Transcripts For CNBC Squawk 20240704

Leading the s p this morning after their results. The cfo joins us this hour for an exclusive big news of the morning, fitch downgrading u. S. Longterm credit to aa plus to aaa it is the second downgrade ever by a major agency after s p back in 2011. Joining us first this morning on cnbc, the interview with the man behind that call, Fitch Ratings richard frances. Great to have you with us. Thanks for the time. Thank you i would love to know, sort of, your some color on the timing and the thinking behind the call now as some have pointed out, some of your quantitative models have been on the mend the last six months or so yeah, i mean, honestly, this is a steady deterioration that weve seen in some of the key metrics for the United States for a number of years. In 2007, general Government Debt was less than 60 . And now its up to 13 theres been a clear deterioration. Furthermore, were expecting physical deficits to rise over the next three years and we expect debts to continue to rise over the next three years. And furthermore, because of the higher Interest Rates and the higher debt, were now seeing the interest rise pretty fast, actually, in the case of the United States. So the underlying numbers, especially in the fiscal andr quite negative when it comes to the argument about governance and responsibility, government responsibility, why not i know you reference january 6th as part of this call why not do this a couple of years ago . Yeah, i mean, i think, again, like the debt and the fiscal burden, weve seen pretty steady deterioration in governance the last couple of decades, and i think you can highlight a few key elements, one would be to generate this, but secondly, more importantly for us, is the constant brinksmanship surrounding the debt ceiling, the debt ceiling debate, the fact that the government, both sides, republicans and democrats, havent been able to come up with kind of meaningful, longterm solutions to deal with, you know, growing fiscal issues, especially around entitlement programs, with security and medicare. I think these are the type of things that highlight the importance of government, but also, the inability of the government and both parties to come up with some kind of solution so i know you talked a bit this morning about the what would it take to get an upgrade back some sort of sustainable sign that governance is on the mend can you talk about what that might look like and whether or not the deal that we got this summer is any hint towards that directionally . Yeah, i think theres a couple of things that we probably want to see one would be some kind of solution longterm, fiscal solution, tackling the entitle program, for example willingness to somehow look at the revenue of the picture and the spending side of the picture, and actually bring down the deficits enough to at least stabilize the debttogdp, which i mentioned is already like three times the level of the aaa medium its much harder than the aaa median and much harder than any other country, actually. And its even higher than the aa category so first tackling, you know, these type of issues, and you know, honestly, the debt ceiling itself, you know, is, you know, kind of suspending it or getting rid of it somehow, that would actually help as well. Because the idea that the United States reaches an x date and all of a sudden cannot pay its bills, we dont need that consistent with the aaa, either. Richard, looking at the criticism that your downgrade doesnt acknowledge the major differences of opinion about the fiscal outlook, youre very much expecting with this downgrade, a recession in the fourth quarter. But how do you respond to the fact that many people disagree with that . Yeah, you know, honestly, if we go into recession, or a further recession, it doesnt really move the needle in terms of what the underlying thing were looking at it wont change the physical picture that much. It will not stabilize the debt and it doesnt begin to tackle these government issues. So, yes, the economy is very important, key in that it does, it could have an impact somewhat on the fiscal picture, but not enough to really move the needle so the idea that the economy can somehow can skirt the recession and there should not be a downgrade, thats just not really what were looking at were looking at more kind of fundamental picture of the United States creditworthiness, and also kind of what we expect to happen over the next few years. And the jobs market has been remarkably resilient and we continue to get more jobs numbers even out this morning. Whats your response to that and does that impact your outlook at all . Again, its a similar story, i would say, to what we just talked about in terms of the Economic Outlook obviously, thats good news, good news for revenues its good news for the underlying economy one of the things that we have noted and do note as a strength of the u. S. Is the fact that its a large dynamic economy very, you know, very wealthy, you know, per capita income, which supports tax revenues. We do recognize that and the second big factor that we look at in terms of the sporting factor is the role of the u. S. Dollar. You know, it gives the u. S. Government tremendous flexibility in terms of financing things so these are strengths of the u. S. Were just saying that given the high levels of debt, given the increasing deficits that were expecting, and given the kind of