Transcripts For CNBC Squawk 20240703

Launching its ipo road show, a blockbuster deal which could value the company as much as 52 billion. Were watching media names, wbd warning of prolonged impact from the strike while disney fires its latest volley in its dispute with charter. Its great to have cramer back in the chair. We missed so much last week, between lulu and the china names and chewy and wolf. First of all, its great to be back. Thank you for the wellwishers. It was a triple hernia. I managed to come through it in a way that i feel very, very strong. I always love september in our business because everybody does come back to work except for the people that still work at home. They want to get back to work. There are a couple of points we have to talk about. One is the bonds are going the other way. Thats going to be septembers headwind. Again, the Interest Rates are up. I think were making much too little about the strike, the uaw strike. By the way, the writers strike, obviously for Warner Brothers is important. These are two things people have to put on their radar screens. The lulu was one off. Mongodb similar. Lulu is in a class by itself other than chipotle. High, expensive senior gross stocks that continue to beat estimates. Doing a great job. It was a very solid upgrade, although they should have done it last week, obviously. Carl, you mentioned september is usually weaker a lot of times what happens, you begin to get a lot of ipos. Theres always other issues away from the stock market. Sure enough, i think thats the strike, especially because dylan tis maybe hits all three. It was the most exciting month of the year from our point of view news, but its a nerveracking month. If we get to 5 on the 0year and we can talk about wallers interview, then we will see Mortgage Rates maybe at 9. We know the fed wants to cool housing, but 9 is a shutdown. So weve got to be very clear, if were going to continue to glide past like goldman says, we have to make sure we dont take out five on the 20year. Then what we start thinking is, wait a second, weve moved too fast. These are all the issues im faced with. Some might shoot Student Loans. Jim mentions waller talking a few minutes ago, who did say the data last week was pretty constructive to the feds overall mission. Take a listen. That was a held of a good week of data we got last week. The key thing out of it, its going to allow us to proceed careful as chair powell said at jackson hole. Theres nothing that is saying we need to do anything imminent any time soon, so we can sit there and wait for the data, see if things continue. The biggest thing is just inflation. We got two good reports in a row. We can kat and see what a third one looks like, can see whether the slow inflation was a trend or just an outlier or a fluke. Jim, he is not specifically pointing to the way supply has come back into the labor market. Youve got to feel good about that. I sure do. To me, september i think people dont understand that powell is playing for time. Thats always been his goal. Hes never said that because that doesnt sound good. You get a lot of people done for the summer, trying to go back to work, i think that there is im not saying theres a strike among those who hire. Its a new world. You dont come back to work, were not hiring you. Theres still lots of cities where people arent hiring. Tech, like the companies that are software enterprise, theyre priding themselves. Even salesforce who had a remarkable quarter is doing quite poorly, 218 from 220. Even salesforce, all the people they let go. When you have a market where we praise companies that let go of people, theyre not going to hire this new class of viewers, i mean users. Retail, same thing. No need to rehire. You can let those jobs go. When i look at banks, they certainly i see another big, big round of layoffs at all the financials, both fintech and regular. Talking about a lot of the economy, not housing, not intra, because of federal money. Thats enough to make it so youre not going to have youll have slack. Lets put it that way. You think unemployment gets to 4 by year end . Yes. Does it seem like a stretch . Yes. I think that also gives the fed co cover. I think the glide path continues. Secretary raimundo, theres no doubt about it that china, if they adopted keynesian economics they would be okay. Gasoline is a source of inflation. But they tend to record that as one off. Then the attack on rental, whether it be airbnb in new york or a recognition that when you get rates up, you cant buy. Thats the next battleground the fed is going to win there, too. Where shelter starts to contribute to deflation absolutely. If you look at food, people seem to gravitate to the clubs. Theyve been gravitating to walmart. That lowers the price. They seem to have wised up to the dollar tree small format. We were charting dg versus walmart yeartodate the other day. Wow. Amazing split among two companies that you think would play for the same consumer to some degree. I think those companies, the Dollar Stores have to start coming to grips with the facts that we didnt go to high school to get stupid, not just college, because the small form factor. They look at the label and then look at walmarts house brand or the premium band which happens to be costco. They realize, wait a second, this isnt so cheap after all. There are a lot of people who felt those Dollar Stores they put them everywhere, then people that didnt have cars could go to them and could walk by. Its still got the walkback thing. The Dollar Stores are no bargain. It sounds like a lot of execution. By the way, goldman, in addition to cutting recession odds looks at real wage growth and real income, up 3 next year in their view. They see Consumer Spend up at 1. 9, streets up at. 9. Theres just not its a mix. You have a Williams Sonoma doing okay. Looks like a refresh going on in terms of the home office. Way fair continues to be terrific. Rh not doing well. I got the catalog, because of the triple hernia, i couldnt pick it up. Maybe by thursday i can pick that bad boy up. I do think theres a sense that some retail this week macys wasnt so good. When you look at walmart and costco, theyre on fire. Thats the sign of the consumer trying to stretch. Well get to some of the calls. Upgrades of we mentioned lulu, but also lowes today. Axp axp had a good quarter. And steve squeri did a good job. I thought marvin elson at lowes was a remarkable quarter. I think marvin is a great merchant. I said, this thing is going to rip. But its been delayed reaction because i think people are very worried about big box. Walmart stalled at 160 after a nice run. I thought mcmillen did a very good job on the call. Rainy who added his middle name didnt have that when he was working with dan schulman at paypal, but thats okay. I added to j. When i got to college. Some guy said, whats your middle name . I dont have one. From now on its j. , sounds very dignified. Lets just say it was code for im struggling not to say jewish. Why not lets go for it. Maybe well get to it. Maybe well get to musk. James j. Cramer. My 42nd year on wall street. Its about time to Start Talking straight. Lets get to arm holdings kicking off their road show, submitting the ub dated filing setting the price range between 47 and 51. Nice hit by Leslie Picard this morning. Jim looking at the discount from the round last month. You talk to raenee haas. Youre not speaking to some oxford professor. A seasoned player. Where did he work . Nvidia. Whats in the grace hopper which is the key chip nobody in china is allowed to get. Its arm with nvidia. Im saying when people listen to rene, its electric. Theyre in everything. I think the press is holding way too far back. I think people are going to want this because theyve got a lot of Big Companies that are socalled anchor tenants. Is it a mall or something . I think this company is fantastic. I think theyre everywhere. Im not worried about, as much as i used to be about hand set because they are ai. They are the cpu thats partnered with nvidia, not amd, not intel. Nvidia is king. To your comment about supply taking oxygen out of the room. There was story last week about aramco talking about issuing shares. Who knows whats going on in the kingdom . We dont know. Nvidia, by the way, which is down 4 jensen went to india. Jensen is at ease everywhere in the world. They have thousands of workers in india. Look out, china. People are stopping at india. Thats what it used to be like in china about 20 years ago. Did you make the pilgrimage to the country that just put a man on the moon . Did you make a pilgrimage to the largest democracy . One thing that has hurt china, a dictatorship. A dictatorship that hasnt used keynesian economics is insane. Another thing youre not allowed to mention, nazi, germany in 1933, deflation. The chinese has to get their act together. Another dictator was launched by deflation which leads to a depression. So lets not minimize whats going on in china. I will talk to secretary raimundo about this. As a coach once told me when they were down by 35 points in the locker room, coming into the second half, we have them where we want them, and then they won frank wright, greatest comeback ever. Like patriots 283, patriotsfalcons. Jim, only one other team has been up by ten and ever lost okay. So