Transcripts For CNBC Squawk 20240704

You do have financials and Energy Taking up the slack to some degree. Inconclusive, indecisive action. Were 4 below the highs the treasury yields remain in fo focus. We did break out on tenyear yields above 4. 25 taking us back to 2008 the 30s are at 4. 40. Its a consistent story were pricing for a better growth economy, high real inflation adjustment yields. We can bet the economy can handle it or not plus a supply demand issue for debt. Look, the latest data is supportive of those higher yields we got jobless claims below 240. Psychologically important. Theres the yellow bankruptcy factoring in so far no evidence of real mass l layoffs in this economy. We have philly fed which was sharply higher and the first positive read since last august and prices paid inside of that, which a lot of people look at, looking for inflation cues was a little higher. You add that to the other data weve gotten this week its not earthshaking data. Its industrial productions, housing starts, retail sales is a bigger start all adding up to an economy that is accelerating, which wasnt supposed to be happening in this cycle. The further confirmation from the fed minutes yesterday from the last meeting that they are watchful of a new wave of inflation, a rising inflation pressures. There is still a bias toward tightening if they want to make sure inflation they have their heads on a swivel some fed officials with a risk of overtightening, as inflation comes down, 5 rates at the short end are, by definition, kind of more restrictive than they otherwise would be. I think my biggest takeaway from the fed minutes is theyre farther apart. The doves and the hawks on what they want to do next and nobody has any clue. Thats why i think, you know, theres some focus on jackson hole and fed chair powell will speak on friday. Theres just not enough. Hell get another jobs report and another Inflation Report before the september meeting he cannot announce any kind of pivot now. Its too early to get a signal of what they should do next. I think thats the clear the market doesnt know and the fed doesnt know. I dont think the markets biggest fear is the fed goes in september. The markets bigger fear is inflation rekindles or they lose control of the long end takes flight and then we have to and we dont cut until end of next year maybe or early next year because thats the other big debate out there in the market all i know is the tenyear yield at 4. 3 , we are reaching now the cycle highs. Thats impacting stocks and growth. Lets get to walmart. Raising fullyear guidance after a top and bottom line beat Courtney Reagan bringing us an interview with John David Rainey at the bottom of the hour. Expectations were high for walmart going in even after what we heard from target we heard much of the differing of opinion between walmart and target we talk about the merchandise mix and how thats different between walmart and target because of the overindexing in grocery walmart does that drives frequency. They talked about the higher income consumer thats coming to them what i found very interesting is when i spoke with John David Rainey this morning, he said yes, there was softness in discretionary but it improved from last quarter. I think theres a big question about whats going on between these two competitors, target and walmart. If walmart is actually pulling share from target, and if that is happening, can they hold onto it i think those are pretty Big Questions we need to ask. I watch the package Food Companies often trade off walmart but theyre all at 52week lows kellogg, general mills, which is interesting. Did you get any sense from walmart about what they were saying about grocery inflation these have all been beneficiaries, as have walmart and kroger. Walmart did go through some Inflation Numbers in grocery some categories have gone up some are going back down food is still an area i think has pressure when it comes to pricing for consumers for walmart. Interestingly, sara, they did say the private label penetration in grocery is up 9 . And if you look at numerator data, which looks across the board at market share, the cpg in private label percent that walmart has is far beyond everyone else. I think its Something Like 29 share of private label and cpg goes to walmart, which is actually above costco and everyone loves that kirkland brand and far above target, which is 3 , i think. Theres a lot of applause for the ecommerce growth in the quarter from walmart how much of that is grocery or necessity . Do we know that mix . I think back a couple of years and target was getting all the celebration for it, figuring out omni channel. I think thats a great question we want to ask. We know a lot of the walmart Online Grocery ordering doesnt end up getting picked up in the store, which is something obviously the retailer likes because its lower cost for them it also potentially grabs the shopper to go inside the store they intended maybe to just pick up and they think, oh, shoot, im here, let me grab a couple more things. The walmart plus subscriptions, they saw more signups this quarter than they have in previous quarters. Thats what John David Rainey told me this morning i want to ask about that, and how much grocery is part of that because its part of the delivery option plan, among other things, rivaling amazon prime. Thank you for the setup on walmart. Lets get back to the overall market the major averages trying to make a comeback as investors digest the fed minutes where they warn fed hikes might be necessary. What should we expect for the september meeting and beyond joining us is u. S. Bank Wealth Management head of Public Markets group. Thank you for joining us, lisa