deterioration in governance and unwillingness to really tackle these issues, we dont think that thats worth a aaa anymore. But aaplus is still a very high rate the second highest rating we have good point does it surprise you that the dollar index is higher today and that its above the 50day yeah, like i said, i dont really pay a lot of attention to daytoday moves in the market we look kind of more at the fundamental picture and i would be looking at these indicators more on a few months, at least, maybe a year basis, instead of what happened today or what happens in the next week or so richard, really appreciate the guidance and the color behind the call very much. Richard frances at Fitch Ratings, thanks. Okay, thank you joining us now with his reaction to this historic downgrade, council of economic advisers chair, jared bernstein. I know you were listening into this i know that youve been following this conversation. Whats your reaction to the downgrade . Well, i must say, the cognizant dissidence that i think many felt from this downgrade was not at all diminished and in fact was amplified from the discussion i just heard nonpartisans describe the fitch decision, im quoting from things that were said yesterday and today bizarre, inept, strange, puzzling timing, which i thought you got at a little bit. Look, fitch relies on a quantitative model in which creditworthiness deteriorated significantly under president trump. And for good reason. They give governance a significant weight and if you look at the movements in that model under president biden, as soon as he got here, it started to track back up towards aaa. So the timing here makes no sense. If you think about the kind of bipartisan measures that this president has presided over, whether were talking about the bipartisan infrastructure law, the pact act, the chips and science act, and particularly the fiscal responsibility act, which not only resolved the debt ceiling in an overwhelmingly bipartisan matter, but took along 1 trillion in deficit reduction with it, the Decision Just seems, as i said, just bizarre and arbitrary and against even their own estimates. Jared, i understand that you see this as a lagging indicator. But how do you address fitness concerns about the rising government deficit thats really fundamentally what this is about. So, i think, again, the timing issue is turning in here. The deficit went up every year under president trump. The debttogdp ratio rocketed under president trump. It has stabilized admittedly at a higher level under this president , but were doing all we can to try to ameliorate those tensions and the proof is in both the movements in the actual deficits down 1 trillion under the president s watch thus far and as i just mentioned, another 1 trillion of deficit reduction in the fiscal responsibility act. And look at the budget the president proposes 2. 6 trillion in deficit reduction over the next ten years. So we are doing our best to rtr to address these fiscal issues, because they matter a lot to this president , and he has a solid track record on that front. So the idea that you would then somehow fail to do so this under the prior administration, when these fiscal measures were massively deteriorating, and then go a notch down, when were not only trying to move in the other direction, but actually having some success in moving in the other direction, it makes no sense. So one reaction to the treasury secretarys statement was that we were caught off what caught our attention was the implication that fitch was going on, and i guess how much do you believe the administration will lean into that, and does that preclude the ability to find further negotiations, further bipartisan consensus regarding these things in the future . Oh, we are going to continue to work for bipartisan consensus on these matters there are democrats and republicans who recognize the need for the kinds of Fiscal Consolidation that the president has put forth in his budget. Now, were going to have a lot of arguments about how to get there, no question he obviously has a very progressive tax plan, which emphasizes taxing wealth and relieving work and thats a plbalance thats vr important to him and we can have that argument. I dont want to get into whos political and who isnt here i do think that the timing is just very strange in the ways ive said. You know, basically, fitch seems to be punishing the cleanup crew when the guy who wrecked the room is long gone. So im not getting that. Are your eyes on moodys and what they may do bell, were always going to be paying attention to the rating agencies, but much more attention will be are being paid to, of course, Financial Markets, and how theyre reacting and i think both in 2011 when this occurred and this case, investors are a much better judge of the reliability, the safety, the critical importance in Financial Markets of safe, reliable, american debt. And, you know, their analysis is miles more important than that of fitch and thus far, we think that they have understood that thequalit and safeties of u. S. Debt remains pristine as ever so given the timing of this, do you think there will be an impact on the debt markets, and whats your message to investors right now . Well, i dont think that we from the white house typically, you know, message investors. Theyre going to look at the things theyre going to look at. I think what our job is to do is to make sure that the overall economy is expanding in a way that doesnt just hit the macro targets, but reaches american households so when we have a gdp that came in at 2. 