More than a decade earnings in focus, state of texas, ea, match, humana and amds chief lisa su will join us later this hour. Apple sports books reportedly reaching a new streaming deal with the pac12 lets begin with the fitch downgrade. Downgraded the u. S. To aa plus you talked about this last night. Is the market shrugging it off or not i think it has to in some ways, its just an upgrade of the way we run our country, and i think you want to go back and think, well, what happened in august 5 of 2011 when the s p downgraded us s p was at 1,119 it had gone down to 1,095. So, there was a big decline. Then, one year later, it went up so, in other words, if you just take the worst case scenario, which is what happened in 2011, it was an amazing buying opportunity. And when people looked at it, i think they said it was quizzical. Tim geithner was very angry, said it was wrong. This one says, youre a completely dysfunctional country, and we recognize that but all countries are dysfunctional. Were dysfunctional less than others are you buying the pushback that their model is actually on the mend why didnt you do this three years ago when things were even more tire . Arguably, they say look, i think its very easy to say that we are, as people are saying, that its the worst weve been since we started as a nation i think they should take a look at that, like 1860, 1862 period, which is kind of perilous. Not being facetious. There were times lincoln had a lot of fiscal responsibility, but if you want to go there, i think you can say, well, you made a big splash, fitch, thank you, but a week from now, were not going to be talking about it maybe we wont be talking about it three days from now thats sort of the view theres a bunch of notes and reaction this morning. One of them is exactly as you said, that this is going to turn very political, and you can sort of see that in yellens Statement Last night yes well, look, i mean, should we be doing this since debt ceiling . Its obviously a very inefficient way to deal with it. I like to speak to Speaker Mccarthy, because Speaker Mccarthy had some very practical things to say about how its not the way to run the government. I think that both sides dont want to run the government this by the way if thats what fitch is saying, it could promote anything like that, that would be good Interest Rates are up again today. I dont think its a coincidence. I think the economy isnt as strong as we thought the job numbers are very good. Were talking about fitch today, so you can make anybody can make themselves relevant i mean, its relevant. I get up and say, i got to look at fitch havent looked at fitch lately good for them. The people at fitch right now are saying, theyre talking about us make it louder theyre talking about us this is really good. Were relevant this is amazing. And there you go and then tomorrow, theyre like, well, that was nice. What happened to fitch . Yeah. There are a host of reactions. Larry summers calls the downgrade bizarre and inept. Wells today, we believe, any pullback in stocks would be relatively short and shallow i am reminded, jim, of when we were still facing the showdown in congress and you were leery of whatever effects might come from a failure to agree. I didnt think Speaker Mccarthy had it. I just didnt. I underestimated him he was very strong in terms of getting that done. And didnt get heralded because, i mean, look, if youre from the right, you didnt like him he compromised if youre from the left, you didnt like him because hes still too far right wing, but he pulled it off, and you have really no credit for it. Im not trying to say, listen, hes the guy i am saying that if he hadnt done it, then i think that we would have then fitch should have that would have been a good time for fitch to say something. But now, its just kind of its very interesting. I agree with Larry Summers for the First Time Since he was president at harvard since then, i felt that he liked to throw bombs hes kind of a bombthrower. Thats going back a ways. By the way, hes hilarious. And i dont mean that like when i say someones nice, which means i think theyre incompetent. Hes a smart guy, but, well, this is something i agree with him on that pictures younger as it is for a lot of us. Yes, it is. So, where does that leave us . Are we still watching memes . Are we watching earnings adt relevant today i was doing some work on tupperware, because rick goins used to be the ceo of tupperware they had a great business, and it kind of went down during covid, and they kind of decided to change the distribution channel. They had three million women work be for them it was really great. Do we go back to that . That one has a buy on it too, and they have to have the stock ready. They have to have a hundred million shares ready not at the market but actually its a boat load and hit the memes with it the memes dont really understand the process, but as soon as you get that okay from the s. E. C. , which they say is going to happen any day now, then theyre all going to have enough money to pay their bills and get in compliance, but their Business Model is so bad and theyre really inept at running the company, it wont matter you talked about the giveback this morning i was saying last night that tupperware should be shoulder unless they bring back rick gogoings. By the way, no one ever thinks their stuff is bad by the way, the nul stuff is starting to sell so, the memes can have some fun. You know, i think that theyre exhausted too. Like, the memes are trying to find, well, give me something new. We cant see the balance in 20. Tupperware was fun while it lasted now were in the amazon, apple part of the order, and real companies, and a lot of those stocks were down very badly on this fitch thing at 4 30 i love watching frank, by the way. Frank holland. And you look underneath it and its like, okay, alphabet is down 2 bucks on the fitch downgrade. Whos doing this whos trading in their pajamas and the answer is people who are stupid enough to trade in their pajamas. I always got dressed at 3 00 in the morning. You dont wear feet pajamas to trade tokyo rail youve been consistent in your pajama criticism for years now. Theres a lot of guys who do that trading please take their money away these are people who bought cbs when it was up, and now its down or they bought cbs, thinking it was paramount. I dont know there is no sense to watching the ticker early on, because its just everybody does it wrong. And now that we come in and we suss out fitch, we realize, why did i sell it . And then you start googling fitch. Yeah. Well, you mentioned apple tomorrow night i see jpmorgan today goes to 235 that piece is revolutionary that piece says it is no longer a product company. Its a Service Company its a derisked company. Now, i always feel like if you derisk apple the day before, you run the risk of running into a genuine buzz saw, but it was such a positive piece. I was like, wow. Jpmorgan is just all in, but i like the piece, and i think that when we talk to apple tomorrow, were going to have to Start Talking about the idea that, what are they doing for programming . Pac12 i dont really care for pac12 football, but the fact is that if you could watch pac12 football, using the vision pro, i mean, i was watching an mls game, and the ball came at me, and i ducked it was that realistic. I hope tim talked about that tim cook, ceo of apple also tangentially, not that its a huge not the First Priority for apple, but it does look like the riders after 92 days are going to return to the table and talk to studios. You were looking for any signal of labor peace you want labor war . Take a look at the things that sean fain is saying in autos hes talking about a workweek thats incredibly short. Hes talking about going back to the combined benefit hes basically talking about that class that i had about the sparsest Workers League and how marx was wrong because marx felt that there should be some capitalism only the workers belong. This man this man studied trotsky, preice pick in ear you think some of the weakness this morning is about uaw over fitch Walter Ruther seems like hes a man of peace it is i have to tell you that if this guy, if sean feiain, the uaw head, if he gets his way, you can short every single auto company until the cows come home they will be the least Competitive Companies on earth there are companies in france right now who are saying, holy cow. What are we doing working wednesday and thursday why cant we be like ford motor . Well, they present to gm today. It must stop. Honestly this is not capitalism its not capitalism. Its some other form i took seven courses on communism at harvard because i was in a particularly bad period at harvard. There should be an eighth course sean fain and what he had to do with engels. It was marx and engel and fain when we come back, well talk earnings and chips and a. I. With amds ceo, lisa su. Meantime, there is Material Weakness in the premarket, although weve gone 47 trading days without a 1 decline on the s p. Old school wisdom, with a passion for whats possible. Thats what you get from the Morgan Stanley client experience. You get listening more than talking, and a personalized plan built on insights and innovative technology. You get grit, vision, and the creativity to guide you through a changing world. What if buildings could tell you how they could be more efficient . Im listening. Well, with ibm, you can use software to help you connect and analyze data from hvacs to elevators to lights. What if we use aidriven insights to pinpoint inefficiency . Yep. And act on it. Saving energy, money. And emissions. Yup. Thats a big one. Now youve built Something Better for everyone. Thats the sustainability solution ibm and a Global Real Estate company created. What will you create . Ibm. Lets create. Carl, we have a welcome back treat for you. Weve got lisa