow they were able to get the cards, and therefore, they can get the numbers. It doesnt help that we play this game like when youre an auc auctioneer, do i have 550 . 625 in the front. Dh check to the phone. Theyre playing this game, and i dont know why. But i will say that theres a path for him to make all these, but it has to do with tsmc, not with him. Right. Because the customers are clamoring. Theres, you know, theres customers globally that recognize that you need to have, including david met with elon musk, and elon musk needs a super computer. The saudis need a super computer. Amazon needs a super computer. Meta. Zuckerberg needs a super computer, especially to do what we havent even talked about threads yet. So, its a capacity issue . Exactly. Im not sure about amd and where they are. I know that arm comes soon, and you have this grace hopper combination, and theyre in it. Yeah. Arm is in it. Arm going to be big. Arm is going to be a very important offering. Thats going to be the most important deal of maybe the last thats coming, lets call it, early to mid september. Yeah. September 13th, somewhere around there. Right around the time as the uaw strike. 13 and 14 are going to be interesting. Big days. But arm is going to be a very important offering. Im glad you brought it up. Important for softbank as well. Its a significant owner, which will continue to own. I think its worth 80 billion. And you think the company is worth 80 billion. This company is in cell phones. Well theyre everywhere. Yeah. Brilliant company. Rene haas is running it. Worked at nvidia for many years. Howd you know that . I was just going to mention that. Hes good friends with jensen huang. Yeah. Next hes going to tell me which Board Members like solve it. Is it kj . Is he the backer . I dont think they have issues. Look at the board. Theyre all in favor. They love him. Yeah. By the way, weve now transitioned from jensen huang to David Solomon. Dont ask me why, i dont know. We havent spent enough time talking about other companies. Oh. Ill stay on nvidia. Im happy to move on to other companies. Id just like a little warning. I can follow you. We got 45 more minutes to handle but then the music plays. You want to talk kenvue at all . Oh my god, that was o overscribed. Im long j j. Thats a big company. We will talk about that exchange and the ratio they ended up at in addition to the s p and everything else. Good, that came up. Yeah. See, he can play. Hey, davids an old pro. Hes been doing this a long time. Old being the keyword. Hes the trebek of the show. No mustache. Not the trebek for jeopardy but Aaron Rodgers is playing for the jets. He wasnt good for jeopardy and he may not be good for the jets. Aaron and i have something in common that few people do. We both hosted jeopardy . Thats right. Well see if we can continue last weeks tepid momentum. Well get to palo alto and the autos and the banks. Couple calls on disney and of course what powell may say on friday. Dont go away. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. Central bank policymakers go to jackson hole later this week for the Kansas City Fed symposium. The big highlight, of course, is remarks by the fed chair. Investors bracing for his comments on inflation and the future of rates. Jim, after last weeks retail sales were hot. Industrial production was hot, b of a says maybe hell be less balanced than he would have been prior. The housing stocks have been really horrible, so its like hes trying to figure out a way to get it so that housing the stocks are maybe a forerunner of the housing prices. But it should be hasnt happened yet. Theyre very high. Almost everythings hot except for cars. The deere call, by the way, i was stunned. Theyve gone up in inventory and theyre going to have their usual shutdowns. David, the deere call, theyre very upbeat, but theyre not acting upbeat. Contrast that, then, with caterpillar for me. Caterpillar sold out. Construction whats the difference . One is ag and one is road build and you need them for datacenter, and you need them for infrastructure, and if you listen to the there are two people on the deere call. One is in charge of ag, which has been so great. And one is construction and forestry, and construction and forestry sold out pretty much as far as the eye can see, but ag is not. Caterpillars the same way. Theyre sold out for a particular kind. When that less of the federal money is distributed, look out. Cats down. Theyre just now all the proposals are coming municipali projects funded. Were talking now the infrastructure bill. By the way, its not as though the chips act or the Inflation Reduction Act wont have a Significant Impact on development and building and when caterpillar was 205, jim gave a talk here and the there was a preponderance of analysts who had a short on it. Its very rare to see it underweight. Take a look at the 205. He came to new york and said, we dont have an inventory problem. He was pastured by people who would know the difference between a caterpillar from, i dont know, an ant, and they just were just steam rolled by that quarter. Yeah. The deere quarter, the guidance on construction, 15 to 20. Goldman last week saying manufacturing, construction, probably has another 15 to go. Yeah, you cant get the stuff. One of the things that had been a factor were semiconductors. Thats no longer mitigating. We have not seen what will happen with that federal money, but jim is pretty confident. Jacobs is very confident. Jacobs engineering. Oh, my, are they doing well. Well, maybe its not a surprise the jthe journal did piece about our star. Maybe the neutral rate is higher than we think. I just think, look, other than china, things are pretty hot. When you look at maybe walmart versus a higherend retailer, the consumer is trading down. Thats absolutely happening. And heres a new one im going to spring on you, david. Im listening. Premiumization, which had been the way we went in our country, dead. Premiumization. Premiumization. Its dead . Yeah. Its dead. The premium tier is dead. My trust owns estee lauder. People are going with elf. The cheaper booze. Premiumization has to do with the highest, you know, people always say, listen, im at the high end, i can charge more. Premiumization was brilliant. Like for wine. The margins are typically far better. You understand that. Yes, i do, jim. Well, then, thats all there is to it. Congrats, david. Congrats. Thank you, thank you. It was 37 years of hard work, financial journalism, but i finally got it. How is that that chateau la fitte at 37 years old . Nobody wants it. They want tickle pink in nitrate. Ill take it off their hands. However, not at a premium. At a discount. Why dont you buy duck horn . M we get closer to the opening bell and cramers mad dash. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. 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 some gainers premarket. Palo altos going to bounce after that beat and raise friday night and all the soap opera about the scheduling of that earnings calendar. Jims going to have the ceo tonight on mad money. Well talk about that after a short break. Opening bell coming up in about five minutes and dont forget, you can catch us any time, anywhere. Just listen to and follow the squawk on the street opening bell podcast. To duckduckgo on all your device duckduckgo comes with a built in engine like google, but its pri and doesnt spy on your searches and duckduckgo lets you browse like chrome, but it blocks cooki and creepy ads that follow you a from google and other companies. And theres no catch. Its free. We make money from ads, but they dont follow you around showing the millions of people taking back their privacy by downloading duckduckgo on all your devices today. What do you see on the horizon . Showing the millions of people 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. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. All right, now we Start Talking some stocks. Well start with the mad dash. We got an opening bell two and a half minutes from now. Palo alto. Palo alto. You got it. Whipsawed some people on friday. There were 14 price target increases today. 