4 in the Second Quarter, but we also have real wages growing and the Unemployment Rate below 4 , from over a year and a half, when we continue to generate record job numbers, again, on behalf of american households, getting the middle class some real breathing room with inflation coming down twothirds from its peak, weve got more work to do. But thats what our focus is on. Were not trying to time the market, manipulate the market, or even, you know, on a daily basis, look into it all that close. What our job is to do is to make sure that we have a sound, growing Macro Economy thats reaching american households thats bidenomics. And from the recent data flow, with i think were having some success. So jared, at this point, is your focus on seeing continued declines in inflation, or are you looking at, you know, atlanta feds for q3, and focusing on prolonged growth, even though that might make these last hundred basis points of cpi more difficult . Oh, i think to get a beat on where inflation is going, you really have to kind of take it apart. And if you look at the various components, so, if you look at, say, core goods inflation, thats been coming in considerably lower than it did a year ago and thats because we see supply chains, and thats obviously an important part of this if you look at housing inflation, thats rolled over in the c pi in terms of rent and owneroccupied rent. Those measures have come in considerably lower than they did. So that leaves gas, foods, and services and thats a pretty labor intensive part of the index. As labor market cools, we should see some easing there and weve seen some of that. Energy and food inflation has also come in recently. So, look, we have to watch every one of those trends. Were not really in the business of forecasting monthtomonth. But if you look at the forecasts out on the street, they generally do have these trends broadly persisting well, were going to have to leave it there jared, thanks so much for joining us this morning. My pleasure important conversations there. When we come back, Teva Pharmaceuticals is looking to claw back some lawsuits after whats been a tough year for the stock. Big gainers this morning ceo will join us later this hour for whats next in its drug pipeline plus, well get results from pinterest and match group. Match groups finance chief joins us with the stock giving up some earlier gains. Thats coming up when squawk on the street returns. Were here today to set the record straight about dupuytrens contracture. Surgery is not your only treatment option. People may think their contracture has to be severe to be treated, but it doesnt. Visit findahandspecialist. Com today to get started. Take a look at shares of pioneer natural resources. Nice pop for that stock postearnings. Its now up about 2. 5 with a headline from the Conference Call that pioneer sees oil pricing between 189 for the rest of the year and into 240. Shares up now 2. 4 turning to ai this morning, we talk a lot about how the trend is driving major gains in the tech sector, but how might it help investors on the back end of trading as the world becomes more data driven, Technology Including ai and Machine Learning will continue to play a bigger role in Market Making joining us here at post nine, bank of america, head of etrading and market strategic investments, sheinelly pieson. Nice to see you. Im wondering, what efficiencies come to the back offices as a result of these trends as were seeing in the news today and with earnings, ai is becoming a larger part of the discussion it needs to be controlled. But theres certainly, i think, with the right controls, having human oversight over what we do, it will continue to play a bigger part in the fixed income market within our Global Markets business, we incorporate Machine Learning into a variety of our algorithms we use it to help make shortterm predictions on where a bond or a stock might trade next we use it to help us calibrate the distribution of best business and best offerings in the market or model the likelihood of winning a trade. And its becoming increasingly important to our clients, because the world is becoming bigger and bigger. The Asset Classes are growing. Its 25 growth since covid and fixed income bonds so as the world grows, we need to be able to service our clients, and these strategies are really becoming a differentiator in the first half of 2023, despite the volatility at bank of america, we department have a single day of trading losses and it was largely because of these quantitative tools that we were able to put in the hands of our risk managers and our traders. You used the word control that indicates theres a potential Downside Risk. Weve talked a lot on this network about the potential Downside Risk about ai and generative ai. What do you see as the biggest risk that needs to be managed in its deployment so, when were talking about what we incorporate, were talking about things like Machine Learning, natural language processing today. And when we talk about generative ai, creation of content data, thats a whole another ball of wax. And thats going to need a lot of research and rigor before it can be implemented into market theres certainly risks, liabilities, youre seeing obviously, focus on this area by the regulators so i think that is a longerterm