su. Shares of amd are rising ceo lisa su joins us now lisa, it is so great to have you back on a day when a lot of people felt, i dont know, maybe youre just kind of becoming alsoran to nvidia, which is completely not true. Well, good morning, jim good morning, carl its great to be here with you guys so, tell me what youve done is that you ordered a lot of chips, a lot of cards that are as fast as a lot of nvidias, and it seems like every hyperscaler wants what you have, which means youve got not a quarter, not a year, but multiyear revenue stream beginning right now. Well, first, jim, id like to say, we were very happy with our execution in the quarter were seeing some positives. We saw our pc business actually grow 35 sequentially. We saw really strong pickup in our newest products, our fourth gen epic cpu products. We had great partners like amazon and meta, as well as oracle and all announced microsoft azure all announced new installations with our newest cp us and were very excited about a. I. Everybodys talking about a. I. , but you need all the computing infrastructure to be there, and were all about multiyear, multigenerational road maps and setting up not just the hardware and the software but also the supply chain for that. So, yeah, were excited about what we have in front of us in the second half of the year. Lets take them one by one. When i listened to your call, i started thinking, my pc is not going to be the pc that it is right now, and that theyre yes, sure, were coming through a period where there was a glut and coming out of that can you give me an instance of what my pc might be like a year from now because of your chips yeah, were excited about a. I. In all parts of the market. When we see it in the largest datacenters to edge devices to pcs, we Just Launched a set of products that actually have a. I. Inside the pc, so its really on board. And what that means is, you know, our pcs are just going to be much more productive Going Forward. So, we are coming out of, lets call it, a volatile cycle for the pcs. We see growth into the second half of the year and even more so as we get into 24 and 25, and the idea is that your pc should be your productivity tool to help you really organize all aspects of your life, and generative a. I. Is going to be a big piece of that. Were working very closely with microsoft and a number of other hardware and Software Partners to really bring all of those experiences to life. So, its an exciting time for the pcs. If i have a a microsoft pc, would i be able to say to it, ive got lisa su on at 9 15, and i would like to be able to just talk to you, pc, about what you might think that we should be talking about i think we are going to have the capability to just organize all of our thoughts and all of our history and all of our capability thats the beauty of jergenerate a. I. You have the power of the cloud and all your personal data as well this is a multiyear journey. These experiences are going to continue to get better were working very closely with the entire ecosystem to make that happen, and so thats part of the promise of all of this new computing that were able to bring on hey, lisa, i think one of the more interesting wrinkles this morning is your comments about how to satisfy customer demands in china while still complying with export controls can you talk about how amd and maybe corporates at large are trying to navigate that . Well, i think i would step back and say, carl, overall, theres just a tremendous interest in a. I. Overall what weve seen just over the last 90 days is weve seen our customer engagements increase by over seven times everyones looking for how do they get more a. I. Solutions, and were very happy that we have a strong road map to do that as it relates to china, china is an important market for us of course, the export regulations are very important, and we all see that. But we also see that theres an opportunity to develop products that really fit within that. And so, this is all part of what we do to really take our baseline Foundational Technology and make sure its for the market people are saying, when will xilinx kick in there are a number of references to some of the businesses that i think you picked up with xilinx, and maybe you can tell us about the companys mosaic and where it was before the purchase of xilinx our embedded business now has had a tremendous run, so we had very, very strong the last six quarters in terms of just overall Revenue Growth i love the markets that were in the fact that were in aerospace and defense, industrials, test measurements, emulation. These are really great markets that need a lot of computing the beauty of it is were finding a lot of synergy between, lets call it our fpga and adopter products and customers are coming to us looking for Overall Solutions for their computing needs. So, very pleased with that, and weve really been able to brain our a. I. Teams together. A. I. Is absolutely our most strategic priority from the largest cloud datacenters from people who are running the largest training and inference models to what you have at the edge to what an industrial customer would need, what an automotive customer would need to what you have in a client when we just talked about pcs a, and that really is the synergy of the Great Technology weve gotten from our acquisition of xilinx, as well as our strong investments over the last few years. Lisa, i know youd love to talk about the business rather than the macro, perhaps, especially in light of this downgrade that the u. S. Got from fitch, but can you give us an inkling of how kceos are discussing it . The environment still continues to be a little bit mixed when you look across the different market segments, but from what we see on a longterm basis, we see a growth environment, and from our business Going Forward, we see the second half, actually, we see nice growth across the business were particularly excited about the growth in the datacenter, and again, what we see now is the data center looks to us to be about, you know, 50 or so in the second half versus where it was in the first half, which is a really strong statement of where we think demand overall is so, you know, agree that theres some, you know, mixed signals in the market and we have to navigate through those, but overall, we see a bias towards the positive one last question, lisa at this time last year, i was worried that you had way too many chips or clients, in other words, for pc. Do you have enough of the mi hundred, which is the rival, the equivalent to h100 of nvidia, to be able to make it so that you can literally fulfill all the orders that you have well, jim, one of the things that we are really good at is managing the overall supply chain, and as we work through some of the inventory on the pc side, weve worked through a lot of that, and i can tell you on our mi300 or on our a. I. Chips, weve been planning for this opportunity. Its a really important opportunity. I think a lot of customersm wan to be able to ramp as soon as possible weve been setting up the supply chain for the last couple quarters and we feel very good about what we have in the second half and into 2024 as we really participate in the most Important Technology trends over the next five years. So, its an exciting time. I would say, to be in a. I. And in computing, but were ready for it well, its true its good to know that its just not nvidia and no one else i think its nvidia and amd. Lisa su, ceo of amd, thank you so much for coming on. Great to see you great to see you guys too still to come, well get cramers mad dash, take a look at the premarket as futures are weak more squawk on the street when we come back i got the cabin for three days. Its gonna be sweet what . Im 12 hours short. Have a fun weekend. Unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. Take a look at the premarket here once again, a lot of discussion regarding the fitch downgrade of the u. S. And the menu of corporate earnings not a lot of relief in at least longterm yields with that long bond back to 4. 16 opening bell is in a few moments, and dont forget, you can catch us any time, anywhere, just listen to and follow the squawk on the street opening bell podcast. Thousands of women with Metastatic Breast Cancer, are living in the moment and taking ibrance. Ibrance with an aromatase inhibitor is for adults with hr her2 Metastatic Breast Cancer as the first hormonal based therapy. Ibrance plus letrozole significantly delayed disease progression versus letrozole. Ibrance may cause low white blood cell counts that may lead to serious infections. Ibrance may cause severe inflammation of the lungs. Both of these can lead to death. Tell your doctor if you have new or worsening chest pain, cough, or trouble breathing. Before taking ibrance, tell your doctor if you have fever, chills, or other signs of infection, liver or kidney problems, are or plan to become pregnant, or are breastfeeding. For more information about side effects talk to your doctor. Be in your moment. Ask your doctor about ibrance. We never just see the numbers. We see the people. Marcus detroit, its just changed so much. You can see what it once was. And then, i think about what it can be. As an entrepreneur, its about how i can give them the tools to empower themselves if we can just all do something small, all the small things will start to amount to something big. Thats why were here to help make it happen. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. It really plays with our results this quarter coming in what we had guided on top line, bottom line, and users on getting back to margin expansion, but most noteworthy, it was our best user growth quarter in more than two years and when you decompose that, you ask about gen z, gen z is our Fastest Growing cohort theyre real. And theyre real for two reasons. One of the reasons is because theyre becoming more shoppable. But the second is, the gen z comment is actually in relation to the way gen z thinks. Bill believes that gen z doesnt like combat. That they dont like the backbiting. They dont like letter x and theyre going to pinterest if they can get international up to anywhere near the margins and frequency, this stock flies to 40. Bill ready is very, very smart, and hes doing a lot of right things, and people are coming back to pinterest. The numbers were quite good, but the stock was up some 40 . I did notice that rosenblatt guys to buy 35. Enticing progress. They do talk about rising relevance. It is good. And i think what people are going to end up doing is if you plan your trip, youre not going to then go to bookings youre going to stay there i think that bill is revolutionary in the sense of realizing, as with shopify, as with roku, youve got to do everything on the site you cant be, like, learning there and going to amazon. And thats what bill ready is doing for pinterest. Very solid we are going to get shopify tonight, along with qualcomm i know. Big day tomorrow afternoon. Lets get the opening bell at the cnbc realtime exchange at the big board, its a weightloss platform celebrating alisting via spac. At the nasdaq, its the new York City Department of transportation celebrating the summer Streets Initiative where they clear the streets of manhattan and the boroughs, jim, let you party for a few hours. I think its terrific i know that on the starbucks call, and well get to that, they still have 3 of the city of the urban area has not come back. But i see it over and over again. The urban at least in new york its back, its back, its back, and people may think that its related to whether people are workfromhome, but the streets are packed tonight im curious to know what you thought of starbucks last night and the cfos comments on squawk today and the guidelines china is extraordinary. Did you know they had done 24 million more in the u. S. , they would have done 8 comps in all these nay saying analysts would find themselves eating crow i think the china numbers are incredible, just in terms of the amount of white space they can have my only criticism about starbucks is that they have missed out, and this is not their problem, theyve missed out on the super high caffeinated drink in the afternoon, the dutch bros drink. I think theyll solve that problem. Theyve solved a lot of throughput problems. The membership, their rewards program is extraordinary no ones trading down. I think its wrong that the stock goes down big. I think this is the beginning of a new ramp, and look, big shoes, okay hes following howard schultz, who always had a production, a grade play for the quarter, and i think that lakshim is more like pepsico, which is like, here, were just going to do the number so, i think the people are my travel trust owns it i say, bring it to me. Keep selling, because this is not the kind of starbucks that youre going to be used to it is going to be consistent and good and growth, and i like him very much, and i think this is a buy. Thats interesting. U. S. Up 7. Its still better than some of the yum metrics. Kfc, pataco bell, pizza yum put a brave face on it. I know starbucks wanted an upside surprise. I say look at the basics look at the machines theyre putting in look at how theyve now adjusted the cold brew, and please, look at the fact that the china numbers were extraordinary but everyone by the way, the analysts, uniformly, take a chill pill go get some xanax if not some clonopin, or maybe true leaf in florida, because boy, were these people negative. I was like, wow. Geez you guys really had a bad day. Its not going to be starbucks that you want. Its not going to be what i would regard as being funny girl i dont know what they want. I mean, its more like rent. You like theater, carl, and starbucks he does not want theater. He wants blocking and tackling starbucks, and so do i, because im tired of the episodic that way, this way, that way. Bank are him, not against him. America already terrific hes an operator, and i love operators. Hell do a great job you mentioned some prescription meds. Maybe they can go to cvs for some of those. They got their results in following reports, of course, yesterday, about some head count reduction. Yeah, i dont know thats up a dollar and then its down 3. 3 yield people do not like brick and mortar thats the problem they dont like brick and mortar because even though shes done this Great Health Care initiative, people actually go to cvs when they go to cvs, theyre confronted with that very difficult plastic piece of paper plastic sheet that makes it difficult to buy things, so youre constantly having to press a button its a very bad model. Two names in consumers that are flying today are e. L. F. And freshworks we were all talking about freshworks, is it for real but i have to tell you, the man who runs e. L. F. , and i brought it home to my wife, its very funny. Its very inexpensive and also, by the way, very good environmentally. A lot of people feel that way. She says, look, i dont want i dont want this e. L. F. Throw a couple of mac tops on it and estee lauder, and she goes, its never been better so, you have to be aware that this is a revolutionary company that is in target, that is in sephora. I happen to think Estee Lauders stuff is superior, obviously, but they are the Ideal Company for the young person who doesnt have a lot of money and needs makeup, and thats why they keep delivering, delivering, delivering my hats off to them remarkable quarter chart elf against estee lauder oh my gosh my travel trust owns estee lauder and weve made a huge amount of money, but he made his bed with china, and elfs made its bed with everywhere. Tarang is hes so nonpromotional that you want to say to him, look, be as good as your product, but he wont he says, thats not his style. He just goes and delivers. Now, estee lauder will deliver because i think that fabrizio is one of the great packaged goods people there is, but he made a lot he made korea he made china huge, which was great for a long time, and now the you know, he needs the Stimulus Program he needs there to be a program, literally, for skin conditions, because i mean, oh you mean a government yeah, like, stop coal and skin conditioning. We mentioned autos a while back ford is posting u. S. Numbers for july let get to phil lebeau good morning, phil good morning, carl. These are roughly in line with what some of the analysts were expecting for june, july, excuse me, sales up 6. 4 . And its really the internal Combustion Engine vehicles and the hybrids that are offsetting the weakness that were seeing with electric vehicles at ford fseries, up 8. 2 . Bronco, up 20. 1 ev sales overall, down 18. 1 hybrids, up 31 . Thats part of the story about why theyre doing the pivot that theyre doing. By the way, lightning sales in july, just 1 is thousand 552 were sold. That was an increase of 9 compared to june, but remember, they had production suspended for most of june well see if this pivot, in terms of the price cuts and greater production, actually increases the lightning sales as much as ford is hoping for in the second half of this year again, ford sales for july, down 6. 4 sorry, up 6. 4 . Phil, just get you for a quick second we talked the other day about how disappointing it could be. We know that they just restarted the f150 lightning Assembly Line i mean, are we going to find those backed up at dealers dealers lots . I dont think so. Well, jim, its pretty hard to find one at a dealer lot right now. The few dealers ive talked to who do have them, they dont have a ton of them they have some, but they dont have a ton of them, so i think the idea is theyll have greater inventory, so there will be greater selection at the dealer lot. You combine that with the price cut and the idea at ford is they believe this will start to juice the market, if you will, that people will come in, and maybe they were interested in a lightning, and now theyll see, looking, xlt, i like it now at this price compared to where it was before thats the theory or the game plan from ford to be personal about it, my daughters got a she had a bronco, and when i was there, all the bro ncos were sold out each bronco had a name on it i listened to farley hes not talking about his strong suit. What happened here why is he saying, hey, listen, go try to find a bronco, good luck to you . Well, he knows the way the market works, jim. Come on. This stock doesnt trade on internal combustion vehicles today. I know. Im just trying to help them whether its right or wrong, it doesnt they are killing it when it comes to i. C. E. Vehicles as well as their commercial vehicles nobodys arguing with that, but if jim farley sits and talks about that, you know where the analysts are going, but what have you done for me when it comes to electric vehicles for better or worse, that is the game for ford and for all the automakers right as rain i know trying to change the narrative a little late in the game. Thanks, phil you bet she does like the bronco, for what thats worth. Yes we mentioned we havent yet mentioned humana and unh moving on these results look, i mean, humana was crushed, because the pickle. Remember that . I remember. Remember that period . U. P. S. Note i had played pickle, and ive got to tell you, i play contact pickle, so i totally understand what youre talking about. No, i play contact gardening no, this is we had this problem with unh, and theyre all recovering bruce did a very good job, the ceo of humana. Those are conservative numbers i was worried this morning, because this has become one of those things where everybody just says, look out, everyones back doing operations and the raw their numbers are going to be bad. The numbers arent bad so, i feel very good about it. I think its the beginning United Health led the group. Its the group