its the eagles. Thats all right. We look good in training camp. Well talk oil after the break, vad extending voluntary cuts. Warner brothers warning about the material impacts of the strikes and well get to disney regarding the ongoing dispute with charter. Futures overall looking pretty mixed here as we get into a busy but short week. More squawk on the street straighthe. Aad every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Im barbara and im from st. Joseph, michigan. Im a retired school librarian. Im also a Library Board trustee, a mother of two, and a grandmother of two. Basically, i thought that my memory wasnt as good as it had been. I needed all the help i could get. I saw the commercials for prevagen. I started taking it. And it helped i noticed my memory was better. There was definite improvement. Ive been taking prevagen for a little over five years. Prevagen. At stores everywhere without a prescription. Warner brothers discovery warning this morning of the prolonged impact of the sagaftra strikes. In the sec filing this morning the company says with the strike still on going, it now expects the impact will persist through the end of 23. That said, jim, they raise their full year Free Cash Flow estimates to above 5 billion. When i looked at it, i thought what is the real takeaway here. Zaslav says why not focus on the cash flow. Were a cash flow based company, were about Free Cash Flow paying down debt. Thats true. Hes paid down 9 billion. If he wants to pay down more, his stock price goes up. I found this one far less pernicious that the battle this strike than the actual battle between disney and charter which im really trying to get my arms around. That seems to be bare knuckles. In terms of the final showdown between the carriers. Watching the game . Thats sacrosanct. Going into lions chiefs on thursday . Thats a huge game. If i have to watch it on wherever they put it, ill watch it. The season overall you cant screw around with the league, with the nfl. I know comcast has a wildcard game. Wildcard has been fungible. We know amazon has thursday night games. Espn is a big deal. This note i dont know if you saw it. Video put out september 1 by charter. The charter presentation. Failure of tv everywhere . Thats just great. Talking about netflix. All they do is basically just say that decline in disney on friday was reason. My travel trust owns disney. I feel bad about it. I made a big mistake. I believe in the franchise. I thought bob iger would turn it around quickly. Its a troubled franchise. Disney shanghai, for instance, where secretary raimundo went, packed. But this fight is existential. All the things in the charter document are what we talk about what people talk about behind the scenes which is, wow, everybody is doing badly. You tend to want to avoid those situations. Disney on friday came within about half a dollar of a seven handle. Bofa had a pull the other day where respondents came in with a median of 68. 75 this morning i thought was reasonable for the next level to buy. Again, ive made a huge mistake on disney. This is one of those situations where, you know how someone brought a gun to a knife fight . No, they both brought. 45 calibers. Theres just a feeling of, you know what, last man standing. You can have a last man standing ford versus the uaw where ford has a fivemonth cash hoard and the uaw has a fiveweek cash hoard. Thats knife to gunfight. Disney some say its thermonuclear war to thermonuclear war. I dont because disney has a franchise. You look at the debt picture of disney and look at the espn hand. Theres got to be some smacking there where you have something a frank cap story where theres an angel. Clarence. Theres got to be a clarence here. Got to be. This is not right now its not looking frank cap pra, a little more john ford. Its obviously going to have an impact on the dow as well. One more look at futures as we kick off t fl. Ngowhe. Erheal [due at target in 5 ] copy that. Make a hard left down the alley. Networks got you covered. [please confirm requesting backup. ] changing route. Go. Roadblock ahead. Back up, back up. Reverse reverse next level moments, were 30 seconds out. Need the next level network. [north corridor, hurry ] coming through or 3, lets go. The network more businesses choose. Transplant received. At t business. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. 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There are certain things where i say, wow, i have to pay attention. Bear puts out chipotle, adding bull lush fresh pick designation. Theres a lot thats goodin this see potential for traffic to accelerate. Thats something people were unsure of in the previous quarter, when is it going to accelerate. Theyre going to accelerate units, pricing action matters. We were concerned about that. A lot of people, i know this sounds a little ridiculous. The carne asada is gone. This is something we talked about when we had the ceo. Are you kidding . Now theyre talking about the idea of a couple of other favorites. What i like most about this, as is lulu, this is a whole group of companies that people are just excited about. We dont get this kind of excitement. Weave missed it. But as the market goes higher, we have a chipotle, we have a lulu and we say to ourselves, all right. Were now starting to amass a group of senior growth stocks. I would add mongodb on friday, hard are to understand, that may make you say i want to own it, not train it. Calvin mcdonald demonstrated a huge amount of stress on the lulu call. He keeps introducing new products. Chipotle introducing new products. I regard this as special, stocks going back over 2,000 and its going to do it in a heartbeat. Baird is looking for 2,400. Well get to the dpz upgrade as well. Oh, i like that. A few good ones on this tuesday. Opening bell is coming up in about 5 1 2 minutes. There are some things that go better. Together. Burger and fries. Soup and salad. Like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together can help you make smarter decisions. Voya. Well planned. Well invested. Well protected. Ai has the power to generate solutions. But if its using unverified data, it could generate problems. Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. Lets create the right ai for your business. With watsonx. Ibm. Lets create. A big sales pump for tesla in china. Jim baron says the price cuts are working. Yes, i think this is important because youre up against some very furiously good chinese countries. We have 27 tariff in this country on the chinese evs. Once again i think tesla is winning everywhere. The place theyre winning the most is the u. S. , because theyre none union against three union shops. Theyve been sourcing raw minerals out of australia. This is good news given the fact that we know the China Economy is weak. The government, by the way, lets be clear, wants very much and is trying to subsidize the Service Economy and not the industrial economy. This comes under that. I think the chinese are grateful. Its very strange because we dont remember times when everybody is trying to move into china. Now its just tesla. We have this huawei example today. Yes. I was going to ask you about this hand set teardown that suggests that the chinese have at least something that would surpass what theyre unable to get from the u. S. The idea is that huawei would go back to be ascendant. It is still very strong in china, able to pick up some of what apple has been able to pick up there. I dont trust the chinese on this. I think the chinese have a habit of saying theyve got something and they dont, whether it be a vaccine, maybe this. Its no doubt about it, this is not the chip you need. You need nvidia. You need the h100. This isnt Artificial Intelligence, not even regular intelligence. As far as raimundos visit, theres disney talk, boeing talk, travel and trade talk. In that trip at the boeing hangar, shes very well accepted. When i speak to her ill be deeply focused on the notion that, is there a carrot and a stick going here. Shes very adamant and very tough, both sides of the aisle behind her, that they Better Change their ways. I want to find out what happens if they dont . What happens if they dont. Thats the key interview that jims got tonight. Theres the opening bell at the cnbc realtime exchange. Semiconductor company st micro, provider of trialbased Web Development services. Churning here above 4,500 the last couple days. The end of august wasnt terrible. I was surprised. I felt when salesforce exploded higher, that would be enterprise. When mongodb had an amazing quarter, i thought that would help us. Splunk and snow it meant nothing. This is the area where everybody had been excited. You have companies that are just crushing the estimates. There was a hub spot recognition today, citi. How about the call on oracle today out of barkleys . If you remember, oracle came here, katz, the legendary ceo. You chased him down. It was like the old days. Stock was up one point 122. 