story. Its going to take a lot of research and rigor within the bank, is there a debate is there a contingent of trade s that say that human sbiuation is always just like in the arts people argue that humanmade goods or humanmade art, theres going to be some premium on that no, i think weve realized that the machines work for us. And across the bank, we are constantly innovating, not just the most liquid Asset Classes. I think this is a really interesting fad. And fixed income, about 90 of electronic inquiry is serviced by algos thats a huge change in the last decade we realize that we want to harness the things that humans are good at. We are using them always to manage the risk. These are not black box algos that are going off and trading without humans understanding the dials. Are there interesting examples of overruling it, where someone says nope, we dont. This is where the human interactions and controls come into play. We have areas where we will suggest a price or suggest this is what is happening, but ultimately and it can override it helps us learn and becomes this Virtuous Cycle where we feed information back into our algorithms ultimately, do you see these Technological Advancements enabling the institution to cut costs and eliminate jobs no, its leading to scale b what we really want to see are the businesses i just mentioned, in the last decade, the number of bonds outstanding in the Corporate Bond universe has doubled. The assets under management for our clients has continued to grow the average ticket sizes are getting smaller and smaller. Were servicing a ton more volume the machines are there to harness and help us. This is not about, you know, cutting jobs, its about scale of all the product categories where youre applying this, is there one thats obviously the tip of the spear sure. I think that its really been an innovation journey, and aside from the liquid Asset Classes, like u. S. Treasuries, ive seen a lot of progress in u. S. Corporate bonds. Another area that weve really been focusing on that i think has been a massive change from where we were is the loan market we now trade bonds electronically in the loan market every day if you think about the journey that that market has come in the last decade around standardizing information and data, i think thats one where were just at the tip of the spear and well continue to. Do you think 08 would have happened had we had this technology then . Hard to know, right it is really hard to know it is really hard tonig know, bt its helping us guide Small Business decisions and earn the business every day from our clients by making sound, steady, prudent risk decisions pretty fascinating, and obviously, it gets smarter every day. Well be talking about this for a long time. Good to have you in. And thank you for having me. Good to be here. Meanwhile, upbeat guidance man what if my type 2 diabetes takes over . woman what if all i do isnt enough . Or what if i can do diabetes differently . avo now you can with onceweekly mounjaro. Mounjaro helps your body regulate blood sugar, and mounjaro can help decrease how much food you eat. 3 out of 4 people reached an a1c of less than 7 . Plus people taking mounjaro lost up to 25 pounds. Mounjaro is not for people with type 1 diabetes or children. Dont take mounjaro, if youre allergic to it, you or your family have medullary thyroid cancer, or multiple endocrine neoplasia syndrome type 2. Stop mounjaro, and call your doctor right away, if you have an allergic reaction, a lump or swelling in your neck, severe stomach pain, vision changes, or diabetic retinopathy. Serious side effects may include pancreatitis and gallbladder problems. Taking mounjaro with sulfonylurea or insulin raises low blood sugar risk. Tell your doctor if youre nursing, pregnant, or plan to be. Side effects include nausea, vomiting, and diarrhea which can cause dehydration and may worsen kidney problems. woman i can do diabetes differently with mounjaro. avo ask your doctor about onceweekly mounjaro. Five. Its happening, isnt it . Four. Three. Two. One. Keep your United States on solar edge q3 guidance did come up short thanks to distributoring pulling back on some orders. The cfo telling our Pippa Stevens, the u. S. Market is not growing this year. And theres the solar etf, ticker tan on pace for the worst day since april. That entire sector is under some pressure today and another mover, pinterest shares are down about 3 this morning, despite reporting a beat on the top and bottom line after the bell yesterday results showed pinterest costs grew 11 in the quarter. Thats more than the 6 growth in revenue that seems to be weighing on the stock. Now ceo bill ready did say theyre seeing growing users and engagement, that the companys partnership with amazon is off to a strong start, and that ai is effectively matching consumers with shopable content. Rosenblatt is among the goals upgrading the stock to buy and hiking their target to 35, and applying 20 upside from tuesdays close. It really seems like expectations were particularly high after metas beat, but ceo bill ready, he did sound cautiously optimistic about the ad market. Yeah, along with cramer last night, kind of echos in terms of the ad market commentary from match, would you argue, that theres some bottoming process here some bottoming. We also have to acknowledge that a year ago, the q2 quarter was a really tough one and i think now, not only were those comps