Transcripts For CNBC Squawk 20240703

Two tech ipos making headlines. Plus Morgan Stanley, as carl just mentioned, upgrades tesla. Analyst adam jonas predicts a 60 rally, largely fueled by a. I. Were also getting shares of qualcomm up ahead of the open. Chip company saying it will supply apple smartphones through 2026. Lets begin with jim in san francisco. As we said, dreaming up for gearing up for dreamforce. Jim, going to be a busy week. Whats really crazy is that theres adam jonas just stealing the whole show. Theres conferences in washington, theres conferences in san francisco, and he makes it so its about tesla. All i can tell you is that out here, its just dreamforce is the aai force. David, you know this from when you were with musk. If you dont talk about a. I. , you sound like youre clueless. If you do talk about it, you better start having something to back it up. Adobes got it. Oracle tonight. But theres a lot of just a. I. Chatter that i think is just chatter, david. Right. And that is a key question for investors. We brought it up many times because every companys happy to mention a. I. As much as possible in part to try to get a multiple expansion, whether deserved or not, but to your point, were going to get a sense as next year rolls along as to whether there are really products that are going to be fueled by this generative a. I. , beyond the obvious beneficiaries that weve talked about so often. Nvidia, being number one. And then working on down from there, whether its microsoft or alphabet or interestingly, jim, id love to get your take on the story about meta, which is now working on a very powerful a. I. That they say will exceed what chatgpt can do. If thats true, i mean, it would be important. Its not really what people are focused on. I think people are focused on something that makes it so that you can very prosaic stuff, make it so data is easier to be able to use on almost a businesstobusiness way. I dont know whether meta is going to get into businesstobusiness or make it so chats more fun. Chatgpt is really limited by where the last date was that it has the information. Carl, i find that whats far more interesting, even though it is for numbers interesting but not interesting for people at home, is at dreamforce, which is billed as the Worlds Largest a. I. Festival, its about how companies can use their data. Its not about how individuals can be more creative. Yeah, it kind of feeds in with a lot of the constructive macro notes that we got today out of b of a, officially, they say we are in a recovery. If you look at their Business Cycle indicator, david kostin at goldman, were expecting some progress toward a soft landing. Cpi days, jim, as we know, pretty much all year, have leaned green. Im so glad you brought up those comments, because ive got Frank Slootman on tonight, the ceo of snowflake. He was one who really did say, in the spring, spending has slowed. He is now saying it has picked up, in some cases theres real green shoots here. David, i think people forget, they had a nice rally but not based on anything other than a. I. Goosing. But if there is indeed a revival of spending for information technology, and very good note today, i thought, from bank of america talking about how there is a return and recovery in finance. Dave, we got finance up and tech in recovery. You know that means rally mode for the entire stock market. What do you make of that, given the recent action that we have been seeing, jim . Particularly last week. Well, i think some of it, yes, has been foreshadowed, but at the same time, if you get a decent cpi number on wednesday, if you actually have numbers going up tonight for oracle, which is going to be very important report because they have done a lot of work with jensen huang and nvidia, carl, what will happen is that people will they have to take numbers up. We havent had numbers taken up. Weve had chatter taken up, and i think that numbers taken up could mean that we have a decent october, which would mean, you know what . Maybe youve got to stop selling safe fitness, and whats really going to matter is the arm deal. I think arm is going to turn out to be incredibly important because they are nvidias partner in the next generation reign. Weve got a lot of interesting things happening this week. Instacart, not so big, but if we get a big ipo from arm, look out. Its going to be a good market for tech and finance. By the way, journal, page one this morning, earnings revisions getting lifted, First Time Since the Third Quarter of 2021. Also in the journal, david, is nick, the socalled fed whisperer, basically the strongest language weve seen so far hinting at a pause in at least september. And that the debate within the fed is not as unanimous as it has been in recent quarters. Yeah. Theyre going to get it to 2 , right . Thats what the word is. So, well see whether, in fact, to requires them to at some point raise again, jim. I dont know the answer. I dont know that you do. But i think a market the market would anticipate a pause and would be surprised if it were not one, correct . Right. But i think if you get a redhot cpi and it breaks the skein, people can say, wait a second, theyre not done. I think this has been an antifed rally. It has not mattered. And the reason i say that is because there are periods in the 80s and 90s where you saw longterm rates go up and fed rates go up and yet the market rallied anyway, and not just in anticipation of the end but because business got better. Carl, were in recovery mode for business. First of all, people dont even realize we had a downturn, but we are in recovery mode. Things are coming back. The estimate revisions is the most important thing that could happen because it just means its not socalled pe multiple expansion. Oracle tonight will be crucial. Katz, if she is as bullish as she was when she was at the New York Stock Exchange, then youre going to see munumbers go up. If marc benioff, and my preview is going to be talking very positive, were going to see revisions higher. Thats going to be important. Maybe Little Wonder that the treasury secretary obviously playing a bit of a political role but on the flight back from the g20 says shes feeling very good about her prediction of a soft landing. I think you would have to say were on a path that looks exactly like that. So, what is there to worry about right now, jim . Is it about the strike and Student Loans . Look, i think that the strike look, ive been putting some numbers together about the strike, and i just do not get theres a lot of people who just think it really killed gdp growth. This is 180,000 people. They dont have enough money to go more than five weeks even if they do a 600 payout per week. I think theyre more likely to if theyre going to pick one, it would be stellantis, so i think its not a big focus. I think its a redhot cpi would make people feel very different, and i think oil going to 110 would make people feel very different. But right now, if we can hold 4. 5 for 20year, i think well feel pretty good. Takes us to this jonas note, david. Yeah. I mean, back to a. I. , really, because that seems to be fueling his decision to make it a top pick, a 400 price target, saying that it could add as much as 500 billion. The add there being dojo, their a. I. Effort. 500 billion to teslas enterprise value expressed through a faster Adoption Rate in mobility. Robo taxis, of course, and Network Services as well. Theyve been at 250. So, that is powering that stock this morning. Not sure where it is in the premarket. Had been up as much as there, you see almost 7 . Aggravating. Come on, aggravating. Look, the guys a showman, okay . Hes a showman. Yes, he has always been. There are any number of his reports i can remember that have very exciting titles. Yes. Yes. I mean, honestly, i mean, do you think the do you think the giants are that bad . I mean, this is like a onehit thing. Wait. Whats the onehit thing, though, jim . That he was against the stock from the hes been fighting this stock, so suddenly, no, he doesnt have to fight anymore, you know why . Because hes been fighting out i. T it as a car company. Jensen huang is saying, this guy is taking my chips because he doesnt have enough of his chips, hes creating brains and now creating himself, a man with two brains . I saw it, its funny. Did i hear you say musk is creating himself as a man with two brains . The brain is nvidias brain. Its jensen huang. I got that from you. Which part . You killed musk. I dont know like, when hes sitting here, i dont know what he means. Its worse crosscountry. I dont follow. I just felt that you expect in your interview, he said that he needs nvidia chips. He thinks theyre really expensive, but he uses them for the brain, and it is absolutely true, when you break open his brain, not that i want to do any sort of neurosurgery, im talking about his not his brain, i dont know whats in there. Its like a lot of nvidia chips in there. You find that it is, you know, whether he wants it or not, its nvidia chips because he cant make them himself yet. Maybe he will one day. They have said right now, he cant. Management has said they need as much compute power, meaning the nvidia gpu clusters, that it can get its hand on and it cannot physically secure the amount of chips necessary to train cars. This is all about this is about the vision for robo taxis that musk did, in our interview on may 16th, outline, and he has before, talking about the real opportunity in terms of revenues from a fleet of taxis out there that they would split the owners with the owner of said car, jim. And this would be getting there. You know, as dojo increases its power and ultimately is a purposebuilt super computer designed by tesla to train the full selfdriving that you get to yeah, and then what do you put a multiple on that kind of recurring revenue stream . I just find yes, its possible that they could have an awslike business, that tesla could do that, and its entirely possible. Look, we knew that everyone kind of folded when it came to their charging. But you know, carl, my problem is that when you do a when you put a 500 billion business, when you say its going to be