what should investors do here . We saw this in august basically yeartodate do you think this is the start of something more pronounced well, were in a neutral position right now on the u. S. Equity market. The reason why is, as you have been discussing, theres both really a balance of puts and takes on the market. So on the more cautionary side we do know overall the economy has been slowing in 2023 and Monetary Policy still remains restrictive. On top of the fact that inflation has been coming down, but its still not at that 2 target however, on the other hand, as you mentioned earlier, we have seen some signs of the data starting to pick up in terms of the direction. So, when we look at the trend or the rate of change, were actually seeing some improvement really over the last year in terms of where its heading off low levels and in addition to that, really weve got a resill jent consumer and labor market they stay at their strategic weights on stock given we have a balance of pros and cons right now. But the question is, does that acceleration in growth were seeing lead to a new wave of inflation thats really key. If its growth, that just picks up earning estimates, that would be a bullish sign for the market. Youre right. In terms of inflation, certainly we have this real issue with the last mile. While weve made a lot of nice progress since june of 2022 in terms of price pressures coming down, that remaining leg to get down to the feds target might be more difficult. We do see some resurgence in energy and food prices and certainly could continue to have shocks come into the system again, we want to continue to watch the trajectory while we see very nice progress, particularly if you look at a onemonth annualized or threemonth annualized number, the fight isnt over yet. You talk about investors keeping a balanced allocation in place right now. Talk about the fixed income piece of that. We look at yields rising, real yields rising, inflation adjusted yields, also going to the upside now, that seems to be rebuilding value in bonds, right . In other words, they can serve their purpose within a portfolio, especially if we get a downturn and those bonds can hold up better yields are certainly very attractive and starting to show increasing compellingness. Obviously, we had yields on the shorter end move up over the last couple of months and now with the recent move on the long end, you have some nice spectrum across the maturity curve. Were not ready yet to dive in and pick up an overweight position in fixed income while the fundamentals are suggesting that, again, we may be able to capture some yields right now and then possibly see them come down with overall growth being at more muted levels than they were in 2022, certainly what we are concerned about is this technical rise as the yields continue to march upward, theres really some momentum theres not really another short of resistance level on the tenyear until 5 or 10 were not quite wanting to step into that sector right now. Thank you for joining us with some of the advice youre giving your clients by the way, a lot more fed talk ahead. Cnbc will be live from the jackson hole Kansas City Fed meeting next week beginning next thursday chair powell speaks friday. Still to come, the cfo for walmart is with us next. And bill rudin on the headwinds facing commercial real estate and the record residential price being seen around the country is there any relief ahd . Ea well discuss when squawk on the street comes right back lify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. Sleep more deeply. And wake up rejuvenated. With purples new mattresses fall asleep 20 faster have less aches and pains and sleep uninterrupted. Right now save up to 900 off mattresses sets during purples labor day sale. Visit purple. Com or a store near you given the popularity of remote and popular work, our next guest sees a glut of offices with Strong Demand for quality, class a buildings in his home market of manhattan joining us for a closer look at the sector is rudin management company, bill rudin. I was looking forward to this conversation, bill, because rates are back on the march higher and with the tenyear at 4. 3, im just curious what it looks like right now in the world of commercial real estate which was already suffering under these higher rates obviously, the tenyear going to over 4 to 4. 30 adds to the headwind what were seeing, conversions from obsolete Office Buildings to new residential properties, we just made a deal a couple weeks ago with larry silverstein, marty berger and nathan bergen, the conversion expert, building a block from where you are, a building my family in the early 60s built for Goldman Sachs headquarters. They moved out, and drexel came in and mid90s we converted it to the citys first wired Office Building its perfect for conversion. There will be over 500 apartments, gym, pool, amenities, a rooftop deck, all the things the Young Workers in new york city are looking for. And then this just now, this morning, mayor adams announced a special office to facilitate conversions in midtown south and potentially can create 20 new residential apartments so, we need to increase supply we have a housing shortage these buildings, older buildings losing tenants to newer buildings that have the amenities, have the infrastructure are critical for the city to continue to grow so, its happening. So, youre doing these kind of deals, bill. I thought the Big Developers were going to florida and texas and to short of shinier places and had given up on doing these projects well, the demise of new york city has been greatly exaggerated. Just this week you heard an announcement of a big major law firm, david polk, renewing