better, but the market does really seem to be Getting Better well keep our eye on that. Shopify tonight after the bell lets get a news update with the aforementioned Pippa Stevens hey, pippa hey, carl north korea issued its first acknowledgement of the american soldier who crossed into the country willingly last month the country offered a brief response to the United Nations command, but stopped short of offering any information about private travis kings whereabouts or wellbeing. King broke away from a military escort at a south korean airport midjuly and joined a tour of the demilitarized zone, where u. S. Officials say he sprinted across the border into north korea. A west african bloc is traveling to niger to negotiate with the military officers who seized power of the country in a coup last week the bloc said it could authorize a use of force if thecoup leaders do not reinstate the ousted president by sunday and iran issued a twoday Public Holiday because of unprecedented temperatures, topping 100 degrees. Starting tuesday, all government agencies, banks, and schools shut down in an effort to contend with the scorching temperatures julia, back over to you. Thanks, pippa ahead, shares of teva on pace for their best day in more than a year, as the Company Reports a solid beat and raises guidance the ceo joins us with a look at whats ahead for the company in the second half and the drug pipeline a check on the markets obviously, its a weak one worst day for the s p since about may. Nasdaq since july. Well be right back. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. Rock stars. Please do you know what it takes to be a rock star . Ive trashed hotel rooms in 43 countries. I was on the road since i was 16. Ive done my share of bad things. Also your share of bad things. We know that using workday for finance and hr makes you great at your job. But that dont make you a rock star. Ted ted ted oh ted in finance. Youre a rock star hey liz in hr . Can you do this . Unless you work with an actual rock star. You are a rock star thank you whos the new guy . Hi, im ozwald. Hello ozwald. Give it up for pam. Pam, you are a rock [silence] i wasnt going to say it. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy s23. Only on verizon. Were about two hours into trading. Lets go postpost with bob pisani for a look at whats moving were down more than 1 on the s p. The first down 1 day since may 23rd this shows you how vulnerable the market is to sudden pieces of news, like the fitch downgrade. Its because the prices are really high. You can move down really quickly. Heres a good example. The bank stocks just had a great run in july. U. S. Bancorp is up 10 or more and you can see down almost 2 today. No news, particularly, on that, but its just a valuation question here. Its had a huge runup off of the bottom, which was back in may. Similar situation with some of these other names, like oil, for example. Devon had a great month. It was up 13 to 14 . All of these oil names were up oil went from 70 to 82. Oil is down rather notably today. All of these names, down almost 7 here. These are what we call high beta names. They tend to react a little bit more when you get news up or down theres two examples banks or energy names that are moving on this fitch news here finally, just on the international front, heres bung bunge, this is one of the biggest Commodity Trading company in the world, they tripled their profit raised their earnings forecast this is a new high, at 114 for the stock. But they talked about how difficult it is with the situation in ukraine, getting grain out of there and that this is going to drive up prizes. So youre not just having questions with fitch going on here, you also have other exogenous things that are going on, like the ukraine situation thats also moving Commodity Markets in this particular situation. Carl, back to you lets turn this morning to one of the biggest earnings movers of the day, and thats teva, surging this morning after posting a beat on the top and bottom lines in q2, raising revenue guides for the fiscal year, driven by growth in the companys generic drug business and the recent launch of the new schizophrenia treatment. Joining us is tevas ceo, richard frances. Great to have you. Were in a pretty interesting period where a lot of companies have product pipelines with something, at least, to brag about. And im curious to know what that is in the case of teva. Thank you very much for having me on so what i like to brag about today is maybe asteado so astead o is our treatment for huntingtons disease and we posted in q2 a 51 increase in revenue in to 38 million. Were very pleased about that. We did a strategy day in new york in may and said that was going to reach 2. 