5 when dominic was running the 5 00 show. Its come back in. This is the inexpensive ai. Its got on prem, meaning on premises, also on cloud, other diggss doing well. When you buy a cloud stock at 21 times earnings, youre not going to have a b pro. Dont forget, you have Larry Ellison in there. I once said something that was mildly critical of Larry Ellison. Lets just say it was illadvised. From a booking standpoint maybe . Its just i was saying that hes all over the place. Hes in hawaii and hes racing and also running oracle. Well, yeah, he actually was. Bark lays does go to overweight, 150. Talking about the sass business providing more weight. Salesforce is the worst performing at the moment. This is ridiculous. Did anyone bother to read the Conference Call . It wasnt the usual Conference Call. There wasnt the hype. Ive known mark for a long time. Amy weaver, the cfo did a dominant job. They talked about the boomerangs, people coming back, sales being great. Lets see what happens next week. Its dream force. Anyone that has bought it has broken even or gone higher. You can sell right here but i think that you watched the big ten you forgot it was on peacock when you watched visio. This is how informed you were. This is a great quarter for salesforce. Cash flow unbelievable good. Margins. Margins were exploding. Okay. Just keep selling it. Oh, now youve got people saying its head and shoulders, a whole group that want to sell it. Go by prell. Its unbelievable to me honestly, i was bedridden for most of my fantastic vacation, staycation. So i had the privilege of reading every Conference Call multiple times and listening to them. Those were selling at 215, they werent on the Conference Call. They werent. They werent recuperating. They were playing. Now theyre selling. Theyre darn threecocktail every night thing, no. They dont know what theyre talking about. Between that, between dreamforce, communacopia San Francisco has got some a lot of executives going on a plane. Sfo had a bit of a tailwind. I spoke to someone big in the real estate business who is buying everything that moves in San Francisco. Dont forget Boston Properties which owns salesforce tower, theyre making a major commitment. Everybody hates it, big mistake. Speaking of another hometown company, airbnb is the number one gainer this morning, along with blackstone. I went back and forth with brian chesky and congratulated him. At the same time we have the city of new york saying, wait a second, were going to start giving you scrutiny. Chesky came on mad money and said, listen, its a great quarter and high end is doing well. The next day the analysts were saying worries about high end. All right, so they dont have cable. Jim, on m a. Friday was about amgen horizon. Today emerson gets National Instruments approval in china. Are we in a regulatory detente . I think the ftc is backing off. I have a source at the ftc who said, you hammered us so badly. If i tell my wife that, shell say, we have to adjust the size of the door. The heat the heat on the ftc is such that even lina kahn whom i regard as one of the most stringent anti combination realize her decision to say bob brad way was going to tie product, you had to take this to get that, even though hes never done it and sworn he never will do it and was ignored by the ftc, they had to back away from that stance. That deal had no competition and its a really smart deal. The chinese, this could be related to this could be an olive branch to raimundos trip, looking for some more boeing plants. The one thing youve got to watch, the big one is the possible october 30th combination closing between broadcom, down again today, and vmware where the only holdup is china. If you get china my travel trust is buying this in part because, if you get china, youve got a thousand dollar stock. The reason we like it so much, theyre a great partner of nvidia. Remember, i have a common theme, v vmware, people thinking maybe china is not going to prove it. They stuck by the october 30th deadline. Hawk, by the way, if people wanted some fun, i want you to listen to a hawk tan Conference Call. Its so fabulously dismissive of people who ask stupid questions. Its the way elon used to be when people used to say, what is he smoking . Hock is more like, youre kidding me that you asked that question. Really . How many times do i have to tell you im not going to answer that question . Yet his confidence that the deal may close was exuded on the call. I think thats the big deal in front of the chinese. Its gotten approval everywhere. Vmware, a great combination to do ai with jensen. Theres a big deal coming out of the quarter. I love the quarter, by the way. Nine price target increases. The stock had run 40 the day before, and then 35, 40 down as much as 50, down again today by people that dont realize 20 times earnings, a 2s yield. Youre going against hock. Weve met hoc tan. I mentioned earlier going against Larry Ellison. Larry ellison, hes brady. Hoc tan is in his own way mahomes. Hoc and jensen are brady and mahomes. By the way, jensen, just the delightful speech hes made in japan. To study what hoc tan has said about morris chang who started taiwan semi theres a great cartoon, theyre great friends. Morris chang is the dean you realize, i need people to study this man. You need to stud y jensen becaue he is da vinci, he is the great creator of our time. When i was out there last, other than the fact he gave my second dog a pass to get in, he was most proud of the fact that he was able to grow grass on the sides of the walls. He had been the architect for this structure. Theres nothing that this man cant do if he puts his mind to it. His easy way with modi in india was a sign he is a Great American ambassador. Watch out oregon. Watch out. The money from nvidia and fortress, if they could, will never run out. They can make that school the one that we want it was always a great school. My daughter was part of the state system. Loved it. Colorado right here as well. A gain. We havent mentioned dion. He deserves mention because hes so excited. Deion sanders. Jim, your concerns on the uaw, the president says hes not worried. Adam jonas says even if you are worried, you have to buy gm and ford in the face of these talks. I like gm doesnt have the strike i think the money put away for a strike that ford does. I greatly respect mary barra and i greatly respect jim farley. But the head of the uaw, shawn feign, if you read his speeches, i went back to see when it was like this. You have to go back to 1950 when you have such a stride dent union leader who basically is asking for 60 billion, some people say 80 billion, and farley is talking about maybe 5 billion for ford. Theres a lot of people that say, listen, labor is not a factor in the end. Its only like 2 of the cause. Those people really dont understand whats at play here which is that, if you dont get those fall cars and trucks out there, youre going to have cash flow issues. Youre not worried about some kind of unionled wage spiral in the country. Youre just worried about shutdowns. Union is 20 of the workforce. Theyre not a factor, but they are a factor with this group. At what point you have a Union President selfproclaimed. At one point, theyll say talk to the hand, youre out. Does it get to that . The answer to that is probably up to the president , not up to jim farley and sean feign. I think the fact hes not worried about it, i love confidence. Were about to go into football season. Andy reid is a good coach. Ive known him for a long time. The one word i wouldnt use is confident. Thats arrogance. I think he should use the word focused. Im not his adviser. My wife spoke to him ten years ago. I havent spoken to him in a long time. To say not worried is kind of a jinx. Obviously the shift to evs, theres all kinds of headlines. This morning germany, shim, schultz says theyre going to be the first european country to require 80 of service stations have a charger. The biggest worry, will new york, illinois, california say well only allow 50 internal combustion engines. Its rogue states they need to worry about. The battery factories the ford battery factory is not owned by ford. They want ford to come in, listen, were making unions, they i have a 30hour workweek which is like what the work from home people are saying. Maybe Take Two Interactive has something. I do think its just nuts to think that you can tell these Battery Companies what to do when they dont have ownership. Meanwhile, we mentioned the saudis reportedly extending their cuts. Jim, red count continues to be a downer as we have wti here bumping up 85 last week. I talked about trust owning disney, eh. We own pioneer. One of the reasons why i own pioneer is they have been figuring out, as is coterra theyve been drilling more, getting more, using fewer rigs. These smaller coterra is using threemile sideways rigs. Youre hitting a lot more oil with fewer rigs. Pioneer, by the way, is by far the best. Theyve got if lowest all in. What you want to do when you look at oil companies, you node to look and see who has the lowest allin cost. Thats what Scott Sheffield came up with at pioneer. He now has a terrific ceo. They have the lowest allin cost for oil, lowest cost for natural gas coming into the winter months is coterra, under a dollar. You have 2. 