Transcripts For CNBC Squawk 20240704

5 chance it was so unlikely. You have children i have children. I have 12yearold boys who look up to both of these gentlemen and think of them as heroes. I dont want this to happen. This is a terrible idea. I think it would be fun to watch. Thats the appeal i get the appeal. Thats part of the problem you will see what will happen at recess after this. My concern is fighting after watching toy story. Lets show u. S. Equity futures at this hour were sitting here on monday morning and in the green nicely. 90 points higher on the dow. Nasdaq looking to open higher 7 points up. S p is up 17 points. Most importantly, more maybe not, we look at treasury yields as the guide to life right now, 4. 1 when you look at the 10year treasury the 2year treasury at 4. 846 you may remember where was the 30year with ackman statement . It was a week ago it was 4. 30 above where we are right now. Ackman last week or ackman in the pandemic last week oh. I dont know it peaked at 4. 30 last week it was in that zone. He is probably flat. 5. 5 . We have a long way to go still maybe the cpi data will see. Squawk planner. We hear from tyson and paramount and beyond meat. Tomorrow is u. P. S. And un under armour disney on wednesday with we have the inflation data and the cpi as well as ppi due on thursday and friday. Speaking of inflation, fed governor Michelle Bowman says the fed may need to raise Interest Rates to bring it down. The Monetary Policy is not on a preset course and future decisions are driven by data the new york fed president John Williams says it is an p open question if more hikes are needed he said he thinks we are close to a peak rate and it looks like the market agree was that. It seems like it. The rate drama last week with the jumpy bond market was not repricing the fed it was pricing out recession and maybe more inflation stickiness and global yields. Were at a pause at this point. The chart last time showed odds going higher at 30 for september or november. Meantime, Berkshire Hathaway out with Second Quarter results saturday it was up 6. 6 from the quarter the year earlier it was driven by the underwriting and Investment Income and stake in apple which with led the market rally in the Second Quarter with 18 gain the cash at Berkshire Hathaway swelled to 150 billion up from 130 billion in the prior quarter. Berkshire hathaway shares closed at a record high on thursday before pulling back a bit on friday boy, you talk about benefits of higher rates. By the way, they make 7 billion on tbills alone they are one of the biggest creditors of the u. S. Government 5. 5 andrew, it is interesting as well that geico has been doing better their advertising dropped 40 last year and progressive has been pulling back at well. Tv companies talking about softness in the ad market. The biggest advertisers on the Car Insurance side of things have had a 14 drop of policies. They became more profitable. Do you need all of the advertising . Two things on geico. They are catching up on progressive. T telematics is tracking cars and looking at the policy as a result they finally got into the game on that and they were late the second piece is if you cut advertising budget, then what does it say about the value of advertising . They were able the industry was able to push through the premium increases. I happen to have written an article years ago about why auto insurers advertise so much i dont think the laws have changed around that. Things you buy infrequently, but buy when you need it, the brand is in your head. They all pulled back at once. Car prices went up and they lost tons of money. This is the only option. I thought that was fascinating for the touch points throughout the economy. Absolutely. Meantime, Saudi Oil Giant aramco reported 30 billion this net profit in the Second Quarter. The drop of 38 from the same period last year the companys ceo sees signals that Global Demand is resilient with the recovery in the aviation sector. The price has been on the rise trading near fourmonth highs. Backing off a bit this morning at 1 . U. S. Trucking firm yellow filed for bankruptcy protection yesterday. The ceo of the company said it is with disappointment that yellow announces it is closing after 100 years in business. The company with heavy debt load after mergers and faced tense contracting negotiations with teamsters union. I was going to ask you about this do you think, andrew, taxpayers are getting money back on the loan rhetorical. I know you were directing that toward me, but no. The company says yes. They claim it will be, you know i dont know how 30 . The government is now a creditor of the company we own 30 of the shares. I know. Is there value no, of course not im missing something. Maybe, by the way, based on the meme stocks. Exactly roaring last week. Speaking of roaring. Barbie topped 1 billion in receipts the movie hit the milestone in 17 days on the big screens Christopher Nolans oppenheimer hauls in 553 million. Lets talk about it. Social media twitter rebranded as x and got the handle music he built the community and x told him he had no choice but to surrender the user name. He had the option to choose from other handles. He said he is not happy with the handle, but he is settling on that for now the company transferred previous followers to that previous account. The company may reclaim user names without liability to you it is not clear where x plans to do with the account. I should say they did this also to the guy who had x literally, that was their name they said we own the company it is yours. It is ours thats the end of the story. Do you pay them for it i dont know by the way, if you were paying 8 a month for the blue checkmark, would that change the dynamic or is it because it is free they take it back it is threads again, it is clubhouse or whatever it was back in the day. Not much why does twitter keep i dont get it what is the goal they had the competitor launch that did not go anywhere it is confusing and alienating me ill be over on instagram. It is in general from everything well see it is interesting to see we will see what happens to threads. I know a lot of people have written it off completely. I think it has a chance of coming back. Lets tell you the other piece of this. Zuckerberg saying he is ready today to fight elon musk and suggested august 26th, he said, for the cage match that was the original date he suggested. Musk hasnt confirmed. He is not holding his breath in response to another post from musk said it would be live streamed on x. He now has a confirmed situation where we are fighting in that post and then zuckerberg said i wont hold my breath now zuckerberg shooting back saying they should use a more reliable platform. Maybe to be funny. Elon musk tweeting the fight is in flux because he is getting an mri on his neck and back and may require surgery before the fight can happen kelly, it sounds like you disagree with me in a civilized world, im hopeful where two gentlemen, for better or worse, become role models for kids across the world and the idea is to stand up in a fight. Fighting, but not really. It isnt wwe. By the way, if i was Mark Zuckerberg, i would take the high road and take threads o twitter and whatever and say, hey, elon musk is one of the great minds in the world i dont want to be the one to damage it. That would be, to me, the high road he will hurt him he will hurt him it might just stay in the zone of taunting and we keep it out there as a possibility we should have a drink some time oh, yeah, thats great five years go by and it doesnt happen for now, it is live if you are getting an mri on your neck, for real, forget. Coming up, get ready for the trading week ahead stephanie link will join us. And later, pucks matt belloni is joining us on the hollywood strikes and the barbie box office. You are watching squawk box on cnbc announcer squawk planner is brought to you by workday. The financing Planning System for a changing world re 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. 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. 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. Markets coming off a losing week and the s p down 2 futures at this hour are slightly positive. It will make up with the s p up more than. 25 the are investors are bracing for another week of busy earnings and read on inflation as they digest the fresh lead of the market joining us now is stephanie link from hightower investments good morning, stephanie. Good morning. The market was hot and we were stretched technically i think the response to earnings report, although earnings had been on balance, relative to expectations, has brought on the response by the markets. What does that tell you about what is priced in here good morning. We had a really great run year to date. Up 17 in the s p. You know, mike, the longterm total return average for the s p 500 is about 7 . We are having a good year. It makes up for last year, for sure what is probably going to happen is a choppiness, if you will, in august and maybe into september. Im encouraged that earnings are hanging in and we are seeing a broadening out in the market i think there is opportunity to be had as a result in terms of the yield move that has obviously gotten the markets attention above 4 , there is no magic level where the stock market can trade above 4 has tended to be a stopandwait and back off level. Can this be absorbed certainly that is part of the chop we see this month and maybe next month and maybe until the end of the year, mike, right . We had a nice result so far this year i think overall, i continue to watch the macroeconomics data and that continues to be better than expected. The job market continues to be very healthy whether you look at adp initial claims and jolts and nonfarm payroll was fine on friday it is healthy. Wages are on the rise at 4. 4 . Consumer continues to hang in there. It is not perfect, of course, but there are opportunities, as i mentioned. The most important data point, by the way, from last week, was the productivity number coming in better than expected and unit labor cost coming in lower than expected that directly feeds into gdp we have seen acceleration into gdp year to date that is healthy. If we chop around, as i mentioned, there are opportunities out there when stocks pull back and you see the volatility increase and you have to look for fundamental stories that are on sale. Certainly the productivity growth is a missing piece of the story. It would be great if it continues. The numbers bounce around. It will help most recently we did see, you know, apple which had been going up in the very, very orderly upside angle. It seems to have broken a little bit. I wonder if there is a change in the market and where things firm up to that point, yeah, apple has had a nice run yeartodate. Faang stocks have had a nice move you want to look elsewhere you want to look at the other parts of the market which are starting to perk up, mike. We have the broadening out with energy and industrials and materials with some financials for sure i think apple takes a breather that quarter was fine. We didnt like the iphone numbers or ipad numbers, but services was good. That is 25 of total revenue trading at 33 times was priced for perfection you didnt get perfection. You had an inline quarter. Nothing wrong with it. I think it may pause for a while. On the flip side, for fortinet cybersecurity crushed down 25 i own it it was a bruising on friday for me i do not think the longterm algo would change with mid teens growth and 200 basis points of margin per year and 23 cash flow growth. It is down 25 what do you want to do take advantage of those names. If we see a broadening in the market, Technology May lag and other sectors might do better about and theyre cheaper for sure. Yeah. It seems like we did get a broadening and we will see if the rest of the market can take up that slack. Steph, thank you talk to you soon. Thanks, mike. Coming up, we talk about part of the labor market that usually doesnt get a lot of attention. A special report on hiring and disabilities is next on squawk box. Were back in a moment futures are still green. Announcer this cnbc program is sponsored by truist secursec securities experience, expertise, execution. 