5 billion in 2027 and i think people have started to realize that could be possible thats one of our Growth Drivers. The other is what you just mentioned. We launched a treatment firm for schizophrenia back in may. Its still very early. But were getting really good feedback from our physicians and our patients because of the patientfriendly profile and the ability for them to administer that and get to a therapeutic dose very quickly, which as you can understand for our patients suffering from schizophrenia, is really important so all in all, good to see researches, Growth Drivers that seem to be kicking in. So a positive trend for us richard, you have these two businesses the brand business and generic business were hearing some speculation from analysts that you might unlock value by splitting off these two businesses how do you see that potential . Thank you very much nice to speak to you yes, no, right now, we dont see the value in that. Right now, we have a lot of synergies within our business. And actually, from r d to manufacturing to our commercial footprint, we see great leverage we can put with our Branded Products and generic products through thesame infrastructure so right now, were benefiting from that. And our genomic business which is significant, over 8 billion a year, a lot of cash which were investing to invest in this innovative portfolio. Right now, its a great pairing. How comfortable are you right now with policy and regulation and how would you stack the u. S. Right now versus other developed economies in terms of their willing tonnes play along with research and let some of these things come to market . Its a big topic and obviously, i think what weve seen is an explosion in innovation right now in the biopharma sector and i think thats really encouraging for patients and for physicians i dont think we want to dampen that down. I do think its important we understand whats key to driving forward is innovation. And as weve shown, just to give you an example, with that drug thats driving our revenue, there was no treatment available for people to start suffering from huntingtons disease. These are two very debilitating diseases and because we can invest in the r d, we managed to bring this product to the market. And we want to keep encouraging that as much as health has improved, theres a lot more we can do and i think people should fox on that and allow innovation to thrive one discussion we keep having with various Pharma Companies is whether or not theres a real race for talent, human talent in driving some of these Clinical Trials or whether ai and Machine Learning will be driving innovation in the next five to ten years. Is that an industry debate or are we still too early to tell how much of that can be done by Com Computers . Look, i think ive always said, consistently, talent, first and foremost, companies are made by people people make products, they research products, they sell products, they give customer service. And when you have quality dedicated people, it makes a huge difference. Can they be supplemented by ai can they be made to be more efficient, given more time to do what only a human can do in that interaction . Thats where weve got to think about that issupplementation, bt this major shift where people are replaced by ai, i dont see that happening anytime soon. I think the supplementary part of it starting to support the people we have but it is evolving all the time. What i talk to you about this quarter, maybe we have the conversation, we have the next explosion in ai. So i think its something you have to watch, but for us, we think of it in a very pragmatic way. What can help us in our business now and how can we interrogate that in to support our people. A final question about increasing your guidance for revenue, the midpoint of your guidance there and reaffirming some of those other guidance terms, especially for these brand drugs. Do you see them as gaining market share or is it more about meeting unmet needs and identifying a new market where do you see that growth really coming from great question. And really important for our products so i think for the one thats going to 51 , what its about is actually treating untreated patients there are nearly 800,000 patients in the United States that suffer from this condition and only 50 thourk on treatment. For us, thats about helping these patients get access to this therapy, helping the physicians diagnose this particular condition so its not about market share now for schizophrenia, that is more about market share. We have a longact market, but for that, we want to get new patients and patients on current therapy to switch to us, because we think its going to be something that theyre going to be able to comply with better over time. It really depends. On our two major ones, thats how i would divide it out. Stocks definitely on the move today richard, appreciate the time always good to see you thanks very much. Appreciate the time as well. From teva ahead, match group well off the highs of the morning president and ceo gary swindler is with us next. And taking a look at amd, near session lows. Already trading near 75 of its average 30day volume. Q2 revenue did fall 18 year on year, street is focused of course on their aispecific chips and Software Lisa sue joined us earlier this morning. Were very excited about ai you know, everyones talking about ai, but you need all of the computing infrastructure to be there and, you know, were all about, you know, 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. With your hearing, if you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. Well find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. No, no, no, no, no, no, no. Theres a problem andwith my paycheck. Ee, its short. Someone messed it up . Im in the middle of nowhere. Unnecessary action hero was that necessary . Nope. Neither are paycheck problems. With paycom, employees do their own payroll. No problems, no surprises. [narrator] schedule a demo at paycom. Com and make the unnecessary, unnecessary. Lets get to our second earnings interview of the hour shares of match group higher this morning after