60 fortunate gas. When you have it under a dollar, youre crushing it. Coterra and pioneer are better than anyone. We sold halliburton, a nice little gain. Do the homework, youll come up with pioneer as the cheapest. Of course, the result from a consumer standpoint is more pressure on retail gasoline prices. Thats kind of driving rbcs upgrade of American Express. That go to outperform 197, only goes up to 200. They say as credit normizes youll want to go to the more pristine areas of credit. No one gives them any. Its gen x, genz. What a lousy vacation. I have American Express, a great second read. Like its toil tolstoy. I can tell pornography when i see it. Pornography is americas best Conference Call because younger people are buying it. No one seemed to care. The analysts didnt focus at all when steve squeri focused on, the generational movement. Theyre more focused on credit, on the idea that travel is going to peak. Theyll recommend marriott to the sky to the cloud cals, whatever you want to call it. I think American Express is a terrific buy. It is interesting given some of the biggest losers are wynn, carnival, some of the airlines, alaska air, ual, marriott. People are trying to figure out exactly when travel ends. There was a very vicious article about citi saying no more to cruise ships. That could hurt carnival because theyve got so many. Wynn, macau numbers always in check. Resmed is the lily product and having tremendous success against sleep apnea. Resmed gives immediate relief. Stock going down, down, down for one reason only. That if you take the monjurno once a week, it has a dramatic effect on sleep apnea, Blood Pressure and also on heavy drinking. The sleep apnea discussion behind resmed. Lily is only 100 billion more than the Largest Company in europe which is novo nordisk. Wegovy is the company that is periodically in shortage because they didnt expect things would be so poundful. Lily spent a ton of money having the right factories, i think in North Carolina which their open has made it so they will not have a shortage. Very important because this as ive said, this will be the greatest selling drug of all time. Finally, jim, a great piece in the journal on apple looking at some of the signups for mls as a result of messi in miami which cook mentioned on the call. His first game had more signups than when the service went live. So, maybe its better to be lucky than good. That was a deal negotiated, as we know, from our excellent cnbc ceo conference. Eddy cue negotiated that deal personally. People thought they paid a lot. Lo and behold messi shows up in miami and they played very little. It was genius. I think global football, as its called, is very important. What people have always said, american soccer isnt going to take off. Messi is pure joy. I know hes helped signups. Theres Big Companies, whenever you Say Something like that, people will say, yes, jim, did you know the apple iphone 15, the stereo system is not that good. Then you say, i didnt know they had a stereo system. I have the 14. I took pictures of the moon. If the 15 can have me land on the moon, ill recommend the stock. These analysts are pathetic. I went back and looked for some something im writing who four times said apples best times are behind them. Thats when the iphone 6 and the 7 i dont know. Look, one of our people who works here who likes me is a comedian. Im thinking that theres room for a second one. Like dickens and feng center. Its the bernstein guy. Dare i mention his name. I promised my wife i would be a scholar and a statesman. The loyal viewers already know who youre talking about. So you dont need to say . They do . I take it back. Well know more about the iphone in the coming days. As we go to break, lets check bonds, holding 4500 on the s p. Not a lot of data this week. We will get ism services tomorrow and beige book tomorrow as well. For the time being, tenyear 4. 23 yields. Back in a moment. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart coach saban, this goat done took over our office. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. Elephant wouldve been scarier. The citi custom cash® card a different kind of card that automatically adjusts to your spending earn 5 cash back on your top eligible spend category up to 500 spent each billing cycle learn more at citi. Com customcash 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. As we said going to be a busy week on conferences. Dont miss fabers interview with David Solomon live from goldmans Technology Conference coming on thursday at 4 15 p. M. Eastern time. Dow with some moderate losses to start a shortened week. S p 4500. Well get stop trading with jim in a moment. With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Doors take us places. So you bought a place. To new adventures. Oh. Mwah. Planned. And unplanned. Surprise they lead to goals. For you, mama. And connect us to family. I didnt get the part. Your dedicated fidelity advisor can help you open those doors. But i did get waiter number 2. Because they know you. They can help you create a comprehensive plan for your full financial picture and personalized Money Management with the right balance of risk and reward. Doors were meant to be opened. Its time for jim and stop trading. I mentioned Toll Brothers upgrade, down 3. Thats pure Interest Rates. I want to focus on something i regard as very good. Someone is getting recognition that hasnt. Thats russell. He runs and has done an incredible job at dominos. People are not giving him enough credit. This is a man who got an upgrade from td cowen but has great deals, uber partnership, 2023 year end, he has tony shoe at doordash. Theyre on the app but an dominos order. If you take a look at the chart people gave up on after pat doyle left. Pat is, by the way, the ceo of restaurant brands, im sorry executive chairman of restaurant brands, a great spokesman for a good stock. I like dominos because theyre showing the open mindedness that gives me give cheese a chance. I put on the no cheese button. Thats something pat doyle said i did, i have a vegan daughter that didnt like cheese. Should have went close. Put that on for you. Raimondo on tonight. I think she is the most savy in the cabinet, most savvy in the administration about building ships, factories here, and about what it means to do business here versus there. They ought to like maybe i hope they took her seriously as she deserves. Right. Reviews from some corporates were solid but curious to see what she tells you tonight. I think shes very strong. Well see you at 6 00. Jim cramer, mad money tonight. Bit of a soggy start as energies the only sector meaningfully higher. Were back in a minute. 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. I wouldnt have my business if it wasnt for my website. Once i decided to go with godaddy, the process was seamless. I was able to create my website on my own. To have it be exactly what i want it to be. Be able to integrate my appointment app. Godaddy was able to provide everything that i needed. The whole image of who i am and what empire is is presented through my godaddy website. Good tuesday morning. Welcome to another hour of squawk on the street. Im sara eisen with Carl Quintanilla live for you at post nine of the new york stock exchange. David faber on assignment. Ahead some of big interviews at Goldman Sachs conference out in San Francisco this week. Dont miss the ceos of at t, and paramount, right here tomorrow. First, take a look at stocks here in the early action. Remember, september is historically the worst trading month of the year. Looks like were on a down note, although nothing extreme. Down 51 points on the dow. S p down 0. 3 . Tech hit a little bit heard harder. The nasdaq down 0. 6 . Some green, energy and consumer staples. Industrials and utilities getting hit the hardest. Here are three movers. Airbnb a top gainer on news that stock will join the s p 500 later this month. Shares are less than 10 away from the highs of the year. Oracle in the green, barclays upgrades to buy from neutral, citing further a. I. Gains related ahead. A winner year to date. Watch Warner Brothers discovery expects to take an earnings hit of 300 to 500 million related to the ongoing actors and writers stock. More on what to do with that stock and the media group later this hour. Not the heaviest week for data but july factory orders out a couplemoments ago. Lets get to rick santelli. Good morning. Good morning, carl. Indeed we are getting our july read on factory orders expected to be a number around minus 2. A . Comes in at minus 2. 1. The lightest number since back to november minus 2. 4. Transportation the number improves. Transportation was a drag, up 0. 8 . Much stronger than the 1 to 0. 2 we were expecting. Up 0. 8 the best level all the way back to, well, up 0. 9 in january and were up 1. 2 in may, so these are very good numbers when you strip out transportation. Lets look at durable goods. These are final numbers, so we take our mid month reads and toss them. Mid month read minus 5. 2. It remains. That is the lightest read going all the way back to april of 2020 when we had a covid affected economy when minus 19. 3. Strip out transportation and you can see it improves up 0. 4 . That replaces up 0. 5 . Still the best level since may when it was up 0. 7. If you look at capital orders nondefense exaircraft, a proxy for Capital Spending by business, its up 0. 1 . Thats exactly where it was. Our mid month read if you look at orders and switch to shipments were down minus 0. 3. Also as expected. Once again, if we look at all this in the entirety, it is definitely, i would say a smidge weaker than expected, outside factory orders, extransportation. Look at long data treasury rates they continue to move higher, 4. 