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. The first time your sales reached 100k with godaddy was also the first time your profits left you speechless. At the counter or on the go, save 20 with the lowest transaction fees and keep more of what you make. Start saving today at godaddy. Com wake up, achievers. Youre making the most of every hour of your life. And keep more of what you make. Except the hours that youre sleeping. So why do we leave so much Untapped Potential on the table . This is a next level bed, for a next level you. My circadian rhythm is kicking your circadian rhythms butt its not a competition. I know, but im still winning so, it is a competition. Save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. 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. Welcome back a look the u. S. Job market where we learned friday the Unemployment Rate is at the lowest level in decades. The year on year level has been greater for the labor force we dont talk about disabilities Sharon Epperson jonins us now this is stronger it has been it is not part of the labor market that gets much attention. Unmemployment rate is3. 6 for people without disabilities. The rate fell to 6. 9 in july of 2023 here is one company that has built business employing people with intellectual and other disabilities of the the coffee shop is a Fast Growing Company who says hiring an untapped talent pool is good for business if you have a desire to join the work force, we give you a chance and figure out how to make accommodations to set you up for success as parents of children with downs syndrome, they know the difficulty of finding a person right for the job. We did not want our children growing up in that kind of world. We started the coffee shop seven years ago. In 2016, the couple opened the store in wilmington. The brand employees 400 people with disabilities in 19 coffee shops. Across the country, about 7. 8 Million People were employed in july with disabilities according to the bureau of labor. That is almost 1 million more workers with a disability than the year before. Studies have shown employees with disbability with disabilities generate more income than those without disabiliti disabilities. People are starting to see people with intellectual d disabilities are loyal and grateful for their job and show up on time and take it seriously. Like most workers, ben says employees with disabilities want their work to be meaningful and high impact. Are they paid the same wages as the regular labor force we were concerned about that. That is not the case at this coffee shop. They are advocates for all workers getting minimum wage and above and promoted as they improve in their jobs. We keep hearing about a tight labor market ceos are saying finding and retaining employees is hard. Is there a directpath for people to locate workers there is a service nationally the Employer Assistance Resource Network for disability inclusion. You can go and find workers who have been trained to help with recruiting and all that as well. Also a local chamber of commerce can help partner employers with nonprofit organizations that work with people with dis disabilities as well as looking at the vocational rehabilitation programs out there in different communities to help. Great parents in particular see that as a relief. Sharon, thank you. Sure. When we come back after this, a lot more on squawk box. We will talk to the chair of the Budget Committee and talk about the downgrade of the u. S. Credit he rating by fitch and att wh i means and whats next. Squawk box is coming back right after this [soldier] take a look at this theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. Good morning welcome back to squawk box here on cnbc lets look at the futures. Green again. It comes down on the dow 36 points higher nasdaq looking to open 46 points s p up close to 10 points. Ke kelly. Oil is hovering at fourmonth highs after six weeks of gains joining us to talk about this is amrita sen this is getting more attention especially where gas prices are headed look, there has been some Political Tension bubbling, but which have been long expecting the move up in oil prices. The macro, i would say, is uncertain. It is not all flashing green lights fundamentals have turned we have seen on the product side and that effect in the pump prices in the u. S. Gas prices have been edging higher we still think the overall system is precarious given how low inventories are here we are expecting to see prices station higher at the pump for a while. You know, like you said, this would hardly surprise Energy Analysts with the supply and demand shows the prices. Do you see the First Six Months is destocking and destabilization and the china story . That was one thing that we talked about was the destocking reason ill give you a reason cushioning in the u. S. Where inventories were at a draw of the that shows a detangle which would be incentive to store oil which wasnt enough because of the higher cost of capital people were destocking crude. We have seen this across products as wealll that is the big reason why we havent moved up in the First Six Months there is only that much Inventory People have. We are running through most of that right now we should expect to see prices remain supported that is fascinating i want to make sure people caught what you said high Interest Rates could result in Higher Oil Prices futures price is higher than where we are, it is costing more to store the crude ill take advantage, but i cannot because the kocost of capital is too high. Now where are we is this sustainable . If we have to support, demand and restock, what does that imply . Thats agreat question. That is where the conundrum is here because it is too expensive to store if you look at gas and diesel, inventories have not drawn you see any time with refinery fires or outages, you have the massive move in prices crude, with the prices last year and this year, there is more of a buffer we still have somewhat of an excess to run down which we are running down quickly by the end of the year, we think we would have run that down. There is a bit of time which exposes us to higher prices next year s year amrita, i know you have done work with refine ry volumes and extreme heat across the country how does that drive prices the refining system has been prec precarious this year, we had stock in the middle east. They were delayed again. Some of them are up and running. We havent seen the rest of the world really operate fully u. S. In particular, but even in europe and even in japan and asia as a whole. We have seen so many outages with the heat where refineries had to constrain services. There is a lot more light crude coming out mainly from the u. S. And in the summer, it gets problematic to process that in the heat because without getting technical it has bee weak without the china market. That is why the pump prices are rising because we havent been able to produce enough gasoline. I was asking bob mcnally last week, are we going over 4 he said absolutely it is a matter of time with the National Average what with w what would you say i think so. The good news for the consumers is we are going to winter and it is less stringent. The prices for the u. S. Gasoline tend to be higher. That is the Silver Lining. In general, we are headed toward higher gas prices in the next few weeks because crude prices and inventory is low and demand is still okay. Amrita, thank you good to check in with you. Thank you. I appreciate it. Coming up, one of the hottest trends in the auto world. Hybrids are head hot phil lebeau has the story next. We talk to senator chris coons on the state of the economy and much more. Get the best of squawk box in our podcast follow us on your favorite podcast apps and listen any time well be right back. Rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. 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Wielcome back to squawk box. U. S. Equities looking to open higher on monday morning dow up 40 points nasdaq up 50 points. S p looking to open 10 points higher there are other news in the highend ev space because lucid is now cutting prices for air luxury sedan by 12,000. This is amid rising cominpetitin in the u. S the base air pure price is now 82,400. The more powerful grand touring package starts at 95,000 and 125,000 lucid saying the offer is valid as long as supplies last mike, i drove in one of th lucids it is a cool car i dont know if i would shell out 120,000 for it. The luxury evs. I dont know if they can do the volumes at those prices, that is an open question. Car buyers are making the turn to hybrids. Flying off the lots. Auto makers are taking notice. Phil lebeau is here with more on the renewed interest of the class of vehicles. Phil mike, something we saw last month is something we he havent seen in more than a year hybrids. They outsold Pure Electric vehicles in the u. S. First time in more than a year we have seen that. In terms of percentages, we are still an internal combustion market it is now for e vvs at 53,000. That is a 5,000 difference compared to the market if you look at the market, they are lower in the 35,000 to 45,000 range toyota is taking advantage of people who said i want a hybrid to get a benefit from battery and i dont want to give up the opportunity on a long road trip to fill up that is why the july sales were up 60 from last year. There is greater production and inconvventory from last year ford has taken notice as it struggles to get the ev platform up to the level of sales that it believes it will achieve the Ceo Jim Farley said we will build more hybrids because the demand is there. The market is there. If you look at shares of ford and toyota and tesla and rivian, keep in mind that the overall ev market sales are up this year 50 according to motor intelligence we will hear from rivian regarding q2 results this week you were talking about lucid we hear from lucid after the bell today there will be a lot of questions for ceo Peter Rawlings and the price cuts they are not able to move the level of production that they thought they would lets see if this is the first time this year that they actually increased guidance because they have not been able to meet the production totals the first two quarters phil, it would seem that a lot of auto buyers just want a more efficient vehicle maybe they are not that distant on it being purely electric. What is the mileage range for most of the hybrids . Oh, it depends on what you are getting. If you buy a rav4 hybrid, the range is 40 and 55 and 60 miles. Gas equal. I dont know exactly it is far higher than be it ta it is for internal combustion. You have greater selection between 25,000 to 45,000 with the electric vehicle compare that with the hybrid electric vehicle they want to take a step toward electric, but not comfortable with stak taking a full step ats price with the selection out there. It makes sense. Phil, thank you. You bet. Coming up on the other side of this, we will talk about the Writers Strike matt belloni will join us to talk about what is happening in l. A. And barbie hitting the 1 billion mark you can watch us live as we speak on the cnbc app. A beautiful shot live of the capitol right now. Were coming right back. Welcome back to squawk box. A lot going on on the west coast. Negotiators failing to reach a deal with the writers and union. The box office is out per performing barbie crossing the 1 billion mark and turtles out without promotion from striking actors for more, we bring in matt belloni from puck news matt, help us understand what happened on friday and what comes next it well, it was a setback there was some optimism heading into this meeting because it was the first time that the Writers Guild and the studios had met since the writers went on strike in early may, and it did not go well there was some name calling before the meeting they did meet, but the outcome there was basically were back to square one. The writers introduce d a couple of new adds, they wanted to continue to write with screen actors guild. They wanted some Additional Health care asks they basically said we are not going to budge on core issues involving residuals. Involving the writers room, they want adds made to the writers room, and the studio side was like were willing to give on a couple of things there are some nonstarters for us we are not going to do a success metric, which is like a transparency metric. They dont want to open their books to the writers and a couple of other things so they basically broke it off, and well see this week if they agree to actually continue negotiating, and if not, we could be in for the long haul hear. So where are the if you were to look at the fault lines, but look at the fault lines where theres an opportunity for compromise, where do you see them the compromise here the money issues are somewhat doable money can solve everything they say. But the money issues i think are doable here. Its these