is not expensive. Good numbers. Yep swings of consumer behavior. Generac is taking it on the chin this morning, jim, on this miss, although revenue was ahead they do cut the yearly guide lower residential sales. Its volatile. Its crazy. One of the things and phil is so right i mean, when i was out at ford, i kind of wanted the story to be more than just e, but generac can be hurt by the f150 lightning. You can plug it in to power the house. The amount of money theyre losing on that mustang is really incredible but yeah, i just feel like this whole alternative energy save trying to fix the grid, become a bad story. The end phase energy a lot of younger people are in these stocks, and i think that theyre discovering that theyre playing with fire. Its not a Solar Revolution anymore. Its not a backup generator anymore. It is really about wind, which was really good. We know that from larry. And about improving the grid, which is why i think that both eton yesterday and emerson today are doing fabulously fabulously theyre improving the grid thats what matters. Just to stick with the cyclical industrial trade, we had cat on yesterday thats above yesterdays record high yeah, well, look, there was some real, i dont know, i want to be polite there were a bunch of stooges that were telling you to short the stock. They were major firms. I came on, and i challenged it basically to a claymation death match. And i got to tell you, two enter, one leaves. I left theyre still in there theyre like the master blaster. I cannot believe guys who are against jim, he said over and over again he was going to do x. Now hes done x. If you go listen to the eton conference call, it is so clear that no orders have even come through yet for i. R. A. , and it is going to be caterpillar, get on board get big or go home you think its just getting started. Oh, yeah. Theres been very few orders placed, according to eton. Etons quarter, oh, man, that was a critic it was belichick when we realized it was really brady and not belichick. I just wanted to take a cheap shot i just was in the mood does dupont take any of the shine off that this morning . No, i got to tell you, ed green is delivering exactly what you want youre troughing a lot of their electronics with pcs and semis, thats coming back i think this is a bullpen name you want to buy ed green right here, lot of firepower also, water is good there, believe it or not. I think it is the right time green is more energized than any time that i have heard him in this many years. Dupont is an inexpensive good stock, it reminds me of 3m without the lawsuit. Couple names well talk about later on this morning. One is match beat and raise btig goes to buy 60 tinder. The commentary around the ad market hasnt been all that terrible look, i think that the ad market has shifted entirely. The consumer packaged goods story, when roku, which reported on thursday, very unheralded quarter, was Extraordinary People the amount look, 37 according to netflix, 37 of the people are now streaming, and theyre streaming and again, well have Shopify Shopify is doing a lot of stuff where you can buy things online, like basically looking at your machine. I believe that the ad market is alive and well its just not where i thought it was going to be. Although charter got upgraded. I was going to say, what goes bullish, charter and lets see. 565, outperform. They have some nice things to say about our own parent as well on comcast yes, they did they had nice things to say, and a lot of it just feels like the worst is over, just the logic behind it. I find that charter is such a challenged Balance Sheet that im not sure i want to go there. But i do look, obviously, parent company, comcast, is not expensive stock. Stocks down substantially from where it was two years ago good yield i dont know i mean, i think its these when you look at comcast, what do they always say peacocks the contained. Peacock was flat, i would say, roku was talking about how, look, were already at the level of peacock when it comes to our advertising and use, and that was a very deflating thing for me when i read that. Working at comcast but if they can contain the peacock losses, the numbers go up it reminds me to ask you about disney and warner, both down today heres a question. If the writers go back to the table, and lets say they get something put together with the writers alone, is that bullish or is it too expensive could a new deal be expensive and depressing on earnings well, you know, your biggest fear is that youre going to get a u. P. S. Deal. I mean, u. P. S. Finally gets a deal and the stock goes down five bucks look, i have had two really bad stocks this year that i have bought for the trust walt disney and estee lauder now, estee lauder was great. Made a lot of money, came back disneys been an unmitigated disaster, and i think disney, not airbnb, but b b. Bad quarter and then bad quarter. And i dont know how bob iger gets out of that, and it doesnt matter, Writers Strike or not, its just terrible by the way, comcast, friscos pretty cool. It does make you think about travel, though, in the light of the norwegian results yesterday. Geez, are we now just down to marriott neutral, 17 carnival is up 100 this year thats going to be wiped out you mentioned warner brothers. Thats zaslav, and i think that his is a debt paydown, if apple decides that they like the nba and they want to show the nba in on the vision pro, well, thats the end you can compete with apple they report tomorrow, and when i look at what apples doing, the worlds their oyster when i see what youtube did, alphabet owns that, with the nfl package, suddenly they became relevant and the ads for youtube are extraordinary, and a lot of Consumer Packaged Goods Companies im talking to are saying, you know what . Were going to go where the viewer is. It would be incredible if they went to mls. I just think i dont like to trade. Someone was internally asking about apple, and i said, my whole mantra for apple for the last, i dont know, almost 200 points is, own it, dont trade it i mean, i dont think theres anything revolutionary with apple. Its all evolutionary. But vision pro is the way to watch sports its also a way to watch taylor swift, i decided that i didnt want to pay the thousand dollar ticket thousand dollars must be some concert you could argue that the device would pay for itself after one show ive argued that, and i argued that to my wife, who went to the concert, and she says, youre an idiot. You dont know anything. Thats fine. Its always good to be your wife can call you an idiot, but she has the free fire zone right to do that it keeps you grounded she doesnt know i have a show, which is so terrific she doesnt have cable ill ask lisa about that next time we talk for now, though, markets down a little bit, not as much as you might have feared in the wake of the fitch downgrade, but s p down 35 points as we go to break, lets watch bonds as well. Adp, by the way, the number today, 324,000 the estimate was 190,000 but after the last couple of months, some people discounting adp as a tell for fridays jobs number back in a minute announcer the bond report is brought to you to by pimco, a Global Leader in active fixed income youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. We mentioned caterpillar a moment ago leading the dow this morning as you can see the heat map there with some winners mostly in caterpillar, merck, have verizon, j j. And coming up talking with fitch and stock trading with jim in a minute 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. Evs deserves a great deal. Thats why comcast business is launching the mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. Its time for jim and stop trading. People look at chevron and knew the quarter was great one of the greatest quarters is pioneer natural resources, stock is up 8 i have to remind people that the permian is alive and well and some guys know how to do it right. Rich deally is a terrific ceo, loved him forever. The yield is lower than i like but its good. We get oxy tonight. People think theyre rivals team of rivals. Yep. And then an ongoing discovery unlikely that opec plus tweaks their policy on friday. Unlikely but i think the government has not been willing to refill the spr, which hurt pioneer. But pioneer is a situation where you realize the permian has not peaked theres a lot of people who think we peaked in our production, which is not the case good to get more on the supply side see what happens with demand. Tonight you have shop kwqualcom dash. Yes, and i have tony xu tonight. I think the stock has been on a monster run but everyone knows that tony is a complete delivery man from start to finish his story is a uniquely american story too. Ive always gotten a kick out of it and Larry Williams on tonight for chart week, speaking of david zaslov, a take off on shark week. Are you sending out as much swag as warner does . I have so many warner discovery, theres just everything, vests and jackets im surprised youre not wearing barbie merch right now. Look, thats why Waste Management land fill is doing so well wm, time to buy. Well see you tonight. Welcome back. Thanks good to be back. When we come back, microstrateg shares tripling. Well talk that and crypto and aesaeler when we return. Saylor 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. Welcome to another hour of squawk on the street. Im carl with morgan and david a little bit of pressure on equities this wednesday in light of the fitch downgrade last night. Vix is elevated this morning but the dollar is trading higher. 