that, were not talking about 2023, 24, 25. And the market works and discounts out about a year, but jonas does it out about three years. Hes out of sync with both the economy and this stock market. So, i didnt like this call at all. I like the hostess twinkie call more, frankly. I hear you. Listen, its a fair point jim makes, certainly, that the guy had a 250 price target, so obviously below the current price target. Hes been equal weight for a very long time and theres a large disclaimer in the note that Morgan Stanley does and seeks to do business with companies related to tesla. It may alter or imply a conflict of interest in Morgan Stanley. The only thing that was true about that note is hes not corrupt. Hes not corrupt. Thats true. Ill tell you what Morgan Stanley would love to do is get out of that 13 billion that it financed the twitter deal. Any bids . Jim, what do you want to bid on that . Theyll listen. I promise you, they will listen. Linda yaccarino, i think shes been saying its 10x. Get that . Since twitter is x . Morgan stanley provided that 13 billion in financing. They will take a discount, i guarantee you, and a significant one to get out of that commitment. Really . They cant put any new capital up until they i was agreeing with you. I was being facetious. Theyre out of the leveraged transaction market to some extent. Theyll dispute that, but its true. Jim, speaking of we had an adl guy on last week about this thing. This thing is so controversial. We dont want any of this stuff. I think this thing is not really coming together, david. Its not coming to fruition. Jim, speaking of chips, qualcomm going to enjoy what we think may be its best day since may as they extend this modem chip supply agreement with apple, which does raise questions among some this morning about apples preparedness on their own chip as theyve gone vertical in the past. Its been six years since they thought that they might have this. I was rather surprised. I dont think it was in anybodys business. I think that as much as he loves to speak much more aggressively about his earnings, if you can get my drift there, david i get it. I get it. Incredibly nice guy. Oh boy. Oh, yeah. Nice guy index. Ng. Per share. But ive got to tell you, this is one of those that it did make me feel like, really . You dont have your own modems yet . Especially because they dont like each other, as you know. Theyre not friends. No. They have had a good amount of litigation in the past. All of it, resolved. But yes, youre right. I dont know that they are an overly friendly. No. Apple has i mean, the m2, i have those laptops. Man, they are super fast. Replacing the intel chips. So, they have a track record of developing their own chips. I have no idea whether or what the time line looks like for this one but certainly not going to be until 2026 at the earliest. I dont want to ruin the narrative because it was so great last week, but the store the apple stores, carl, jammed this weekend in china. I know it doesnt go with the narrative. Were supposed to, full stop sales sales, but the stores were jammed. Those were not actors. I think those are people who are buying apple. Maybe even the one that david was talking about, but actually the cell phones. The stores in china . Yes. You got channel checks for us there . Yes, i have channel checks. Okay. Just making sure. No, no, but i you know what . I said, im just going to make it up. Im going to be like the im going to mention it again, like the giants offense. Im trying to get someone to bite on this thing. Come on. That game was our game. It was the first game. Im more a jets fan than giants, but i do root for them. Ill bite. You want to talk about the mets now too . What else would you like to do . I actually think the jets are going to play a good game tonight. Probably will. Siriani says your birds are going to have to reevaluate after that Second Quarter. What we have food is have linebackers. We had nine men on the field at one point, i think, and not just in the terrible Specialty Team phase. That nineman thing against 11 is always bad. The main thing tonight is if youre a spectrum subscriber in new york, what are you going to go to . Im trying to decide. Hulu live. Fubo or youtube. Got to make that decision today. Were going to talk a lot more about charter versus disney later in the program. Are you surprised its come to this . No, im not, in part because i listened to Chris Winfrey at the goldman conference, and i have been doing a good amount of reporting on this. Are you boeing me on my disney position in the trust, david . Are you boeinging me . Youre doing a boeing on me. Were going to talk about it. Dont boeing me. Talk about i could believe it. Youre boeing me. Features quite prominently. Guys, lets take a break here. There will be a moment of silence in a moment at the big board and the nasdaq. There are some things that go better. Together. Burger and fries. Soup and salad. Like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together can help you make smarter decisions. Voya. Well planned. Well invested. Well protected. Meet gold bond healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers and 3 vitamins, you can pay more but you cant get more. Gold bond. Champion your skin. fan 1 there ya go thats what im talkin about you can pay more but you cant get more. 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 football season is here. Get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free 5g phone. Only on verizon. Youll hear some applause on the floor of the exchange this morning as the New York Stock Exchange and the nasdaq each about to observe a moment of silence remembering and honoring the victims of the 9 11 terror attacks, which took place 22 years ago today. Its been said that even 22 years later, the sadness never truly leaves you, but we remember the victims. We remember the bravery of the rescue personnel, and we try to remind those who increasingly are too young to remember that day how much was lost. Robert j. Hall. Jane marie collin. John michael collins. Michael l. Collins. Thomas joseph collins. Joseph kent collison. Jeffery dwayne. Patricia maria. Robert spiesman. Patricia jane stats. Coach saban, this goat done took over our office. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. Elephant wouldve been scarier. Futures looking pretty good here on the back of that tesla upgrade, which we talked about a moment ago. Well get to some of the other developments, boeing, walmart news. When we also come back, a crosscountry edition of amsmada uawk on the street continues. The opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. Lets get to our first crosscountry mad dash of the week. And jim, hostess is getting bought by jm smucker. 5. 5 billion. That includes debt. Its 30 bucks in cash and 0. 3002 shares of smucker. That amounts to about 425. Total price before we begin trade, 34. 25. General mills wanted it too. I think a lot of people remember hostess as going bankrupt twice. Dave, ill tell you why i like it. I like it because people are still snacking, and i think that matters tremendously. I have them on tonight to talk about the deal, but Andy Callahan turned this company around, and it was not the company that people remember as being, lets just say, suboptimal when it came to its numbers. I think the deal is fine. You got ding dongs, a lot of what i regard as being the ultimate, lets say, fattening snack food. There you go. To your point, it was an auction, conceivably, and they came out ahead, but you know, i think some investors are wondering whether there are real synergies there for them, given who they may have been up against and obviously paying a higher price. That seems to be reflected in an 8 down print right now. Well, look, i am surprised that they, you know, speaking of tonight, that General Mills came in. I think theres look, people are desperate for growth in the food business, and this company got growth. Its also in convenience stores, which has turned out to be a more important channel than people remember precovid because of travel. There are some people saying with these new weight loss drugs, youre not as interested in buying junk food. Im not sure if thats the case. I think junk food is always going to be on the american agenda. I like the deal, if only just because i like this channel for smuckers. Smuckers needs growth. Theyve got growth. Jim, its interesting, and well get to it at another point, but you mentioned it a number of times, the idea that these new drugs that control weight loss also do depress your appetite for mcdonalds, for cocacola, for things of that nature. For anything good. Anything thats fun. Dont forget alcohol, david. Holy cow. I think thats going to be the big knock on the deal. I think thats why i want to hear from them tonight. Lets get the opening bell here. And the cnbc realtime exchange. At the big board, ecopetrol, the Largest Petroleum company in colombia celebrating its 15th year of listing. At the nasdaq, it is tuesdays children, a nonprofit supporting those impacted by terrorism, military conflict, and mass violence. As at least jim we get some decent breadth at the open and once again 4,100 and a stones throw. Thats amazing is that weve been hearing over and over again that if Interest Rates go up, this market should go down. We have a notgreat bond market today. It doesnt seem to matter. What matters, i think, is earnings, and the possible excitement of the arm deal, and the fact that apple, looking at the scores this weekend, we just kind of lost the whole narrative of apple doing poorly. That was, you know, a crucial narrative to send the market down, and instead, we got jonass call. Morgan stanley. Ive got to tell you, if you didnt like him for autos, boy, you love him for tech. Thats the way that storys playing out. David, you know that tesla can ignite this whole market, and weve got microsoft catalyst, oracle tonight, but if tesla so goes the tesla and apple, so goes the market. Those are the two most important stocks in the market. No longer nvidia being amongst the most if not the most important stock . I think nvidia, we need more data. I will talk about nvidia tonight with snowflake because theyre good partners. But i think that tesla and apple because it was going down, tesla because it seemed to have lost some allure. Dont forget the strike is going to cause even more attention to how teslas got the lowest cost. Look, nvidias been always been a reason to go up, but thats been the bellwether. I think that nvidia needs to rest here. Its had a great run. The other dynamic thats gotten written about over the weekend is the way in which tesla is crushing any of the germans ability to leverage the china market, particularly volkswagen. I think this is amazing. Remember, these are when he went to germany, took on the germans, david, you remember, youre not supposed to take on the germans in germany because of german engineering. Was he that confident about u. S. Engineering versus german engineering . I dont know. I dont think we got to that level of discussion. And sadly, i havent had a real opportunity to speak to him with any great regularity since our conversation some months ago, so i dont know the answer, but to carls point, the germans are not ahead when it comes to ev. I think we can all they may dispute that, but that seems relatively clear. I dont know if you guys also saw all of the traditional engine cars that are being shipped from china to places like europe as well at incredibly competitive prices given the fact that the Chinese Market has started to really weight towards evs. 27. 