14. And one of the reasons was, this is a rather amazing story. The whisper was this is a man, nikesh, who, by the way, one of the best performers of the year, guys just got a new contract, trying to get people to a hundred billion, s p company, he decided to give a Conference Call friday after the close. Now, he told everybody, including yours truly, that he had to do this because he had a huge meeting with the salesforce this weekend and he wanted to be able to make it so that everybody had the information so that nobody, you know now, i got no less than four people i never speak to these hedge funds because i find them typically just talking their insane book, saying this is going to be the biggest short. Hes going to miss. People thought it was going to be a blowup. Right. And i go back to nikesh, she says, look, id like to come on the show. I was very clear, you can come on the show monday. David, it was an outstanding quarter, but the best thing about it is it began with a pastiche of songs that talk about friday. Because he totally knew what was going on. And he snookered, but he didnt snooker anybody who too many him seriously. He snookered all those who felt, this cant be true. Summer friday after the close, hes got to be having bad news. And the bad news was so fabulous that we have 14 price target increases. And there you can see the stock is going to be up. Theres so much cyber so many Cyber Threats out there. He has a platform, nobody else has a platform. He is winning business from everybody, and it is one of the most impressive, a albeit long Conference Calls that i have ever been on. And it was so detailed and with such great scrutiny. He is a rigorous thinker, and those who were short the stock today, david, theyre sending me an invitation to their funeral. It doesnt sound like hes going to do it again on friday night. I think that in retrospect, it was a little much. I think that the timing of maybe have the sales group. Right. Another day. But it was was he having fun with the analysts . No, i mean, he really wasnt. Actually, im not sure. Well see what he has to say tonight. But theyre just crushing it. They did say that some customers were having trouble buying all their stuff at once, and they needed terms. Now, the Balance Sheet is so great, they can do that. You have to do the remaining performance obligation, arpo, t see how great he was doing. Its not billings necessarily. Its the way you do accounting for subscription. Theres a lot of subscription business. Its very clear that the threats have really picked up, and you know that from listening to clorox, from estee lauder. The s. E. C. Has said you have four days to own up to a hit, and that also plays in his wheelhouse. It was a remarkable quarter, and other than that one aspect of people not being able to pay all at once, which is not really his fault, its very clear that he is taking share, taking names, and crushing it. Doesnt sound like you think necessarily reclaiming 250 going to be easy. No, because a lot of this is just short squeeze, and there will be people who say, wait a second. The fact is, maybe his stuff is too expensive or maybe the customer is really going to hold back. But i would say, if you hold back on cybersecurity, thats like holding back on fire and safety. It just doesnt make sense because the bad guys are everywhere. Now, i mean, they have this thing called project 42, area 42. Its like a movie, a danish movie. I mean, hes got people. I signed up to palo alto for dummies just because there are so many he uses every single acronym there could be. He does not stop. You have to be up on what he is saying, and frankly okay, im going to say something. I find him delightful. I mean, there was, like, somebody wrote a piece that says, you know, palo alto, im in love with you. I thought that was a little aggressive. But it was a great quarter. He delivered a great quarter. He just delivered it friday evening. Well see what heaths got t say. Hell be on with jim tonight. Heaven forbid they remember to watch. Mad money at 6 00. Doesnt mean they will. Memories are short. Please put up the kenvue. Lets put up kenvue and j j. Everybody may recall or many people that kenvue being split off from j j, there has been an Auction Going on, essentially, in a way of how many shares would be put up by j j shareholders in order to receive kenvue shares. We now have the results, and you can see whats happening. By the way, j j shares have been up, i think, outperformed the s p by 13. 9 while kenvues underperformed by 4. 6 . Thats of late. Since the Exchange Offer was communicated to the market. Here are the numbers. 802,777,000 shares of j j were tendered and theyre going to accept 190 million of these shares. Im long j j . Huge buyback, obviously, for j j, using those shares. About a proration of about 28 . That did come in within the range of consensus expectations, and j j will own about 9. 5 of kenvue after. Isnt that more than they thought theyd own . Yes, i think it is. There was an expectation that they would own hardly any at all, but they still own roughly almost 10 . But again, it is youre seeing the results there. Thats ard. Thats not something that happened at j j. People found out they had a little too much j j. You were trying to figure out what the ultimate exchange would be. And its also getting added to the s p, right . Kenvue is. Kenvue is being added to the s p. Thats also having an impact here as well. The decision to still own 9. 5 , that will be that will actually lessen it, so lets see, 200 million shares, trade distributed, given kenvues s p weighting of 9. 85 basis points, so there is also some expectation there. I know the people that hopefully weve explained what happened. Theres something going on with talc litigation but this is entirely ard. Talc litigation has been quiet. You buy one, short the other in the hopes that youre going to set up the exchange properly, and then you benefit from it. It was really positive. But this was a little like remember the dupontiff deal, which tanked iff . Yes, i do. These are very tricky. They are, which is why many go for a spinoff as opposed to a splitoff. But the buyback was huge. You get a certain ratio of shares and youre done. That was a great explanation. I went over this and over this thinking, if im asked to explain it, can i do it as clearly as you did . That was perfect. Thank you. Quite welcome. I appreciate that. Meanwhile, whats your view on j j . Im very concerned. First of all, j js last quarter was magnificent. And theyre their device business is really strong. Their pharma is the fastestgrowing large pharma. On the other hand, theyve been losing a lot of cases. Now, theyve been winning some, losing a lot of cases, but this texas twostep so far, this idea that you can create a bankrupt entity, that lost in Bankruptcy Court from a guy who actually earlier had ruled in favor. Theyre appealing to someone in the Third Circuit who has pointblank said, i will not allow this. So, what theyre really trying to do, david, is get to the supremes, believing that this Supreme Court will somehow rein in the plaintiffs bar. But its going to take a long time. First, you have to be rejected by the Third Circuit, and i have to tell you, david, i dont like the way these this litigations going. Because the a hundred tens of thousands, since the bankruptcy was defeated in the federal court last, there have been so many thousands more of cases because, frankly, if it does causes me sthelioma, then theres a bias in the jury system, including one recently in california, to use j j as a piggy bank to pay people who have terrible illness. Jackpot. Or fairness. Very hard. So, it makes it hard to own the stock is what youre saying. I sold it as soon as they announced this thing, we have got out at a good price because, frankly, i dont want to be involved in a litigation situation, because these days, theres just so many juries that will find against you. J j, big cap stock, theyre rich, boom. By the way, similar i mean, i dont want to relate too much to uaw, but there are these forces that where capitalism is not in favor. But the j js brutal, because if you go back and look at the alameda case they lost for 18 million, i think you would find that its very compelling to j j and the law, but the persons dying. Right. The plaintiff is dying. I mean, talk about sympathetic. Anyway, thats my rap. Okay. Jim, you mentioned nvidia earlier. I think we now have hsbc at 780. That was the second highest on the street. I know you were not a fan of rosenblatt last week at 800. The godfathers got to deliver more than michael and don. This is ridiculous. Kind of absurd. Just let the quarter happen, for heavens sake. Just let it happen. I mean, someone said the other day to me, you kept me out of nvidia. I said, no, just dont buy ahead of the quarter. Look at this. Another person said it was the greatest call of my life, you should retire. I thought that was interesting. I dont want to retire. I got enough tomatoes, i could set up a stand and retire. Theres some great tomatoes on the third floor fourth floor. Im going to move them down. Does that mean i can have some tomatoes . I thought you were offering me some tomatoes. Ill give you a great price. I brought me best jersey beefsteaks. Whos going to man this tomato stand . Im going to man it. Do you need me and david on either side of you to sell . You guys,i got to tell you, ill give you these are, at whole foods, this would be a treasuretrove, and i will offer them to you for