30 minutes into the trading session here, here are three movers were watching. Pinterest under pressure, expenses growing faster than revenue. Sales up 6 , while costs and expenses up 11 . Shares up almost 30 in the last two months but down about 4 1 2 right now. Shares of match losing all of the premarket gains as well. The firm pointing to tinders improving outlook. Up 1 right now. Finally cvs health headed higher beating on the top and bottom lines due to cost cuts and fresh layoffs. Cvs has been an underperformer on the year but outperforming today, up 3 the fitch downgrade did make news last night. We wondered what the effect might be this morning on treasuries and the dollars and equities in general, the reactions seem to be this is telling us nothing we didnt already know i think thats the takeaway from any Credit Rating on a sovereign issues in other words its not based on any information that the market has not already been aware of. That being said, it pushes at least lightly in the direction of some Market Trends which is higher in yields at least so far. Whats interesting is that was not the initial reaction in treasury yields because they popped after the adp jobs number, hotter than expected and its a matter of bond traders not wanting to bet outright we have two fluke months in a row. All that being said we have a market thats been hesitating for really two weeks we got overbought, stayed overbought in the indexes. A nice broad rally, total return in the s p 500 almost everybody pointing to the seasonal he wiheadwinds e emer emerging in august earnings reaction, earnings better than expected, feared, the reactions have been relatively uncharitable. Mainly because i think we priced it in getting into the reporting season. Folks pointing to valuations as well. Seasonality as you mentioned, maybe were overbought at these levels 4,600 is maybe a challenge or Pressure Point for the Broader Market but talking about what were seeing in yields, the 30 year hitting the highest in since 2022 you had the Treasury Department raising the borrowing estimate by more than a quarter trillion dollars to 1 trillion, so talking additional supply of long term treasuries, thats denting bond prices, boosting the yields and speaking to the bear steeper in the market as well and weve seen the inverted yield curve and speaking to long term traders that is a bearish sign for stocks in the coming months as well. As everybody has migrated to the soft landing cape which i think is still the prevailing assumption that the economy can grow, even if if its slowish. The inverted yield curve usually requires you steepen the yield curve but usually its people be cutting soon this is different. People more Inflation Expectation of doing what its doing. Fitch, in that downgrade, a mild recession in their forecast later this year in that downgrade towards the bottom of it as well the idea of what specifically constitutes a soft landing too i know were going to get into this in more detail in a second. But a lot of people pointing to what we saw play out in the market and recovered and then some before the end of the year yes. It did get we thought we had a double dip recession on the way. It was very much a kind of risk averse moment. That being said you did get another 10 down, a quick panic selling. In retrospect, i dont think anybody looks back and said that was smart to panic out on the s p downgrade. Because what didnt happen is treasury yields didnt blow out. You didnt have a long term concern about the market for u. S. Issued debt if anything it reinforced the status as kind of the water in the plumbing of the worlds Financial Systems which is still retained. This morning, the downgrade unlikely to trigger any selling of treasuries. Remember s p 2011 the downgrade and remember coming away unsc unscathed. Lets bring in Emily Wilkins with more on the impact of this drown grade. Good morning. Reporter good morning. As weve been discussing fitch downgraded the u. S. To a double a plus rating. That move shocked washington after a number of positive Economic Indicators in recent weeks. Janet yellen called the ratings arbitrary and based on outdated data she went on to say the change should have come under the Trump Administration congressman richard neil, the top democrat on the ways and Means Committee blamed the republicans for the downgrade saying americans bear the consequences from the drawn out. The counterpart on the ways and Means Committee said biden is to blame for pressing the debt limit to the brink this kind of back and forth is why fitch said they downgraded the u. S. Not just the recent debt limit debate its 20 years of what they called steady deterioration of governing and congress failure to address riding deficits and increasing costs of Social Security and medicare the change may come as a surprise but were expecting more conflicts on capitol hill in the coming months as congress tackles spending and a potential government shutdown. Thanks so much. A little more of a policy in g governance call than a financial ju one. Joining us now is jeffreys chief market strategist. David, good to have you here put this in context for us what it means, doesnt mean but also coming at a time when markets are digesting what the bank of japan did or didnt do last week and yields have been moving higher in general. I think, you know, you summed it up very well in your initial take here. Theres a lot go on that is affecting the long end of the bond market and that is affecting peoples thoughts oval wags in stocks i think what the boj did last week is being digested, seeing a significant rise in long term yields in japan people assessing what they think the buying out of japan, one of the largest buyers of foreign securities in a fixed income market what that will be the next couple of quarters if not longer so these are big moves and changes in the market. And then, of course you have the data today the adp data was strong. The data we have pretty much across the board has been strong weve seen good data in gdp, weaker inflation, but weve seen good news data all around. And i think thats you know, thats going to keep peoples thoughts that the fed is going to keep pressure up here for a while. Remember, mike, we have 120 basis points of rate cuts priced into the market for 2024 that is a lot of rate cuts and that is whats priced into the stock market as well if we start to maneuver some of that out over time and take out that part of the yield curve, that money market curve or projection of where money market rates are going to be, i think its going to weigh on stocks, steepen the curve out a little bit, and its going to be a little simatico with what were seeing in the markets. Yeah, the market has had to continually move the forecast of when the fed may be cutting and when rates may stay up here but can we isolate how much of those projected cuts in short term rates is in the stock market as opposed to the bond market because it wasnt that long ago the market was projecting cuts for the latter part of this year and stocks were lower before those were priced out. Right if you keep rolling them out and keep the ten year yield kind of in and around whatever, 375 to four and a quarter the stock market is going to be fine with that because its focused on that long term point. But if we start to really push ten year yields up to the top of the range, four and a quarter or higher thats where you can get an issue with people thinking about valuations slightly differently. Right now the market, whether they start easing back or taking their foot off the brake if you will, a couple of quarters earlier or later isnt going to matter as much to the stock market its going to look to the longer term structure. But if were longer, at the higher yields for longer or a more permanent basis and staying at higher levels than people thought i think thats going to have to weigh a little bit its one of the reasons i think stocks get a little tricky as we go into this year. A heck of a run and i just i think youve got a lot of easier ways to skin the return cat by looking at those higher yield credit sectors of the market particularly in leverage loans where youre off the short rate instead of the high rate but even the high yield bonds. Given the fact were focused on deficits and how much the u. S. Government is and has been spending, should we be talking more about the countereffects of all of that fiscal spending on the economy right now and how thats contributing to the soft landing narrative at a time where the fed has tightened as aggressively as it has. No question it softened the blow of covid. We had 20 plus Million People getting thrown out of their jobs at the beginning in that fiscal expansion which lasted quite a long time cushioned that blow as we recovered but ive never been one, morgan, to get too excited about fiscal multipliers. Its my economics training come from a shchicago rochester schol we look at lower fiscal multipliers through time i dont spend too much time on it and i dont spend that that much time worrying about deficits and debts weighing on creditability. I think the downgrade as you have pushed it under the rug, you wont be talking about it in a day or two, itll be gone and well be talking about things like what the bank of japan is doing. A little bit about Inflation Expectations, and really more about the u. S. Data and how likely a more serious slow down is and how likely those rate cuts for next year are i think those are the big topics you did bring up one point we havent discussed. The treasury borrowing is pretty heavy. And that probably is a little bit, at least in the short term, on this steepener. Its a pretty heavy calendar we have to throw into the back end of the market. So that could be without a doubt supply demand matters more that Credit Ratings. The view from the interstate 90 school of economics, rochester, chicago. David, thanks so much. Always a pleasure, guys as we go to break lets get a road map for the rest of the hour the health of the consumer is in focus as starbucks is the latest name to show some cracks an Important Group when it comes to the Housing Market. New data on which cities are seeing