fundamental issues like transparency where the writers want access to books they want to see that their shows are making money thats something where the streamer component, particularly netflix, amazon, apple, they just dont do that they dont want to set the pres k dent of allowing the guild to see the inner metrics of their companies, and thats a real hard one to bridge, and i do think that these issues of the writers room where the writers want commitment to staff the writers room with six, eight, ten writers, they dont want these situations where theres one writer doing an entire show. They want commitments there will be writers hired the studios are like were not going to commit to hiring writers when we dont necessarily need them. So those are the more kind of fundamental issues where i think that they are going to have problems the compromise is going to be on the money. Im looking at the calendar, were on august 7th. I think there was a sense at least among some in hollywood that maybe you could get a deal by labor day and then the question is do you do that concurrently with the actors does this then push into the end of september, into october where do you see this really going in terms of looking at a cal calendar and a true time line. It will have a massive knock on effect, more importantly what you see next spring and summer. Absolutely. Thats the real fear the studios are losing out on these Summer Movies if this strike continues to go warner brother discoverys ceo said last week they were anticipating labor day that this would be resolved. Ive been sort of similar where i think that early to midseptember they will get a deal with first the writers and then the actors or potentially vice versa if this does not work out. I think this week is key if they do not continue to negotiate on the writers side this week, then theyre not going to theyre going to break, theyre not going to negotiate for weeks. Thats going to set everything back the guild has been going one by one. The studios have been negotiating it one at a time, i think if they dont get a deal with the writers theyll probably end up going back to the actors but the actors have been equally if not more forceful in their demand and the rhetoric coming out of the actors has been pretty incendiary. If the studios expect to go in and get concessions from these guilds, i dont know that theyre going to get them anytime soon. Do you see any break happening either among the writers themselves who may be you know, a lot of folks are going to start to struggle to pay their rent, i know thats probably strategically something the studios have been banking on, similarly objn the actors side or is there any break between some of the studios. The interesting question there, on the guild side there has been remarkable solidarity on the guild side. This is the first strike of the social media era and the writers and actors have used social media to galvanize their membership, and theres been this cheerleading effect where theyre all in it together keep in mind these are very unique unions in that the majority of the membership dont actually work at a given time. This is not like, you know, auto workers or restaurant workers where everyone is on the same level and theyre all fighting for better conditions on the job. You know, the Screen Actor Guild in particular, a very small number of these members work the people who voted for this strike arent actually the ones that are working at a dwgiven time that creates a very interesting dynamic. The actors guild, tom cruise is a member and your average member is barely making enough money to get insurance. You know, most of the members in the teens dont even make enough money in the year to get Insurance Coverage so i think that there is potential there for differences in opinion there on the studio side, obviously disney has very different concerns than comcast or netflix or amazon or apple these are very different businesses with different agendas that only come together in the amptb, this coalition in order to negotiate labor deals so they have their own issues on their side of getting on the same page if theyre ever going to make a deal here. Right matt, weve got to leave it there. I wanted to talk barbie, a billion dollars, and also the fact that we had teenage mutant Ninja Turtles released this week without actors out there to promote and it seems to be working. I imagine were going to see you a lot as this progresses, matt, thank you again. No problem. You bet. Kelly. Really interesting discussion there, thanks. Reaction over the weekend to the july jobs report Steve Liesman joins us straight ahead. Futures are still pointed higher. And house Budget Committee chairman jeyrrgtod ainon will weigh in on the downgrading of the u. S. Credit rating squawk box will be right back. You sell High Commission investment products, right . Fisher Investments nope. Fisher avoids them. other money manager well, you must earn commissions on trades. Fisher Investments never at Fisher Investments. other money manager ok, then you probably sneak in some hidden and layered fees. Fisher Investments no. We structure our fees so we do better when clients do better. That might be why most of our clients come from other money managers. At Fisher Investments, were clearly different. 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 s23. Only on verizon. 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 upbeat music woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Good morning, stocks coming off their worst week since march. Were going to take a look at whats ahead for involves. The fitch downgrade sparking talks on capitol hill over the testi deficit in spending. An update on the zuck versus musk cage match. The plan to own the meme universe as the second hour of squawk box begins right now. Good morning, asknd welcome back to squawk box. Im andrew ross sorkin, joe and becky are off. A lot going on u. S. Equity futures in the green after whats been a while, basically a week, week and a half now, looking at the dow s p up 12 points and nasdaq up about 60 points. Treasuries were going to talk about the debt, the deficit. Even that bill ackman call the twoyear at 4. 8. When you think about oil, lets show you wti crude, you can guy by the barrel. It will cost you 81. 94 right now. Crypto, which has been our barometer of risk on, risk off, its been kind of well, 29,000. Weve been sitting under 30,000 for quite a while now. Kelly. Holding its own, i guess we have to say. Lets get over to dom chu with a look at this mornings premarket movers good morning, dom. Good morning, kelly, andrew, make lets start with the macro picture. Andrew mentioned the oil trade its off by about a percent. Its still hovering near this kind of fourmonth high level. Going all the way back to here, 81. 96, we were talking for the longest time about this idea of 70 per barrel handle for prices a lot of messaging from many of the bigger Oil Producing countries like saudi arabia and russia, that Oil Output Cuts are going to last for the foreseeable future keep in on that crude trade. On the earnings front, the notable one from over the weekend, the liquid b class of shares are trading up by about 1. 5 right now, 5,000 shares of volume, after it reported operating earnings of 10. 04 billion thats a 6. 6 gain over the same quarter last year. Those stronger results by b berkshire, insurance underwriting results as well as strong gains in apple stocks in particular and then well end with a check on draft king, which is higher by 1. 5 right now, around 85,000 shares of volume helped along by analysts at wells fargo who upu raised the target price by 9 bucks to 37 a share they cited better market share gains, bet product improvements and being able to control their operating expenses better. Draft kings over the yeartodate period, this is a juggernaut i dont have an online wbetting account, but i kind of feel like i almost want to get into it now. That surprises me, dom, youre such a sports guy ask a markets guy. I tell joe all the time if i got a fanduel or draft kings account, i think id spend way too much time on it because i do i enjoy gaming and i enjoy sports, so those are two things that i have to keep in check a little bit well, listen, i guess maybe when you sign on, well know theyve reached their market saturation. I hope not to be that guy, but yes, ill keep you posted if that ever happens. Thank you, dom, well see you in a little bit. Lets talk about u. S. Trucking firm yellow, the companys ceo saying it is with profound disappointment that yellow announces it is closing after nearly 100 years in business the company was burdened with a heavy debt load after mergers, and as weve mentioned a bunch of times was one of Many Companies that took a bunch of money during the pandemic. Were now the government is taxpayers. So much was happening during that time, i dont remember ever even being aware that yellow was getting the taxpayers were going to own the equity and they got the big loan do you think there were other companies who similar sli benefitted much has been made of their lobbying, and maybe it was just them. I imagine theres probably many more. This is a little bit what does Warren Buffett say, when the tide goes out, you see whos swimming when the tide goes out you see a lot of stuff that you dont know about. Doesnt the government still hold warrants on the Airline Stocks do we still yep weve got them on the airlines and i think we might have them on some other stuff. A lot of its worked out pretty well. The strategy post financial crisis looked pretty solid unfortunately the way they ran that company for 15 years, it just was not the deserving recipient that maybe others have been you know, though capital structure. Im going to agree with you, but ill say this, i think the program in terms of keeping everybody afloat worked. The question is whether it was targeted enough in the end i think when people look back in hindsight, theyre going to say they moved fast, probably broke things along the way, but in erms it of keeping the economy up and running i agree less to the yellows of the world and more to folk who is didnt need the money at all no, and we all knew about the ppe and the fraud waste, okay, whatever, but in this fog of war, i literally just did not realize that there was stuff like this going on with yellow, for instance, so im just curious if there were others as well have to check it out. Im sure theres a government report out investigation now. Treasury. What was owed so we got some hawkish fed comments over the weekend and some new commentary shows some rethinking of fridays jobs report, and where all the job growth is coming from or if it is indeed real Steve Liesman joins us now to run through all that hey, steve hey, good morning, mike fed governor Michelle Bowman saying over this weekend, she expects additional rate hikes will be needed with inflation still high and with demand for workers out stripping supply while the market took the friday jobs number as relatively dovish for fed policy, the comments echo some taskes ive been reading from economists. Here are some of the bullet points ive seen among the concerns, job growth has been consistently greater than population growth where are the bodies coming from this is reflected in still strong wage gains. The Unemployment Rate ticking town thats a measure of tightness. Slowing payroll growth is seen as a result of there being not enough bodies to hire rather than an unwillingness to hire. Chris ruppky, economist writing this could be the first time in economic history where Payroll Employment drops, which normally indicates a recession. The reason will be theres no one in the country left to hair. The problem could be revised away when in january when the government reestimates population growth. The last two years, the problem was solved with the addition of 1 Million People in the past two years to the Population Estimate the government could also revise down job growth, and thats whats expected to happen. Well get an announcement august 23rd of the new benchmark revision for now fed officials got to deal with this fuzzy data that there are more jobs than there appear to be people suggesting a still tight labor market and potentially keeping further rate hikes on the table, guys yeah, steve, its fascinating and its a good reminder that, you know, even with the massive sampling efforts, its impossible to be too precise in realtime on these. When it comes to the feds job, to they need to think beyond what the actual Inflation Numbers are telling us at this point in time . In other words, are they still looking for bank shots about this is exactly how loose the job market has to get in order for us to get to our goal. They think were in the zone of where the rates have to be, arent we going to see what the inflation data gives us . I think thats right. And thats a good reminder that we do have inflation data coming up this week this week on thursday theres the nonfarm payroll data were looking at a 3. 