like a dollar, four for a dollar. Thats a good price. Its a really good price. By the way, you take you get the bagels, the everything bagel, hes got the cream cheese on it, cut it, put a slice of my tomatoes on. I mean, hey, nirvana. Youre good. Heaven on earth. Got it. Nvidia, as for nvidia, it is the second biggest gainer this morning after palo alto. Number three is tesla, jim. My travel trust owns the first two. Falling almost 30 since july earnings. Tesla, its been a while since it poked up its head. I dont know. T its about time. David, have you been in contact with him lately . Some people feel that hes a little more off the rails. There was that story, again, in the journal, saying questioning some of the decisionmaking or whether hes being challenged effectively enough by people around him. He makes a better rocket than the russians. He sure does. I, sadly, have not been corresponding with elon to the extent that i was. Theres a good chance for you to pivot to broadcom, vm ware. Thats the story i was referring to, is he out of touch . Thats the question they raise there. Tesla shareholders would say, no. And to jims point, its not like they keep putting rockets up every five days from spacex or whatever it is. I suggest that everyone go to a launch, because its one of the greatest things in the world. It does get a lot of focus as a result of his ownership of twitter. Moving on, as you already did for us, to vmware, it is worth noting the uk antitrust regulators had approved that transaction for it to be acquired by broadcom. Not unimportant. No. And now theyre ready to nail that company. Get its worth. There is still more to come, but that was an important one to clear. No doubt. In particular, given what weve seen with activision, which were still waiting for in terms of the in terms of them getting the approvals they need from that same regulator in the uk. Not i got to get some more updates there, see if we can find some things out to tell people. Remember, as of august 29th on the activisionmicrosoft deal, the breakup fee will rise. That doesnt mean much, obviously, if the deal closes. It doesnt mean anything, but that was another date thats not far away now in terms of still waiting for something to happen there. Right. Where we believe many believe that the path has been cleared for an approval. I dont know. And then, on the antitrust front, horizon, amgen is the other one im focused on for obvious reasons. There still continues to be a belief that the two sides or the ftc and amgen will somehow cobble together something they will call a settlement that allows amgen to go on and allows the ftc to not lose in court. Does it bother you that amgens never done what the ftc charges . Theyve never theyve never actually bundled. Is that not dispositive . Maybe they want them to say they never will. Mr. Bradway did it to me. He said, i will im happy to sign anything. Hes already put it out there, that he will never do it. It doesnt matter. Mr. Bradway has said, look, ill do whatever they want. Were on broadcom, im trying to get them to tell them we should be doing horizon, amgen, thats all. Broadcom, marvell are these ancillary ways that people are playing the you were saying something important about bradway. He told me he would never do it. If theyre willing to offer that, say, to the ftc, well never bundle, you would think they might actually be able to come to some sort of settlement. This is important because theres a lot of data about the potential close for that deal. Thats why were keeping an eye on amgen. Mr. Bradway has made a very good case for saying, listen, i wont do any of the things that they want. But it doesnt seem to matter. This ftc is ideological, and no ones quit. Thats why we come back to it a lot. On the deal front, guys, one other name last week that came to life, of course, was u. S. Steel. Oh yeah. Cliffs wanted to buy it and then smark, that private company, saying theyve got the financing to pull it off. He said, im rich. The uaw. That was a great interview. Im rich. The other name i would that has been in the press, and i can confirm, of course, i think potentially serious is matal. That is very serious. They have hired an investment bank. Theyve hired bank of america, i think its out of europe, to advise them. My understanding is, in fact, they may have been the ones who set this all off. I believe so. They may have been the first sort of incoming at least inquiry. That would be great to get that. And you know, the question is, what price . I dont know. Lets get lorenzo on. Hes fantastic. Do you think a deal would be allowed and. Absolutely not. You dont . No. Even though they have owned and bought and sold many assets in the u. S. . Including with Cleveland Cliffs. Right. I just think that whoever gets it, whether it be Jonathan Kanter or justice or whether it be lina khan, they continue to look at what the share is in america. Now, there isnt theres much less share than overlap of Cleveland Cliffs, but i dont believe Cleveland Cliffs, in particular, we focused on their share of the u. S. Automobile market in terms of steel. Which is 40 , but worldwide, its almost nothing. Its 60 . I got that 40 from i got to look back at my notes. From the people, not directly from Cleveland Cliffs, but writing about it. Your concern is on the antitrust front. Matal, you think, would not be allowed, why . Because its a u. S. Asset that you wouldnt want to im going to use something youre going to be upset about. Im going to say, its not going to be allowed because theyre antimerger. They dont think this is worth this does not help anyone. Remember, lina khan, if you go back to her seminal piece that she cowrote, said these deals are just to enrich shareholders, which by the way, you know what they are for . Enriching shareholders. Potentially. You would also think u. S. Steel needs more competitive. I got 40 of flatrolled steel and 60 of auto grade. That would be the Cleveland Cliffs in the u. S. So, the overlap there is bad, but i think its those are big market shares. I just think that theres no need to have i think theyre against consolidation, kind of like what they felt like with the penguin case. Oh, random house. Yes. Where stephen king testified. Im on page, like, 400 of the outsider. I dont want to finish it. Hes so great. Jim, you cared all about the small deal in the permian. Permian resources buying something called earth stone energy. Do you know any of these companies . You know every single company. I do know permian resources. Im surprised the only companies that matter in the permian is diamondback. Delaware basin independent they just go by pioneer. Delaware base, pxd. Go buy it. Okay. I like coterra because i want the natural gas ahead of a cold winter in europe. Yeah, this potential strike platform workers in australia is just showing what a global commodity it is for the those buyers in the eu. Thats what happened. Meanwhile, jim, the rig count, 17month low. I know. Down 9 of 10 weeks. Whats going on there . If you go, say, to coterra, they are getting more yield with fewer rates. And thats been the trend. And i think, david, one of the things thats occurred is the technologys so great, theyre using threemile drill. Threemile. Can you imagine that . Its amazing what they can do. Yeah so and they can come from they can have them meet. Right. You know, all that way, way they can sip it with a straw. Its crazy. But it is whats coming on. The technology is so great. They dont need to drill as much. I go to the guys and say, why dont you drill more . They say, were drilling less, making more money, what do you want from us . What do you want from us, jim . We did not even get to David Solomon and the board. We dont need to. Okay. We said our part last monday. We already reported on that. Stick with the jail, the permian. Delaware basin is great. By the way, you want good news . Coterra, tom jordan, new mexico is where the new oil find is. We could drill, really, where the new disney park is going to be. Thats not a good overlap. We havent gotten to the disney note. Youre going for oil as opposed to selling it to disney . I had 300,000 acres. I proposed it directly to someone who was previous to bob iger, and i guess it wasnt as received as well as i thought. Yet, yet. Still hope. Games not over. You got oil, and you got mickey. Mickey oil. Could be a great ride. Oil right . D. Med dpep and the oil business in every quarter. It works for me. Mickey rig. Mickey rig. Take a look. Weve lost the opening gains. Dow is down 25. Quick reminder, you can get in on the investing club with jim. Use the qr code that we provide for you on the screen. As we go to break, this is going to be a very busy week for the bond market. Its not just jobs revisions tomorrow. Flash pmis but of course jackson hole on friday. Tenyear has been a little elevated this morning. Still above 4. 