Transcripts For CNBC Squawk 20240703 : vimarsana.com

Indecisive positioning. According to bank of america fund manager survey as they wait on cpi tomorrow. Mike santoli is here with more. What are you watching in positioning . We worked off this excessive bearishness by longonly Fund Managers and a lot of other indicators. No longer we also dont have people positioned for the market to run away from us on the upside. We can call it indecisive, call it neutral, call it confused, datadependent. All those fit. Weve been fighting the same battles with oil prices nudging above the comfort zone, perhaps, and then yields, how are they going to absorb this inflation number tomorrow . So, i think the big picture story of this year remains in place, which is disinflation, you know, youve had the fed mostly done if not fully done. Earnings are tilting up slowly from a trough. All that is and then the argument what is priced in . Have we priced in benign soft landing scenario or do we have more to benefit. It will be fun to watch the doves who were earlier tuned to headline. This time really tuned to core, right . 4. 3 is a nice number. I think i take comfort in the fact the numbers have been coming in close to consensus forecast. Its no longer this bucking bronco. We dont know where the numbers are going to end up type of story. The other thing the market has taught us this year or reminded us is while we are far from target and far from the feds target. They want to get there and theyll get there, 4 inflation is more like the toggle for the stock market. Below 4 is more comfortable historically. We can make some progress in that zone as long as its not rising from that level. So, you know, i feel like you still want to see further progress, but its not so make or break when were in this area. But at what, 19 times earnings, the question is how much of the soft landing is already priced in. That is the big question. You know we can slice it every which way. You look at all these blue chips trading at the exact normal 15year multiples outside of the top seven stocks. You have a much more tame valuation. But you still have seven stocks trading at 30 plus times earnings that are trillions of dollars in thats what coston told us at goldman sachs, most are trading at 17. Really quick, b of a note the desk talks about signs you would look for if you were to call a top, nvidia action, oracle and the Morgan Stanley tesla call. Its so tricky because you have multiple opportunities for people to declare, you know, its all priced in, are we o overhyped in the short term. The oracle is interesting because of the willingness of the market to give them credit for being having levers to a. I. And then having the reality check that its obviously not nearly the whole story there. Although dell has held on to most of its upside, which is a similar story. Wish i could say, yeah, this is it, perfect, lets put the pin in it, but its very hard. Thank you, mike. Mike santoli. Lets get more on the state of the markets and credit and the economy. We are joined by pe giant Carlyle Group cofounder david ruben steen. I rubenstein. Thank you for joining us. Thank you for having me. Do you think the fed is done . I think the fed is likely to do one more 25basis point increase before the end of the year. That would be my guess. And i think thats probably the conventional wisdom. So youre thinking november, december . Its difficult to predict exactly when, but i think the fed wants to make it clear that its not completely happy with where inflation is yet. Its target was 2 . Were not quite there yet. Whether well get there or not, we dont know. But i think the fed is recognizing the market is expecting cuts next year. But the market isnt expecting cuts this year, so i think the fed can get by with 25basispoint increase without unduly affecting the markets. The cuts next year are a hot topic of debate. Do they come in the first half, the second half, what are you thinking . Well, of course, as the fed chairman always says, everything is dependent on the numbers. So, well have to see what the numbers are in the first quarter. But i dont think the fed is itching to lower Interest Rates right now. I think they feel inflation is coming down, but i think they would more likely to do something by the second half of next year, not in the first half. That would be my guess. Given that outlook and the fact that we have seen the stabilization a bit in Interest Rates, although yields are the tenyear is around 4. 3, is it enough to unlock the capital markets, to get activity going . Theres been some optimism around green shoots and m a. Were seeing ipos come back, arm is on thursday. Do you buy this is a comeback . The history of the markets is when Interest Rates go down, the markets go up. I expect that will happen now. I dont think the markets are going to be too excited right now. I think theyre going to probably wait until theres more clarity probably early next year where the fed will what the fed is going to do next year. I do think the markets are beginning to show some signs of life. I do think youll see more m a and more buyouts in the early part of next year than youve seen this year. David, one last one on the fed here. Another note this morning, i mean, the questions getting almost a little tired