3 cpi and a 4. 7. Its a little hotter on the headline were not going down in inflation on a Straight Line we could have a bump up in inflation. Youre right, the fed is looking at a range of outcomes here. Right now when theyre getting down to the end game its a little bit more tight when it comes to figuring out which way to go. Youll remember they were burned at the beginning of this year with some revision to inflation data and now theyve got to watch this jobs data to see if its revised if it changes the picture either way they could put more people in through the estimate or they could take some jobs away and actually, both could happen, mike yeah, exactly fascinating. Steve, thanks very much. Well get back to you with how many people they may have come up with. Thanks. Okay coming up, weve got what investors need to be watching this week and where you should be putting your money to work. Plus, downgrade reigniting the conversation on capitol hill over deficits and spending, were going to speak to Budget Committee chair Jodey Arrington in just a bit. Squawk box comes back after this i was like i cant pass the ball. I cant dribble. I wasnt at the level that they were. I thought do i give up . Do i quit . But i was like i can overcome this. You have to dig deep and fight for what you want. You have to stop looking out. You can only get where you want to go by looking in. crowd cheers net swish i remember being on aau trips, high school games. My mom would always say, you need to fuel the body and you need salt. I would always be the kid not cramping, ready to go. Fast forward 20 years and i go from eating salt out of my palm to drinking lmnt. Lets talk about the markets and the economy in light of fridays jobs numbers and with inflation upon us this week, joining us now is jill carey h hall, bank of america head of small and mid cap strategy thanks for having me. When youre small and mid cap strategy, are you tops down, bottom up . What do you think is more informative right now . Both, were fundamentally seeing a good backdrop with earnings season. On the macro, our economists at w of a revised their economic outlooks theyre no longer expecting a recession this year. Would you say out of curiosity so were you guys more constriuctive on the outloo for earnings when you looked at the companies did you worry a big slowdown was coming it feels like the macro has had to catch up to whats happening on the Company Level we were expecting initially, you know, more negative earnings backdrop ask revised that up as well the earnings backdrop were still expecting flattish growth this year, better growth next year but i think now that were expecting a soft landing a lot of the segments of the market that have been pricing in a recession and there are pocket os of them, small caps being one of them we think are poised for at least nearterm somewhat of oa reboun. We could be shifting are from more of this downturn backdrop, is typically positive for cyclicals and smaller stocks. I was looking at some of the cardboard corrugated box, these kind of earnings have been coming in and theyre seeing a little bit of a turn, people think the isms are going to follow the other stat that gets thrown around is 40 of the russell 2000 is not profitable so what are you watching there that kind of shows that . Right, i mean, i think, you know, nearterm when you look at positioning, multicap managers, their weights in small cap stocks is at record lows flows have been extremely negative this year youre starting to see a turn there. Valuations are extremely cheap relative to large caps near historic lows and usually valuation tends to be a good longer term predictor as well. If youre thinking about large versus small over the next decade, it could be a good time to own small, but i do think to your point, medium term, you know, once you see this catch up rally, then it makes sense to be more nimble and selective and cautious in small caps given some of the refinancing risks, given the fact that a third of the index is nonearners that isnt profitable. It tends to spike up during downturn periods, but it is more elevated than normal in part due to bigger weights in biotech and health care and following the ipo boom within small caps we would be more cautious on health care and tech relative to in large versus in some of the other cyclical sectors that look a bit better. Certainly if zyou look at th small cap 600 theres a similar valuation with large cap it seems that its at a pretty significant discount i guess the question is if i look back to the early 2000s example of when you do small caps did kind ofprotect you in that bear market and going beyond that. Do we need to have the mega caps break to kind of create some kind of meme reversion here. Well, i think were at the point where we saw significant megacap leadership and now we really just expect a broadening out of the market so we like the equal weighted s p 500 over the cap weighted s p 500 we expect some small caps. Usually were in a new bull market usually when youre in a new bull market, small caps lead by a significant margin and they lead large caps. Definitely room for catchup here we are watching Goods Versus Services small caps are more exposed to services youre starting to see a goods comeback, potentially see if thats going to be at the expense of services. I think lot os of room for a catchup rally right now, makes sense to be nimble, makes sense to pick stocks over buying an index. All right so then if we have no recession, but were still priced for recession in the russell 2000, july was a good month for the russell or was it not . I think youve seen a bit of a comeback recently. You know, after a pretty poor first half, and i i tthink youe seen this weird dynamic in small caps where you actually have a kind of seen risk on i dont necessarily expect, you know, the low quality, you know, biotech and mid cap software certainly you can have the shortterm rally. The meme stocks, unprofitable biotechs, that does tell you that Risk Appetite is bad, i guess. A lot of the low quality stocks has been whats led this year i think you know like i said, when youre in an environment where rates could be higher and inflation could be more elevate for longer rates and credit spreads could go back up if we see a tightening of credit conditions, all of these are risks to small caps that have a lot of shortterm and floating rate debt, so you know, i think as you look out the next couple of years, theyre going to hit a lot of maturity walls. There are certainly pockets of small caps that are going to be a lot more risk for that i think having leverage screens on your investment process means leverage will matter more than it has historically. Almost kind of by factor and by stock or as you mentioned kind of be a little careful in health care, maybe tech, what are some areas that you think are safer yeah, definitely factor wise focusing on Higher Quality stocks that have earnings rather than no earnings, stocks that have lower leverage or dont have a lot of shortterm and floating rate debt Free Cash Flow is a factor Free Cash Flow tends to matter a lot in these high yield back drops. Youre not thinking usually about buying small caps for Free Cash Flow or dividends that actually has been a strong factor recently. Thats how were thinking about it from a style basis or sector basis, Consumer Discretionary started to rank a lot better, materials, some of the cyclical sectors outside of financials because the regional banks wed be a bit more cautious insmall than large. It seems that m a should start to become a little bit of a boost as well. You see private equities there theyre getting a little more active im wondering if thats something that keeps people more alert. I think m a backdrops havent necessarily helped small cap performance overall, certainly in certain sectors for a while there was a lack of m a and that was a the reason small Cap Health Care had done so poorly now if theres hope of that, that does tend to benefit performance in some of these areas. Jill, thank you good to see you this morning. Coming up, how ai is helping doctors. That story is next check out shares of apple coming off the stocks worst week of 2023 lta twel lkech and more in just a bit. Squawk box will be right back. He snores like an angry rhino. Youve never heard an angry rhino. Baby i hear one every night. Every night. Okay. Ill work on that. Save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. Welcome back, roughly 60 of doctors in family medicine, pediatrics and internal medicine say they are burned out. A big pain point according to many, filling out medical records where now there is an ai app for that, and Bertha Coombs joins us with a look at how that technology is helping doctors happen happily and finally in the office. When you go to see your doctors, most of the time you see them sitting at the computer typing notes while youre talking to them. Thats going into your Electronic Health record the thing is a lot of them dont finish up until later at home during what doctors call pajama t Time Microsoft has an ai app that could put pajama time to rest. You dont look like you feel good today dr. Johnson foye starts patient visits by pulling out our phone. It listens in on our visit soky pay more attention to you using nuances app has freed her from typing when shes seeing patients. The ai program writes her patients summary for her, which has freed her from. Pajama time, which should be the time where youre getting ready to wind down going to bed. Were usually still charting and noting and doing things that are going to enhance the life of the patient but not necessarily our own quality of life. Reporter at Baptist Health in jacksonville, harnessing ai programs to help doctors and nurses fight burn out. Leveraging ai like bewhat you eliminate the bureaucracy overhead. Using ai to reduce administrative tasks could help hospitals cut total costs by 5 to 11 in the next five years, according to the National Bureau of Economic Research study, for physician groups up to 8 , and for Health Insurers 7 to 10 the upfront investment is not cheap. I made my patients a whole lot happier and my physicians more productive. About that productivity, dr. Foye says it shouldnt mean more work. Pajama time is now reserved for time with her family. This is about the doctor having the quality of life they deserve. Were people too. So the newest version of that app, dwhich uses the open Ai Technology writes up the note instantaneously. You stop talking and theres the note a few hospitals are actually testing how to use this for followup notes to patients, and i talked to one doctor in san diego who said we do put on the note that they are generated by ai, but she says my patients would know it because the notes are much nicer than mine thats what they say about the drivethrough ai its nicer than dealing with a human. Its amazing. Microsoft and nuance are sort of in the lead on this, but theyre not the only ones who are working on this. Everybody wants a piece of the action because its health care. This hashuge promise for records as well, which has probably been one of the most frustrating parts. I dont even fill it out correctly anymore. I dont have time. How much of the back end really could we see this make inroads or is all the regulation and red tape, is that Still Standing in the way . All that stuff. Theres some of it, at baptist and other hospitals are trying to figure out how to make it easier for you to check in and do that, you know, also the insurers are looking at this as well onto earnings call, dirk mcmahon at United Health said were looking at how maybe people can look up whether their physician or whatever theyre doing is in network, so thats potentially something that would make it much, much easier. Microsoft right now is in the lead theyre working with epic, which is the nations Largest Health care Records Company and nuance, we have a graphic i can show you, but amazon is in there too google, also with their cloud, they have put up med palm. Lets not forget oracle as well. They bought cerner, which is the other big Records Company skand they are working in that space as well. Its a very competitive market right