3 . Shares of vm ware, we discussed it, the uk regulator saying okay, they make it clear that ftc has also said okay. So all that is left for vm ware, and its soon ittobe potential honor broadcom getting approval from chinese and japanese antitrust regulators. The ftc in the press release says, the heart stop premerger waiting periods have expired and no legal impediment to closing rbo aerulio. Gatns wee okft this. Fisher Investments in this market, youll find Fisher Investments is different than other money managers. other money manager different how . Arent we all just looking for the hottest stocks . Fisher Investments nope. We use diversified strategies to position our clients portfolios for their longterm goals. other money manager but you still sell investments that generate high commissions for you, right . Fisher Investments no, we dont sell commission products. Were a fiduciary, obligated to act in our clients best interest. other money manager so when do you make more money, only when your clients make more money . Fisher Investments yep. We do better when our clients do better. At Fisher Investments, were clearly different. The citi custom cash℠ card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash℠ card. I love it. [voice vibrating]. Lets get to jim and stop trading. One of my favorite stocks is reagainer in ron. Theyve done so many good things. Over and over. But this week they got approval for a larger dose of Macular Degeneration drug. A lot of people are betting against this. I think being up 11 is not enough and going to be worth more. Its a remarkable drug for Macular Degeneration and given people sight and done Amazing Things and doesnt get the credit. He came on when the stock was at 5. He was my first guest. 5. He said i have this shot, helps Macular Degeneration. Who is going to take that. The current standard is five times a month. I was like done, bye buy buy buy i think that david. Jim. Friday night may be the new time that you want to report. Lesson learned. Yes. What a great show. Pretty interesting. We covered everything. David, did you get to cover everything . You wanted to you covered j j well. Thank you. Thank you. I appreciate you doing reviews of the show while its still ongoing. This is what we do now. A review. Post mortem on our own so the viewers can see everything. I think we could done a little better. The podcast. See you tonight. Mad money 6 00 p. M. When we come back, how chinas economic cllgehaens figure into his investment strategy. Dont go away. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. Good monday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with david faber and leslie picker here at post nine. Sara eisen has the morning off. Trying to get a little bit of bounce after three weeks down for the s p. A lot is going to depend on the data and the earnings headed our way. Some highprofile ones including nvidia. A pretty big week. Wea were 30 minutes in. Tesla rebounding this morning, though still in correction territory after a double digit fall in august. Shares more than 25 off 52week high and up 6 today. And nvidia, carl just mentioned it, continuing its ride higher. Hsbc raising its price target to 780 per share as baird calls it a top pick ahead of results later this week. That stock up about 4. 5 . And finally, palo alto surging after a strong eps beat and guidance. More on those results in just a moment. Well the dow is coming off what was its worst week since march. The nasdaq posts its biggest threeweek drop since december. All this as investors brace for fed chair powell who will be at jackson hole later this week. Steve liesman joins us, of course. He gets ready for jackson hole. His fishing gear is ready. All ready to go. He can tell us what to expect more importantly . A year ago fed chair, jay powell, in jackson hole said inflation was too high and no one should doubt the feds resolve to bring it down. On the eve of this years summit powell and the fed can claim sukz. Gdp remains above trend. The Unemployment Rate low, no recession so far at least. The fed still faces work here. Principally, the economy has not slowed as much as they thought it needed to and theres been no increase in the Unemployment Rate, so loosening in the job market creates concern that continues about wages driving up inflation. Powells most likely course here is to stay the course and wait for a slowdown from three things. The lag effects of monetary policy, bank credit tightening and tightening of financial conditions you see in the recent stock market selloffs and increases in bond yields. Over the past year and in the past several weeks the market taking the fed more seriously or embracing the higher for longer mantra from the federal reserve. Futures priced in the year end 2024 rate at 3. 17 and now puts it at 4. 25. The average forecast from the fed official 0. 7 Percentage Points higher. Thats the chart there. If the economy doesnt show signs of slowing, well thats a problem for the fed. It could continue to hiking. There is one more hike built in. It could maintain the current rate. That would mean a tougher real rate. Inflation would be falling. Its worth pointing out, guys, just because its jackson hole, doesnt mean powell has to decide anything, at least this month. No. But steve, he has chosen to communicate in the past. I mean, im you know, youre a veteran of that event more than, perhaps, anyone other than the chair himself. What are your expectations . Well, you know, its a time to reflect. Its a time when you get a little more time to think about things. There isnt a meeting right away. Theres one in midseptember. I expect him to maybe explain a little bit or as well as other fed officials were talking to Patrick Harker on thursday morning, david, its chance for them to say hey, what are we doing with this higher than expected or better than expected growth weve had and how is it weve had higher inflation but declining inflation at the same time and also theres talk some folks have been writing about whether or not the fed, jason furman in the wall street journal ought to raise the inflation target. I dont think thats going to happen. I think hes going to talk tough but suggest some flexibility here if things keep going the way they have been going. Weve see what happens on friday. Well talk about it between now and then. Tech meantime coming off a rough week as you know. A number of mega cap names in correction territory including apple. The focus is going to be on nvidia as the chipmaker gets ready to report earnings wednesday. Our next guest believes the guidance will be heard around the world and could fuel the tech rally for the rest of the year. Lets bring in dan ives, Wedbush Securities analyst has an outperform at 490. Not that aggressive as compared to some on the street. I think its just starting. Were going to hear from jensen and nvidia, about the demand story that i believe is right now skyrocketing and if you look at tech across the board, this is going to be guidance heard around the world because the godfather of a. I. And in terms of what were seeing, that is the best barometer that we believe is really just starting what we believe is a new it tech bull market yunds way. Whats kept you from goosing your target the way others have, 800, 720 . Its showing the use cases in 24 and 25. If you look at 2025 and 2026, youre talking about revenues that could double over the next two years. The important thing for the market, its not just nvidia but for microsoft and for google and for some of the pure plays, salesforce, palantir and others. This is starting what i view as probably the biggest trend tech theme weve seen in 30 years. Theres a lot of hype going into wednesdays print. What if nvidia disappoints . Is the Downside Risk symmetrical to the potential for an upside surprise here . I would be shocked. Right now, even being in asia, all the demand that were seeing, they almost right now are going into call it midnext year have sold through. Theyre the only game in town. I think thats the difference right now, is that if you look, the best barometer of a. I. Spending, it goes back to jensen and nvidia. If you look at what happened postmicrosoft, i think there was some nervousness. Is there a slower ramp . You seen tech stocks sell off here. Bears have come out of hibernation mode. I believe this is a tech rally that continues into the second half and put fire in the engine. When you think about amazon and alphabet and microsoft and oracle and you think about all that demand, you have to wonder, though, do they have the capacity and what is that going it to do in terms of the language or conversation around it on the call in terms of saying whether they can actually meet that demand . Yeah. I think to davids point, i think thats an important thing in