the most investment and where investors are pulling back. And a first on cnbc interview you do not want to miss microstrategy chairman and cofounder chmiael saiylor with his thoughts on the business, bitcoin, we have a whole lot ahead. Stay with Us Communities and the people who live and work there grow and thrive. Were proud to call these places home too. Theyre where we put down roots, and where together, we work to help move everyones financial goals forward. Pnc bank. This is dr. Arnold t. Petsworth, hes the owner of petsworth vetworld. Business was steady, but then an influx of new fourlegged friends changed everything. Dr. Petsworth welcomed these new patients. The only problem . More appointments meant he needed more space. Thats when dr. Petsworth turned to his American Express business card, which offers flexible spending limits that adapt with his business. He used his card to furnish a new exam room, and everyone was happy. Built for dr. Petsworth business. Built for your business. Amex business. Starbucks carving out some gains on the back of the latest results. Same store sales for china soared 46 however for america and other International Markets were weaker than expected lets get to that with david palmer reiterating an outperform on starbucks with a price target of 125. It sounds like at least in north america, u. S. You think resilience is the key here. Yes i think there was a lot of expectation that sales decelerated through that quarter, ending june and they would be cautious about the September Quarter. But theyre really speaking to consistent 7 ish type of sales growth through that quarter and continuing into the September Quarter. And thats really big for the narrative because they were talking about getting some productivity on the cold beverage platform and to see that yielding some results here with stable comps is really helpful for the story. Do they get a pass on china how does the market view that, do you think to some degree they do. Theres still going to be a big argument there to some degree tourism and the high end consumers needed for starbucks needed more than other c concepts but also concerns that other local competitors are nipping at the heels of starbucks and limiting the long term opportunity i dont think anyone is going to win the argument on china in the near term but the u. S. And north American Business is taking the burden off china in the near term, their margins are ex expanding rapidly in the u. S. And for comps to be consistent here, thats really helpful as they get ready to set their fiscal 24 guidance in november. Whether it is starbucks after the bell last night, chipotle last week, yum this morning, what can we glean about the state of the consumer here in the u. S. Especially if you start to break it down across demographics . Pretty solid. These chains talk about their being some evidence of trade down, but theres not a lot of evidence of weakness or slow down within the Quick Service arena. Even on the casual dining front theres been stronger for longer than we would have anticipated with easing food costs the labor pool has gotten a little bit looser. Although a little bit of an upside to the labor inflation side hearing a lot more of inflation than we would have thought there and so, theres going to be some reasons for some price increases from players like texas red house or chipotle we expect both to take price in the second half of the year. So a little more of the strong e for longer, a touch up on pricing. David, quick last question for you. Top pick if you could buy one stock right now in your coverage universe, what would it be thats tough. I think yum is setting up pretty well here. We expect good ongoing results for qsr. Starbucks this next quarter is massive for it if they do what they say theyre going to do for the September Quarter this is going to pack the most punch if they do what they say theyre going to do for the September Quarter. So perhaps the most upside in the second half if things go right here well be watching the September Quarter in the u. S. For starbucks. Finally, coming off of mcdonalds earlier in the week i wonder is unit growth the story just at mcd or is that the name of the game for a bunch of other players . Theres going to be, you know, with mcdonalds youre really talking about having their unit growth go from 1 to 3 over time and they outperformed players without unit growth by comping everybody else but youre seeing good comp growth from yum, accelerating unit growth for restaurants, 6 already for yum. So unit growth is important. Seeing it from chipotle, starbucks. Mcdonalds is just catching up here and theyre due theyve not grown in units in the u. S. For a long long time. Renovations but itll be interesting to see how many they do add in the coming years a lot to get to in the coming weeks. Thanks for the time. Thanks, carl. A check on the chips as amd slumps after results from the company and investors look to qualcomm numbers after the bell. What investors need to know after the break. Down 1 , hasnt closed with a 1 loss since may 23rd. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. 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 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. One of the things that we are really good at is managing the overall supply chain and, you know, as we worked through some of the inventory on the pc side we worked through a lot of that and i can tell you, on our mi300 or a. I. Chips weve been planning for this opportunity. Its a really important opportunity. I think a lot of customers want to be able to ramp as soon as possible weve been setting up the supply chain for the last couple of quarters and we feel very good about what we have in the second half and into 2024 as we really participate in sort of the most Important Technology trend over the next five years. Its an exciting time to be in a. I. And computing but were ready for it. Thats amds ceo lisa su talking to us last hour. Results are off the highs of the morning. You heard her talking about ramping up production of the mi300 but data center was a slight miss, gaming slight miss, pc getting some relief. The street was willing to say great new product cycle well build that to guy dance and take their word but the fundamentals as they came through in the quarter of the core businesses with the stock, of course, up along with the entire group pretty significantly this year seems like some give back and nvidia also 3 down today as well. Yeah. I would say sort of like real time the bottoming or stabilization of the pc market seems to be an emerging trend coming out of the semiearnings in general whether its amd or the others weve gotten in the last two weeks but longer term analysts do point on that a. I. Chip possibility. Its going to be not only the investments right now but the monetization of that in the co coming quarters seen to your point the closest thing to competitor, distant competitor for now to nvidia. We have qualcomm earnings after the bell which ill cover on overtime focus they make chips for telecommunication and other consumer e lexelectronics. If you look at nvidia as valued, this is the only game in town everyone has to pay for what they have what does that mean for everybody else saying were in the market too it creates tension inside the sector. They talked about it in that first paragraph of the Earnings Release yesterday. Seen seven times more hit. Engagement. Yes, customers engagement. Thats the word on a. I. Amd as we say not the only semi name on the move as the street looks towards qualcomm results after the bell if you look at the reasons why, amd today got an upgrade over at citi to a buy, a call there given the fact they missed the whole idea that investors wouldnt care about valuations but there appears to be some of the moderation happening right now. Look at the overall chip sector and some of the etfs that track it the etf has been the momentum trade possibly of the summer so far and the year up 40 of the qqq nasdaq 100 and 18 for the s p 500. So that chip trade has been part of the upside momentum story so on a relative basis, an outperformer look at the etf in general and wonder why there might be moderation and stabilization look where it stands on the 50 day price rolling basis and 200 day rolling price. Right now talking about a 3 gap over the 50 day average price. But right now this gap here over the longer term 200 day is roughly 25 at one of the widest levels weve seen over the course of the last year. So that momentum may be waning a little bit if you put the peers up there with regard to amd and the pull back were seeing. Point to the other names, nvidia specifically which has been the workhorse behind the whole thing. All of that chip complex moving to the down side has been giveback and by the way, you mentioned qualcomm, morgan, mike, carl, with regard to after the bell today. Whats interesting about the qualcomm trade right now were tilting towards the higher end of the trading range so far this year so much so the Options Market is predicting a 5 move in the stock on the heels of the Earnings Report later tonight. To give you context, morgan, carl, mike, over the last two years, the stock has moved on average, an average of up or down 6 1 2 so the market is pricing in slightly less volatility for the qualcomm trade on the heels of earnings back to you guys. This sounds like something im going to cite you in the 4 00 hour on. Remember those stats. You are the only person that draws a straight a line as mark siegel as mike san toll lee. You should see the circles i draw still ahead, microstrategy executive chairman Michael Saylor breaking down results for that company as shares surge more than 200 on the year as we head to break, shares of Virgin Galactic under pressure, it launched commercial service at the end of q2, losses widening as theyre investing in