now. Bertha, the question i was going to ask you about how this works, how often does the doctor have to go back into the notes and say, actually, i kneneed to edit this because it didnt really catch the most important component of what was actually happening, you know, during that visit with the patient or what have you its really iterative, and the doctors say its Getting Better and better. I actually did a mock interview. Ill tweet out the link later. With one of the doctors from microsoft, and there was just one thing that it missed, and she put it back in one thing right now is that all the doctors, all of the clinicians working with these, they do go in, they look at them, and as i mentioned at the hospital in san diego when they sent a note to patients, they tell them this was generated by ai, but it was signed off by a human, so the question that people have, andrew is, you know, at some point are we just going to make it automatic, but at the moment people go back, they check it over and make sure that its right. For the most part it is. And how far are we away from you know, how often do you have to try to get a prescription, they write the prescription they say well call it in. They have to go to an assistant or somebody else who has to call it in to cvs someone on cvss side has to deal with it, confirm back and forth. How far are we away from ai doing that meaning the doctor says through the phone, you know, give him zpak or something, and then all of a sudden it just happens in the background that is one of the things thats one of the things theyre looking at, particularly when you need a refill and you have to go back in and call, it will be in your record, and what theyre hoping is that with the ai, it will come up more quickly and then cvs hopefully the ai as well, theyll be able to do that much more automatically. But you know, we complain about the fact that they have to call it in now. Remember when you had to go to the office and actually get a physical script. I think we could be a year or two away from having to have it even called in, meaning it could literally be said from the phone do it and it just magically does it. You still knneed to sign off particularly when youre talking about serious drugs like opioids, those have to have an extra process in them because weve all seen what happens when we didnt. 100 . Theres still going to be people involved in there, theres still going to be some things that are not going to be automatic. I talked to a doctor from stanford, she said this technology right now is when we got the first iphone and we went whoa, this is amazing. She says this is not going to take 15 years to go from iphone 1 to iphone 14 she said it is learning and growing much more quickly than what weve seen up to now. Bertha coombs, thank you for bringing us this fascinating story this morning thanks still to come, congressman Jodey Arrington joins us next to talk Government Spending and the state of the economy after last weeks credit downgrade. Plus a look inside elon musks ambitions for x, well talk to liz ffhoman for the latest stay tuned youre watching squawk box and this is cnbc 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. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from morgan stanley. Welcome back, the recent Fitch Ratings downgrade of the u. S. Has capitol hill buzzing about deficits and spending, uniting a blame game between the political parties. For more on this i want to bring in congressman Jodey Arrington of texas, who serves as house Budget Committee chair i want to thank you for joining us this morning. There has been a lot of finger pointing, but ultimately theres two major questions. Does it change the dynamic and conversation around deficits in a way that you think it wasnt before youre right, those are great questions. Both sides to have some share of blame here in terms of our unsustainable debt trajectory and the rapid deterioration of the Fiscal Health of our country. But i do think the last two years and 11 trillion in record spending and the spending induced inflation and the Interest Rate hikes in an economy thats projected not only by cbo but by fitch and en even the white houses own economist headed for a recession. Were in trouble these are things i think investors were watching for years now, and i dont think its a surprise to anybody sadly enough because there are some structural problems in our balance sheet, namely mandatory spending, and we have an aging population, the Worlds Largest generational retirement, and we have to rein that mandatory spending in, and weve got to grow the economy faster than were spending, and thats not happening. And the policies in place today, andrew, are not going to get us there, which is why all these negative projections of under 1 gdp this year, fitch says its going to be not even half a percent in 24 weve got to return to progrowth, proenergy, and progrowth policies that will get baus back on track. What is your sense of taking on the third rail, which is entitlements you know, you look at the Social Security funds and you can do the math of everybody, but nobody historically has really wanted to go there well, were going to go there. Were going to reveal our tenyear fiscal framework called a budget resolution. Probably most of your viewers havent heard of that because for the last four years, my colleagues, democrat colleagues never put forward a budget framework, but were going to include entitlement spending so that we put our country on a path to balance in ten years part of that is growth part of that equation will be right sizing the bureaucracy, thats the Discretionary Spending and all the activity around the appropriations process and the debt ceiling agreement, but we will take on welfare and health care and other entitlement programs to make them more cost effective, to root out the waste, to give states more autonomy and responsibility among other things but yeah, youve got to do that or you dont get out of this mess, you get more downgrades and potentially a sovereign debt crisis with respect to Social Security and medicare, those are very difficult politically, theyre used on both sides as a weapon, and so weve made it so that nobody wants to address the shortfall that those programs will be insolvent within the next ten years youve got to provide some mechanism for serious lawmakers on both sides to come up with a consensus like Ronald Reagan and tip oneill did to address the insolvency to strengthen the program and give ashasurances nt only to seniors or future seniors. If nothing is done, the the Social Security will take a 20 haircut, thats unacceptable we need to be responsible leaders if both sides have to what does that look like for you . I mean, in terms of a position that you would take on Social Security would you push out the age at which it begins . Not necessarily tomorrow but push it out for folks 20 years from now so they can begin to prepare, you know, thinking that folks are living a lot longer than when this original effectively Insurance Plan was put into place would you what kinds of things would you do . Yeah, i think heres the problem. As soon as you start picking those out without having republicans and democrats in the room so to speak saying lets put the pay force and the programmatic reforms, some of which you just mentioned, all on the table. We know that youre going to have to have both present and both probably in the final analysis because democrats want the revenue side and focus on that and can focus on the programmatic reforms, some of which you mentioned, all have to be on the table. Its got to be one where we hold hands and jump together in order to save Social Security and medicare and taxpayers a lot of money. The longer we wait, the more expensive its getting. And final question for you, are you surprised both by the timing of the fitch downgrade and by the reaction . And the reason i ask, if you really look at the fuch itch mo if you will. They actually put a chart in their own report, it was going down, and i try to say this apolitically, you know, during the Trump Administration it looked rather more perilous than oddly now, where it seems to be going back up. So there is this unique question about the timing of why they chose to put out this report now, but also the idea that the market has for the most part shrugged it off. I know people looked at the equity markets last week and seemed to think it was related youve got to say to yourself, what do they know that we dont . I would say im surprised its taken this long to arrive at the conclusion thats Standard Poors did ten years ago. As to why they did it now versus when they were warning us during the debt ceiling negotiations, i do think that they saw how difficult it was to get my c colleagues to the table, and actually include some modest fiscal reforms in this recent debt ceiling negotiations. But when you look at their metrics, debt to gdp, and you look at them relative to our peers and the median debt to gdp of our peers, we are two and a half times worse off than our mad median peers in triple a you look at interest to revenue, we are ten times the median ratio of our peers i think they have all the justification, even though janet yellen tradied to discredit the saying it was arbitrary and they used wrong data. The economy is not strong, inflation is still stubborn, and weve got to get at the mandatory spending thats driving it, not expand it, rein it in, thats the recipe thats what were focused on we appreciate it. Its a longer debate about whether our economys strong a lot of people look at this employment picture on a lrelative basis, theres an argument to be made its strong as well. Nonetheless, we hope to talk to you again very, very soon. Coming up, a check on the markets this monday morning. And then the Company Formerly known as twitter is seeking a financial giant to build a trading hub inside the app well speak to liz hoffman about that. The latest in the musk versus zuck cage match, squawk box will be right back. So you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. School is back and Dicks Sporting Goods has everything you need to gear up so you can show up. With the hottest brands, like nike, jordan, on, carhartt, and hoka. And, with even more options at dicks. Com, its never been easier to sport your style. I need it cool at night. You trying to ice me out of the bed . And, with even more options at dicks. Com, baby, only on game nights. You know you are retired right . Am i . Ya save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. 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Built for your business. Amex business. Welcome back some news about a frequent squawk box guest, jeff currie is retiring after 27 years at the firm thats according to a memo seen by reuters this morning. Here to talk about that, elon musk, and more, liz hoffman, business and finance editor, shes also a cnbc contributor. Good to see you, good morning. Good morning, guys. So 27 years at goldman sachs, jeff currie leaving. Its not necessarily out of the ordinary for that to be a kind of retirement moment it does come along with maybe some more attrition. There were some more departures from the wealth and Asset Management division announced. Is it normal kind of wear and tear on the ranks, or do you think theres Something Else happening here look, i dont have the numbers, and if you ask them, theyll crunch them internally ive covered this firm for a long time. It looks like its higher than usual in senior people people have stuck around for a long time there, and you have people coming up through the ranks who hit their head on a ceiling and start to get frustrated a couple of these departures have been eyebrow raising and i think really hurt the place. On the whole, a lot of talent in the building whoever jeff curries number two is having a good day. Theres no doubt about that there always was a thinking currie that theyre going to allocate for your partners. Right well, we have been talking about this elon musk story, the x plan that youve been reporting. Tell me about what they might have in terms of Financial Services elon has been very public about his idea of x as the everything app its hard to imagine any app that really does everything for you that doesnt have a major financial component. They had a request for proposals out this spring to big Financial Data supplier. Remember the cash sign i remember when i was a m a story. They have real ambitions to make a wrap around trading product. They had an effort this week that never launched with etorro, a funnel to refer trading business over