their lease. They took a couple extra floors at a building near Grand Central station owned by my friend, who was on a show the other day. Thats a huge deal and affirmation that the citys coming back. Our occupancy levels for our Office Buildings continue to go up were about 70 average. Some buildings higher. Financial service like blackstone have been there five days a week in the announcement of david pulk, they announced theyre after september labor day theyll be requiring all their employees and lawyers to come back but, bill four days a week so were seeing positive signs of people coming back to work. But isnt it just the fancier, newer buildings my question is, what happens to third avenue people dont want to be on third avenue or lexington avenue, which is full of Office Buildings that are not the new, fancy hudson yards or broad street youre talking about. Yep. So, are we going to see a wave of distress were going to see some buildings that are going to be distressed and buildings that are leasing up Empire State Development corp leased a space and on 42nd street, and then child mine institute took 150,000 feet in another durst building thats why we need the conversion opportunity in relationship to older buildings to allow them to be converted to residential. Bill, do banks have the appetite to finance these conversions . In general, can the Financial Sector absorb whatever there is to come in terms of values going down in core Office Buildings, renegotiating either leases or credit agreements . You know the scare story out there that theres something waiting for us out there and somebody has to take the loss. Where are we in that process again, theres no question there are going to be significant losses and there are buildings that are going to be handed back. Weve already seen that. And but the deal we did with silverstein is an indication there is capital available if the deal is structured properly. It took a significant amount of time to get this deal done were staying in the deal. We believe this conversion will work we have arias capital as the equity department, along with nathan and marty, and carlos slims bank putting up the debt. It was very complicated and took a long time but youre seeing funds being created now, private equity, individual High Net Worth individuals, putting money into distressed funds to look for opportunities and i think thats going to be hopefully part of the solution but, yes, theres no question theres going to be some pain out there, but then the banks need to start lending again. We need to start seeing Interest Rates come back down we need, you know, Capital Formation to start occurring again. But they will be opportunities for people who have a longterm perspective and looking for opportunities. Bill, im curious what you would do with some of these public reits, which have been hammered 20 , 30 lower. If you go to the office space, 20 , 30 lower do you think theyre good values at this point or more pain ahead . What youve seen literally over the last couple of months since sl green announced a partnership in their building at 245 park avenue where a foreign investor bought into 50 , youve seen their stocks go up 15 , 20 , 25 there definitely seems to have been a floor in terms of value and each im not going to opine about each of these individual companies were partners with Boston Properties theyre a Great Company and a building we developed with them at the Brooklyn Navy yard. And they have the diversification in their portfolio. Others are more new york centric, or other parts of the country. It depends, with Interest Rates being higher now, but thats not going to last forever. Along the line, Interest Rates will come down you know, people have to evaluate these companies and look at their underlying assets and think about what their longterm value is so, again, people two or three months ago were opportunistic and bought those stocks and have done very, very well will that continue i dont know what we do see is a continuation of leasing momentum. Were also seeing, interesting enough, significant amount of sublet space on the market pulled back by Companies Like uber, peloton, first republic, theyre thinking about the fact they probably need the space now as they look forward to where their business is going. Thats a positive sign obviously, sublet space is a downdraft on the market. But were seeing people look at their potential growth and realizing they have the space and theyre pulling it off the market so, thats another positive sign really good color, bill always good to talk to you. Thank you for that and some green shoots it sounds like as well bill rudin. Well, were realistic but optimistic thank you. Say hi to carl and david for me. Im sorry i wasnt on the show today, but theyre good youll be back soon theyre both on vacation today back tomorrow. Bill rudin mike, thats really the thing. People are just worried about this wave of refi coming and whether well see a distress cycle or the upbeat casesunfold slowly and we can manage the losses along the way well see how it goes. Walmart cfo John David Rainey coming up next. Ecommerce bright spot on the quarter. Were watching cisco guidance mixed improving order volumes giving the stock a boost. We talked to Chuck Robbins soundingpb ueat about enterprise spend and where they sit in a. I. 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. 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. You ok, man . The internet is telling me a million different ways i should be trading. Look whats up my trade dogs . You should be listening to me. You want to be rich like me . You want to trust me on this one. [inaudible] wow yeah its time to take control of your investing education. Cut through the noise with bestinclass Education Resources that match your preferred style of learning. Learn your way. Not theirs. Td ameritrade. Where smart investors get smarter℠. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. European market set to close in a moment. All pointing lower as the story stateside is defining the story abroad with the feds warning of higher inflation, worrying european investors one name in particular being hit hard is the dutch payment platform which counts netflix, meta, microsoft all its clients, tumbling after missing earnings expectations, higher costs after boosting the workforce by 15 so far this year. Watching that down 38 . That is a rough move. Time for a news update. Good morning a texas woman accused of threatening to kill the judge in Donald Trumps d. C. Election case has been arrested and charged. According to an affidavit, the woman called the federal Judges Office earlier this month and went on a racially charged rant that included the threat special agents say she admitted to making the call but told them she never planned to act on what she said. Canadian officials ordered the entire population of the countrys northwest territorial capital to evacuate as a wildfire barrels towards their homes. People who live in yellow knife were given until noon tomorrow to get out as firefighters struggle to control the flames the Northern City has limited infrastructure so to 20,000 residents will have to use a lone road to evacuate south to alberta. More than 1. 5 million dehumidifiers are being recalled after the manufacturer warned they can overheat, smoke and even catch fire. The recall affects 42 different models so a number of big box retailers including walmart, home depot and lowes. So far there have been 23 reports of fires sara, back to you. Thank you the cfo of walmart is coming up next with his thoughts on the consumer and the current willingness to spend right now the stock is down a little over 1 still up 11 year to date and mostly being hailed as a Strong Quarter both on comps in the u. S. , ecommcendaid idceer a rse big banks data. No big deal . Go on. Well, what if you partner with ibm and red hat, use a hybrid Cloud Solution to connect data across clouds, then analyze all that data with watson. Okay, but this needs to meet our. Security standards . Yup. Compliance standards . Mmhmm. So they get the insights they need. Yup. In real time. Check. To make quick decisions . Check. Aaaand check. Thats the solution ibm and a global bank created. What will you create . Ibm. Lets create. New natures bounty hair growth. Clinically shown to help grow thicker, fuller hair with just one capsule a day of advanced hair complex. Conquer hair thinning. And fall in love with your hair all over again. Only from natures bounty. Welcome back walmart, one of the movers of the day. Our Courtney Reagan back with us along with walmart cfo thats right. Thanks for having me here. Thanks to John David Rainey, walmarts cfo. Thank you for being with us on your earnings day. I want to dig into it when it comes to what youre seeing for discretionary categories at walmart. This is an area thats been soft for competitors. Admittedly soft for you as well. It seems like youre seeing improvement. Would you say youre gaining market share in discretionary and is it a new shopper to walmart . Courtney, its a pleasure to be on the show, first of all yes, one of the exciting things about our performance this quarter is the share gains we had. It was broadly across all categories weve seen for four or five quarters here now that weve been gaining share in food and grocery but we expanded that into general merchandise and consumables. It demonstrates our val proposition is resonating with customers. Weve always been known for everyday low prices but our customers are telling us they value us for convenience now thats an exciting part of the business. Thats fascinating. You detailed tailwinds and headwinds for the consumer potentially to come including the resumption of student loan payments what do you think will win out ultimately when it comes to what consumers are facing will they rise above well, we talked earlier this morning, courtney. I said i feel marginally better than at this point in time a quarter ago but theres still uncertainty in the economy theres still high Energy Prices, as you noted the resumption of student loan payments in october and we still va havent seen the full effect of the tightening the fed has done. What weve seen with our customers behavior is their discerning and leaning into these moments like seasonal around july 4th, back to school and not sacrificing those events theyre spending into that and thats benefiting our business were trying to provide the best assortment and merchandise for our customers to buy during those times. Speaking of assortment, we touched on discretionary but grocery extremely important to walmart. More than half of your sales it seems to be a big differentiator, especially this quarter. How has the government changes in snap benefits changed your growth at all . We saw a difference in the First Quarter and also related to tax refunds down in the quarter. That impacted our business but what weve historically seen around s. N. A. P. Benefits, we recapture 90 of that through other tender types what it speaks to our Value Proposition is resonating. Customers come to us to buy groceries online, pick it up curbside that category of our business, which we include in ecommerce, thats a 50 compounded annual growth rate over the last three years. Importantly when we look at that customer, they shop with us more frequently and they spend on average about 1,000 more per year. Wow online