terms of supply and demand. Right now they are the only game in town and down the road you have amd and others that will benefit. Its about the second and third and fourth. What are they hearing from enterprise . From a use case perspective. We believe use cases were looking at 5, 6, 7x and that really for the Broader Market right now, from the tech perspective, is what everyone is waiting to hear. Thats why that is going to be, in my opinion, the guidance heard around the world and sends the bears into hibernation mode, despite this pullback that weve seen. To be fair, its going to be years until we see the results in these other companies that are using againtive a. I. Reflected in terms of their usage . No doubt. Most of my conversations from an investor perspective, not the next quarter or two from microsoft or amazon or some of the names like salesforce, its look out 12, 18 months. Where could numbers go . What could revenue microsoft is an example. We think for every 100 hours of cloud spent theres 35 to 40 of a. I. Incremental spend for na dell and microsoft, which is why i believe thats going to be a company i view this as a golden buying opportunity. It comes down to the biggest earnings week for it tech that weve seen probably in five, six years with everyone focused on wednesday night because of the pullback weve seen and, carl, because you look at microsoft, maybe talking about a slower ramp. Weve seen across the board, but now you have to hear from the godfather of a. I. Jensen. What does it mean, i dont know if you cover snow and plunk, with you get those two. How big is the halo . Start off with the friday night special in terms of palo alto, the fears, soap opera, the bark worse than the bite. Strong numbers, strong guidance. Cyber feeling better about, feeling strong about cloud. You look at snow. You look at what i view as a cloud, you look it at names like zscalar. Across the board we will see strength. Do you blame nikesh for allowing friday to become a distraction . It became a story of itself and ultimately nikesh is one of the best tech leaders out there, period. Now its water under the bridge. I do not expect them to be doing another friday night call any time soon, but this year, cyber security. You had the softness in fortnet. Now palo alto. I it continue to view that as sort of the steph curry of cyber security. I noticed tesla is up 6. 3 . I dont know if the market is taking maybe that combo youre wearing is sending a sign of some kind, dan. The miami vice. Its beautiful. Thank you. But what i mean, what do you make of that . Why the outsized performance versus everybody else, right, just right now . Because the price cuts that everyone is worried about last week now weve dug into and i think the market is starting to understands. It was only 10 or 12 of the models impacted. Big selloff in tesla because these price cuts worry theres going to be a price war, we believe 95 of that is in the rearview mirror, the other thing important, demand in china, we believe, is actually starting to uptick relative to what weve seen the last few weeks and i think thats why tesla is reacting accordingly. Thank you. Plus if we get a strike vote later this week well see what it means relative to the legacy. Look, the 313 area code continues to have one hand behind their back with uaw. Dan, thanks. Good to see you. Either way that miami vice look. Full body shot. Our viewers are not taking full advantage. See the blue. Its beautiful. Yeah. Need to pull up my crayon box here. Thanks, dan. As we head to break our road map for the rest of the hour. Why jpmorgans chief economist mike rowley sees a soft landing ahead. Concerns continue to grow around chinas economy. Which u. S. Stocks may be more exposed. Mark mobius will weigh in. And why there could be more pressure for commercial real estate ahead. Big show coming up on isth monday morning. Dont go away. sfx Stock Exchange bell ringing sfx people celebrating sfx people celebrating sfx Stock Exchange bell ringing welcome back. An abundance of negative news surrounding china has put u. S. Companies with exposure to china in focus. Seema moody joins us now with more. Leslie, u. S. Companies were betting on a strong turnaround in chinas economy this year but so far most have been left waiting. Dow cfo said on the companys Earnings Call that anticipated economic rebound following the end of zero covid restrictions have yet to fully materialize and thats left a number of highprofile, multi nationals in a difficult position. Continue to invest in the country in terms of a 2024 turnaround or prioritize efforts to diversify away from china in countries like vietnam and india that have their own set of challenges. The answer seems to be both. While apples latest Quarter Results revealed strong growth in china, ceo tim cook did cite apples progress in other emerging markets. In total, tech, by far, does have the strongest exposure to that country with 16 of revenue made there, followed by sectors like materials and industrials, both of those sectors have also seen slowing demand in china. Markets are now awaiting comments from president xi jinping who is scheduled to attend the bric summit this week. The team does not expect the chinese leader to announce fiscal stimulus measures at the meeting. They still think the appetite for stimulus is low and think xi will emphasize the current challenges in china are temporarily and seek solidarity among other nations attending that meeting. Guys . Im curious, you know, you did a great breakdown on how the demand picture is impacting multinationals. How is it impacting those with supply chain poexposure to chin . It does seem to be improve from what we saw last year but nowhere near what we saw before the pandemic. It reminds me of a conversation i region had with General Electric Ceo Larry Culp who said yes, the story is improving but one of the reasons is, the production efforts are improving on the ground in china but the diversification efforts to expand into mexico and vietnam and india, those are also paying off as well. So sort of this dual strategy contributing to a slightly better picture on the supply chain front. Leslie . Seema, thank you. Seema moody. Lets get more around the risks right now, perhaps, of investing in china, mobius Founding Partner mark mobius joins us now. Mark, good to have you. Youve been investing in the region as long as anyone i know, certainly, and im curious to get your perspective. Were getting a spate of negative news here, so to speak, in our news cycle about chinas economic fortunes. Do you buy into that . Is it as bad as some are making it ought to be . Theres no question theyre having real problems on the property front, and thats the reason why the stock market in china is not doing well, because its driven by Retail Investors and these Retail Investors have been losing so much money on their property. Roughly 70 of the china wealth in individual hands is in property, so thats really the problem. Anybody holding debt of chinese property companies, is in trouble. But, and this is a big but, the Chinese Government is not emphasizing rescue of the property sector. What theyre doing is emphasizing tech investment, obviously, because they have to compete with the u. S. Now that the u. S. Is cutting them off from their technology partners. So youre going to see a lot more emphasis in china. I think xi jinping is going to emphasize tech investment and investment in the service sector. So theres still going to be lots of opportunities in china in those sectors and particularly, one of the areas that is really it interesting to me, is the travel sector. If you look at any of the travel stocks around the world, theyve been it doing very well, and one of the reasons is because people are traveling from china into other areas. I was just in japan, and i saw many chinese travelers traveling in different places in japan. You can see more and more of that. So i think theres great opportunities in that particular sector. Right. So youre youre not expecting an Overall Economic meltdown, so to speak, for lack of a better term, thats going to impact across the board . Youre staying away from certain areas, but seeing as you just said, opportunities in others . Exactly. I dont see a big meltdown. Of course a lot of people are hurting, Many American investors, if you look at the holdings of many of the Big Companies here in america, the big funds, youll see theyre holding a lot of chinese debt and hurting. Its not going to be disastrous for them either. Ive seen a lot of commentary this morning about the prospects of chinas slowdown impacting its ability to surpass the u. S. , you know, in terms of the Worlds Largest economy and whether it delays it, you know, for out in further in the future or indefinitely. Do you have any thoughts on that, as well as