there. This feels like a bit of a redo to me. First of all, it makes sense to create more engagement because financial twitter is pretty high volume, theyre plugged in all day but to be an actual provider of Financial Services and what it means for regulation and whether you want a Trading Platform and there are zero commissions anyway, i wonder what that all means. Im skeptical of this whole thing. Its a head scratcher. Theres not a lot of money in it mid to late 2010s you started to see twitter feeds integrated to things like the bloomberg platform so, i dont know, maybe theres enough juice left in that. If anyone can squeeze it out, it is elon musk i guess you would think so. But its also as with everything, theres so many layers to this because the ceo of this company was sanctioned about statements he made about his own company stock. Hes a problematic person in terms of the regulators. These are places where there hasnt been this robust financial app system they got to skip the part that was hard and the credit card and depp debit rails which are pretty entrenched i dont know if it works here or if we need one. Do we need one. Its in search of a problem, i think. Whats at stake for musks business empire. I know a lot of shares had been pledged. If it is static and they cant figure out the super app, where does that leave him . I think you the concern is that, first of all, they dont have a lot of money. Last time they spoke about it, it was cash negative theres public co, they own some private stock in twitter its still down more than half from the acquisition in october. You have equity thats underwater and debt that as far as i know the banks have not been able to place. So they hold it in. They old it i think if they had started selling it, woo we could have heard. If you have the equity value at 10 billion instead of 40 youre very close it being underwater in terms of debt. At the really need cash flow here but it seemed so promising when they hired linda yaccarino. And the next week they change the name of the app. At the present time look like incredibly well rolled out some numbers im sure in your feed theyre slightly less garbagy. This is a company in both real financial and strategic trouble. Twitter always seemed to punch below its rate in terms of revenue for diffuser it was a agree product and jack dorsey said it never should have been a country. I dont know what he means by that it was incredibly valuable in these moments of peak news brecking it probably belonged in the tomb Warner Warner where theres a tiein to realtime information by the way, the request that went out to providers a couple weeks ago says twitter is the realtime hub of society today. I dont know how true that is ook. Woorp just talking, though, that nothing really seems to be replacing it the only thing and Mark Zuckerberg may prevail after all, but instagram im watching that as a applause where it used to be like, hey, my friends are posting pictures. Us its before huge opening day, so to speak. I dont know, it doesnt feel look a twit are killer mabb nothing feels that back. I think the internet rahal is starting. Thanks for having me. Thanks for being here because of what you just said about instagram, kelly, theres a chance they have a second or third bite at the apple. If they get futures up. Knocks threads, no, no, no not in moo where theab where the no, no. A big hour of squawk ahead well be right back. He snores like an angry rhino. Youve never heard an angry rhino. Baby i hear one every night. Every night. Okay. Ill work on that. Save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. Coming up s p and cpi numbers. And were going to hear from ups, disney and a few more of the other big name media companies. And were going to take you in in in inside Berkshire Hathaway. And people stocks, what is driving it and well do it as the final hour of squawk box begins right now. Zrjs good m good morning. Welcome back to squawk box. Joe and becky are off. We have still got a big hour ahead. Futures are opening up higher. Its been a rough couple of sessions here. The nasdaq off about 61 points the s p if it opened right now would open about 12 points higher and treasury yields, the 10year at 4. 099 and the 2 year at 4. 831 Berkshire Hathaway, net income swinging to a nearly 36 billion gain from a 43 billion loss last year. The strong results were helped by a jump in berkshires insurance sector and oil prices have been generally a lot lower. On friday west texas crude hitting its highest level in a little less than four months wti has been up for six straight weeks now. And a milestone for those heading to the movies or those who have just been there the barbie movie crossing the billion dollar mark. Its a new record among female directors. Oppenheimers Parent Company comcast and giving a little bit of confidence to some folks in hollywood this weekend leaning on that old i. P taking a look at the markets and some of the key drivers from here, mike in a week when were going to turn our attention to inflation and we come off of a little bit of a cooling off in the s p 500, the 2year chart interesting we had a huge come back from the october lows we had five straight months higher, and three straight weeks higher going into last week and i think you could have had a lot of reasons to say it might have been enough for now given where the sentiment has gone and now the bar is a little bit higher, especially with these negative reactions to still doseecent earnings 4,400 would be interesting from a last august high, that would be a pullback. The rally this year has mimicked what we got going into the summer a couple of years ago its kind of interesting that were not really breaking into a new zone on that time scale. Take a look at real Interest Rates as measured by the tips yield. Look at this on a fiveyear basis hovering up on this, right near the highs, 1. 7, 1. 8 . This is telling you in theory Inflation Expectations up and youre getting longer term from the fed right now. It creates that expectation within the market that perhaps theres going to be some rate cuts next year, almost no matter what the economy does. Well see how that plays out the market has been wrong about that a few times in the recent past the credit markets remain pretty sturdy we see yields go up. High yield bond routed to a comparable etf, still outperforming on a yeartoyear basis. What do you think its telling us about kind of inflation or that kind of inner play, broadly speaking i . Think its saying that theres a building sense in the markets that maybe we have to be aware of the possibility that it going to be stickier, that were not going to get down to two necessarily very soon. Believe it or not, high nominal growth is something that can support things like highly Indebted Companies for a while, if the economy doesnt fall apart. Thats why people are somewhat more comfortable with riskier credit at this point as well i think that the stock market can be okay if the fed is not quite at the 2 target theres nothing magic about the 2 inflation target, but if it means that they have to get more aggressive, if it means there is a little bit more of a hiccup on the Consumer Spending side, i think thats what we brace for now its considered consensus. What does that mean how good news has to get. It all comes back to nominal gdp. Thanks here to explain from a technical perspective is ceo carter wirth put the upward rim in context of what you think is going on here. Impressive strength sin the october 14th low of last autumn, which is in many ways almost as impressive as the preceding selloff. We know Global Equities peaked in january 22 since the october low weve been recovering the market, as in any instance, whether going up or down, is most always characterized by countertrend moves on the way down we had these sharp rallies, which gave way to new lows well, so, too, from the low of october 14th to where we are now, we have had two very distinct countertrend moves, selloffs, draw downs, corrections. There was the december 1 to december sort of 22 selloff of about 8. 2 of last year since the october low and there is the second one from february march of this year down 9. 2. Now is this current daytoday, weekoverweek selloff the third normal garden variety selloff. So what comes next . First of all, it would have to be complete something happens once you go down 5 . We spend a lot of time looking at that, whether thats because where people stop losses but if you look at all 5 plus selloffs in the history of the s p going back to the 1930s, the median and mean end up around 9, 9. 5 so were down 2. 8. I think we will get that 9 and that will be a property correction so from there well see. But its in the etymology of the word why would we use the word correction unless the implication that the preceding is incorrect if something gets too steep or ahead of itself, it needs a pause or rest to break so im going to ask given for those of us that are a little dense here so are you saying, then, that the larger kind of rally trend that weve been on postpandemic is in tact or is it ending here . Its really more about seensinging is what im saying if you were to observe the market and we know when youre in an uptrend or downtrend, those are invare by countered. You typically will see on any given twotofour month vacancy and we hit the upper band to the men opiniony and thats associated with a microsoft apple stall. If we were going to the bottom line, it would be right in line with the prior two give becky quicks if youre bearish, you believe thats not going to stop there, its going to go a lot more. And if youre bullish, it allows you to go further if youre going to continue higher which is to say you must you hurt your eyes or you blow the test and go take a rest and then you come back and do well on your exam. One can anticipate a garden variety whatever nomenclature one prefers. Bulls should want a 10 drop here thats the kelly headline. My boss was a big horse nut wed go to the track all of a sudden hed throw his tickets away these are 4,000, 5,000 bet. In the furst quarter turn, my horse is way too fast, he ahead. Every time his horse was last. You couple out of the gate too fast, you mess things up you want breaks and rests along the way. Carter, thank you for your time fabulous interview, kelly coming up, concerning new stats from americasmanufacturers an how they feel about et regulatory straight. Were going to break it all wndo and debate it. Stay tuned youre watching squawk and this is cnbc of advanced hair complex. Conquer hair thinning. And fall in love with your hair all over again. Only from natures bounty. 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. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. 