sales is another areas where walmart was a bit of a standout this quarter compared to what we heard from rival target yesterday, continuing to grow on top of the pandemic surges you saw what are walmart customers buying is it being driven by the Walmart Plus Program and those signups you saw during the quarter . Yeah. Were excited about the 24 ecommerce growth we had in our business, which includes customers buying online and includes advertising if youre an advertiser, you want to spend where eyeballs are. Our advertiser count, the number of advertisers that are advertising with us is up 60 in the quarter. Related to the customers, what were seeing is theres a slight change in some of their behaviors around what theyre buying in food items things like prepared meals that was something we saw an inflection more of in the quarter. General merchandise like hand mixers or blenders, things like that where it clearly indicates theyre preparing meals at home. Theres a big debate on wall street right now and around the country about whats happening with inflation does it come all the way back down or does it remain sticky or even are we going to see a wave picking back up . You see all the categories, including food what is going to happen there with inflation sara, its interesting. We talk about inflation in terms of year over year numbers but right now were lapping these high prices from last year if you look at it on a twoyear stack, versus two years ago, food inflation is still 20 higher prices are still high if youre a customer going to the store. We see similar numbers around the consumables category the one area we actually see deflation in our business is related to general merchandise thats actually weve seen prices come down year over year there. What about your costs, pressure from wages and transportation, how much has that come down and where is it going . Last year we had excess costs in the business related to supply chain disruptions we saw around the country, frankly. Were lapping some of those. Thats getting better. Importantly, when you think about our cost structure today, its changing. Were investing more in technology and automation. One of the big things weve talked about a lot this year is the supply chain automation. We see efficiencies of 30 more units per hour in these automated facilities where we put in the supply chain. Over time, our cost structure will change and well become a lot more efficient in the way we serve our customers. John david, theres been a lot of discussion around the diabetes drugs being used from weight loss. We saw strong sales from the drugmakers that produced these walmart has a pharmacy business. Can you tell us what youre seeing when it comes to increased sales but lower margin walmart grabs from a business like that and how youre potentially getting a shopper coming in to fill a prescription to shop other parts of the store. Pharmacy is a big part of our business overall were excited about the progress we made there the growth in the last quarter was in the high teens. To your point, courtney, a large part is drugs related to diabetes we see those customers tend to spend more with us overall theyre spending less on food. Were hoping theyll spend more on apparel as they trade down into smaller pant sizes. That is a good point, i suppose. On the Earnings Call Doug Mcmillan talked about generative a. I. , its the buzz word were hearing from all sorts of different companies. Walmart has a treasure trove of data mcmillan talked about trying to unlock and use these tools. Can you give us an example of what walmart is doing or might be doing that even helps the business run more efficiency or that a consumer would feel with generative a. I. . Sure. Historically weve been a brick and mortar type business a lot of customers come into our stores and shop with us anonymously. If youre shopping with cash, we dont know much about you. Whats changing about our Business Today is were approaching 100 billion in sales in our ecommerce business is we actually have the data around that. That enables us to better serve our customers where we can use a. I. To tailor offerings to them relative to them and timely to them we also use it in our supply chain. We look at the routing of our bots and automated storage and retrieval in fulfillment centers. Were optimizing around that if one bot takes a more route or runs into another bot, we learn from that real time so we can more efficiently route that bot in the future. Im curious if you can go into more detail about what youre seeing for back to school obviously it starts in different parts of the country i know my nieces and nephews started this week, but here in the northeast we still have several weeks to go. What are you seeing in what customers are buying for backtoschool and how does that correlation with walmarts holiday business there is a strong correlation there. Broadly speaking if you look at the first half of the year, where weve done well are in some of these holiday seasonal type events like fourth of july, like backtoschool. Were encouraged by what were seeing with backtoschool what weve done on each of those occasions is were providing a basket of goods for our customers that doesnt reflect the price increases we see today. Its the same price as a year ago. With back to school we have a basket of 14 items all combined priced less than 13 were leaning into areas where our customers need us most and were seeing a response from them as theyre coming to our stores and shopping during those periods of time. Finally, i would like to ask about whats going on in your store when it pertains to shrink, particularly in regards to theft, organized crime or otherwise. This seems to be a pressure