5 tariff that we have on china. I spoke to secretary Gina Raimondo from commerce about whether that could go up. It isnt clear. Carl, look, the sentiment against china is pretty universal. We could try to stop those chinese imports by taking that 27. 5 up to, say, 50 . Right now, i know that bill ford is very worried. I know theyre also worried about the strike. But chinese are well underneath our cost, and i just dont know whether theyre going to let them take our markets away. Theyre not shipping here. Theres no i. C. E. Engines getting shipped here from china. Not yet. No. You think even with a 27. 5 tariff theres a chance they could try to take market share in the United States . I know that fords word. Im not worried, but if ford if bill ford is worried, i cannot say to him, you dont have to worry about it. I just dont have that kind of staying power against the ford family. In part, though, its the surfeit of automobiles in china as a result of, a, where the economy is and again the fact that they have weighted towards evs for new sales more recently. And obviously, tesla does compete very aggressively in that market, given the largest factory it has is in shanghai. I think that maybe the germans have their factories in the wrong place. They have been building a huge number of factories in mexico, and thats a great idea, but you know, carl, i just think that the theyre not in ascendance at all. Germanys kind of sun setting right here, and i think that people are unwilling to say that. I just said it. No problem. Yeah, i do wonder, jim, whether or not you want to take on the alibaba management shuffle or what the president was able to get accomplished at the g20 and in vietnam on this boeing deal and also the boeing story in the journal today. The boeing story in the journal, a little rocky, but they get saved by the old technologies, raytheon, rtx. Did you see that . I did. Providing us an update on those engines. You want to do the news right now, guys, in terms of what the impact is going to be . I dont know whether the biggest thing is the charge or the fact that you got to take 600 engines out to be inspected. These Airlines Need every plane they can get. Suddenly, theyre taking the engines out. So, i think that, i dont know, you cant just switch over to ge. This is a big service issue. But whats incredible is this was, i thought, one of the bestrun companies, i dont want to give up on them, but carl, this is no, this is one of the worst stocks other than disney in the dow. Disney, being the benchmark of bad, i guess. Yeah. 3 to 3. 5 billion as jim just said over the next several years. Pretax operating profit impact. That is inclusive of a 3 billion pretax charge that is taken in the Third Quarter. And again, this powder metal Fleet Management plan, which as you point out is going to take out a lot of engines. Oh, my. The airlines are just you know, youre going to honestly, carl, you may actually see estimate cuts from the airlines because this is that big. I mean, its huge. And i can understand why the stock is down. It makes sense that the stock is this low. Although the full year adjusted eps guide doesnt change. No, but i think you got these situations and people just say, you know what . There is a Company Called ge, and we could lets just you get in tainted issue, i think its this Company Comes right back and safety matters tremendously, but david, you might look at this stock, if you look at ge over rtx, its extraordinary in terms of the stocks. Yeah. Larry culp over the weekend, taking a bit of a victory lap. Took him a while to get his momentum going, carl, but once he did wow. And look at ge medical too, because thats right, jim . Thats performed quite well. My trust owns it. No. The numbers are great because youre going to need them, particularly for the plaque. Youre not going to be able to get the antiplaque alzheimers drug unless you use an mri, but nobody seems to be focused on that. My trust started buying Ge Health Care on the big discount. Maybe it starts coming back, but the stock has acted terribly, carl. Just acts terribly, and i dont understand it, but medical devices have not been a great part of this market. I didnt realize it had been down that much from its not that long ago highs. Its been bad, but its a great company. I think the real exciting part of this whole thing will be the renewables, david. They got a Renewables Business that right now, everyones in first solar. They have a good industrial Renewables Business that larry culp has turned into a powerhouse. He is something. We should get him on. David, you flew up to boston and got him. I did the first interview with him. And you got solomon last week and musk. Solomon, musk, culp. The solomon interview, by the way, that was fabulous. Thank you. The solomon interview was fabulous. I loved it because you didnt relent. It wasnt like, okay, i guess things are good. It was like, well, hold on, five partners left. That was some body language on the five partners. You know what . Listen, those questions, i felt, had to be asked, and they wont be asked again by me, so hopefully well sit down again at some point and get back to a more normal type interview. Down goes solomon. It wasnt that . We got to plenty of the usual questions. I thought comments about capital guidelines under the new basil regime, which is yesterday to come, more interesting, sort of pushing back, relatively hard against it. And jamie dimon might do the same at 1 00 today. Wouldnt shock me if jamie dimon just doesnt take the wood to this. There is that as well. Did you want to comment on the boeing story at all . I thought it was a weird story. With the work from home . Theres a big work from Home Movement there. Calhoun doesnt actually work from the headquarters, i guess thats clear. Does work from, as you pointed out in 2021, from other places, is in a plane a lot. I guess the cfo works out of an office in connecticut. All right. I mean, theyve got hybrid work. I dont know. I thought it was a little solomons goin a plane, that oak. I thought it was its not like theyve said, everybody back to the office every day, but not us. The lake sunpy aspect was suboptimal. It was ill advised. It was. Well, you clearly knew about it before other people, perhaps. Reporting, david. You taught me how to do it. Yeah, i taught you. All right. Ill take that. Ill take that. Where do we want to go now, guys . Do we want to lets do a faber report, shall we . I want to get back to a topic weve been talking about a lot last week, mentioned it briefly at the top of the show, which is this really seminal moment in terms of Cable Television as we know it. The fight that weve talked about, if you want to call it that, between charter and disney. And tonight, for us jets fans out there, of course, theres a key moment in having, really, the question is, if you are a spectrum subscriber, charter owns spectrum, the cable service, and broadband obviously, provider, much more important. Do you find a virtual mbpd . It doesnt appear at this point, and we got some time to go here, but less than 12 hours before kickoff that, youre going to be able to watch the jets game. You got to figure something out if you care about sports. But this gets back to a lot of other larger issues, and let me just share some of the thoughts from some of the analysts out there, starting with Moffett Nathanson talking about the fact that much has been made of the usual asymmetry in negotiating leverage between disney and charter, and they make the point that i have made. Every fight weve ever had, it was always content is king and ultimately, the distributor relented. But in this case, programmers like disney had all the leverage. This time, they say the shoe is on the other foot. Charter now has always leverage, why . Weve made this point again and again. This is not a particularly profitable business for charter, and in fact, Moffett Nathanson makes the point that it may, by getting rid of video, will open up significant capacity for their broadband business, which could result in even higher speeds to customers for which perhaps they can get paid more and certainly be rewarded with more loyalty. There is that question that if you actually remove spectrum as your video provider, will you also choose at that moment to remove them as your broadband provider . Its a reasonable question. But at this point, the real question is, does disney have any interest in changing its Business Plan the way that charter would like it to . To the point being that, you know what . We want you to bundle not just your Linear Networks but we also want you to bundle your dtc offerings, adsupported, all in one package. We want our subscribers to have access to them as well for what you want us to pay. Because this is, again, charter. Im speaking broadly. They say, because for years now, youve been hollowing out your linear video offering using the money that our subscribers are paying to you to enhance your dtc offering, which they cant benefit from, at least not for the price that theyre paying us. By the way, its 2. 