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. President biden heading out of washington this week for a swing through western states in an attempt to high lie the reduction act and at the same time receiving criticism from manufacturing. Theres been a lot to tout on one end. Where would you grade at this point . You would be a good teacher from this administration and congress, certainly the chips and science act, infrastructure and investment and many policy previsions of the ira. But to the point that you just made, were very concerned about the onslaught of regulations that are going to drive up the cost of doing business in the United States. On the one hand we have a manufacturing strategy that congress and the administration has been putting forward, which is great news to prioritize growing manufacturing here in the United States. But if youre compounding that with, one, the amount of regulations coming down, were engaged in about a hundred regulations coming out of 30 different agencies; permitting issues, slow permitting, which is making it difficult for manufacturers to build those facilities theyll willing to invest in and, thirdly, some of the provisions that have been enacted. Theres been confusing guidance or no guidance when it comes to accessing the funds that are available for motor vehicling all three of those things together are making it very difficult for manufacturers to compete and succeed some say there shouldnt be incentives at all. Some say there should be Strings Attached and others say there should be no strings im not sure it needs to be black and white but there is a question of what everybody wants. If we believe that the United States needs to maintain our manufacturing edge, our technological edge, our economic edge in the world, then we do have to have a manufacturing strategy there is no question of that and it needs to start at the highest levels of government and business and government need to Work Together and they need to do so in a cooperative way i think weve gone that quite well over the past several administrations. If you think of the clinton, the bush and obama administrations working very, very aggressively to open markets overseas for products that u. S. Manufacturers make, getting those products out to other areas of the world, that was a great achievement there. The Trump Administration focused on a competitive tax structure which was very, very helpful for manufacturers to able to utilize our capital right here at home and they had some regulatory certainty that really helped us understand kind of where directionally the government was going. The biden administration, as we just discussed, chips and science, infrastructure, ira, those things have all been good. Now, put all that together, were unstoppable, unless the government starts to say, well, now wait a minute, we want to do it this way, we want to do it that way that can work as long as were talking about something thats pr pragmatic and not aspirational this administration is looking at things in a very aspirational way. Lets go through on a detailed way what are the pieces of this that you dont like because i think what happens is taxpayers go oh my goodness, were spending all this money on the chips act, for example, and then some people and well see five, ten years from now whether this was done in a remerrickable way or it was a big mistake. Some of people look at the Clean Energy Policies and say either this is going to be a fabulous thing for the country or its going to turn into a sm sort of wild boondoggle. And what is being proposed will help tamp that down if thats the case so i think again what is our priority our priority is to grow manufacturing. Lets look at some of the specific regulations being considered of those 100 ive been talking about so youve got epa and nhtsas capbase standard. That is very aspirational and the pathway to get there let me back up were not saying no regulation weve never said that. Were saying lets make these regulations essential, smart and conceivable. The bridge to to where the industry would like to be is too short. The sec scope three regulations, same thing sec proxy rules, sec private security role and its going to chill or stop manufacturing investment in many areas of the country. Then were looking at some of the potential the president is talking about or the administration is talking about, potential executive order on an Outbound Investment as it relates to china which, by the way, china is a huge competitor this we need to be very aware of and we need to take on head on, but we need to make sure that those potential regulations that are being issued by the administration are sensible and achievable. Jay, it is a much longer we appreciate you coming in and talking to us about it this morning. Thanks, andrew. Kelly if. Coming up, senator chris coons will talk to us. Hes one of President Bidens key allies but whats different about the current meme stock rally versus 2021 well tell you about that and more when squawk box returns welcome back to squawk box live a shot of the capitol. Take a look at futures we are in the green this morning. Nasdaq looking to open about 40 points higher and looking for the s p 500 to open about eight points higher. Here are the stories investors will be talking about today. Elon musk youll only laughing because weve been talking about this for a couple hours. Musk posting a match will be posting saying he was been lifting weights. And the more perhaps relevant comment is that he may leave surgery before a potential fight leaving the question open as to whether it will actually happening. Zuckerberg saying hes ready to fight but isnt holding his bre breath zucks personality really coming out. And investors grapple with anxiety about chinas growth post pandemic. Theyve been told to refrain from negatively talking about topics like fears of capitol flight and softening prices. This comes as chinas been cracking down on a lot of Foreign Workers there, especially in the research and information community. And beef and poultry producer tyson falling. Tyson has been moving to cut costs by trimming jobs and closing facilities today they announced the closing of four more chicken processing plants, the share are down 8 today and more than 16 this year, andrew u. S. Trucking firm yellow sorry, i jumped in here, for chapter 11 bankruptcy protection em o yellow is saying its with profound sadness we are closing the business it is worth highlighting as one of the high profile bankruptcies of the year and there have been several, 30,000 jobs at risk here maybe a Silver Lining is there may be a home for the works are because of the strength in the Trucking Industry its a big player in that business and yellow shares have been really on the move meantime investors getting meme stock deja vu. Hi, kate shares of yellow have been surging as speculative trading rite aid up 67 last week, joining tupperware up 500 for the month and Truck Company yellow, which you guys just talked about despite shutting down operations, its stock up 400 last week these are consumer names, these companies all have around 20 of the available shares sold short, about four times the average stock that tends to track individual traders and of course social media mentions on reddit and hedge funds tend to monitor these forum. Third points dan loeb saying fundamental analysis is increasingly taking a back seat to monitoring. And its not all peoplememe ston chasing undamentals. The bulk has been in treasuries. Back to you. I always like to remind folks that we didnt invent the idea of nonfundamental stocks i think this is a distinctly new phenomenon when people like loeb get upset, theyre feeding into it. Its a power struggle and they feel like these platforms have given them the power to come together and take on big investors. I dont know if this would be tantamount to people coming together to bid up pricing i agree it wouldnt happen at this scale and this speed. I also think thats a little bit of a sad part of it to me, is that all the energy is from we have to put it to the man. And its a zero sum game mentality. The markets dont have to be a zero sum game mentality. Ltv was a people stock level three after the bubble i mean, serious when howard stern went, it has happened before and it feels like its not just people stocks for the big guys good morning, kelly. Shes repeating her remarks from the weekend that she thinks additional rate increases are likely and likely needed to lower inflation. She says Monetary Policy is not on a preset path so shes not guaranteeing or saying shes definitely going to hike shes going to closely monitoring incoming data shes looking for evidence inflation is, quote, on a consistent and meaningful downward path. I think what that means is one, even two lower inflations are not enough to bring her alone to hiking rates because she talks about the imbalance of the economy. The market is not necessarily pi buying this idea of another rate cut. Were at a 16 hike. Compare that to leaving the door open to the possibility of cuts next year because rates could get too high people should take the idea of cuts with a bit of a grain of salt because he doesnt think hes cutting the real rate he wants to cut hes going to cut the nominal rate if you put the nominal rate here, inflation falls. He doesnt think basically the fed will be getting tighter as unflags falls relative to the nominal funds rate hes not trying to stimulate the economy. What hes trying to do or talking about is this idea of you might want to become less reviktive but you dont want to become stimulative so hes searching for that future rate. Being an expert doesnt mean you know exactly where it is no, but the fact that he is willing to say this is a risk that we could be tacitly ti tightening dont get too excited that is in the forecast out there. Maybe ill have this for tomorrow the market has been banking on less rate cuts or fewer rate cuts than it had been. So the idea of how much the market is thinking about how much the fed is going to cut has been coming down, though the fed itself is already forecasting rate cuts next year, but only in the nominal rate thank you very much coming up, what we learned about the mega caps from a wild earning season but next, senator chris coons on whether he thinks bidenomics is working. Well be right back. 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. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. What if you could make analyzing a big banks data. No big deal . Go on. Well, what if you partner with ibm and red hat, use a hybrid Cloud Solution to connect data across clouds, then analyze all that data with watson. Okay, but this needs to meet our. Security standards . Yup. Compliance standards . Mmhmm. So they get the insights they need. Yup. In real time. Check. To make quick decisions . Check. Aaaand check. Thats the solution ibm and a global bank created. What will you create . Ibm. Lets create. Welcome back some conflicting signals for the u. S. Economy first fitch downgraded the credit and a goldilocks on friday senator, good morning to you ill ask you the question just as we set this segment up, is bidenomics working you just said and i agree that we had a goldilocks job performance. Broadly the Economic News to the United States is good and compared to virtually every other advanced economy, we are coming out of the pandemic very strong, with steadily lowering inflation, with the lowest unemployment, the lowest sustained unemployment in our lifetimes and with steady, good job growth so 13 million private sector jobs created so far during the biden administration, 800,000 high skilled, high wage manufacturing jobs and the markets overall for the year responding very favorable. The fitch downgrade took me somewhat by surprise and i frankly think it reflecting more their concerns about political instability than about the fundamentals of the american economy. Let me ask you about the political instability question but put it in the president ial context. You look at bide nonomics and l at the polls and you thought that bidenomics was working on a number of metrics. If that so true, why is President Trump polling at the same level or ahead of the current president . Former President Trump, a reality tv star more than he was an actual successful Business Leader did a great job of talking credit for things he didnt do, and President Biden has actually delivered on things former President Trump promised to do. Three quick examples infrastructure he said it so many times it became a running joke that it was going to be infrastructure week at long last. President trump promised to fix our infrastructure, immediately i dont kn President Biden delivered. President trump said he with strengthen manufacturing and immediately President Biden signed into law the chips and science act, which has been leveraged by a 41 match at least from the private sector, hundreds of billions of dollars of new investment in highskill manufacturing jobs all over the country President Biden goes this week to the sought west to several states to say here we are on the anniversary of the Inflation Reduction Act and soon the anniversary of the pact act, the biggest expansion of veterans care in our history. I, too, am somewhat puzzled to your question about the gap between what form are President Trump is given credit for in the polls and President Bidens actual record. I think the polls will catch up with the record in time. But so then the question becomes is this a messaging problem or is this in fact that americans feel and it may be a function of inflation and wage growth on a relative level to prices, which have gone much higher and people sit around and say this is not such a great economy. Its very hard to understand what is either a disconnect or not based on the stats that you cite and therefore the polls and the way apparently america feels. Andrew, three quarters of americans feel better about their own economic future. They feel they have their feet under them, that they can see growth and opportunities for them im confident that will gradually translate into confidence that President Bidens approach to rebuilding our economy from the bottom up and middle out will prevail over a view that the better way to grow our economy is for more tax cuts for the very wealthiest americans. You could not see a sharper contrast and as 25,000 new Construction Projects get under way in the come being six to nine months, you are