25 in 10s. That is a super important level. We keep coming back to that. Were up on the session, and we see less inverted yield curves by 3 basis points, twoyear and threeyear notes. On the shorter end of the Treasury Curve underperforming, the yields not moved as aggressively to the upside as 10s, 20s, and 30year. Back to you. Rick santelli, thank you very much. I would throw in the dollar as well on the move and now at a six month high. Were at the highest levels since march or so on the u. S. Dollar. The story here is that even with some data misses in the u. S. , its worse overseas and the data continues to come in negatively. You have to start with china on that story where the yuan is getting punished on more weaker data, which is what the market is reacting to, and less on the piecemeal stimulus measures. It was a private Sector Services reading, and it was a big miss. 51. 8. Actually the weakest that china has seen in the Services Sector in several months. Slowest pace in about 8 months in august. So data is not looking better, as we continue to come away from covid there. I think that was disappointing. The european pmis, final Services Pmis coming in lower, 47. 3. Its worse over there than it is over here even if the data here is starting to weaken. Thats a big part of the narrative. Yeah. Of course, weve been paying attention to some of their deflationary numbers. Eurozone ppi year on year got peoples attention to. Down 7 plus. Right . Good. Yep. Although its more of a toss up what the ecb is going to do because they have higher inflation and a weaker economy, tougher predicament, as always, for Christine Lagarde, the president of the ecb coming out in coming weeks. As far as the u. S. Data and this market story lately, its been continued soft landing, dont you think . Disinflation. There hasnt been anything really to disrupt it. I think the two outstanding questions that we just dont know the answer to, worth talking about is, will inflation remain stickier . That could be a problem. Or will this sort of weaker, benign data turn into something worse . Deutsche bank this morning offered a reality check and looked at we got the jobs report on friday and looked at threemonth payrolls and see a slow and steady decline of where we are on the right side of the screen. Thats soft landing, not causing a lot of stress in the labor market. Yet. So they say, in order to keep the soft landing scenario intact, we have to kind of continue to see this slower but stabilize, otherwise it turns into a harder landing. Thats the hard thing right now, is to figure out whether the market and the fed can have their cake and eat it too. They can get away with this idea of a soft landing with the data deteriorating in a not more meaningful way. Right. Maybe the best things we have going this morning are waller to some degree saying last week was a great data week in terms of supporting the feds mission after jolts and the jobs number and then gold cutting their recession odds, they cut it from 30 to 20 to 15. Thats their 12month odds of a recession and saying real income up 3 next year, going to support real Consumer Spending of 1. 9 in 24. Street at 0. 9. They continue to have maybe most cup strucktive house view on the street. They push back and say look the continued numbers on the economy and on inflation preserve the soft landing scenario and take down recession odds to 15 from 20 , which is a strong statement and we should say that jan hatzius and the team have been right in this idea that it hasnt looked worse. So theyre more optimistic than other forecasters. I think, though, theres still an outstanding question for the market of whether the s p can continue to rally on the data coming in, little bit worse, but nothing too alarmist, and the Federal Reserve pausing, which was the message we got. Lets bring in Steve Liesman off the interview with Federal Reserve board member chris waller. Steve, he sounded hawkish before. I thought this interview was notable. I think so. He is one of the more hawkish fed members, sounding a bit dovish this morning. I wouldnt say all the way dovish. The data last week broke the feds way and in the way of a soft landing and another rate hike was possible but not definitely. That was a hell of a good week of data we got last week, and the key thing out of it is, its going to allow us to proceed carefully as chair powell said at jackson hole. Theres nothing that is saying we need to do anything imminent any time soon. We can sit there and wait for the data, see if things continue. Waller continued to say that inflation is the fed stop issue and is going to determine what happens next. He would not rule out that additional rate hike this year saying he doesnt think it would tip the economy into recession. He was not ready to declare victory over inflation. Ive been burned twice before. 2021 we saw it coming down, and then it shot up. The end of 2022, we saw it coming down, that all got revised away. I want to be very careful about saying weve kind of done the job to inflation until we see a couple months continuing along this trajectory before i say were done doing anything. Waller is just the first in a series of fed speakers we have this week. Wednesday, its collins from boston, harker from philly and goolsbee from chicago on thursday. Along with williams from new york and bostic from atlanta. Logan from dallas and bowman from the board of governors. Busy day thursday. Michael barr from the Federal Reserve board on friday. Wallers more dovish tone with the comments powell made at jackson hole set a marker for the committee. Were doing nothing in september. Its a default position. The fed will figure out what to do in november when it gets there. Waller sounding more dove ir, guys, on that score. Everybody has to get their opinion in before the blackout period, i guess, on saturday. So the question mark is around november now, and just how much of an inflation may be im looking at oil prices. Brent back to 90s on news from opec continuing their cuts on production. The dollar stronger again. I wonder what it would take on the inflation front to put november squarely back on the table . Well, i think the clear thing would be those Higher Oil Prices bleeding into the core prices of the p kreshgs e and cpi. If those go up and it looks like theres a generalized increase waller, this morning, went along with our take last week on the pce number which was driven by kind of strange factors. He said he doesnt like to throw things out. But the big rise in Financial Market commission was a big reason for the increase on the Core Services score. He was ready to kind of get rid of that for a while. If those Higher Oil Prices and Commodity Prices bleed in, thats going to be an issue. We have to watch the Unemployment Rate and see if the tick up in august was a one off or goes away in september and were back to historically low Unemployment Rate. Steve, thanks. Great stuff with waller this morning. Lets talk about whats ahead for the fed. The economy and markets as we get into september. Post nine, Wells Fargo Institute daryl kronk and kpmg diane swank. Great to see you both. You know, part of the interesting action was in treasuries on friday after the jobs number, and then again today. If consensus is the fed is done, why doesnt the bond market believe it . Yeah. I think thats really the key message here, carl. You hit it on. If we got a 3 cpi print a couple months ago and yet, the long side of the yield curve is higher today at 4. 25, right, its only basically 9 basis points off its alltime high. If inflation is coming out of the economy to the previous discussion, that part of the yield curve should be pricing down inflation premiums an its not. Right. Its not just commodity and oil prices. Wages are too high, the fact that Housing Market remains strong, which all feeds into inflation data in the back half of the year, despite 4 cpi will have the fed rethinking november again and loo no further than the super core on friday and the pce number, its way too high. Waller chalked it up to the whole Portfolio Management services volatile and this morning, so do you see this as a headwind for equities . Because the market right now seems to be pricing in the disinflation story. Yeah. I think right here the riskreward on equities is not good. Stuck between 4300 and 4600 range. If you look at equity risk premiums were almost 19year low on equity risk premiums. Am i getting paid to take risk in todays environment . I am not. If youre going to participate in equities do it defensively. Do it in places where the earnings are a little stronger like industrials, like defensive health care, materials we think are a deep valuation. We just downgraded tech and energy on the big strength that theyve had. We think they got too rich, basically. Diane, do you think theres going to be a data set that ends up being more convincing to either the hawks or doves than weve gotten so far . Not before the meeting in september, which is why theyre willing to stand on the sidelines. I actually think they probably will skip november and this is the peak in rates. The higher for longer message came through. I was at jackson hole with steve and