2 billion. Thats what charter pays disney just for the sub fees. Thats obviously paid by subscribers. Its a big number. The question then becomes, well, does that go away . Or do those who leave simply replace charter, spectrum with virtual mbpd, the way im trying to figure out right now. For me, it may end up being fubo, believe it or not, because they offer sny and msg, because im a big sports fan and i care about the knicks and i used to care about the mets. Ill care about them next year. No Warner Networks on fubo but maybe you dont care about discovery or cnn. It will be interesting. We are moving to the a la carte world. How many will make the move . By the way, spectrum sent a text to its subscribers saying, here, you can sign up for fubo at a reduced price, at least for the first few months. Both stocks up today. I would point out that research from evercore isi this morning also makes a points that, in fact, many of these customers for disney will go to the virtual mbpds so if the programming is removed from charter, what do we think . The 2. 2 billion doesnt disappear. In fact, they say, it will go to other video providers as opposed to leaving the ecosystem. Youll benefit because the youtube tv, which is basically is priced at par. I mean, they dont make any money from it. They pay higher rates than charter. So, whos the big loser here will be a key question. Not to mention, jim, the question of sports rights. If espn does not have the leverage that it appeared to have, can it continue to pay at the same level . Weve talked about competition from the likes of apple and amazon for sports rights, but if you are going to see a lessening of leverage, perhaps, does it mean sports rights actually starts to come down unexpectedly . What would that mean for pay, for example, as well . So, jim, were following it closely. I dont know what your plan is. Youve got every you dont have to worry because i know in every one of your houses you have like three different providers. Thats true, i do. I actually do. And i was using the youtube yesterday, and i was quite satisfied with it. But david, disney , espn , those are expensive to the put together. If you just bundle them and give them away, isnt that another, i dont know how many another couple billion that if that was multiplied across all systems, isnt that just terrible for disney . It wouldnt be helpful. I think first issue is, do people just say, fine, i dont care, i dont want espn . And charter stops paying them for it . And all the disney programming and 2. 2 billion is gone . Thats unlikely because many of us who are sports fans will go to one of the virtual mbpds as i said and therefore the affiliate fees will remain the same or may even go up, but your point is an important one. For its part, charter and its relatively new ceo, Chris Winfrey, you know, simply says, hey, we dont see the economic value for our customers here. You keep hollowing out the ecosystem in linear. Theres nothing left there, per se, that were paying for. And so, we dont want to keep subsidizing your d stc efforts, but they believe it should be all one package, and they believe that disney would benefit longterm from retaining the overall connectivity relationship with them and letting them, by the way, promote those dtc offerings as well to their customers. Remember, as weve said many ti times, broadband is the key product. Its the main product. And wireless now. Video just doesnt seem to matter as much, certainly not for charter. Wow. Content is pulling. Amazing. Plus, carl, its like with the strike, its like, great, we dont even have to pay for content. What the heck happened . I thought content was really important. Well, definitely a reset in what its supposed to cost, i guess. Giant pull forward to some degree, david, right . Trying to chase the netflix model in a hurry. Yeah, without a doubt. But again, we continue to come back to the question of the directtoconsumer offerings, the amount of capital that they consume, and i think the fact that they will never replace what had been for 20plus years or more an incredibly profitable business, namely having many, many people pay for networks that think didnt watch. Thats what you want. Jim, only two tickers i think we might have missed. Kenvue had quite a nice open on this deutsche upgrade. This stocks just been terrible, and a lot of this is, you know, people are concerned theres a tylenol lawsuit that i think will not affect them. Im not that focused on that. I am i had a feeling that nvidia would not go up today. This is an attack i regard musks move as basically that he is saying, listen, im going to find a way to do better than nvidia. I dont think you can do that. But it is hurting the stock. And you know, i just think, let it fall and then buy. The jonas piece has a lot of resi resonance. Whats interesting is the market managing to work around the drop in nvidia today, jim. All sectors are green. Almost every dow stock, green, except for cisco, just down marginally. This cisco has had tremendous outperformance. Look, i think this is a market that may actually got dreamforce this week. I really want to find out whether there are companies that are other than adobe, other than adobe that are actually making money on a. I. And i think Frank Slootman at snowflake, whom ive got on tonight, i think he is making money off a. I. I think most of the people are pretenders, and if youre a pretender, theyre going to take you apart. We will get both oracle and adobe earnings this week in addition to all the other news headed our way. By the way, quick reminder, you can always get in on the cnbc investing club with jim. Just isign up and find out more or use the qr code on your screen. It tackskes you right there. Feds going to be in a blackout window, but well watch bonds closely. Take a look at yields with the dow up 150. Dont go anywhere. vo explore the world the viking way from the quiet comfort of elegant small ships with no children and no casinos. We actually have reinvented ocean voyages, designing allinclusive experiences for the thinking person. Viking voted worlds best by both travel leisure and conde nast traveler. Learn more at viking. 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Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Welcome back. Did want to point out big interview tomorrow, that man runs brookfield Asset Management. We dont talk about it, perhaps, as much as we do the kkr, the blackstone, the carlisles, apollo of the world, but they are one of the dominant Asset Managers. Jim was talking about renewables and the portfolio at ge. Want to talk about renewables, these guys have an enormous business in terms of providing financing and equity for many of those deals around the world. Bruce flatt tomorrow. Lets get to cramer and stop trading. We talked about companies in a. I. And weve talked about how meta has a relationship with nvidia and doing inference work. We havent talked about microsoft and a catalyst watch thats really i think kind of very true, which is that youre seeing this copilot microsoft has. People forget about it. It was something that people said if these guys have chatgpt and a lot of stuff, people forget about microsoft. Its better to put microsoft front and center in a. I. Thats got a real a. I. Product that is as citi says a rich catalyst. Deserves to trade up 3. Makes sense. When they announced the pricing in june or july and see what 90day catalyst looks like. Everyone forget its going to be big. Snowflake, that is big in a. I. And its actual an additive. We have twilio using a. I. To revive their Customer Relations management and i booked the James Smucker on the deal to buy hostess twinkies, in bankruptcy twice and came out, Andy Callahan steered that we had him on National Doughnut day in june. Talk to mark smucker and see if the food company can reignite. Good numbers a couple years ago and do it again. Thats a good one. Well see you, miss you at the desk but great coverage coming. Jim cramer at one market for dreamforce this week. Nice open, dow up 120. Tesla leading the s p. Only industrials are down sector wise and the vix closeo. T14 dont go anywhere. 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. Good monday morning. Welcome to another hour of squawk on the street. Im sara eisen with Carl Quintanilla and david faber, live from post nine all together which is nice from the New York Stock Exchange. In real. Can touch you. The stock market, starting on a high note this week with the s p 500 up about 0. 4 . The nasdaq up 0. 5 . The dow 86 points here. Its going to be a crazy week of trading. Well get to some of the catalysts in a moment. 30 minutes into the session. Here are three movers were a watching right now. J. M smucker buying Hostess Brands for 5. 