going to see, i believe, more and more americans credit the skrb growth, the steady improvement of our economy and strengthening of our place on the world stage as compare to the chaos of the trump candidacy. I think going into the elections next year well be on a firm setting. Do you think the fitch downgrade changes the dynamics monday democrats in terms of spending over time i think it heightens the fact that we need a bipartisan approach to addressing our deficits and our debt. President biden put forward a budget this year that would have cut our deficit by trillions over the decade. It was rejected out of hand by house republicans. We frankly need to find a way forward in the middle that balances revenue and spending in a positive way i believe in President Bidens approach, which is investing in america, investing in the middle class, growing what has been the backbone of of our economy for lek. Do you think that democrats will ever touch things like Social Security, medicare, medicaid, things of that nature . Theyre pushing either ages out farther, not again today but maybe 20 years from now. Doing things like means testing. Is that on the table you think for the Democratic Party or never . Well. They are going to stand staunchly hund those who paid into the system all their lives and are counting on Social Security for their retirement. But there are some reasons we can address revenue limits and ways that are income caps for social and medicare, ways to for the long term i think there has to be a bipartisan conversation about it. What i just heard you say between the lines and tell me if im wrong that the way to solve Social Security is not sao either pu to raise taxes on the wealthiest above the current limit so theyre paying more, is that what youre saying . Thats one path forward frankly, at the end of the day democrats are not going to cut benefits under Social Security so were going to have to find a way forward that includes revenue. Most republicans ive spent with or focused with will not consider revenue the last time there was a bug bipartisan and it took both parties to come to the middle on . Coons, thank you very much coming up, analyst gene munster will join us and stay tuned youre watching squawk box on cnbc my dad was a hard worker. He used to do side jobs installing windows, charging Something Like a hundred bucks a window when other guys were charging four to fivehundred bucks. He just didnt wanna do that. He was proud of the price he was charging. My dad instilled in me, always put the people before the money. Be proud of offering a good product at a fair price. I think hed be extremely proud of me, yeah. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . 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 we have a much clearer picture of the health in the text sector after the mega caps wrapped up their latest Quarterly Earnings for apple specifically, they say its all about the greater number of loyalists who get snapped up in pthe ecosystem after buying theirfirst product. Gene, good morning, good to see you. Hi, mike. So apple, you know, it seemed as if it was a report that was more or less as expected but, you know, lower revenue growth, maybe projecting more of the same for another quarter the market really backed off on that you think it was a reassessment of longterm apple Growth Prospects or Something Different . I think the pullback more broadly is related to some of the longer term growth expectations, like you said. Its down about 5 from where it was before they reported and i think theres a bigger theme going on here and that is this installed active base two of the last three quarters apple has led their press release emphasizing this point, that this continues to grow. I think investors are progressively starting to put more weight into the value of this the basic many theme is when you buy an apple product, you fall in love with the product you buy additional product, whether its services or a watch and then you upgrade down the road that piece to me is remarkable because the fact that apple stock is up 44 year to date, the nasdaq is up 34 speaks to i think what is this trend around investing and this theme about this active install base you asked me to put the last three quarters into context, i would say theyve been sluggish. I think that the december they preannounced, they missed the miss the march quarter they got it down for june. The june quarter, you got it down for september yet the stock continues to broadly hang in there and i think this is evidence there is a new investment theme to apple. The investment thesis around apple changes about every five to ten years the previous big theme was of course related to services now i think were entering the theme related to the active installed base and if youre curious how the active install base is going to play out going forward, you can model this out theres a Waterfall Model that you can put together and effectively they can continue to grow active base with the device sales being down 15, 20 , so i think that this is going to continue to be a reassuring factor for apple investors, something thats been largely overlooked with all the noise in earnings the install base, lets say, two billion users worldwide, its a 2. 9 trillion market cap it didnt change that much in the last seven months, and yet the stock was up 40 im curious as to why thats a here and now investment prospect even as people are getting concerned about the longer upgrade cycles for iphone. Thats, i guess, my point precisely. Investors are getting more concerned about what these upgrade cycles are going to how theyre going to play out, but yet the stock has done relatively well, and it has not had the benefit, i think, of the a. I. Theme apples been has been judicious about talking about that so, my simple takeaway is that i think that the fact that this has not been a stellar period, i mean, its theyve done great relative to the rest of tech companies, but based on apple standards, these have been relatively sluggish quarters, and i think that ultimately, this is evidence, the fact that investors are i think the Stock Performance is evidence that theres something bigger going on, and this ultimately, for apple, is positive for their multiple of course, theyll get consumer staples. Mike, i know you and i have talked about this. I think cocacola, clorox, procter gamble, those stocks are more of a comp now for apple, and i think that investors are progressively going to be embracing that theme. Thats fair enough, although apples now more expensive than all those that you just mentioned on a forward pe basis. I do want to get to alphabet its interesting how its gone from, they might be a bit of a victim of the a. I. Theme to now perhaps a beneficiary. So, wheres that stock situated in your view i think its in a great position, and recently, meeting with a broad group of investors and they still view google as going to be underperforming relative to microsoft when it comes to a. I i think thats generally missing the point. I think that their new search experience, their generative search experience thats in google labs is going to be rolled out later this year, i think is going to be a shift in terms of how consumers use search today, we use search for three primary purposes, mostly to look up information secondly, to buy things, and third, for navigation. And in the future, were going to go to google for asking questions and getting insights, and more importantly, doing tasks. I think of this as called personalized a. I i think google is in a great position to do that, and i think generative search ultimately is going to increase the frequency that were going to be using google products. And while its true, theyre going to have to rethink their model, the advertising model, i think as engagement comes, so will follow revenue. And this is very similar to some of the themes that we saw a decadeplus ago when google was going from a desktop to a mobile search business, and what theyre getting paid per search was dropping dramatically. But the number of searches was accelerating even faster, and the net of that created what was a great decade run with google i think were in front of another decade that trades at 20 times next year. Microsoft trades at 26 i think this stock is setting up for a great a. I. Play over the next several years yeah, its a good point people are obsessing over cost per click, every quarter, and that doesnt seem as relevant anymore. Gene, thanks very much good to catch up with you. Thank you okay, when we come back, weve got an inside look at retail trader activity what are mom and pop buying and selling . Were going to have that plus eng lleaofheh ahd t opinbe nce 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 opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. Mlb chooses tmobile for business for 5g solutions. To not only enhance the fan experience, but to advance how the game is played. Nows the time to see what americas largest 5g network can do for your business. Welcome back Td Ameritrade is out this morning with its latest Investor Movement index behaviorbased index aggregates main street investor positions and activity we could use this, given the meme stocks lately joining us is director of Trading Services education at Charles Schwab is this about, like, meme stocks, or is this just generally a Sentiment Survey of how does the public feel about the stock market i think the key, kelly, is that its an aggregate of their behaviors, so its not attitudinal. It measures their positions and activity so, what we saw for the july month, we saw a slight uptick, 5. 53 versus 5. 46 in june we saw our traders and our investors were buying slowly into making Information Technology and Communication Services those were the two sectors that saw the buying we saw selling across the board in the other nine sectors, which i think is interesting because the buying was really concentrated just in those two what about energy where weve, you know, our nick wells had crunched the data, some others, and i think stephanie link was talking about this, but energy looks like its becoming as crowded or as kind of overbought as tech, which you mentioned. Are you guys picking up on any interest there if anything, we saw selling in energy, which i think is interesting because we have been talking about that broadening of the base of the market, right, the breadth. We started to really see that in july, and i think what we saw from our investors is that they used that as an opportunity to maybe take off some of those positions as they rallied in where we really saw those the biggest amount of sales, believe it or not, was in that leisure and travel so, the two names that we saw the biggest amount of sales would be Carnival Cruiselines and american airlines, and i think that makes sense, given the fact that Carnival Cruise lines was up about 130 year to date at the beginning of july. We saw investors kind of pare back those positions we also saw american airlines. And they were prudent in doing so, because if you look at what happened at the end of the month, those names definitely pulled back a bit. Joe, we appreciate it im just laughing because the retail, we always they always used to be called the dumb money, but those are some savvy, exiting hotels its true certainly in the near term flows matter in the short term i wouldnt say it breaks down alongside smart or dumb. Its much more about time horizon, i think, but we have seen the options trading fever restart again, and so, once that overshoots, its probably not a great thing, but as they say, it takes bulls to have a bull market andrew, what grade would you give this show today oh, well, because you know i like to ask people for grades, i think its an a. Were not grading on a curve here no curve i just love that he said, you know, you should be a teacher. Why are you always asking for grades its a great way i always ask, what inning are we in how else are we supposed goto gt a handle on these topics its a way to create a discussion and do something quick because you know what they think. Speaking of quick, we should say goodbye pleasure thank you so much, mike and andrew see you all tomorrow. Squawk on the street begins right now. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber, all back at post nine of the New York Stock Exchange premarkets getting back some of fridays downside reversal big week for inflation data. Cpi thursday, earnings this week, u. P. S. , disney, baba, under armour, roblox and more. Nasdaq looking to rebound from fourday losses as investors digest conflicting fed rate hike