maybe just the overall interconnectivity and whether a slowdown in china also kind of drags the u. S. Down with it . Well, as you know, the u. S. Is doing very well, and i think as a result of inflation coming down in the u. S. , Interest Rates will probably follow. I think the u. S. Is doing very well, and it will be difficult per for the chinese to catch up in the short term. You must remember, with the size of the chinese economy, theres no way theb they can go back to 7, 8, 10 growth they had in 2010. You will see 3 growth in china like the u. S. U. S. Cannot go to 10 because the economy is too big. I believe gradually china will recover. Theyll come up, but i think it will be difficult for them to overtake the u. S. For some time. Mark, you mentioned japan or having been there recently. Im curious, that economy is performing quite well, it would seem. Are there opportunities there . We talked earlier on the show about the arm ipo being sold, part of it, by soft bank. What are you seeing on the ground in japan . Its really interesting to see the amount of traveling that you see all over japan. We went from one side of the country to the other, from tokyo down to kyushu cities in the south and the trains are packed. The hotels are full. A lot of it is foreign travel, but particularly local travelers are there as well. I think the japanese economy is doing very well now. And finally, is there one market overall, you know, back to that point of china slows, everything else, i would assume, particularly their key trading partners in that region you invest in slow as well, are there opportunities youre seeing in other markets outside of china . Well, because of the china problems, a lot of the manufacturing has been moving south into vietnam, thailand, malaysia, indonesia, and particularly india. India is really the big growth story of india of the asian area going forward. I see india really taking the place of china as the high growth area in asia for the near future. Mark, always appreciate it. Thanks for your time. Thank you. Still to come this morning, a possible bidding war brewing in the hedge fund world. What investors need to know after the break. Your record label is taking off. But so is your sound engineer. 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 connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com some drama in the Hedge Fund Industry involving that company right there. Sculptor capital. Our viewers may recall went public some time ago, not great performance, a lot of internal instability if you can call it that but on july 24th, a firm called rhythm capital signed an agreement to buy sculptor the price 11. 15. In the intervene weeks a group of wellknown hedge funders that includes bill ackman, marc lasry and boaz ween stein has made another off ter acquire the company but in a press release out yesterday, sculptors committee of the board said they do not believe the higher offer is reasonably likely to lead to a superior proposal. Why not . Well they cite concerns about the financing, saying the proposal only includes committed financing for less than half of the amount required to consummate the transaction and in their opinion, at least, underestimates the amount that would be necessary by several hundred Million Dollars and, therefore, they say, no, not likely or reasonably expected to lead to a superior proposal. Leslie, very much unclear where this ends. My understanding is that danny, who still owns a good amount of stock, might be expected to roll in to, if they can get into a new entity, that would, obviously, lower their needs for new funds, to finance a deal. Something that perhaps a special committee is unaware of. I dont know what has been communicated to them. But the history here is also very interesting. Danny okly losing control of the hedge fund to jimmy levine who has voting control of 20 , who was his pro te yeah. Taught water skiing to dannys son at camp in wisconsin. Its a storied firm with a tremendous amount of volatility in recent years. The for ren corrupt practices situation. For a long time dealing with that. Litigation surrounding that. Ultimately that led to a succession situation where jimmy took the after, you know, a few stops along the way, ultimately landed in the hands of jimmy. And then now, you saw a letter last week from danny saying he wasnt in support of this deal with rhythm and then, of course, shortly thereafter you see this new consortium bid come to light. Youre right in that Boaz Weinstein seems to be the driving force in fully support and some of his hedge fund friends on board most of the portfolio at sculptor is credit. Mr. Weinsteins expertise is in credit. It is. One would anticipate being able to merge them together. Merge them together. This firm. This is an Lp Limited Partner money they would be rolling into this. Their own personal funding. Right. To take over this company. In the proxy that was filed this morning, some interesting nuggets i wanted to flag here. They say that belief from the special committee to the board is that the consortium underestimated financing by 217 million and at least, my understanding is, from proposal one, the idea was that they needed to sell the clo business to help raise the capital to finance this transaction. Now the question becomes, what happens next . Because its clear that sculptor rejected this deal. Does this consortium come back to the table to your point with maybe some other creative measures to get that financing together . Because if financing really is the crux of why they rejected it, what other options do they have . 217 million, not a small amount of money here. No. Although you are talking about principals who can conceivably get ahold of that money and they will figure out a way to fix it. I dont know to what extent there is the contemplation of a roll in by the likes of a mr. Ok, for example, which again would diminish the amount of funding overall needed. Yeah. But its an it interesting potential battle. I didnt know rhythm at all. Theyre a reit, Real Estate Investment trust. I think the rationale is worth noting there arent that many Asset Management m a deals. Its very few and far between. A big reason behind it that is just the idea of combing kind of two cultures, Asset Management firms are kind of creatures of their culture, so to see this in a situation where its not even a friendly deal per se is it interesting and you brought up the point about the aum, sizable credit portfolio. 34 billion in aum. This is not a small firm. Its not a small firm, although used to have been one of the leaders. It did. And the performance was not good. Up 8 over the long period of time. The stock trading at a tremendous discount. Yeah. Relative we will be keeping a close eye on it. It is a fun one involving a lot of wellknown names. Indeed. A quick programming note, dont miss our delivering alpha investor summit on september 28th. Where some of the streets biggest investors and leaders will talk where they see risk and reward ahead. Scan that qr code or visit cnbc events. Com delivering alpha for more. Still ahead, a big test for the fed and stocks at jackson hole. Jpmorgans chief economist joins us to break things down. 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. Heres why you should switch fro to duckduckgo on all your device duckduckgo comes with a built in engine like google, but its pri and doesnt spy on your searches and duckduckgo lets you browse like chrome, but it blocks cooki and creepy ads that follow you a from google and other companies. And theres no catch. Its free. We make money from ads, but they dont follow you around showing the millions of people taking back their privacy by downloading duckduckgo on all your devices today. Our customers dont do what they do for likes or followers. Their path isnt for the casually curious. And thats what makes it matter the most when they find it. The exact thing that can change the world. Some say its what they were born to do. Its what they live to do. Trinet serves small and medium sized businesses. So they can do more of what matters. Benefits. Payroll. Compliance. Trinet. People matter. Heres your cnbc news update at this hour. Tropical storm hilary now a posttropical cyclone after rolling through Southern California bringing high winds and heavy rain which led to downed power lines and flooded streets. The storm is over central nevada. The National Hurricane center is still warning that historic rainfall could bring catastrophic lifethreatening flooding. About 850 people are still missing in the aftermath of the maui fires from the countys mayor who in an overnight update on facebook also updated the death toll to 114 people. President biden and the first lady are expected to arrive in maui later today. And the Russian Space agency says its uncrewed luna 25 crashed