but one does write, the rigidness of the 2 target that held for so long is no longer applicable in an era of change, energy, housing. Do you think the fed is interested in getting us there . If so, how would they communicate that . I think the fed has taken a 2 target because thats what we had for roughly 25 years before this inflation came about in the last year or so. And i think the fed would like to get back to 2 , which is considered to be a level where inflation is not a factor in financial markets. But i think getting there is not easy. And i suspect at some point the fed may say, well, maybe a little closer to 3 is okay. High 2s. Getting to 2 is going to be very, very difficult by, you know, next year this time even. And do you think how do markets react in terms of fed credibility and dollar strength, if that were to happen . Well, the feds credibility is very important to the fed. And the fed has been consistent saying 2 . Perhaps could reinterpret that a bit. I dont want to say the fed is going to change at 2 . Right now theyre adamant that 2 is their target but there are many ways to calculate 2 , i suspect. You see so many Different Companies and Different Industries within your portfolio and beyond. Do you agree we can achieve a soft landing, one more hike and done and theyre able to do that, bring down inflation as needed without taking us into a recession . The history of increasing Interest Rates, as much as the fed has done, does not suggest a soft landing is possible. On the other hand, right now i do think a soft landing is more likely than a hard landing. The fed has done a pretty good job of, you know, conditioning the market for what it wants to do. I think a soft landing is not impossible. I dont think well know for another six months or so. I do think we have a reasonable chance of escaping a recession. U. S. Economy is in pretty good shape relative to other the european economy and the chinese economy. In fact, were probably much better shape than the chinese or european economy. I think the fed has done a pretty good job. While people like to criticize the fed because its easy to do, i think the fed has done a pretty good job under jay powell of getting us to a point where inflation is back to where it probably should be, much lower than it was a year or so ago. David, on china, people continue to kick around the socalled japanification where its a slow slide, 1990 style. Others argue with the aging population and this rekals trant government and the debt load that its going to be more dramatic. Do you have a view either way . Many western economists for the last ten years or so says the chinese economy cant do what its done. With aging population, the Real Estate Market was going to collapse and other things in the Chinese Market was going to go down. Generally western economists have not been right. The chinese have figured out how to keep their economy going at reasonable levels. The numbers may be a little suspect from time to time. When the numbers dont seem to be favorable, they dont release them. I think the chinese economy is not going to collapse at all. I think they have enormous amount of foreign reserves they could deploy and i think they have a different system than we do. I think its harder for us to predict. I dont think the chinese economy is going to be going into a recession any time soon. Do you think its safe to invest there now, given that, all the geopolitical concerns . Well, its a little more treacherous than it was a few years ago, for sure. Sdpe depends on what youre investing in. Real estate may be more complicated, technology companies. You really need to have people on the ground who know w theyre doing when youre investing in companies. Its more complicated than investing in the United States or europe for sure. But i do think there are pretty good opportunities there if you know what youre doing and youre not dealing with regulatory issues all the time. You know, were getting a big apple event today. Theyve made highprofile migrations to their supply chain into vietnam and india. Do you think china feels that . Do you think there was something behind xis absence at g20 that sort of speaks to the share shift thats going on regarding supply chains . Well, the supply chain issue really arose, i would say, when covid came and people in the United States realized that not just on iphones but a whole variety of other things we were very dependent on china to manufacture things. I think American Companies have been trying not just because of the china factor but trying to not be so dependent on any one country for supply chain. Some manufacturer has come back here. And i think vietnam and other countries in Southeast Asia are going to get some of the business that china had. Its very difficult to replicate what thooin has because they have so many people and theyre very good at producing a lot of products. David, while were talking about all the big picture sort of risks that investors are thinking about now, i think we should mention the u. S. Fiscal position, because i know you watch it very carefully. It does feel like theres a heightened awareness and concern in the markets right now. I dont know if thats part of the reason yields are elevated right now, but these high debt numbers, the fact theyre high during an expansion period, and that were going to have so much issuance. Doesnt that tighten the economy and supply . Well, the debt in the United States is like the weather. Everyone likes to talk about it. At the beginning of this century we had 5. 