across the board but called out by some of your competitors in former quarters, more than you have pointed to. Is it an issue for walmart whats going on . Its an issue for walmart like it is for all retailers i will point out that despite is being an issue, we still grew our profits appreciably more than sales in the quarter. Its having an impact but its not taking away from our financial performance. Its an issue retailers cant sofl by themselves we need help from local communities, local Law Enforcement to help address this were doing the things we can to protect our associates and our customers. But we actually need engagement from the local communities as well that is a sentiment many others have echoed thank you for joining us on what i know is a very busy day for you. Thank you i mean, it sounds like the thesis at least, and im reading some analyst eports, is they deserve the higher valuation because in this kind of environment when people are trading down and theyre spending money on basics like drugs and food, walmart is the beneficiary. Absolutely. I think it just makes sense to bea multicategory retailer so you can benefit in some areas consumers are going after and those that are weaker, you know, you get to balance out i find it interesting they believe theyre gaining share in the discretionary area, perhaps pulling it from target. Target didnt talk about improvement. They did month to month. Thats a good point, sure from june to july. I do think thats why it always comes back to me to the ecommerce side because if youre looking at where walmart is already fully penetrated, obviously on the ground in most of the country, that seems to be essentially a new pie they can go after the growth rate, where theyre pulling that market share from is interesting. Absolutely. Obviously, we often look at walmart versus amazon, too, online i think its important to remember amazon is so much bigger than walmart online i think walmarts is a fifty of the size of amazons online. Thank you for the interview. Up next, headwind are mounting for one Clean Energy Sector details after the break. Watch discover Conference Call going on with analysts talking about the surprise resignation of the ceo on monday. Stock is rebounding. Up about 3. 5 , although still well off the highs about 25 off its highs. Perform has turned negative overall on the session. Energy has held up rel livety well its higher so far this year one Clean Energy Sector were looking into is facing some big headwind Pippa Stevens brings us that story. Were talking about the offshore wind industry which is at a turning point after years of falling costs which made it competitive with other forms of Energy Prices are now on the rise so much so that some projects are no longer economically viable they are looking to renegotiate contracts with some walking away entirely in some cases, costs are 30 above initial projections. According to Westwood Global Energy group thats tou due to a combination of volatile Commodity Prices for turbin materials labor costs, equipment shortages and rapidly rising finance costs. Its being felt through turbine manufacturers and cable makers to developers, including orsted and bp despite incentives in the inflation reduction act, these bottlenecks are creating longerterm problems because it means capital isnt being reinvested to build out needed supply chains to support the biden administrations ambitious offshore wind targets. So, pippa, what are the critical elements among all those things you laid out that can make the cost efficiency equation more friendly to the industry is there anything were waiting for to kind of get to some kind of critical scale or get production costs down to a level where the math makes sense again . One area that could be potentially fixed is putting limits on how much equipment can itterate because equipment gets bigger and bigger. The blades are getting larger. The turbines are getting taller. That means equipment built just a few years ago becomes obsolete these are intricate and complex supply chains. If the blades are getting so big that the ship cant handle the blades, then it makes that equipment completely unviable after a few years. That is one of the quicker fixes. Longer term the power have to be reneg renegotiated, and they encourage developers and manufacturers to build out those supply chains. Doesnt seem like an instant fix. Thank you so much. Appreciate it. After the break, the information Jessica Lessin says dont fall for the musk distraction machine. Shes joins us in two. Its polite to thank someone when they do something nice for you, isnt it . Well, how about when they do something brave for you . Lets show veterans our gratitude. Ask your local Veterans Affairs office how you can help. The more you know. Every day it seems theres a new headline about x owner elon musk. Hes said to be throttling traffic to websites he dislikes, is fighting Mark Zuckerberg or hes not, but a recent crop of editors and publishers started to pose a provocative question how much should we ignore elon musk jessica, i mean, i guess nobody is forcing us to Pay Attention, but he does now own this very key social platform, very important distribution mechanism for news its the realtime source of a lot. How can we properly ignore what hes doing well, i think we have to focus on whats happening with musk inc versus what hes posting and trying to distract us from musk inc. X is down, tesla profits taking a haircut because they have to lower prices over at spacex the starship got off the launch pad but, you know, it ultimately crashed. So i believe that muskis out there posting incessantly about pranks and fights and driving to peoples houses and showing off his