into the moon after spinning into an uncontrolled orbit. It was trying to be the first craft to land it at the south pole where scientists believe there could be ice and precious elements. Guys, back to you. Thanks very much. An hour into trading we have lost ground on the dow but the s p is holding up a couple points. Dow down 180. Big week with the fed chair at jackson hole on friday, major focus for the markets. Our next guest raised his Current Quarter gdp expectations along with his odds for a soft happeneding. Jpmorgans chief economist is back. Great to check in with you. Good to see you. You had a great chart last week looking at expectations for q3 and how atlanta fed has pulled away and no one can sort of understand what theyre seeing but what do you think explains their tracker . Its very early in the quarter, right. We dont have much data yet for the third quarter. We did get a good retail sales report last week, so that does make it look like consumption will have a pretty good quarter here. Invest inventories are lean. The restocking there will contribute to growth. I wouldnt put too much weight on the syestimates as they shak out. Well have a better sense. It does seem like its off to a good start. Yeah. You did say maybe real Consumer Spend up 3 to 4 this quarter. I think thats possible. Certainly after, again, after last weeks number it looks like july is going to be a pretty good real consumption month and every reason to believe, given what were seeing and things like jobless claims the labor market is holding in and no reason to expect a big retrenchment in august or september. Does that mean that powell needs to lean hawkish on friday . Well, look, i dont think powell is going try to send too strong a message here. I think the message that was reiterated in last weeks minutes is theyre going to be data dependent and laid out what kind of data theyre looking at. We dont have the august payrolls or cpi report and thats going to inform their decision in september. I dont think powell is going to want to, you know, front run the Committee Without having that data in hand. While as you mentioned growth is coming in better, inflation has been coming in softer. It doesnt necessarily, the combination, doesnt necessarily mean that the fed has to do more here. One plus one may not mean rate hikes. Speaking of rates, what do you make of the current dislocation were seeing in rates . What do you think the key driver here is . Is it duration supply . Is it Growth Outlook . Something else . So we think a large part is the Growth Outlook and the improvement in the Growth Outlook over the past few weeks. So its not, in our opinion, all that much of a surprise that were seeing rates go back up to the highs of the cycle. German ppi, mike, goes negative First Time Since 2020. We spent a big part of the morning talking about chain and china and youve done work in terms of feeding global disinflation, how do you think about that . Were not worried about the china growth slowdown on economic developments in the u. S. Theyre just not a big enough export market for the u. S. On the other hand, we think the deflationary impulse from chinese from the chinese slowdown could add to the narrative of a soft landing here and yet another force contributing to softer goods inflation which has been, you know, one of the big drivers of the disinflation weve seen over the past few months. If anything, you know, looking just at the u. S. , there may be a bit of a Silver Lining out of the chinese slowdown. Interesting. Just kind of going back to your take, i know you moderated your projection for, you know, some kind of landing here. Theres been work about the inverted yield curve and were about 11 months past the point where the 3s and 10s inverted and whether that means a recession could come in the next month or two. Do you Pay Attention to that. Is that the precursor it once was or do you think there are other forces dictating that curve steepening . We look at that and it would be kind of foolish to disregard a statistic like that that has a pretty good track record. It is one of the reasons, even though we are a little more optimistic on the outlook here, we think recession risks in 2024 are elevated. So i wouldnt, you know, toss out that indicator or the things that were seeing in the loan office survey. Theres a lot of things out there that suggest that the Growth Outlook in 24 could be still pretty challenging. That said, i think there is at least some empirical work that suggests the slope of the curve isnt as strong a leading indicator as it has been in decades past, but even that being said its not something that i would want to toss out. My favorite title of your reports last week was a whiff of u. S. Exceptionalism and i just wonder how you think about the u. S. s place in the global economy, best house in a bad neighborhood by a long shot . Yeah. I would say so. If anything, its looking, you know, good even on an absolute basis, right. Particularly if we see these Inflation Numbers continue to come in softer, without any real increase in the Unemployment Rate and growth as we started this discussion off, coming in pretty strong, and i would add to that productivity growth is looking pretty good. Overall, the picture is one thats looking pretty favorable and you cant say that about too many other places around the world nowadayses. Mike, its great to see you. Paying close attention to your work these days. Thanks so much. Thank you. Mike furly. Well take break here. But before we do that, check out the biggest gainers on the s p led by palo alto, of course. Weve discussed it. Kind of the fake out on friday. People concerned, perhaps, with the expectation that you deliver bad news after the close no, it actually was a good quarter and the stock is reflective of that the stock is reflective of that this morning. With your hearing, if you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. Well find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. Brp. Welcome back. Im dominic chu. Stocks as you can see mixed to start off the trading week as investors digest rising u. S. Treasury yields and commentary out of the meeting out of jackson hole, wyoming. A closer look at the Financial Sector which has been under pressure so far this month. Regional banks like keycorp and fifth third and pnc off by 10 or more just on a monthtodate basis alone. Keep an eye on this one area of the market that we are watching as we try to get a sense for the feds policy outlook later on this week. Now i will send it back over to post nine for you folks, leslie, at the Stock Exchange. Thank you so much. Sticking with those regional banks the next guest oversees 65 banks in the northeast and while deposit pressure has stabilized over the past few months, commercial real estate will remain under pressure for some time. Lets bring in ocean first chairman and ceo chris mar. Thanks for being here. We looked at those sizable selloffs in regional banks over the last month or so that dom showed us. How much of that has to do with just the overall rate complex and how much of it has to do with just kind of a worsening sentiment surrounding a sector. Great to be with you, leslie. A couple things going on, the first a little bit of uncertainty around regulation and capital levels, so in that uncertainty its very difficult to understand what the longterm profitability will be for a number of those institutions. I think its about that and about concerns or questions about the rate cycle, higher for longer how does that impact different banks and how is everybody positioned . I think its a bunch of things kind of wrapped together. On the positive side, though, i think the Credit Outlook has gotten better. It looks like theres a bigger chance that economy is going to hit a soft landing or less of a recession. We can be a bit more dont want to be relaxed but a little bit more thoughtful about credit risk. Interesting you think the picture is looking better. We had a fed survey of Bank Officials who said they were tightening their lending standards and pulling back on credit in this current environment. Theyre worried. Youre not doing that it sounds like. Were not. You have to have your credit standards in good times and bad. If you play the game of changing your standards when you think the economy will be rough you will wind up in trouble. Weve always been a conservative lender. What youre seeing in the slew survey, the bankers get more conservative until you get to the point where we have clarity around the recession. People being incrementally a little bit more careful is recession fears hopefully will ease in the coming quarters. Youll see that return to normal. Is there a lag there . It feels like the recession fears have abaptted in recent weeks . There is a lag. Everyone wants to make sure their