6 trillion now we have 33 thrrillion. The only way out of it is inflate your way out. Were not going to increase taxes very much at all and were not going to cut spending very much if at all and were not going to go to the imf for a bailout, and were not going to default on the debt. What do you have left . You inflate your way out of it and thats basically what were doing. My young grandchildren will be paying off this debt many years into the future, i suspect, with inflated dollars. Do you think thats why were seeing high yields, part of the reason . Well, i think right now we lived with these high debt numbers for quite some time. People in washington, the government officials basically say the market was so terrible, the people in wall street would not be financing this debt. People on wall street are saying, well, government must know what its doing, it keeps issuing debt. Nobodys really doing anything about it. Its too difficult to get anything done. 85 of our budget is locked in at defense Interest Rates interest debt and defense spending and Social Security and entitlements, so forth. Very difficult to cut the budget. I dont have an easy answer for it. I dont think were going to do anything to cut the deficit very much. I suspect well have closer to 2 trillion deficit this year, not a 1 trillion deficit. Great. Not so great, but thank you for coming on with all the predictions and the opinions. Let me i dont want to end on a down note, let me say generally the u. S. Economy is in pretty good shape. The fed deserves some credit for taking on the inflation issue. They may have gotten there a little late but i think theyve done a pretty good job. I think were likely to have a soft landing rather than a hard landing. No doubt. It was all of powells training at the Carlyle Group that prepared him for this moment. David, thank you. Thank you. David rubenstein. Still to come, we will go live to cupertino ahead of the apple event and launch of the iphone 15. Maybe isps, charging ports, some rumored changes. And the ceo of airbus joins us. A surge in travel causing a jump in demand for airplanes, causing a stock jump as well. Ghba see wl etrtilbe rit ck. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. 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. Apples product event kicking off on the west coast where we find steve kovach live from cupertino. How much is riding on the launch of this particular new phone . Reporter yeah, carl, we got a lot of people already coming in to see it. You can see behind me the press and analysts starting to filter in. Look, a couple things to watch here. First of all, we know that this new phone is launching into a weak demand environment. In fact, i was here just a month ago talking to ceo tim cook, and he told me in the United States and other important markets for the iphone that demand is just weak. Thats why apple is expectingto see its Fourth Quarter in a row of declining sales overall sales, not just for the iphone, that is. A couple things to watch here. One, as they face that environment, whether or not the analyst predictions become true and they actually end up raising prices on the pro line of these new iphone 15s were expecting to see. Analysts are saying 100 buck price increase. That means starting price of 1,100. On top of that, and i know well have joanna stern talking about this, but big change from the European Union forcing apple to make a change to the hardware of the iphone, the port on the bottom is expected to change from the lightning connecter that you and i have been using for the last 11 years or so, thats changing over to the same kind of connecter called usbc that android phones and loads of other phones use. Apple will make it sound like a good change but they are being forced to do this. A eu regulation affecting american tech companies. Four models of the new iphone similar to what we saw last year. Two of the regular base models of the iphone 15, one with a larger screen. But all the new technology, all the new features get put into the pro models. That means faster processors, better cameras and expected titanium casing. Well get all the details in a couple of hours right there behind me on the steve jobs theater. Looks gorgeous. The hallmark of the last few events have been their ability to brag about going vertical in chips and faster processors. I wonder, is there discussion about the qualcomm deal taking some shine off of that . Reporter not really. Apple has been silent on that. In fact, yesterday i was asking, do you have anything to say about this qualcomm announcement . Just pure silence on apples part. It was a great advertisement for qualcomm putting out that announcement yesterday. Qualcomm gets to say not only is iphone 15 powered by qualcomm mow democrats it will be the 16, 17 and 18 over the next couple of years. So, i dont expect them to talk about that. They like apple likes talking about its own silicon and, yeah, its very clear after what we heard from qualcomm yesterday, theyre not able to translate that