autopilot on his tesla because he would rather we focus on that. I say lets focus on the business okay. So why is it important for us to focus on the business which is now privately held and maybe is struggling, maybe is coming back i guess i wonder its role in society and the news ecosystem and how everybody gets information is very relevant as well absolutely and its a great point, mike. As journalists we probably do pay more attention to this platform than certainly its revenue would suggest we should. But x is important musk bought it because he believes it is important, an important town square, and it has huge influence of so many businesses including media companies. And so i think we have to Pay Attention to whats going there. It also, you know, if the financials continue, musk is going to have to make moves with his other companies to continue to pay for this thing. So its an important piece of the business puzzle, but we should put it in context i was told last week they were close to brought back even and a lot of advertisers have come back like cocacola and anthem yes, sara, time will tell that is the question linda is in there. She has the reputation and relationships to bring people back, but are they going to come back in big dollars . Advertisers like to say theyre back on the platform to give the ceo a nice press release i think the numbers will tell whether theres meaningful business to be built also, musks plan was not just advertising. He said advertising is never going to get this company to where it needs to go he wans to do subscriptions. He wants to do commerce. So far both of those are stalled. Right i mean, it seems, at least right now, they have started to charge hes paying subscribers where maybe he will share some ad revenue. I just wonder about the prospects not just for x to become the everything app but for anything to become the everything app in this context i actually its a great point. I think the web is fragmenting, and the days of everything apps are over it seems like musk is out there throwing ideas out there hes got to get engineers interested he may have to raise money and get investors interested so, you know, we see that kind of behavior from a lot of ceos really the devil will be in what they build and what they do. And lately, you know, with the report from the Washington Post around throttling traffic to publishers sites he doesnt like, that doesnt seem the behavior that will get advertisers back onboard and to really grow this business. Well, you mentioned that in your piece about throttling of traffic to sites he seems not to prefer where does that leave us you mentioned, of course, he bought the platform saying he was in support of unfettered free speech, but where does that bring us with all social media plot forms and what people are looking to do to regulate what travels over them as we get into an Election Year this is the great question. I mean, clearly all the platforms are moderating to some degree i personally think they did go too far in the past in moderating, and partially thats what brought musk to x but i find it just really problematic that someone whose stated mission is to bring free speech to the platform is throttling, which is a type of moderation thats pretty sneaky. Its very different from even saying publicly, were not going to post links to these platforms for x, y, and z reason its doing it behind the backs of everyone. He supposedly reversed it after this report from the post came out, so i think its cause for concern. But the bigger question, certainly, going into the election, how are all the platforms meta, youtube, and so on going to deal with not just sort of moderation questions around the kind of content were used to but, god forbid, all the fake news coming from ai. Its going to be pretty mad, i think. Ah, certainly will be we can all remember in news past, Newspaper Publishers complaining how facebook dealt with distributing traffic back to them. Jessica, thanks so much. Appreciate you joining us today. Thanks for having me. I will just say they said the same thing about donald trump. I think elon musk is very funny and so i think its hilarious. Squawk on the street will be back with the markets all turning lower and the nasdaq hit the hardest, which has been the themofheeeinhease t wk t pt three weeks of august. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com watching shares of Hawaiian Electric this morning getting slammed in the trade over reports it is in talks to restructure the business, the Company Stock and bonds were already under pressure after being hit with numerous lawsuits for its alleged inaction both before and after the maui wildfires. Shares are down 60 and on pace to close at their lowest level since 1985 wells fargo this week warning on the wildfire risk for utilities. Weve seen this play out in past years in california, of course, so investors dont want to stick around and see the implications Broader Market stimll to the don side also kind of inching up above 17 were still tensed up as bond yields make their way. Theyre firmer. Thats going to do it for us over to scott wapner and the Halftime Report back at post 9. Sara, thank you so much. Welcome. Im scott wapner front and center this hour, ugly apple. Why the biggest stock in the market, which is also the worst performing mega cap of the month could hold the key to everything right now. Well discuss and debate the road ahead with the investment committee. Joining me josh brown, Jenny Harrington and Capital Wealth Planning cio Kevin Simpson everybody here at post 9 good to have everyone here take a look at stocks, were red across the board here. 10 year, 4. 31. Apple, too, for that matter. My bottom line,