portfolios areperforming. Our customer is doing great. Baltimore to boston. We have a big presence in the jersey shore. Seasonal market in new jersey, so were seeing our clients doing pretty well. Although things have slowed. You can see a slowdown in a couple sectors, see it in transportation, see it in warehousing and a few other areas as well. Do you think delinquencies top out or plateau . Its a really hard question because delinquencies are low right now and charge offs are so low, theyre wildly lower than anything you would have seen in the last 20 years, so youre going have to return to normal. One concern is return to normal slightly higher delinquencies, more charge offs will spook the market a little bit because were not used to seeing these numbers. When you see nonperforming assets and delinquencies at the level theyre at now, credit is pristine. Anything other than pristine are you talking higher than 19 levels . Going back to 19 would be a significant shift. So i think thats what im concerned about, that you could see headlines where people say delinquencies double or nonperforming assets increase and that doesnt tell the whole story. You have to look at the absolute number. Do you think Consumer Behavior changes if and when excess savings goes to zero . Thats the big question, right. That excess savings is running down, so the concern is that when they lose that savings you have the Student Loans returning to repayment this fall, you know, is the consumer going to start to show the delinquencies. We dont see it today, with some exceptions. Some segments in auto pick up a little bit higher, some borrowers and credit cards pick up higher. Still cyclically pretty well. What about liability side of the equation here . Wasnt that many months ago many were concerned about the ability of banks like yours to maintain deposits, given the outflow for higher rates. Youve been able to increase your noninterest bearing deposits, but what are you seeing an how have you been able to do that. I think it was here with carl the day after Silicon Valley went under, it was an exciting spring not in a good way. But i think things are stabilized and seeing deposit flows normalize at most banks. You are seeing customers that were taking money out of noninterest accounts and shifting them to interest bearing accounts. That was a big movement started like late in 2022 and into 2023. That appears to have abated. People that were going to move their money have moved their money and negotiating rates. Theres still pressure. You still have to pay up for a deposit, but the deposits are increasingly there. And i think the Consumer Confidence is much better than it was a few months ago. You feel like deposits have effectively peaked . Im not sure peaked but theyre slowing down and approaching a peak. I think youre going to see maybe for another quarter or two a little bit of pressure on funding costs, but, you know, i would point to this, 75 basis point moves by the fed are different than 25 basis point moves. The pacing has slowed down. It wasnt just that rates were going up, they were going up fast and frequently and that curve has flattened so youre starting to see this ease off a little bit. The pause really gave the banks the banking it system time to take a pause and assess whats going on and a breather . Absolutely. I think it was the right thing. If you look at the economy were starting to see the jury out on inflation, but hopefully well start to see better numbers this fall. Great. Chris, thanks so much for being here. Thank you. Still to come this morning, coming up at 11 00, the read on china from the worlds only largescale private data player in the country. China beige book. Leland miller arguing the slowdown not as bad as feared. Well talk about why when that starts in ten minutes. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Eli lilly shares once again alltime highs going back to the first Public Offering in the 50s while Dominion Energy falls to lows not seen since 2011. Lets get to bob pisani. A little bit of a bounce. Great moves up in semiconductors, technology. Technology was a big leadership. It fell apart after the open. Oil moved down rather notably. Energy was up at the open. Consumer discretionary a bit stronger. These are sectors that have been hit notably in the month of august. Bouncing a little bit, or at least stable here. Just take a look at what we are looking at in august. Youll see the pain is very evenly distributed. True tech and semiconductors have had the worst of it. Not by much. Banks, utilities, Interest Rate sensitive. Anything else out there in the world. Materials, cyclicals are also weak. Across the board. Put up the second full screen. Consumer discretionary down 5 . Communication services, industrials. You think the market would be more defensive with this kind of underperformance. And its not really happening. Consumer staples are just acting terribly. Theres a whole group of them out there that are sitting near 52week lows. Campbells soup, general mills, conagra, goes on and on, kraft, hershey. Theyre all looking terrible. We dont have a lot of Leadership Groups there the month of august. The big thing, two issues. A valuation problem and a yield problem. We talked about this valuation problem. We started august near 20 times forward estimates on the s p 500. Historically that is very difficult to sustain for long periods of time. Its come down right now. Its closer to 19. Theres the number for today, 18. 8. These are the forward four quarters for the s p. Historic average is 17. Its still higher but its coming down. Thats a little bit of good news. The real problem is the yield issue because the stock market is getting very serious competition from the bond market. So, in fourth the beginning of end of july, 3. 95 on the tenyear. 4. 3 . What this means is the equity risk premium, what youre being compensated for to own stocks versus riskfree treasuries is below. Its below 1 . That is terrible. It usually is anywhere 2 , 3 , 4 typically. Stocks are not very compelling against bonds right now. So, good news here for the markets are the corrections been modest. Seasonally light. Theres no buying interest. Suspect vix is still lame tame, i should say. When its below 20, dont worry about it that much. The bad news is were in a news vacuum. We have this yield fixation. We have whats going on friday with the fed. So, everybodys thinking, oh, my gosh, powell is going to be hawkish. Three weeks ago people said powell is going to prepare us for rate cuts next year. The sentiment is totally flipped on the jackson hole thing. It makes me a little nuts, frankly. We also have some ipos in the pipe, bob. Im happy. I know. Arms are going to be over on nasdaq. Thats interesting thats the biggest of the biggest. Look, if they can get that out the door, thats a signal. Theres your big, big signal right now, because everybody keeps saying, so, where are they . Theres the unicorns, bob . You have these nice stocks you keep talking about. You have a little restaurant stock here and there but wheres the really big names . There you go. I think it will get out the door. Well see how it performs. But theres no doubt. And theyre not selling that much of it, obviously. Just get all these things have to take care. Cuts, you know this. Theyve been sitting out there for ten years. Some companies were going to go into retirement, you and me well, me. By the time these companies go public. Ten years have been sitting out there. Reddit has been sitting out there. How long . Two years waiting to go public. Theyre middle Age Companies so lets get them going. We know they have to take a haircut. Lets do it, and get some new ipos, new companies out in the market. All those companies sitting there private, lets let them Start Talking about going public. Lets actually get the market working again and not have middle age Companies Going public. Lets have new companies. Id rather have volatility in new Companies Like we had in the late 90s than old, aging, g geriatric Companies Going public right now. Youre trying, bob. It used to be fun to do ipos. In my book i say its my favorite part. I love having you on the floor. Thats american capitalism at its very finest. Its the birthday. It will happen again. Ill be there screaming up and down like a crazy person. Believe me rest those vocal chords. Bob, thank you. Sawonhetrtilquk t see wl continue after this quick break. Good monday morning. Today investors playing their cards close to the vest with three js set to define the market this week. An ace in the hole with Jerome Powell in jackson. Jenson huang cashing in and a potential house of cards for xi jinping. Mohamed el erian is on deck to weigh in on all of that along with the Strategic Direction the fed should go. The market currently mixed. S p trying to hold its gains