success quite yet, what theyve seen in the processor side to these mow dedems they r on qualcomm for. Well talk about that. Steve in cupertino. We havent talked about the china issue, which was the only topic of discussion last week. Right. The concern was reports about Chinese Government banning government use of apple iphones. And then the possibility, and, again, nothing confirmed here, that would expand beyond that in terms of a ban. We know chinas very dependent on growth from china for its revenues. That consumer business has been strong. For china. Were you struck by rubensteins comments a moment ago about chinese Economy Holding . Not really. Because they do a lot of business in china and have investments in china. It was interesting that he went against the doom on the economy. He said they have trillions of dollars in reserves and theyll figure out what to do. He also said economists have been bearish on china for a while and theyve been very wrong on china for a while. So, dont expect apple to get into any china commentary today because its all about the unveil of the new phone. But i think between that concern and then, you know, we were talking to tony, he said also apple has been in a slump. Their sales this year of iphones were weaker than last year. Its not necessarily that things are falling apart. Theres still strong demand. But its kind of a slump relative to where we were. That could be part of the weakness in the stock lately as well. Yeah. Every story about apple the last few weeks is led with threequarters of declining revenue growth. We are getting breaking news out of washington. For that we turn to emily wilkins. Hi, emily. Hi, sara. Hi, carl. Theres going to be news on capitol hill. Speaker Kevin Mccarthy is talking right now. He is expected to announce his support for an impeachment inquiry into President Biden. This ties back to hunter biden, a lot of his foreign business dealings, and whether President Biden was involved either in soliciting money or he was paid. We have had inquiries going on for several months looking into this. We havent found any direct evidence that biden was involved. Mccarthy is saying that what we have found has raised enough questions to begin an imp impeachment inquiry. Republicans are not entirely united. While republicans have been pushing for something against biden, digging him into, you have more moderate republicans saying, hey, this is not what we should be focusing on right now. We have to be digging into Kitchen Table issues. Theres been concerns from Congressman Ken Buck theres not enough evidence right now. Theres enough pressure on republicans that youre now seeing mccarthy come out and endorse that as a path forward. Of course, the question at this point, this is an impeachment inquiry. Are they actually going to get to the point where they move to impeach . Emily, i also wonder so, congress is back, sharp reminder there. I wonder how it relates to this upcoming deadline, september 30th, where the federal government runs out of funding. We could be facing a potential shutdown. Does this increase the risk there because of the what this might do . Its a great question. It kind of depends on who you ask whether the two are related. Certainly, congress likes to say they can walk into gum, they can put together the spending bills while doing an impeachment inquiry. Mccarthy faces a battle from his own members to ensure the government is funded. A lot of the same members pushing to have this impeachment inquiry go against biden are the same ones who have a strong list of demands of what they want to see if theyre going to fund the government. And so part of mccarthys strategy here could be to give them an impeachment inquiry, solicit support for passing a shortterm funding for the government that will give them more time to get the bigger bills together. Of course, its a question on whether thats going to work. Chip roy yesterday talked to reporters and he told them, look, these are two separate things. The impeachment is one thing, the spending is another. We have demands we want met on both. Fascinating that its an order from the speaker and not a house vote. Well see what happens later in the week. Emily, thank you. Emily wilkins in washington. Lets get back to apple. Wall street journals joanna stern is with us after the curtainraiser from our steve kovach. Good to see you. Are you a buyer of this view that a huge part of the install base hasnt upgraded in years and is poised to . I definitely believe a lot of the install base hasnt upgraded in years. Thats because we have seen incremental updates over the last few years and phones last even longer, right . You can replace that battery. You can replace that screen when you break it. So, that is part of the reason. I think that this year were going to see, again, another incremental update, what people may say is revolutionary but evolutionary. And around that, we do see people who are going to need to upgrade. Whether thats the two to three or three to fouryear cycle. We were talking a moment ago about some of the higher expected asps at the high end. Are you going to be sort of on watch for what you think the consumer can pay, can afford . Yeah. Last year my review of the iphone 14 was go pro or go home. It was very clear the pro models