posting a beat across the board in the Second Quarter price increases helping boost subscription revenue, but also driving a 4 decrease in tinder subscribers year on year joining us now in a cnbc exclusive, match Group President and cfo, gary swindler gary, talk to us about these numbers. The fact that you see this decline in tinder users, that really raises some concerns about whether weve hit saturation in the u. S. Market and how much the price increases are having a negative impact there. What are you seeing . We definitely havent hit saturation in the u. S. Market or any market theres still so many people out there who are single or who are using dating apps. We think everybody who is single should be using data apps. We want to see that penetration keep increasing. Weve got lots of room to do that in developed markets like the u. S. Or europe and less developed markets like asia. And weve got to keep driving our misconducts to make that happen and we have the runway to do it, no question about it. Talk to us a little bit about your outlook now, both for that Topline Revenue growth and also for usage trends Going Forward look, weve made a tremendous amount of progress i think q2 was a great one for us we had ham some tougher quarters the last few weve been executing so much better the team at our flagship app tinder is really executing well. We were able to raise revenue expectations for q3 and the rest of the year. It was a really Strong Quarter we feel great about it and we have to keep going youve raised your margin expectations, now looking for Margin Expansion this year what is going to be driving that is that about the price increases or does that impact your longerterm outlook on margin potential i think we have room to expand margins over time so were a very profitable business thats growing very nicely as well now, which is a great combination, a rare combination in the tech space of profitability and growth and what weve done is made some smart decisions. We have reduced costs across the board, made a little bit more financially disciplined. And youre seeing the real benefits of that start to take hold plus the Revenue Growth at a highmargin business like tinder is really helping Overall Company margins. The combination of Revenue Growth and being smart on cost is really driving a springboard effect, which were starting to see in the numbers as well, able to raise margin expectations for the fullyear and it gives me optimism longer term, as well. Gary, you know, the streets obsessed with the idea that a pressured consumer is going to start to cut back on something, whether thats highend dining or the movies or travel. And i guess im wondering where you would put online datai dati that stack whats the elasticity on that kind of thing . I have seen an incredible amount of resilience in our business throughout this Economic Cycle we really havent seen Significant Impact on our business its a small purchase. Its a purchase that makes people very happy. You know, for 15, 20 a month, they can meet people and get out and date and i think people are going to continue to pay for it we dont see people cutting back on the dating apps at all. Certainly, ai is a theme weve been talking about across this earnings season tell us a little bit about how youre deploying ai, what its going to mean for the effectiveness of your products and also your promfitability weve got a bunch of teams working on ai. A lot of capability in this area weve been doing things with ai since 2019 this is not new for us and were leveraging our teams around the world to bring some really cool new features every time i see one of them, ai im more excited about how interesting and fun they can be. Features that tell you, which photos to use for your profile, so you dont have to think about it we know which ones work best explanations of why weve matched you with certain people, so you understand the rationale for the match. And a lot of other things across the dating journey to make it more fun, easier, less friction, and something people will enjoy doing. So were just Getting Started in ai, like a lot of companies are, and i think theres kind of like the skys the limit, for what you can do with ai certainly early days for ai deployment thank you so much for joining Us Match Group share is now up about half of a percent. Thank you soft banks chip unit arm looking to go public, as you know, in what could be the third biggest ipo of all time, according to some new reports. Well get the details d ybanmae a timeline next on tech check. With gold bond. You can age on your own terms. Retinol overnight means. The smoothing benefits of retinol. Are now for your whole body. Plus, fastworking crepe corrector diminishes wrinkled skin in just two days. Gold bond. Champion your skin. Fisher Investments its easy to think that all Money Managers are pretty much the same, diminishes wrinkled skin in just two days. But at Fisher Investments were clearly different. other money manager different how . You sell High Commission investment products, right . Fisher Investments nope. Fisher avoids them. other money manager well, you must earn commissions on trades. Fisher Investments never at fisher. other money manager ok, then you probably sneak in some hidden and layered fees. Fisher Investments no. We structure our fees so we do better when our clients do better. That might be why most of our clients come from other Money Managers. At Fisher Investments, were clearly different. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Arm, the soft bank chip Company Targeting 60 billion to 70 billion september ipo. Deirdre bosa is checking into that carl, a lot with happen between now and september. All indications so far is softbank have timed this ipo pretty well. Our audience might remember that in february of this year the ceo told us he was committed to lifting the company this year. At the time that seemed risky because we had a chips glut. Showed no signs of reopening tech had not yet rebounded from the ugly 2022. Excitement around generative ai was just getting under way fast forward six months, the conditions are a lot better. The need for computing power, more chips, that is booming amid the rush to capitalize nvidia now a trillion dollar plus company that said, arm is not nvidia it is making moves into ai chip design and it works as a mega cap to help them design their own silicone it phases competition from a company. We dont talk about it a lot but its out there and is gaining momentum it provides an alternative to arms close source model the company is targeting between 60 billion and 70 billion or bankers are targeting, meaning arm is trying to ride the im cycle if arm can pull this off, and this is a big if a lot can happen between now and a road show and an ipo, it would be a much needed win for masa son and looking for liquidity to invest this could blow open the window for tech ipos and raise the pressure for others like instacart. We could see others follow obviously this would be a massive, massive ipo what are the broader implications for this market that has really been quiet lately weve seen some ipos go out and be successful but not in the tech space this would be a huge ipo it would be massive, the Third Largest tech ipo, reports saying its trying to raise 10 billion. If it goes well theres no more excuses. Employees are waiting for this company to go public if it is unsuccessful and lets say its dropped on its first day, tries to go too high a valuation, that has major implications, too. It raises the question for those who have laid the groundwork if they want to be early or first or the environment is more secure the environment right now is pretty good. We saw the stocks chips etf has done this year we know, of course, whats happened with nvidia it feels like the conditions are perfect. What happens we still have some mega cap earnings to get through. Their Spending Plans will matter a lot. Weve been talking about capex it matters for an arm as well. People on this arm ipo are eager to get this out. They are reportedly targeting maybe the second week in september. It cant come soon enough. If youre going to be first, you want the conditions to be right. Looking pretty good for a tech ipo. Thanks, dee well be watching september perhaps a massive ipo. A look to warner bros. Discovery as they head back to the negotiating table. Meantime, keep your eye on the nasdaq down 2 plus now, session lows, and the worst day in several months. This is cynthia suarez, cfo of gogo foodco. , an Online Food Delivery service. Business was steady, until. Gogofoodco. Go check it out. Whaatt . overnight, users tripled. Which meant hiring 20 new employees and buying 20 new laptops. So she used her American Express business card, which gives her more membership rewards points on her business purchases. Somebody ordered some laptops . Cynthia suarez. Cfo. Mvp. Built for cynthias business. Built for your business. Amex business. From wall street to the hollywood walk of fame, the buzz down here is on warner bros discovery with earnings coming before the bell just as the Writers Guild and studios announce they will resume negotiations to try to end the strike warner bros. , of course, with a huge success of barbie in the past few weeks one big focus tomorrow is what we hear about the streaming service. They just recently relaunched max. How is that going and whats the streaming outlook. Is barbie going to be a billion dollar movie i think it will be. That wont impact this quarter maybe that will be clouded by the conversation about the strike and that impact and i see a report despite barbies success how much that can offset disappointments earlier in the quarter, the movies that did not do as well weakness in the ad market if the writers get something going with the studios, do the actors necessarily follow . How much of a white space they dont necessarily follow, but it could prompt the actors to then return to the negotiating table. Especially around issues they have in common there is overlap there plenty more highprofile earnings this week along with more Economic Data tomorrow, jobless claims of boe, the jobs numbers friday and apple amazon will be the huge events this week also, how much of their success is priced in the stock we take stock how much is reacting to the fitch downgrade. Dom chu is in for the judge. Thanks very much, carl and julia. Welcome to the halftime report. Im dom chu in for scott wapner today. Front and center this hour, its the debt downgrade and what it means for your money our Investment Committee is standing by to break down the fallout plus some major moves from one specific Committee Member joining us bryn talkington, joe terranova, jason snipe and steve weiss rounds out the lineup. Lets get a check on the markets right now. We are down decidedly. The dow industrials down 250 points the s p down around 60