6 billion. Smucker shares the worst performer in the s p 500. Hostess surging on the news. Rtx under pressure. The Defense Company warning it will take a 3 billion charge in the Third Quarter due to a manufacturing flaw in its Pratt Whitney jet engines. Rtx cutting its Sales Outlook for the year. Tesla the biggest gainer in the s p. Morgan stanleys adam jonas upgrades the stock to buy, raises the price target fto 400 from 250. Points to teslas super computer which trains a. I. Models for autonomous cars. Jonas says, quote, we believe dojo can add up to 500 billion to teslas enterprise value through an Adoption Rate of mobility and Network Services. Thats certainly helping tesla this morning. Guys, it is a huge week ahead. Macro data, company specific, conferences, we have a calendar of what you can look forward to today, includes an apple event on tuesday. A potential uaw strike by midnight on thursday. Heres the look through. Today we have the road show for instacart, the arm ipo on thursday. Theres apple on tuesday. Cpi which has become the most important data point is wednesday during a quiet period for the fed this week because the fed meeting is happening next week. But, weve got an ecb meeting this week on thursday and its kind of a toss up of whether theyre going to raise interes rates because theyre dealing with Slower Economy and high inflation. A lot to digest here. I think the big sort of macro question for the markets, guys, were coming to at this point is, two, is the fed done raising rates . And is inflation is disinflation on a steady downward trajectory so that we dont have to worry about it much and the fed doesnt have to worry about it much anymore. A combination of those two questions underpin this rally we have seen so far in 2023, the fact that it looks like inflation is on its steady downward slope and the economy is doing okay. Its the soft landing scenario. Its weakening, but not crashing. Thats the story. Well look for it in the data. Well a get retail sales this week. Kind of fits with the macro commentary out of bofa saying were in recovery mode in terms of Business Cycles, whether its goldman saying Good Progress being made on a soft landing, whether its the treasury secretary feels good about her prediction thats what were going to get. Lets talk about the yellen quote. Normally the treasury secretary would be political but she happens to be one of the best economist in the country. Im feeling he very good she says over the weekend at g20 about the soft landing. I think you have to say were on a path that looks exactly like that. And to her credit, that has been the story of 2023, which is erasing or postponing the recession, and if you look at the Inflation Numbers which have come down pretty rapidly and steadily, or the fact that Unemployment Rate is going up a little but not causing major stress or layoffs, thats a good sign for the soft landing story. Now the question is, does it last . Because, you know, every recession starts with a soft landing. So far so good for the treasury secretary. I would put Goldman Sachs economist in that camp, jan hatzius has been on the soft landing story. Those that just have not expected recession this year its been quite a surprise. It has. Is it really possible . We can really do it . Half the people i talk to will say yes, and half the people say the yield curve is inv inverted thats a telltale sign. The 25 basis points of tightening you dont usually get away with no recession on that. Leading Economic Indicators told us were going into recession and there are lags and getting into when they might happen. Its a high its a big debate. I know. Meanwhile, the employment picture remains even though it is not quite what it was six months ago, its cooling, but its still pretty darn good. Theres not signs of mass layoffs. Jobless claims continue to come in around 216 last weeks number surprisingly low. The stress that you would see in recession or cool labor markets its not happening because the labor market is tight. Everyone talking about the fed article from the wall street journal writing aboutthe shift in mindset at the fed right now that used to bethey would just do anything to fight inflation. That was priority number one. Compromise everything weve got and now, theres more of a balanced view about okay, we need to still fight inflation, but we dont want to mess up the soft landing or really do unnecessary harm to the economy. Its something we all new, something that the market knew, but being taken as good news it came during the fed blackout period that fed is really, you know, not going to do too much harm maybe. Right. I wanted to get to a story i spent a good amount of time on in the last hour during a faceboofaber report, the dispute between charter and disney. New reporting that indicates perhaps surprisingly that two sides are nearing a deal. They are nearing a deal is what a im hearing from people familiar with the situation in which espn and the Disney Channels would resume being broadcast on charters Distribution Network for video and unclear exactly what the parameters of the transaction are, and again these things can fall apart at the last moment, but many of us who have watched these kinds of battles in the past distinguished it this one because it has gone on for a while. It involved disney actually choosing to pull the content, but it also involved charter being in a position that we havent seen very often in which its video business was not of great importance it to any longer. So with the possibility of us new yorkers, for example, who are charter subscribers not being able to watch the monday night Football Game tonight, you had people suspecting once that was breached this is not coming back. 2. 2 billion in subfees paid each year by charter subscribers to disney for all of its channels, fx, atnath geo. Whether its a marketplace deal, would you have to believe involves some sort of give here by disney on its direct to consumer, perhaps just disney plus, charter had been asking basically for its subscribers to get the ad supported tier for free, not for free, for what they were paying no more price than the increase built in. But again, perhaps surprisingly, i am hearing that a deal could be reached very quickly and perhaps announced very soon. Prior to tonight meaning i dont have to worry about getting fubo tv or youtube tv or hulu live, all of which i was looking through to determine which tier which one i want to go to. Replacing in many ways what you get from cable, and doing so at actually a price thats lower. I may still make that move anyway at some point. Is it lower . Its 75 bucks seems to be where they are. They dont have everything. But they have most of what you want. And you twin that with your broadband and probably are coming in for maybe a bit less. Youre still paying for a lot of your streaming services separately, right now like i get max via spectrum, but, yeah, i think it could be a bit less. Youtube basically they do it at cost. I think its the data thats incredibly important if they have a deal does that mean all the existential threats about the future of cable go away . Lets see what deal looks like. Lets see if it does include disney plus, for example, perhaps at a lower price for charter subscribers, but promoting it to them. Again, the fact that they are near a deal perhaps somewhat unexpected but thats what im hearing and you can see actually whats happened to fubo tv which has just turned around on the news because it was a beneficiary. In fact, spectrum sent a text to all of us on friday saying heres a link to fubo to sign up for it. The stock had been up 7 . Not a huge market cap. It is turning around. Warner brothers discovery up sharply. Its stock price came down dramatically last week in part because there are questions about the leverage that these cable content companies have or these Network Companies have if, in fact, theyre just getting dropped. They dont have a lot of sports to begin with. Paramount up 5. Warner brothers discovery up again. The deal quite close. We will monitor the situation and bring it to you if, in fact, we get it whenever we get it. All right. Mean time the ipo market heating up. Chipmaker arm looks to price at the top of its range and new details out of cart today. Leslie picker is resting in advance of a busy week. This counts as resting, im here for it. Exactly. The ipo market is heating up and kind of being blanched. When youre cooking you boil something and put it in ice water, because if you look at the valuations that these two deals came out at, theyre a bit more muted and modest than what a lot of people were expecting. Instacart coming out at a quarter of its private round that the valuation from its private round from two years ago, arm also below reported expectations. So the key here is going to be pricing. This is still a very uncertain market for ipos. People dont know exactly kind of the appetite what it looks like for venturebacked companies and instacarts case, private equity or softbank backed arm and so these are going to be important tests. As a result, you kind of have to price them more conservatively in order to ensure a decent debut because the risk it goes the other direction and that could, of course, impact the ipo pipeline as well. Implications of some of the headlines on friday about arm being oversubscribed . I heard that arm was five times oversubscribed thursday, six times on friday, makes sense. Its notable because this is a pretty sizable deal. Theres scarcity. That said were talking about billions of dollars worth of stock theyre selling. Instacart has it even much smaller float actually because they have cornerstone investors that are taking up 400 million. That leaves about 212 i think rough math off my head, 212 million worth of stock that they have to sell. So thats about 2 of the company. Thats a really, really small float. You could expect to see some, you know, interest given the supply and demand dynamics technically speaking. The valuation itself its coming at a discount to peers when you look at it relative to its gross transaction value there. Discount in valuation, discount relative to private round and additionally kind of this small float dynamic as well, you may see some of those numbers that small float may be beneficial if theres demand for the stock. Exactly. On arm, larger float, but to your point, you still also have these Strategic Investors stepping up for some commitments as well. As a percentage also still not enormous, right. Exactly. When you take them out. What are you going to be focusing on . Like everybody else, how the price performs or a key plmetri . Whats interesting with these two you have restricted stock units. Employee liquidity you have to factor in and interesting component of the instacart deal theyre used to proceeds, all of the money theyre raising for this deal will be used to pay tax remittances related to the liquidity for employees and former executive officers. Its not necessarily going to be reinvested in the company like you would expect to see in a traditional venture backed ipo. There is about, you know, a couple tens of millions of dollars they will be able to use for those purposes, but a large portion will be due to this liquidity event for their employees and restricted stock units. Thats interesting. It impacts the dilution aspect of the instacart deal as well and impacts the fully diluted versus nondiluted. In this case if youre going to compare it to private rounds you need to include the fully diluted share count because thats inclusive of all of those rsus which makes a difference in the numbers as you look at this deal. All right. Keep us posted on with what you hear. Instacart road show today, ipo thursday for arm. Thank you. As we head to break our road map for the rest of the hour, a look at apple ahead of a blockbuster event in cupertino. What investors need to know. More on the banks with the ceo of keycorp with potential job cuts at that company. A breakdown on the fed. Jim oneill will join us with ahd. L ke as a big show is stil ea 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 football season is here. Get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free 5g phone. Only on verizon. 