had superior features. Had the dynamic island which some people said was a gimmick. I liked that feature. It has the better cameras. It has the better design, better screens. So, when you look at all of that as the package and if youre only upgrading every three to four years, then why not spend more of that money . That was my case in my review. I expect theyll make the same case this year with some of the improvements were expecting in the pro lines. I do wonder, joanna, whether they say anything or whether you know anything about chips. We were talking to an analyst thats really bullish last hour from oppenheimer. He said that will be the key. That will put some concerns around huawei and china to rest, and thats something investors can get excited about, if they make some sort of advancement towards a. I. Using their own chips, in light of the qualcomm deal yesterday. Absolutely. Its a nobrainer. We can bet. I would say theres going to be four to five minutes on the new chip, on the new aseries chip, how thats going to be improving, again, performance on the pro lines, forcing people to feel like, okay, if i get that pro line, im going to get better a. I. Processing, im going to get better photo processing and making the case through the features, not the chip. We cant wait. Its always a fun ride to watch, even from a distance, joanna. Thanks for the heads up on this. Joanna sterns joins us from the journal. The ceo of Caseys General stores is coming up later this hour. A check on the consumer and how gas prices are playing a role in that quarter. Draw your attention to Morgan Stanley. Stock at session highs. Company says at barclays financial conference that Credit Capital markets performing really well right now. Part of several banks this morning that have had constructive comments about either markets or the consumer. Were back in a minute. 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Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire welcome back to squawk on the street. Im bertha coombs. Heres your cnbc update. Massachusetts city is under the state of emergency after flash floods dumped more than 9 inches of rain last night. Local Officials Say the flooding inundated roads creating sinkholes and damaged homes. The mayor warned people who lived there to stay inside as the rain came down. Schools are closed today as the city cleans up. The former spanish soccer president resigned over an allegedly unsolicited kiss at the world cup, will testify in Spains National court on friday. He has been accused of Sexual Assault and coercion because the player involved says she did not give him consent. The high court is in charge of the probe because the incident took place outside of spain. And Aaron Rodgers season is over, according to nfl. Com. The new york jets star suffered a torn achilles against the buffalo bills. The injury came just four plays into rodgers debut and during the jets opening possession. I think the new york football teams were just cursed this weekend, sara, between the giants getting trounced 400 and then big buildup for Aaron Rodgers, ten minutes in, hes out. Didnt they win . They did. But, man, i dont know. What a bummer. Sad news. Thank you, bertha. Bertha coombs. The ceo of Caseys General store is next. Stock higher after fuel prices helped to fuel profits. The ceo will join us on the back of the results with his outlook for consumer spending. The stock hitting a 52week high. Coach saban, this goat done took over our office. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. 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Heres why you should switch fo to duckduckgo on all your devie duckduckgo comes with a builtin search eg but it doesnt spy on your seac and our browser blocks creepy ads that follow you around fro and other companies. And its free. Download duckduk welcome back. Lets dig into bullish commentary weve gotten on the state of the consumer the past couple of days. First jamie dimon who said that consumer Balance Sheets are in, quote, great shape with more cash in their checking accounts than precovid. Wells cfo telling the conference the underlying performance of the consumer is, quote, still really good. B of a constructive on the consumer given Balance Sheets days after the fed showed new u. S. Data showing Household Wealth hitting a new record on a nominal basis. Important to keep in mind. True. Its interesting to see the divergence in forecast for gdp from the atlanta fed and the st. Louis fed. All over the map. Atlanta fed is still tracking 5. 