the nextgen class of planes. Also guiding the flights starting with the first private Astronaut Mission next week gene rating only modest gains in the future back in two. Td ameritrade, this is anna. Hi anna, this position is all over the place, help hey professor, subscriptions are down but thats only an estimated 15 of their valuation. Do you think the market is overreacting . Howd you know that . The Company Profile tool, in thinkorswim®. Yes, i love you please ignore that. Td ameritrade. Awardwinning Customer Service that has your back. Mom hey cheap flight alert td ameritrade. Daughter hawaii can we go . Dad maybe. Ill put a request in monday. Sfx shattering glass. Theme song unnecessary action hero dad was that necessary . Unnecessary action hero no. Neither is missing this deal. With paycom, vacation is yours to manage. Unnecessary action hero not to mention benefits, scheduling, payroll. Its hr in the palm of your hand. Dad wow. Unnecessary action hero ask your employer about paycom. And make the unnecessary, unnecessary. Dad approved welcome back im Pippa Stevens with your cnbc news update. A lawyer for donald trump is pushing for the trial in his latest indictment to happen after the 2024 president ial election he made the argument on the today show this morning. A grand jury indicted the former president on tuesday on charges related to overturn the results of the 2020 Election Special counsel jack smith said his office would look for a speedy trial ukrainian Officials Say russia hit a key grain port today sending food prices higher. The port has become ukraines main alternative to keep up foot shipments after russia halted the black sea deal according to ukraine todays drone attack damaged almost 40,000 tons of grain destined for export. And hollywood writers and studios are expected to go back to the table after a threemonth hiatus the writers are demanding better pay, staffing changes and control over Artificial Intelligence morgan, back to you. Pippa stevens, thank you. Microstrategy, the largest public holder of bitcoin back to profitability. Eps exceeded estimates but missed rev fusion expectations adding more bitcoin to the Balance Sheet. Joining us now executive chairman Michael Saylor great to have you on the show speak with you again. Thanks for having me. When it comes to mi micros microstrategy. You have the dual strategy, its an operating company on dual intelligence and moderately leveraged play on bitcoin. Does the marriage continue to be worth more than the sum of the parts . Absolutely. The operating Company Provides diversification for investors versus the volatility of bitcoin and allows us to borrow money cheaply, our blended cost capital is like 1. 5 and were able to invest that money into bitcoin and on the other hand our Bitcoin Investment is bitcoin itself is up 145 since we started buying bitcoin and that bitcoin position crates the volatility in the stock that allows us to borrow and raise capital cheaply in order to buy more bitcoin and grow the business. I know you retired one loan earlier, i guess last quarter. And brought your leverage down, when i hear you talk about being able to borrow cheaply, are you doing that right now were not borrowing right now but we go through successive cycles f of leveraging and deleveraging. Weve been deleveraging now and generally our decision about whether or not he leverage or deleverage is a function of the Market Opportunity and whats most creative for our shareholders. In terms of the rally we have seen in the bitcoin, what do you attribute it to . Especially on a day weve seen other folks invested in the asset class say soft landing is what the rally is contingent upon theres a growing consensus that bitcoin is a unique and valuable International Asset endorsed by politicians, regulators, investors, you hear Money Managers like larry fink say this that has created a change in sentiment, the odds of a spot etf being approved this morning is 65 according to bloomberg analysts so thats driving the near term sentiment. Plus the fact theres chaos in the crypto industry, bitcoin is the safe haven institutional asset if you want to play the space without parsing through the politics, the legal and the regulatory complexity. Would a spot bitcoin etf be good news because its a tide that lifts all boats in terms of bitcoin and microstrategy shares or something that could actually dent your Investor Base as you see some folks that are invested in microstrategy to have a liquid option in bitcoin shift there. I think spot etf is great news for the space bitcoin you can think of it as this Beautiful House in a scary neighborhood that you have to pay for in cash, takes a year to buy and you can never rent it. The spot etf is the same Beautiful House in a nice neighborhood and you can buy it tomorrow no money down you can rent it and refinance it from your bank its not a threat to microstrategy. Microstrategy is like that Beautiful House with 10 ho000 ae of land behind it that can develop the land so we offer yield and leverage through active management, which is unique for a set of our investors. We obviously dont have room in our capital structure for tens of billions of dollars of sovereign wealth or major hedge funds so they need a spot etf in order to take the position in the space. I know that in talking about the Price Performance of bitcoin, you know, your time frame is going to basically determine whether its done amazingly well or has been disappointing. If you go back three years its about where the price was in dollar terms three years ago in the meantime we had the most inflation in four decades. We now have a lot of questions about the size of the fiscal burdens of the United States and also, as you mentioned, bitcoin has emerged as kind of the survivor and the original Digital Asset of this type in other words, its seemed to have created distance against other tokens in this in that context are you disappointed were at 30,000 still or does it matter what the price is today i think three years is clarifying three years ago, bitcoin was 10,000 if we look at the three year chart from august 10th of 2020 to today, bitcoin is up 145 , s p is up 37 . The s p is the cost to capital gold is down 3 . Bonds down 18 microstrategy is up 254 and our enterprise valleue is increased by a factor of ten, like 8 billion or something were glad we adopted bitcoin. If youre not getting 37 gain in those three years via the s p youre not keeping up with the cost to capital. Michael, you know we talk to you so much about cryptocurrencies and the stock is arguably a proxy for crypto i wonder if theres anything that makes you want the street to view as a. I. Play. I think microstrategy has opportunities to harness a. I. Bringing out a new product based on a. I. Shortly were excited about that what id say about a. I. Is, a. I. Is devaluing assets created with pure information or whitecollar type of straightforward labor. And a. I. Is going to create value to assets that are energy rich you know, that acre of beach front property in palm beach that a. I. Cant create, bitcoin a. I. Cant create. And ultimately, bitcoin is the solution to a lot of problems a. I. Creates and if i was looking at the a. I. Revolution, i would think how do i buy scarce desirable assets that the computer cant spin out of thin air. 23 you own those youll be good. Because the stuff that the a. I. Creates in a split second, thats going to get devalued yeah. I do want to dig into the a. I. Piece of the puzzle where microsoft is concerned as well you did ink this Multiyear Partnership with microsoft youll integrate azure, open a. I. Service to enhance the a. I. Capabilities with your an alytic whats the uptake been so far on this had how do you expect this to continue you touched on it just now but how do you expect that to contribute to the broader fly flywheel microstrategy has been in the Business Intelligence business for 30 years we brought this module to our customers recently theres a lot of enthusiasm what we can do. Anyone usin a. I. Does a good of joining with our software and our proprietary graph in order to get them that answer faster and quicker. We think its good for the Business Intelligence industry and its going to make every enterprise, more nimble, intelligent. I want to ask you about regulation, something we talk about every time we see each other. The commissioner of the cftc was on cnbc earlier today, heres what he had to say there needs to be action by congress so that we can fill these gaps in the crypto space and ive said, as the chair of the Commodity Futures Trading Commission weve been bringing enforcement cases without Clear Authority over the space and a huge portion, and ive argued up to 70 of the market, is largely unregulated because they constitute commodities i want to get your thoughts on that, especially since we have seen regulators, the s. E. C. , for example, cracking down on cryptocurrencies and exchanges but bitcoin has been the exception thus far can the case be made that bitcoin is a commodity and doesnt require the same regulation as Everything Else or is it coming theres universal consensus generally everywhere in the world across all parties that bitcoin is a decentralized global asset that has value. It is without an issuer and it is a digital commodity in fact, it is the Gold Standard of digital commodity you study bitcoin to figure out how to create a digital commodity. Theres also pretty general uncertainly in conflict and controversy surrounding the role of crypto exchanges, digital securities, tokens and defi i dont think that that uncertainty is going to be resolved any time in the next two years. And the chair of the cftc is correct in saying we need a political solution coming from congress its clear that theres not going to be a quick solution coming directly from the regulators or organically from the industry so were waiting for Political Leadership to resolve that ambiguity. Meanwhile, bitcoin is the one unambiguous thing. Its the most certain thing in a promising innovative economy but full of regulatory uncertainty if you want to participate in the space, the way do it is with bitcoin. Yeah. And, of course, were looking for changes to the fasb accoacc accounting rules which i know affect you at least nice to talk to you, great to get your thoughts. The price of bitcoin was the current level 12312020 two years, seven months ago. I said three years ago, thats what i meant. We got you, mike. Still ahead, growing fevers about a key buyer in the Housing Market discuss that and a programming note as we go to break do not miss an exclusive with jamie dimon, 2 00 p. M. Eastern this afternoon get his outlook on the banks and the reaction to the downgrade from fitch stay with us 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. From big cities, to small towns, and on main streets across the us, youll find pnc bank. Helping businesses both large and small, communities and the people who live and work there grow and thrive. Were proud to call these places home too. Theyre where we put down roots, and where together, we work to help move everyones financial goals forward. Pnc bank. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire welcome back to squawk on the street. Higher rates are not just hitting domestic demand for Residential Homes this year. Diana olick joins us with the rest of the story. Reporter foreign buyers of u. S. Real estate are pulling back as well its not just high Mortgage Rates but high price supply of homes for Sail International buyers purchased roughly 84,600 homes this year the lowest number since they began tracking it, a 14 drop from the year before bought fewer homes but paid more for them, with the median price of 396,400. So whos buying . China, mexico, canada, india, and colombia this does not count new construction thats by number of homes and not dollar volume. Chinese buyers had the highest average Purchase Price of 1. 23 million, likely because a third bought in california where home prices are highest. In total, 15 of foreign buyers bought homes worth more than 1 million where are they buying . Florida, california, texas as well as north carolina, arizona and illinois as for the how and why not all foreign buyers use cash but 42 did. And half of foreign buyers bought the properties for use as a vacation home, rental property or both and thats up from 44 , the previous year. Does this make it easier for domestic buyers out there . Sadly probably not overall foreign buyers make up just over 2 of home sales but in some of the popular foreign markets it could have maybe a small effect i got it. When youve seen the policies coming out of the government, florida comes to mind where there was this proposal around limiting purchases or stopping purrs chas by some types of buyers i think chinese buyers in that state if im recalling correctly. Is that going to have an impact . It could Going Forward but buyers are heavy in california as well. And text texas is getting more popular. It depends on where they are real estate is local it could have an effect Going Forward but buyers are coming from china actually was the biggest growth we saw in foreign bu buyers, even though the overall numbers declined. Diana olick with fascinating data there well talk to fitchs cohead of the americas with us to defend the downgrade making waves today. And get the white houses take as they say that fitch is nonghas en resilient economy. Jared bernstein joins us, thats all at 11 00 a. M. Eastern time dont go away. We planned well for retirement, but i wish we had more cash. You think those two have any idea . That they can sell their Life Insurance policy for cash . So theyre basically sitting on a goldmine . I dont think they have a clue. Thats crazy well, not everyone knows coventrys helped thousands of people sell their policies for cash. Even term policies. I cant believe theyre just sitting up there sitting on all this cash. If you own a Life Insurance policy of 100,000 or more, you can sell all or part of it to coventry. Even a term policy. For cash, or a combination of cash and coverage, with no future premiums. Someone needs to tell them, that theyre sitting on a goldmine, and you have no idea hey, guys youre sitting on a goldmine come on, guys do you hear that . I dont hear anything anymore. Find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. Stocks struggling right now. The s p down about 1 , on pace for its worst day since may 23rd the nasdaq on track for its worst day since july 20th. Bob pisani is here with more on the morning action and you can see the effects of this fitch downgrade. High prices, very vulnerable to a sudden downturn. And not surprisingly, some defensive names holding up Better Health care, Consumer Staples doing a little bit better. And stuff we call the high bag day names, technology and Consumer Discretionary these have been the ones that have outperformed throughout the year or to the downside. A different way to look at this is high beta versus low volatility high beta names are names that will move a lot when the s p is up 1 . Theyll move a little bit more like 1. 5 . And high beta names Like Technology stocks, like intel or bank stocks like key copper, some of the auto stocks, like ford, Energy Stocks like apa are typically highbeta names. Freeport mcmoran, mosaic in the materials space. All down a little bit more and the stuff thats holding up better is what we call low volatility names these are typically consumer staple names like general mills, hersheys, Insurance Companies like chubb health care Companies Like United Health. You can see the market sort of bifurcated along those lines this fitch thing plays into the markets vulnerability right now, which is very, very high prices high multiples weve talked repeatedly about the current multiple being close to 20 times forward earnings that is very high, historically. Typical historical levels around 17 a lot of people say, just take out those magnificent 7 stocks those stocks that are out there. Apple, amazon, alphabet, amazon, microsoft, and you get a lower multiple go down to 17 or so, thats more historic if you take out technology completely, youre in the high normal range at 17. 8 the problem is, you cant take these things out if you look at separate sectors, its very clear, technology is trading at multiples 28 times. These are crazy numbers, way above historic averages, Consumer Discretionary is. You look further down, it looks a little cheaper Consumer Staples at 19 and health care at 17. But theyre not bargains thats the problem nothing is cheap financials, of course, because of the bank crisis, is trading at an historically normal multiple its always been lower at 13 or so or is that a bargain because its trading at its historic multiple i dont think so thats the real issue that were facing right now the issue is what does it mean really to be expensive we say that, what does that mean it means that youre not getting paid much to own stocks at the current prices and there are compelling alternatives what we call the equity risk premium. Bond yields at 5 offer very compelling alternatives to stocks right now so what all of this means in plain english, as you know, mike, is that were very vulnerable to sudden downturns we saw this last week with bank of japan we see this today with fitch were facing a potential of 1. 2 this will be the first down day since may 23rd, as i recall but its this vulnerability that we keep talking about. Thats why, dont be surprised if we get a sudden 5 downdraft in the markets with this kind of pricing. Rich valuations kind of a preexisting condition that makes any little jolt a little bit worse. Plus, youve got the seasonal factors turning a little bit less positive, into negatives. And also, i guess, the answer to the valuation question is saying the market says 2024 earnings are actually going to pick up more and the market is getting ahead of it. Thats exactly right. We have a ushaped earnings expectations here. The bottom of the trough is q2, as youve been talking about, and every quarter, q3, q4, q1, q2, were up, and so suddenly q2 in 2024, theyre expected to be up 15 from the Second Quarter so theres your ushaped recovery in earnings thats whats got to happen to get this multiple down a little bit. And if that doesnt happen, you know, its going to be very hard to justify the prices at this point. We need we are baked in not just a soft landing, but an earnings rebound in the market right now. I mean, two areas that are very economically sensitive and tend to be early indicators of where activity are going, semiconductors, and youve seen some green shoots or at least in stabilization within some of those names and some of those different segments and also, freight. Freight has been in a downright recession, but youre starting to see some recovery or beginnings of recovery in that market, too. I bring it up, we have rxo logistics ceo joining us in the 4 00 hour on the heels of that companys earnings earlier today. Logistics, brokage, thats what its focused on there. But it also speaks to some of the wild memes trading weve seen in things like yellow for that bankruptcy. Bob, thanks with that, session lows, s p down almost 60 points. Teth cties the streetonnu afr is good wednesday morning im Carl Quintanilla top of mind were investors today, this historic downgrade of u. S. Debt Fitch Ratings head of the americas Richard Frances will join us to defend their call plus, Immediate Reaction from counsels economic advisers Jared Bernstein as the white house pushes back hard on the timing of the call then, a csuite double play the ceo of Teva Pharmaceuticals with us. Big boost for that name after an earnings beat and raise. And later, mch
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