theres a commitment to higher for longer. Math gets hard from here and they know it. Unless we see an absolute flat lining of inflation on core inflation from here through the end of the year, youre not going to get anywhere near the feds 2 target. That means the fed needs to hold rates higher for longer and youre hearing that from Central Banks around the world. Now Christine Lagarde is more concerned about a wage price, even as their economy slips into a technical recession in the eurozone led by germany. Were not as worried about that here, but the bottom line is the job is not done, and that message was clear. I think the other side of this, is that the fed doesnt expect to cut rates as rap putly as it hiked hiked rates nor does it expect to go to the ultra low rates we saw in the wake of 20082009 recession. The Balance Sheet repairs that we saw in the wake of that Great Recession have really helped us to be much more resilient this time around, but it also justifies higher rates than we had prior to the crisis. But, diane, on the other side of the equation, the Economic Data starting to come in a little bit soft, and people are paying attention to, for instance, what we heard from some of the retailers, macys and nordstrom, increased rate of delinquencies from credit card borrowers, that sort of thing. Isnt the flip side if the economy weakens more materially and we see the stress show up, as we do with lags from Central Banks, i dont know, hiking of 525 basis points, then they will cut earlier than expected. You see quite a substantial weak ing from here and lets face it, the Current Quarter is adding up to 3. 5 . Looks like 3. 8 in the Current Quarter. Thats stunning Economic Growth and an acceleration over the summer. July was the strongest retail sales and overall Consumer Spending we had since we got that record bump in Social Security payments in january of this year. I think those issues are really important that were seeing in a rotation in spending away from some areas in the services, but services is where the fed chairman jay powell spent a lot of time on saying were worried about that being more labor intensive, more resistant to rate hikes, an thats why they want to do higher for longer. I think the economy is showing remarkable resilience. We weve seen on the treasury data people are starting to pay back their Student Loans in august, instead of october, because they can afford to, but it will slow down growth. I dont think were going to see an actual recession. If we did see a recession, that is what would pause the fed to lower rates sooner. Again, you really have to have something deep, a mild increase in the Unemployment Rate is within what fed considers a soft or as jay powell has often put it, softish economic landing. Yeah. Finally speaking of august, when things were getting dicey, some technicians were saying we consolidate to maybe 4300, you think that might be generous short term . I think, as i mentioned before, were stuck between 4300 and 4600. We tested in midaugust the 4325, which was actually the august 22 high for the market, right, which was a good support level. We bounced off of it, came back to around 4500. We still think, though, that the preponderance of evidence, the 20day pierce through the 50day, right, you still have a 200day thats challenged on the s p 500, so we wouldnt get aggressive here until 4100, 4200. Remember, on any given calendar year, you typically have three 7 to 10 corrections. Weve had one. It happened in february and march. 9 peak to trough. Were due for another one. I think diane is right, the key here about recession or no recession, is the consumer and labor. Right. Remember, labor starts to deteriorate 23 months after the fed starts the hiking cycle. Its on cue where it should be. Well watch the numbers. Great to have both of you guys. Thank you, daryl and diane. As we head to break, heres our road map for the rest of the hour. The latest on what could be the biggest ipo of the year. Arm kicks off its road show. Oil is higher as the saudis extend their cuts to the end of the year. Well talk about how to trade energy at a sevenmonth high. Warner brothers warning new developments in disneys battle with charter, what is ahead for the media stocks. Stay with us as the dow fals falls a little bit further down 96 points right now. 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. On saudi headlines, the price of oil is higher. Energy the only sector actually to end august in the green. Its the only sector right now to be in the green as well. Are more gains ahead for these stocks . Look at brent crude, past 90. Wel scs d t ckwhldiusangepis en we come back. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Oil prices moving higher this morning on saudi arabias move to extend those voluntary oil cuts of a Million Barrels per day until the end of the year. Energy was the only sector up in august. Lets look at how to play the space in the month ahead. Our next guests top picks include natural gas and Carbon Capture, like eqt and exxon and occidental saying the sector entering a decade of dividend space. Lets bring in the Portfolio Manager at Tortoise Energy and Power Infrastructure strategists. Thanks for joining us. You manage some closeend funds around energy. Got a news peg on the cuts from saudi. Is this a surprise to the market . What does it mean . Sara, i think the duration of the cut is a surprise. I think extending it three months is a surprise to the market and you see Oil Prices Rise as a result of that. The world knows that the saudis want Higher Oil Prices and the result of this will be lower inventories for the rest of the year, the under supplied oil market will likely result, temporarily, in Higher Oil Prices or at least Stable Oil Prices throughout the end of 2023. So i assume its important to your thesis at tortoise, how are your funds doing and what sort of moves have you made lately on names . Look, thats a good question. At tortoise, the oil price really doesnt factor in tremendously to our investment decisions. We look at energy as an essential sector. Youve seen whats happened, right. The economies have come roaring back and whats happened, were at recordsetting levels of demand for all commodities n particular oil and natural gas, natural gas liquidities. What we focus on at tortoise is the companies that benefit from rising demand driven by gdp growth like Energy Infrastructure companies are classic examples of that. A lot of these Companies Pay high dividend yields and thats where we see attractive Investment Opportunities from the rest of the year. One of the things that got interest last week was the big chinese refiner, pulling forward their forecast for Peak Oil Demand for this year. The ev market there has developed quickly. I wonder how you think about that in terms of the longterm trajectory of oil prices. Carl, we do look at that all the time and thats important because the oil demand is important to our thesis. We have shifted our portfolios to a large extent to focus on natural gas and the opportunities in natural gas. Yes, theres concern about Peak Oil Demand. Nobody talks about peak natural gas demand and wont for a long time, so we really center our portfolios on the opportunities in natural gas not only because its decarbonizing, but the Growth Potential Going Forward is tremendous in our opinion. It sounds like more for the portfolio stock that you like. Its the infrastructure act that will help drive the next period of growth than necessarily what were seeing from opec or Energy Prices . A little bit of that, sara. Like you mentioned in the beginning, Carbon Capture, thats really important to decarbonize, accelerate the pace in the u. S. And globally, you need really Carbon Capture to work. Theres a credit in there that benefits Companies Like occidental and exxon building out Carbon Capture infrastructure. But we also like traditional Energy Infrastructure. Thats really the bread and butter for us at tortoise and traditional Energy Infrastructure we think is important because not only can it be used today to transport fossil fuels, but in the long term, if were going to decarbonize, you can use existing infrastructure, Energy Infrastructure, in the ground today to help that decarbonization process. Got it. Rob, thank you for coming on. Name something names and some of your ideas. Rob thumble of tortoise. Softbank arm launching its ipo road show on what might be the biggest public debut in years. Leslie picker joins us with more on the filing released today and some of the numbers that get implied by that. Hey. Hey, carl. Thats right. Softbank backed arm kicking off its road show this morning with an amended f1 revealing a price range of 47 to 51 a share. Softbank plans to sell 95. 5 million, that is an offering size of as high as 4. 