6 growth for this quarter. I think st. Louis is negative growth for the quarter if not very little. It does depend on the consumer. Theres some mixed theres some questions. Retail sales on thursday will be really important because the resumption of Student Loan Debt begins. Starts october 1st. Theres evidence its already started. We started seeing money flowing into the department of education. That could take a bite out of consumer spending. And gas prices are on the rise. People spend more on gas and less on restaurants and services, which has been the strong point. Indeed. The gas price drag is important. Although goldman last week tried to argue the early resumption in payments on loans might mean theyre getting ready and theres less drag from here on out. Well see. True. Lets take a closer look right now at Caseys General stores. That stock hitting a 52week high after delivering an earnings beat in fiscal q1 with higher than expected fuel margins as they say they also plan to add more locations next year. Joining us for a closer look and first on cnbc interview is caseys ceo darren rebelez. Thank you for joining us. Its good to talk to you. Where do you think the consumer is right now . Thanks, sara. Great to be with you again. What were seeing is the consumer has been fairly resilient so far this year. We are seeing a little bifurcation between the lower income consumers and everybody else. But in our footprint, about threequarters of our guest base make over 50,000 a year. In our more rural geography, thats a pretty substantial income. So, those consumers are doing just great and we have great momentum in the quarter from a sales perspective. We are seeing a little pressure on the lower income consumers, but theyre not stopping spending. Theyre shifting around to more affordable options like our prepared foods and like our private label products. I mentioned the fuel margins. That seemed to be the good surprise in the quarter. Why so much better than expected and where do we go from here . Yeah. Fuel margins hung in there really well. I got to give a shout out to our fuel team because they executed in a challenging somewhat of a challenging environment really well. What i would say is over the last couple of years, fuel margins have been really volatile. Theres been a lot of exogenous reasons for that. This quarter was a little more rateable from a supply standpoint. So, the way we look at fuel margins moving forward is these margins at more elevated and historic margin levels are a reflection of whats going to be happening in the future. I think they are more sustainable at these higher levels. A lot of that has to do with the fragmentation of our industry. Twothirds of the Convenient Store industry are operated by chains of ten stores or less. So, when you think about the inflationary environment weve been in through the last couple of years, that puts a lot of pressure on those smaller operators. They have to raise fuel prices and extract margin simply to survive. In that environment, that works to our favor. Were seeing that play through on a lot of different fronts in our business. How would you characterize or describe the Pricing Strategy going into q4 and early next year exgas . Well, from a pricing standpoint, we look at category by category. Our merchants spend a lot of time trying to position our pricing relative to our competition based on what that category is. So, in some categories we want to be very aggressive and we want to drive traffic for those categories. So, well price it accordingly. Other categories maybe we dont have that focus and were more looking to gain margin and grow growth profit dollars. We strike a balance across the assortment. It all blends into pretty good margins for us. Frankly, we have some of the best inside margins in the industry as a result of that approach. So, how big can you get . Your stores are mostly, what, in the middle of the country, midwest, right, ohio, indiana, illinois. How big are your ambitions when it comes to expanding . We can grow a lot, sara. Just a quick data point. We have 2,500 stores in 16 states. But 2,000 of those stores are in only nine states that we operate in. So, we have a lot of white space just in our existing geography. But there are small towns in Rural Communities across the u. S. , obviously. So, with only 17 states penetrate 16 states penetrated at this point, we still have a long, long runway for growth. How discretionary is Convenient Store spending, darren . What happens typically in recession . Because gas you need. But, you know, those extra little treats that people buy, i dont know. Yeah. Actually, sara, you know, weve performed really well in recessionary environments. One of the things that really helps our Business Model is that we sell basic needs. So, 80 mrs of what we sell is consumed within minutes of purchase. Really highlighted by our prepared foods business. So, when you think of more discretionary retail, its easy to give up maybe not buying that new Television Set or a couple hundred dollar pair of jeans, but when youre talking about your delicious Breakfast Pizza and cup of coffee or energy drink to get you through the day, those are low dollar purchases and make you feel better about getting through the day. So, we find that the categories we play in are very resilient in recessionary time. And pizza, which is a staple for me always. I dont think people realize youre the fifth biggest pizza chain in the country. Quite a distinction. Well, it is. Really, pizza is the crown jewel of our business. And, you know, in this quarter we launched a new thin crust pizza platform, which performed exceedingly well and really highlighted the value and differentiation of caseys. Thats what helped drive traffic into our stores. Thats why we had such a strong quarter. Analysts were excited about that thin crust pizza launch. Thank you very much for joining us. Appreciate the color. Thanks a lot. The ceo of airbus coming up next. Travel demand bounces back and airlines scramble for planes. Cnbcs Financial Adviser 100 list. You can head over to cnbc. Com fa100 to view the entire list. E. 