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. Nice footwork. Whose resumes on indeed matman, youre lucky,ia. Watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho 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. Chip land today, qualcomm striking a new chips agreement with apple and shares are popping on the news. Kristina partsinevelos here at post nine with more on the backstory here. Yeah. Its not only it is considered a win for qualcomm not only because they will continue to provide apples 5g mode m chips and their licensing patent agreement, which means royalty revenue. Apple is defining its wifi chips and bought intels modem business in 2019 to get a headstart on making those chips. The fact that apple has to continue to partner with qualcomm shows how tough it is to make the chips. At this point apple hasnt figured it out at scale. A Popular Supply analyst suggesting the modem chips wont be ready in two years. How long does that take a to be put in iphone . Qualcomm doesnt break down the revenues but androids revenue including samsung and other chinese makers contributes 54 a of revenue. Apple contributes 23 of total revenue. That stream could continue to a certain extent. We dont know the terms of the deal, the favorable pricing that qualcomm might be giving to apple. This partnership could also offset any potential weakness, potential, from competitor huawei, and its 5g phones that could pose a threat. Since this Material Information information is material, it falls out one day before the big iphone reveal tomorrow and you can see the stock has come down quite a bit. It was 8 higher in premarket, now 2. 5 at the moment. We were looking at the best day since may, but well see where it ends up. As you can say well off the highs. Meantime Apple Holding its most important event of the year with many expecting a new iphone, the apple watch, will apple live up to the High Expectations . Our next guest not sure, joins us to discuss, a neutral target at 180. Before we get to the event, on the qualcomm news does it display some vulnerability . It shows its taking apple longer to takts products and make them themselves. When you think about what they did with the intel chips and that sort of thing, which basically means it will be slower for apple to market having, you know, more vertically integrated products in the future. Thats the apple side of the story on qualcomm there. Yeah. Why the neutral rating . The neutral rating is that basically a lot of food good ne baked into the shares and i dont think they will be able to get scale for the vision pro which comes out next year and then since we went to neutral, you have seen incremental concerning news coming out of china, protection igs behavior by that country which is 10 of apples revenue and important from a supply chain standpoint. Can you quantify your level of concern . Is it about huawei and 5g or something broader about Chinese Industrial snols. Policy . My initial concern there was good news priced into the stock including a successful i15 launch which well talk about, and then in addition that apple wont get mass market adoption of its arvr pro and now you have incremental concerns out of china which is about 10 of revenue, the Chinese Government may implement more protectionist behavior. Thats also concerning. So you dont think an event tomorrow, new products, 15, new watch models, will be enough to sort of offset some of the worries about china, but also about a sales slump . I do not. I think in years past, the iphone has been the savior for apple and looks like the big announcement tomorrow will be taking price on the iphone 15 pro, could have a positive impact on sales, reported three quarters of negative sales, and already indicated they expect negative sales growth in the september quarter. But apple is in a tough position right now. Were a three, four years in on the adoption of 5g phones, which was a stimulus for sales. May not be for this one. I dont believe the iphone 15 will reignite the stock. Really quick, does it strike you that chinese to apple and tesla are different and a is that because of something that musk is doing that cook is not . Its hard to find fault with tim cook in anything hes doing as far as managing relations with the Chinese Government and things of that nature. What ive been comparing and contrasting is versus amazon where there was a very significant bias towards alibaba. I think that maybe the tesla versus apple is that theres a greater push towards luxury vehicles in china and maybe thats at a relative basis benefitting tesla versus apple. I think apple is in a precarious situation here, given, you know, protectionist behavior by the Chinese Government and their current exposure to china. Well see what happens tomorrow at this event. Tom, good discussion. Thanks. Good to see you. Speaking of tech keep an eye on oracle set to report results in a few hours. Well break down the numbers tomorrow. Still ahead, more on the market with former Asset Management and uk treasury minister jim oneill with us. Dont go away. Were back in 2. Dow up 130 right now. Its being led bun dney h,isy and amgen. You cant buy great conversations or moments that matter, but you can invest in them. At t. Rowe price our strategic investing approach can help you build the future you imagine. T. Rowe price, invest with confidence. More than 2500 investors and Financial Advisors descending on Huntington Beach california, for this years Wealth Management future proof conference. Bob pisani is live on the scene with more. Hi, bob. Hello there. Its financial stars meet hiphop stars here. This was the brainchild of barry and josh. Last year they had the conference and a their idea financial conferences are becoming a little obsolete, old fashioned. They wanted to try to bring it into the modern generation attracting younger investors, registered investment advisors. They put an emphasis on social, mine social. A conference on the beach, this is on the beach right now in Huntington Beach. Theyre trying to get all these young people in. Method man is playing here. Wu tang clan, red man playing as well tuesday night, so interesting mix of people who want to see financial stars as well as hiphop stars. Well a be talking to josh brown on half time report what hes trying to do to reinvent the financial conference. That should be fun. Well talk to jan vaneck one of the etf stars here and talking to him whats going on with the arm holding ipo because he owns the biggest semiconductor etf out there, thats the smh and they will be a buyer of this, depending upon where the levels come in terms of a free flow. Sometimes below 10 its prevented from opening these companies. All of these discussions this week are about semiconductors and the poor performance. Put up the earlier numbers. Nvidia down today. Most of the semiconductors are on the weak side today. Kla and marvel technology. Thats about what arm is going to probably come in terms of a free float. In terms of the month, s p, living up to its reputation. We know september supposedly the worst month. Its down about 0. 6 . A lot of weakness were seeing is around the semiconductor area. What everybody is talking about this week at the conference its going to be about inflation and semis. Well get cpi and ppi on thursday. Well get earnings from oracle and adobe and lennar. The first early reporters, august ending monthly reporters for earnings this week and i think thats going to move things a lot and move into the fed meeting on september 20th coming up. The issues are the higher rates weve had and the higher oil wear seeing right now. Just want to note here the energy, up 3. 5 this month, one of the only real leaders out there. Banks down 3 . On this nasdaq ipo this week on arm holds, david, the valuations are 48 to 52 billion. You heard theyre going to try to push it towards the high end of the valuations, perhaps 51 and above. Well see if they can get that. The important thing is a lot of the etf providers out here are going to be forced to buy this, depending upon where the valuation comes in. As i said if you get a free flow below 10 , some of these etfs wont be able to buy that. Its in their regulations. Right now this is looking like 9. 5 , somewhere around there. People are scrambling trying to figure out exactly what free float is going to be. More on this with jan vaneck later in the hour. David, back to you. Good point. Want to keep an eye on. Enjoy the conference. Sounds like a fun one. Bob pisani out west. Quick programming note as we take you to a quick break. Aninterview youre not going to want to miss. Brookfields ceo bruce flatt, sara interviewed him back at milken. Yeah. Theyre a giant and dont get as much attention as some of the other giant alternate Asset Managers involved in so many parts of the global economy. He wasnt as worried about commercial real estate then. Of course theyre a giant. Well see wh hate thinks now. Make sure to ask. Squawk on the street is back after this. The one thing we can never get more of is time. Or. Can we . This is watsonx orchestrate ai designed to multiply productivity by automating tasks. When you watsonx your business, you can build Digital Skills to help Human Resources spend less time generating offer letters, writing job reqs, and managing schedules. And spend more time on humans. Lets create more time for your business. With watsonx orchestrate. Ibm. Lets create. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Welcome back to squawk on the street. Im silvana henao. Memorials under way to honor those killed 22 years ago on the worst terror attack on u. S. Soil. Vice president Kamala Harris voinds a ceremony which featured a reading of victims names and President Biden will take part in a ceremony on a military base in alaska. North Korean Leader jim cong will travel to moscow as russia continues its invasion of ukraine. Any deals would violate multiple United Nations security resolutions. M kilauea volcano on hawaiis big island is erupting after nearly three months of quiet. Hawaiian Officials Say the lava does not pose a threat to nearby communities but the particles and gas from the eruption could cause breathing problems for sensitive people. Thank you. Take a look at some of the stocks in the media cable ecosystem. This is going to be winwin and in saying that im talking about, of course, a report we brought you at the top of the hour that charter and disney unexpectedly are nearing a deal in which the Disney Networks would return to service on the charter for video distribution system, chief among them espn. Its having a positive impact across the board and benefitting charter even more than disney shares right now. Well see if, in fact, they do get to a transaction and again, people familiar with the situation indicated that one was near. What it looks like. Does it include some sort of componepent that charter has been pushing for for access either at reduced price for its subscr subsc subscribers to disneys direct to consumer offerings. Well see. The reports we brought you about a half hour ago having a positive impact on many of the stocks which had been down sharply. Warner brothers discovery shares bore the brunt of much of the decline thats taken place over the last few trading days in part because of concerns about the leverage it would have with the video distributors should Disney Channel never return to charter. A look at Warner Brothers discovery setting up as well. Setting up to be a big week for investors. Were going to get key inflation data on wednesday, ecb Rate Decision on thursday and comes ahead of the feds Rate Decision next week. Joining us is jim oneill, former Goldman Sachs asset manager and chair of northern gridstone. Good to have you, laid out some of the things were expecting. Including a cpi report later this week as well. Do we stay here at 5 and would that be a good thing for the World Economy . Im leaning the way were going to have short rates staying higher for longer. For those that think about it from an equity market perspective, im not sure if that would be a bad thing either. Part of the Bigger Picture dilemma, i chatted with you guys before recently, is that we have this very, very long period of zero rates or close to it and this incredibly accommodative Monetary Policy thats led to all sorts of consequences, as always, many of which we couldnt anticipate until fully ended, but from the days when i was still in my short trousers beginning to think about economics it was normal to have a significant positive level of circle real Interest Rates. Ultimately and probably therefore, more effective allocation of credit and probably more consistent with whatever Sustainable Growth is being Sustainable Growth. So i actually think that that would be a good thing for the world if it turns out we could cope with it, but the dilemma, of course, were seeing a bit and you discussed on the earlier segment i think for the equity markets, its quite a challenge having to think about competing with rates at higher levels for a much longer period particularly because until recently the market seemed surprisingly convinced that fed was going to be chopping again pretty soon. Doesnt seem theres a lot of case for that, unless we see much weaker economic data. Globally we are seeing weaker economic data. We have the Inflation Numbers from china. Its good there wasnt a negative sign but 0. 1 cpi, europe, European Commission revised gdp figures lower, including negative growth for germany this year. Weve seen the dollar strengthen a lot. Can the u. S. Really pull off a soft landing if the rest of the world cannot . I mean, ultimately from the 40 odd years ive struggled through this kind of issue, probably not. So either the rest of the world is eventually going to start doing a bit better, or the opposite to what i just talked about will be the case in the u. S. If you delve into components of what you raised there, the european situation is marginally intriguing in that its germany thats the weakest place and at ones that really matter. And thats a consequence of it being, of course, so immersed in Energy Imports from far too long from russia and eastern europe, but it seems preposterous to me frankly, for europes Biggest Country to be so dependent on its export performance to klein. Germany suffering the same thing, the china weakness. In a way a i think its partly the same question. But im saying it that way because one of these moons germany is going to stop being so dependent on just exporting somewhere else in the world, and do something a bit more about having stronger domestic demand growth, which a country of 80 Million People should be game for. What would they do . What will they have to do if theyre going to stimulate their economy effectively . Im a not suggesting thats around the corner because in the german psyche what i said sounds like a plea for spending more government money, and, of course, the germans are, other than the swiss, perhaps the proudest in the world for trying to keep public spending under control and low deficits. I dont think its really helping the german at a time of this enormous change going on around the world and in the middle of that, of course, is the whole thing with alternative energies, especially for autos, because buried within that is germanys past 30, 40 years is this neverending ability to produce and export cars almost anywhere, despite high german costs because of the productivity but, you know, they cant do that either now because of the whole thing with the shift towards electric cars. So theyve got to think of something else, but im not sure its going to be very soon. Linking it to what sara said, thats of course partly why the dollar is so strong against so many currencies because of this dilemma. Eventually in my opinion germany will have to start thinking to do more to stimulate and helping its domestic consumer which will be better for the rest of europe than generally the situation we have found ourselves in the past 20, 30 years. Just in the time we have left i want to get a more specific take on china right now. Yeah. You spent a large are part of your career studying it. Far too long. How bad is it right now . Are they in danger of missing the 5 growth target . What is happening beneath the surface on Economic Growth and credit . Should they be worried about a credit event or a bigger debt problem . I just wrote a piece for a very important chinese financial magazine post the brics meeting, but it was more about china and i sort of did it semi jokingly because the chinese call me the father of the brics, sort of a complimentary thing. I get interviewed by many chinese media. And i said like many fathers looks like my children arent listening to me. Because i dont understand what xi has made a number of silly decisions in my opinion. You know, the covid lockdown in the middle of it, soft about its own domestic Investment Climate at a time when they started to deliberately clamp down on real estate credits and its all going in the same mix, but crucially, the first time ive heard this in all the years ive followed it because i speak to a lot of Chinese People, including young ones, they think that days of the china dream of becoming the biggest economy in the world are over and a thats a problem for xi. I dont think he and his cronies really realize it yet, but a some point, unless they can change that psyche, he himself is going to have real problems presiding over what he thinks he can preside over forever. The Chinese People ultimately bought into the deal that is kind of below there, so long as the wealth [ inaudible ] but at the moment theres no chance of that happening a without them also being a lot more serious about trying to stimulate more confidence, particularly amongst the nonmajor urban city areas. Sooner or later i think its inevitable that the chinese will do that because over those 40 years, they typically respond when they really need to. Theyre cutting it pretty fine this time around, thats for sure. Jim, that as we say in the News Business would be one heck of a story. Well certainly be following it and discussing it in the years ahead. Appreciate your time today. Thank you. Youre welcome. Thanks for having me on, guys. Funny, he thinks china he is the father of the brics, but still. Jim oneill, always a pleasure. Key bank, the state of regional banks with the ceo of super regional keycorp, one of the banks downgraded in august for, quote, constrained profitability. Heoi ts gngo join us to break down the state of the business, next. Copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. Together, we built something truly beautiful in the true iconic notion of what america is all about. this is our task. This is our mission. We have a clear focus, and we have the ability to be agile and innovate. It takes years of dedication to get us to this milestone. It is all because of you. Never doubt that a small group of thoughtful, committed citizens can change the world. It is the only thing that ever has. to be a woman leader, its not so easy. But its easy if the passion and the love is coming from your heart. The New York Stock Exchange is the symbol of what america is all about. The potential of capitalism, the potential of the american dream. The only way you can move a Society Forward is a true expression of freedom. sfx