9 billion. On a fully diluted basis, restrictive stock options, arm is seeking a valuation up to 55 billion. Arm also revealed that a whole host of its customers, you know the names, apple, nvidia, intel, samsung, amd, google and others, intend to participate in the offering by buying a combined 735 million worth of shares at the ipo price, although those indications are nonbinding. Last month softbank purchased the 25 of arm from the investors vision fund at 64 billion, so the ipo valuation actually implies a wider than 14 discount from that recent transaction. Of course, arm could ultimately decide to increase the range if theres enough investor demand for the ipo. The Semiconductor Industry started the year strong, thanks in part to the hype around a. I. And the chips that power it. Chip makers have gone subways after the last few months or so. Arm makes arm based chips used in products ranging from smartphones to sensors to super computers. The company says its working with partners such as alphabet, mercedes and meta and nvidia to manage a. I. Workloads. Arm will market the deal with an expected debut by next week, but the conversations with investors will ensue throughout the course of this week and mid next. Guys . I imagine one interesting sort of conversation is the bullishness around a. I. And it its participation. But there are china risks, and im curious what youre hearing about that . We learned from the prospectus that arm china is 25 of sales. Its about a quarter of their revenues exposed to china and, of course, with the chinese slowdown, thats a pretty big concern. Within that they are pretty concentrated in terms of their customer orientation. Thats something thats caused investors to be a little skittish as well as just the overall fundamentals. This is not a company thats growing at the top line or its bottom line, and in the current environment, especially with so few deals out there, investors who are buying ipos like to see at least some kind of growth and so theyre trying to kind of, you know, assess the pros related to the a. I. Exposure with the detractions from china and then, of course, the fundamentals which at least at the current juncture arent showing too much in the way of growth. A lot of interesting numbers in there. Well see what happens in the coming days. Leslie picker, on arm. Meanwhile, housing is taking the brunt of todays move in treasuries. Take a look at the home builders, pulte and lennar among the laggards. Plenty more on that list in addition to the nail etf. We are less than month away from delivering alpha. Cnbcs investor summit where the streets top investors and Business Leaders break down where they see risk and reward. You can always scan this qr code or just visit cnbcevents. Com delivinlp r re. Ergaha its going to be a good one this year. Back after this. Nley is partnerg with the Womens Tennis Association to remove boundaries. because this game is for everyone. About an hour into trading this morning. The indices not moving on a headline level. Just south of 4500 by 1 point, but the sector wise not a pretty picture at all. All sectors red except for energy which is having a day after the saudis extend some of their voluntary production cuts. Youre looking at a decline of 1 plus, sara, in materials, in industrials, and utilities. We talked about what housing is doing today as well. You have the mix of weaker cyclicals on the weaker data but higher treasury yields putting pressure on tech as well. The stronger dollar. All not adding up to a very bullish mix for stocks at the moment, though it could be worse given some of those factors with oil, which makes you wonder what will happen with inflation. More with whats moving with dominic chu. The one interesting we are seeing out there and behind me. Its about the flat right now. On the upper half if you will of the leaders. Intel and broadcom having some out performance in those particular names. And then some under performance in some of those high flyers tied to that Artificial Intelligence trade like amd and nvidia as well. But, of course, some of the real upside right now, is happening because of oracle on the tech side of things because of the barclays upgrade to outperform citing the better trends in software as a Service Revenues and margins with regard to its oracle cloud infrastructure, oci. Keep an eye on that technology trade. Oracle helping to void things in the tech side of things. Ill send things back over. All right. Thank you. Breaking a sevenmonth win streak in the month of august but the best performing sector this year up 44 . Lets discuss whats ahead for the magnificent 7 names and tech. Joining you is a cowen analyst and it is an important question not just for tech and some of these names but the entire market because that is where the leadership has been. Do you see a rally to the end of the year. Thanks for having me. It depends on how you look at it. The sexes i cover the hardware names, like. What i would say the a. I. Relighted piece, some tied to the fact of the cyclical correction things pick up on the nona. I. Side of semis. Its a combination of two. At the moment were still in favor, but i have seen some investors take money off the table given the fact that the names have had a strong run year to date. Which names would you take money off the table and which ones would you stick with . From our vantage point, applied materials, asml. We like the names and think theres a lot of upside, you know, in the long run, stocks have had a pretty good run, discounting next year, but i think theres longterm potential. Other names kind of interesting i would say you know, as a part of the a. I. Team, you saw the memory names rally like micron, but then some laggards like seagate. I think that to me is interesting and the stock is really rallying in the last few weeks or so. I think theres more upside there. A lot of headlines about the chinese and huawei and whether or not they have managed to get a 7 nan mow meter of breakthrough of sorts to do an end run around our export controls. How real do you think that is and how concerning would it be . Yeah. Its surprising to be honest. I dont have a whole lot more details. But its interesting theyre able to do it. As you know those restrictions that went into smic last year, restricted any subs too. Some of these can be used and able to process. It seems a bit of a stretch. Its very interesting that, you know, theyve been able to get this working. At the end of the day, huawei, i would say a few years ago after the u. S. Put the sanctions bear the brunt of the slowdown in sales, and the biggest impact was apple which actually saw the market share in china go from like mid Single Digits in like 2020 to mid teens in the next couple years. Interesting to watch on huawei the feature. Its interesting they launched the 40 billion state fund to boost their industry which is kind of not covered as much compared to the coverage we gave to the chips act here in the united states. So now every country just has this stimulative boost to Semiconductors Act . Thats right. Thats right. And i think weve seen the u. S. And chips act, 52 billion, still to meet this. Europe has a similar one. Japan working on one. China has been more aggressive than the rest of the world. If you look at many of the semi Cap Companies the sales to china over the last few years have been pretty strong. A lot of it is coming from domestic chinese customers and many funded by the government. If you go back and look at china, a few years ago, it is a mix of the multinationals, the sam sung, [ inaudible ] in china, but now its largely skewed towards domestic. Many of them have been funded by the government. They are going ahead. Many of them are actually [ inaudible ] what i would characterize as like not a full nanometer more in the 2840 note which caters to analog and things like that. Power semis. Yeah. Its the new industrial policy across the world. Thank you very much. Appreciate your time. Thanks for having me. Still to come, Warner Brothers warning about the Financial Impact of hollywood strikes this morning. Disney shares at covid lows. What is ahead for the media names as we head into fall . Thats next. Let Innovation Refunds help with your erc tax refund so you can improve your business however you see fit. Rosie used part of her refund to build an outdoor patio. Clink dr. Marshall used part of his refund to give his practice a facelift. Emily used part of her refund to buy. I run a wax museum. Let Innovation Refunds help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Warner brothers discovery latest name to warn about the impact of strikes in hollywood, but shares have turned higher. Julia boorstin joins us with more. As the Writers Guild strike enters the fourth month and the Screen Actors Guild strike drags on, Warner Brothers discovery is warning the company assumes the Financial Impact of this strike will persist through the end of this year. Announcing in a filing that the Company Expects earnings to be negatively impacted by 300 to 500 million predominantly due to the strikes. But, the company also raises fullyear Free Cash Flow expectations to at least 5 billion. Saying it, quote, expects to exceed 1. 