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. You cant buy great conversations or moments that matter, but you can invest in them. At t. Rowe price our strategic investing approach can help you build the future you imagine. T. Rowe price, invest with confidence. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Demand for airlines is striking as airbus has been one of the biggest beneficiaries of increased demand. Lets get to phil lebeau who joins us with the airbus ceo in d. C. Hi, carl. Gall a guillaume faury, ceo of airbus. Whats your take on global traffic and where its headed over the next six months . It keeps going. Demand is very strong. We see the widebody business recovering as well. We keep having a demand for planes that is significantly higher than the ability to supply. Thats why thats what were working against. And making sure you can meet that supply depends on the supply chain. We talk about this every time we meet. How much more comfortable are you now with the strength of the Supplier Base than you were, lets say, a year ago . Yeah, things have been improving in the meantime, obviously. But we have more expectations as well as we are in the rampup. We keep seeing a lot of and our job is to try to manage those bottlenecks as good as we can to keep growing at the pace we have indicated to our customers. Is the bottle neck with suppliers employment, the ability to find the Skilled Labor they need . Depends on the suppliers, but thats one of the drivers. Weve had some drivers as well coming from the availability of raw material, of logistics around the world, price of energy. Its a complex environment. You have the geared turbo fan engine, which is on a number of a320s, which are going through inspection or going to be repaired because of the fan blade issue in terms of the manufacturing process. Are you still a believer in that technology . Oh, yes, we are. Of course. Its a very good technology. It sells the market well in terms of performance. We have some durability that needs to correct and thats ongoing. Plus the recent quality product airbus is addressing that will put aircraft on the ground in large numbers for the next two years. Thats something that needs to be done for protecting safety. That doesnt undermine the technology itself. You have the a320 in mobile which you plan to get up to 30 by, what, 2026 from where you are right now. Can you make it there . Do you have the manpower and the supply chain that will give you the confidence that you can meet those targets . Yes, we are very satisfied with the footprints we have in the u. S. And also in canada for the 220 and the 320. We are on our way to grow. We are putting together fourth final Assembly Line in north america for the a321 which we start producing and delivering by 2025. Then well be up and running going up to 30 planes a month in the u. S. Or in north america. Thats quite massive. Yes, we are on the trajectory to do this. On the flip side, you have production in china, massive market for airbus. Because they havent placed an order with boeing since 2017, this has been a market thats been very good for you. Whats your take on the China Economy right now . China economy is softer than what was expected going out of covid. Still the demand for planes is very strong. We have one Assembly Line in china and we are building a second one for the 220. We want to be well equipped in china to serve china. I remain optimistic on the growth of the business in china. I have to ask you about the push for lower emissions. You have staff production being subsidized in the United States. You Just Announced a deal to work with the development of saf. In europe its not incentives. Does that need to be changed for manufacturers to hit their targets . You need a good combination of Regulatory Framework that supports the use of saf but you need a way to help as a government or as an authority. Because the beginning of the cost curve is very expensive. Thats the place where you need to give some incentives, some subsidies to grow through that part of the cost curve thats painful and then it flies by itself. A good combination of Regulatory Framework and subsidies is the right framework. We very much welcome what has been put in place with the United States with the i. R. A. Proves to be strong and successful. How do you feel about the a380 flying for lufthansa again, with routes in the u. S. . It was difficult to take the decision to stop the production of the 380. The 380s were put on the ground. We see them flying around the world. Thats a pleasure because we love that plane. Youre a proud papa there. Thank you. Guillaume faury ceo of airbus at global aviation summit in d. C. Extremely cool, phil. Still to come this morning, the doj taking on Google Search dominance in this antitrust trial. Widereaching implications and detas tethbrk. Ilafr e ea with your hearing, if you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. well find you a hearing aid that fits your lifestyle and budget. Unlock your riskfree trial during our limitedtime sounds of autumn event. Call 1800miracle to book your appointment today. The doj trial against alphabet kicking off today, the biggest antitrust case since facing