Stock Exchange bell ringing is your brokerage leaving you out in the rain . are you missing out on access to ipos . switch to sofi invest to get stocks, etfs, and access to ipos before they trade on an exchange. See what ipos are available today at sofi. Com ipo. Sofi. Get your money right. Regional banks continue to suffer down 8 in the past month and now down 25 this year. The group on pace for their worst year since 2006, Interest Rates and troubled Real Estate Market pressure the sector. Joining us for a deeper dive keycorp ceo presenting at the barclays Global Financial services. Welcome. Thank you, sara. Great to be back on. There is this lingering fear about profitability and regulation and just the Business Models for regional and super regional banks like yours. Are the fears overblown . I think so. The npr came out a couple months ago and people are digesting what does the model look like going forward. How much capital will people have to carry. What will be the cost of that capital. I think the banks will be able to adjust. I can speak for, you know, key, we have a variety of ways to generate capital organically, which were currently working on. I think the Business Model going forward, sara, is going to be one thats a more asset light Business Model. There will be a lot of focus on underwriting and distributing securities and a focus on businesses like wealth, businesses like payments. Those are the kind of businesses that i think will make a lot of sense and kind of the path forward. The other thing i think youll see from the banks is lower loan to deposit ratios. Ultimately the ability to grow will be based on the granularity and the quality and the duration of your deposits. There will be changes but im confident that Bank Managements as we always do will adjust. Speaking of deposits and some of the nagging fears from march and svb, the fed has continued to raise rates and still some uncertainty whether they will continue to do so and weve seen so much money flowing out of banks, deposits and into money market funds. Is that still happening. Thats really slowed down. In the Second Quarter, for example, sara, we ended the quarter with a billion dollars more in deposits than we went into the quarter. I do think, though, you know, obviously, higher rates do have an impact because weve talked about it. I felt for some time that rates were going to be higher for longer and still believe that to be the case. I think theres still some impacts that the economy is slowing down, but impacts that i dont think have even hit the economy yet. For example, the fact that bank arent lending as much. I think the notion of the fed shrinking the Balance Sheet, the 8. 2 trillion Balance Sheet thats being shrunk by about 117 billion a month, that has an impact. You could have a scenario where fed funds rates are flat, but Interest Rates are still, you know, going up a bit. The last thing is just theres really a lag effect. Weve had a lot of monetary action in a short period of time. Thats the case for the fed stopping to raise rates now. And potentially cutting into early next year. You mentioned first the tightening in the economy from bank lending slowing down and i want to dig into that with you. How much is it slowing down . There were fears post svb that we would see some type of credit crunch. Doesnt feel like that really materialized. What are you seeing at key . Theres certainly not a credit crunch, but clearly as banks have to carry more capital and capital is more expensive, what youre going to see is banks relationship client will always have a lot of access to capital but some of the people that have been borrowing that had nonrelationship borrowing only arrangements with banks, i think they will find it tougher going forward. On the profitability pride, what is happening with deposit costs. They have been rising as rates have risen and i know you had to lower your forecast down 13 in 2023. Is that still on track . How does that look . Yes, we are on track. We gave guidance at the end of the Second Quarter and we are on track and the third and fourth quarters of where we are and what weve seen, the dope positive date is our slowing and so we had a cumulative deposit data of 39 at the end of the Second Quarter and we have targeted a 50 cumulative deposit data and we are seeing a slowdown in the rate of deposit data increase. Chris, there are some that believe that ultimately, there needs to believe further consolidation among some of the regional banks in order to deal with some of the larger issues. In part, the idea that your deposit base can disappear ready quickly. How do you feel about that . What with the approach be from your Vantage Point . Sure. Good morning, david. I think there is a couple things that are going to keep i dont think there is going to be a lot of consolidation in the nearterm. I think the challenges around nearterm consolidation are, one, everybody has unrealized losses in their security books and when you buy a bank, unrealized losses become realized losses and, secondly, people are concerned about the trajectory of the economy in my personal view is that we are going to have a soft landing if the economy is slowing down and i dont think it will be deep for long but i think there is a question around that and then the last piece of it, of course, where do the regulators stand on improving consolidations . I dont think you are going to see a lot in the nearterm but to the premise of your question, there is no question that additional scale, we have to carry more capital and the capital you carry is more expensive, is oneway to up approach it. Chris, you know, i wonder how you think the slowdown in lending fits with what some argues is a real acceleration and domestic macro capacity utilization, gdp forecast, maybe a little inflation, so ism p. M. Nice, are those false tales . When we get to the end of a cycle like this, i think we are going to get several indicators that go in each direction. I think that when we talk about bank lending glass, i think that part of it is that some lending activity is being driven out of the banking system. The private that funds are Significant Players in the nonregulated space, so i dont think it is really in conflict. I think it is, there has been a whole cadre of the borrowers that arent relationship clients and they will be looking around for other places to get capital and they may find it. Just looking at the stock and to go back to the market concerns. Your stock is down 35 this year and it is not far from levels back in march when everybody was wondering who was next. I know you are speaking at this conference tomorrow, so why do you think the outside fear around is a commercial real estate exposure . Is it the mismatch on the Balance Sheet . What are you hearing from investors and what are you hoping to tell them . I think the parts of the story, sarah, that i think all of the investors really understand and can rally around, are our deposit base. This will focus on privacy that with for the last five years, we have a really, really solid deposit base. Weve also the wrist our business to a very significant extent over the last decade. We also have this notion of targeted scale and we are not trying to be everything to everyone. We are very focused. The areas that i think investors are looking to see come to life, is one, we do, in fact, our Net Interest Income is below where it should be right now because we are burning off some short dated treasuries and swaps. Those burn off to a very significant degree. 44 between now and the end of 24 and 55 between now and the end of 25 and the other business we have that is a little unique, we have a very difficult Capital Markets business and as you know, the Capital Markets business has been very challenged over the last couple years. I was looking at some numbers. The ipo market, this will be the second worst ipo market of the last 50 years. The good news is, as you know, we are starting to see the activity start and on the him him a friend, we are starting to see private equity firms, as you know, is an inverse relationship between linked of Holding Period and cash on cash returns and we are starting to see the private equity firms really enter the market. Ill be at from a very low number and im pretty optimistic about that business has been look forward into 2024. Yes, we have for that recently. Morgan stanley ceo. It should help on the fees business. Chris, thank you for the deep dive. Its good to talk to you. Thanks so much. Appreciate it. Even more on the banks next hour, we will sit down with the ceo of barclays in a rare interview and an exclusive one. He is hosting the Financial Services conference and we are going to talk about him and the Investment Bank here in the u. S. When more thing before we close out the hour. Check out smoker, the worst performer right now. The drop coming after they bought Hostess Brands for 5. 69. Smuckers ceo, jim smoker, will be on with jim cramer to talk about the deal. 6 00 p. M. I do think that he has some explain to do, guys, because usually these big food makers by growth. They are looking for faster growing, more companies that are resonated with consumers right now. Twinkies goes back to 1930, so it is experiencing some growth but it is experiencing growth on the back of bankruptcy, so a low bar there and it was a slowly decelerating and it makes sense for smoker, david, and that smoker buys just and a folgers, kind of old school brandon good for cash flows and good for earnings but not growth companies, which may be makes sense because its more family controlled business. Its not like a pepsico or a hershey. No. No. Again, there are questions and largely stocked. Excuse me. Largely cash. 30 bucks. A small stock component. 17 times earnings. The cable deal was about less than 15. Not going anywhere neither should you. Back after this. A good monday morning. Im sarah eisen with carl continua. The ceo is coming up in just a few minutes with some news from their Global Financial conference as reports of potential job cuts swirl. Bill is going to join us and we get new details on the instacart ipo, including this down evaluation and we will