7 billion in Free Cash Flow for the Third Quarter of 2023. In part due to the Strong Performance of barbie as well as incremental impact from strikerelated factors. Theyre saying on production right now. Key bank saying they view the announcement as neutral, but that some view it as a positive given that Free Cash Flow improvement should help warner brother to pay off its debt more quickly. We could learn more when Ceo David Zaslav speaks at the Conference Tomorrow in the 5 00 p. M. Eastern hour. Meanwhile, disney and charter, charter remains without access to disney channels including abc and espn missing the u. S. Open and college football. And now both sides are appealing directly to consumers. Last night disney launched new consumer focused campaigns to push subscribers to its own tv bundle. Hulu with live tv which includes espn. Charter tells us spectrum is also working with its customers to help them find alternative ways to watch disney programming. Spectrum is offering customers 30 off fubo tv for two months including nfl red zone and includes espn. That offer sending fubo shares spiking up over 7 . Right now the pressure is building on both sides to settle in time for monday night football starting on abc and espn. That starts next week. Guys . Julia, i was looking at a tweet from steven a. Smith of espn who says, folks are coming after the worldwide leader. It gives you all these tools to go find ways where you can basically go direct. Nothing about this feels like prior rounds of disputes. This really does feel different and i think its also worth noting that charter, which owns spectrum, is really treating this as a referendum on the future of the Live Television business. They are saying were moving Forward Together or were going to ditch you entirely. Never before in one of these negotiations have we heard one of the paid it tv providers say its possible for them to survive without espn and a network like abc without the it disney networks. This should be different. What charter is focused on right now, they would like to offer to their subscribers access to disney plus without charging them extra for it. They dont want to pay disney extra for it. Their argument is that disney is offering a lot of their content on their streaming platform and they want to bundle it in. Disney is saying hey, on disney plus, you have the library and these old movies additional and exclusive content. Theyre not the same thing. That is a key Sticking Point and they have to resolve it before monday. Julia boorstin today. Lets bring in michael morris. Googen hymn Media Entertainment analyst. Its good to see you. Right now what is more interesting. The Charter Disney disruption is more interesting. To be honest you made the point earlier that this dispute is different from what weve seen in the past being treated as sort of a referendum on the future of the bundle and when you have, you know, this disagreement with arguably two of the largest players in the space your really are getting those what could be a Tipping Point for how consumers receive content and sports content in particular for, you know, the rest of the future if you will. Does it feel like mutually assured destruction . Ive seen estimates on, for example, what would happen to charters revenue assuming that say 10 of subs cancel and then more cancel their broadband. Whats at risk for either side . Sure. I mean, i think mutually assured destruction is a good way of thinking about it. I dont think its full destruction, but it eliminates a very meaningful part of economics that could void both companies during a transition period from a bundled world and a linear world to a streaming world. We all know that streaming is the future. We see it in cord cutting. We see it in more content being made available. From the point of view from the Distribution Company like charter there is more Broadband Service which increases its value. There is a lot of value being created. At the same time people who have been overpaying for services they dont want, are taking that money out of the system. This dispute is really about how do each of those Legacy Companies participate in the economics of the future business model. Its really going to be important for how contracts are established across the entire industry for the future. I mean, it really is not your typical carriage fee dispute, so how do you expect it to shake out . Do you think theyre going to make a deal . I think they will make a deal. I know i might be i dont know if im in the minority, but its debatable. Like i just said and carl hinted to, there is a significant portion of each companys near term economics that they will be giving up, right. Disney generates a significant amount of revenue from their paid tv distribution partnerships even as cord cutting continues. Charter generates a significant amount of gross profit from its video product eventhough they say that theyre getting closer to a point of indifference. So each company while they want to plan for that digital future, they would be better off doing it from a position of generating the near term cash flow. I would point out and i think this is a point that perhaps julia may be for, if each this is only the so, if these two sides do not reach an agreement, it has implications for the bundle across the board. Now, charter, are there disadvantages there are these virtual packages that consumers can switch to and theyre priced 20 to 25 less expensively when you look at their rpo. Thats a point that shouldnt be overlooked when you think about whether or not charter would be willing to come back to the negotiating table. Right, right. We just took a look at your buys. Are any of them at risk or are you considering ratings changes, whether because of charter or the ongoing strikes . We certainly always consider if we need to make ratings changes. The Media Industry is a very disliked industry for an extended period of time and valuation multiples is traded at discount. That reflects the expectation these companies will be under pressure. We havent talked about netflix, but we still see netflix as an incredibly Strong Company that spends a meaningful amount on its content and uses it to distribute content directly to the consumer, which means more money spent by the consumer, makes it to netflix and the content owner than it does in a traditional bundle. If you look at the traditional media companies, they spend substantially similar amounts on content to what netflix spends but theyre still beholden to a legacy model that is under pressure. We believe its very important for those companies to aggressively establish both the right level of spending and a streaming first product that helps them sort of move across this divide. Now, this in the near term looks like pressure but it could be the catalyst that forces them to be more aggressive and more disciplined in pursuing that streaming future. Its obviously fascinating, even to those who dont work in the business. Michael, thanks. Good to see you. Appreciate it. Speaking of netflix, it is one of the top gainers along with tesla as some price cuts in china appear to be bearing some fruit from a sales standpoint. Well get more on the w p ckouofolan in a moment. Ible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . 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Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Welcome back to squawk on the street. Carl was just mentioning the strength were seeing in names like tesla and netflix. The nasdaq 100 just popped into positive territory. The broader nasdaq composite is still negative but things have improved. The s p is only down a quarter of 1 . A number of sectors have turned green. It was just energy. Now its energy and Communication Services and information technologies, which is notable theyre staging a comeback given were seeing yields on the rise as well. Not necessarily always see that relationship. Tesla, microsoft, airbnb. Goldman sachs out with an update to its conviction list of stocks it likes. Dom chu has the details. One new addition and one deletion. Well start with the new one, jeffries, being put on the list. The financials analyst team added it to their best ideas because they think jeffries is well positioned to gain market share driven by underappreciated investment in people and staff, also a bigger exposure to Equity Capital markets which industry wise is seeing better trends. Jeffries down about twothirds of 1 . With regard to the deletion, goldman is removing macys because it was just about lowering its earnings expectations for the retailer post its earnings report. Macys shares on the climb down 40 year to date. As for where you could see the most upside, the three stocks on the conviction list that have the highest implied upside targets, the Company Formerly known as weight watchers, ww, could have 60 upside. Warner bros. Discovery could have 73 upside and first solar 50 . First solar has an an riis day coming up on september 7th. Keep an eye on some of those names and the update for that conviction list. Ill send it back to you. Thank you. Squawk on the street continues after this. Dont go anywhere. 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. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com welcome to the third hour of squawk on the street. Im Carl Quintanilla with sara eisen. This hour a rough road ahead. Deutsche says were entering the riskiest period for the economy. The road is muddy. Are they right . Plus, regulators can be heroes. Thats what Meredith Whitney is arguing as banks take a larger piece of the pie and the smaller names are left behind. From government funding to geopolitics. What should investors focus on . Topping the tape at post 9, concerns about september. A number of notes making the rounds on wall street today, arguing the setup for the economy in equities is looking shaky from here. Mike santoli joins us. We know septembe