off with microsoft two decades ago. Back then when the Big Personality was bill gates, this time it might be alphabets pichai. Hes a peacetime ceo. Sundar pichai is a really nice guy, is that enough . Sundar pichai is calculating and efficient, the wartime google needs. Since taking the job in 2015 Sundar Pichai has increased the val up of google more than 300 facing critics inside and outside of the company. Internally he has had to navigate an increasingly del delicate, turmoil over discriminatory policies, contracts to government agencies, and Ai Research Center in china. None has impacted the business in a material way. Google is still seen as one of the most desirable places to work here in the bay area. When pichai did have to cut the workforce, he did so swiftly and efficiently. He laid off 6 of the Global Workforce amounting to 12,000 employees in january. Perhaps his biggest crisis came this year when wall street thought google had fallen behind in the generative ai race and microsoft and chat gpt were going to kill its golden goose, search. No one thinks google is behind anymore. Take a look at this chart. It is outperforming microsoft this year by nearly 15 percentage points. So wall street and the doj perhaps should not underestimate pichai over the next few weeks and months as the doj makes this case that google has abused its power. Finally, i can not mention this. When nadella said he would make google dance, pichai answered yesterday in a wired interview and said in cricket theres a saying that you let the bat do the talking. So, guys, Sundar Pichai may be quiet and soft spoken, over the years hes proved himself, and this could be an interesting battle shaping up between him and google and the doj. I was going to ask how theyve been dealing with the regulatory issues. Todays case reminds me a lot of what they faced in europe and have been facing in europe from their antitrust market. Not sure margaret would give him the glowing reviews but im curious what thats been like. She might call him a formidable opponent. Sara, you know better than anyone, it has faced more google has faced more penalties, more fines in europe than it has over here to a wide degree. But, you know, something Sundar Pichai has done over the years, hes known who to appoint. This move we got last Earnings Call was moving the cfo to president of the company. She is going to have more of a role with regulators. To move someone so high profile that has been so good at her job as cfo into that kind of role could be really interesting. Well see if it turns out to be a good one. The other thing ill add, i wanted to provide opposition to the idea Sundar Pichai has done a lot that proves he might be a wartime ceo, when the stock does 300 and is riding this ai wave, 300 since he became ceo, that makes up for a lot of other stuff. All right, deirdre, thank you. Good to get your perspective. Deirdre bosa. Still to come, a key Energy Agency says it is the beginning of the end for fossil fus. El we have their new time line and who it is next. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire energy is in focus today on the street ahead of the international Energy Agency declaring the demand for oil, coal, and natural gas will peak this decade, calling it, quote, the beginning of the end of fossil fuels as the world marks a turn to more Renewable Energy sources. Higher oil prices contribute to that pivot. Crude did hit the highest level of the year today, got to 89. I think its notable for two reasons. One, they are the International Energy watchdog and, two, the specific forecast for the first time theyre saying is fossil fuel consumption will peak just before 2030 and fall as the Climate Policies take place. So get ready, i guess, although its not going to be good enough for those that say we need to warm our planet even faster. Of course thats a global picture already in china, the huge refiner there, has pulled forward their peak demand a couple of years. Its happening in some parts of the world more than others. Looking at the market, the tenyear yield has turned lower on the day. It feels like weve broken that correlation we had lower yields, higher stocks. The dow is up 54 points right now. The s p has come off its low. There are pockets of strength. We have energy up. You mentioned oil prices, industrials and utilities. One big interview on the markets and the economy were looking forward to this week 10 00 a. M. Talking to ken griffin. He doesnt speak that often. He is, of course, the leader of citadel, one of the most well, the most high earning hedge funds and wealthiest individuals in our country, on thursday. This week on the economy and the markets. The judge is in huntington beach. Lets get to him. All right, carl. Thank you very much. And welcome to the halftime report. Im scott wapner. As carl said, live today from the future proof wealth conference here in huntington beach, california. Our josh brown has a big part in this event. Well talk about that in just a moment. He is with me, today, along with liz young and shannon saccocia. Less than an hour away from apples big event a few hundred miles north of us. Well size up whats at stake for that company, definitely whats at stake for the stock, and the markets as a whole. Lets take a look right now. The dow, a