indicated up by just over 70 points above fair value. s&p futures are up by 3%. the nasdaq, up by 3% as well and both the s&p and the nasdaq closed at record highs last friday, so we'll see what this week brings. great to see you this morning. make sure you join us tomorrow. right now, it's time for "squawk on the street." ♪ good monday morning, welcome to "squawk on the street," the band is back. carl quintanilla, jim cramer, david faber, together again at post nine of the new york stock exchange. futures, pretty steady. s&p coming you have its best week since april and that record close friday. big week. powell on the hill, cpi, and the start of earnings season. our road map begins with the market's record run, helped by five of the mag seven. also ahead, paramount has reached a deal to merge with skydance and everything else that goes along with that. and boeing agrees to plead guilty to a criminal charge stemming from those deadly

crashes involving its 737-max jets. let's begin with in busy week for the street. s&p, nasdaq, at record highs but it's nice to have all three of us here, first time in a few weeks. >> i just -- lot of work for the investing club on friday, and friday was one of these days, i have to tell you, i can't recall, maybe in the '90s, maybe even the '80s where you have these stocks, like, meta was up $29. rallied in the close. amazon, $2.40. google, up. microsoft, up $6.9. apple, up $4.79. these are very, very big moves, and it tells me, david, welcome back to you. where's the sellers? why are the sellers not lower? why are the sellers holding out for $20 and getting it? h holding for 25 and getting it? what is going on? >> i'll come right back at you and ask you, jim, because you may be in a better position to tell me.

people will start to make that connection. >> have to. >> to the '90s. now, the question, of course, is, is it '95? is it '98? where are we in this cycle in terms of a seminal technological event if you want to call it? and its development. the bulls are arguing, very, very early or, if you want to make the real analogy, '95, not '99. >> well, mr. week was on, wendell weeks, fabulous interview by "squawk box," the ceo of corning. we recommend people buy corning two weeks ago. we said, we think they could be very involved in a.i. the numbers are so much better than expected. and i think the difference here is that, remember, corning is not based in silicone valley. corning is based in corning, new york, which, david, i'm sure you've spent a lot of time like i have. it's cow pastures and a.i. they both have --

>> wendell weeks has been running that company for a long time >> he sure has, hasn't he? >> look at that. up. >> it's a real company. >> we're going to talk about larry ellison in a bit, but take a look. it's not just those things. oracle's a $400 billion company, why? same reason. >> a.i. >> so, i don't know. we've got this -- this is a proof of concept name, corning, because now some will say, wait a second, corning was one of the great performers of the year 2000. that's not fair, because a lot of the orders were from companies -- they were laying fiber everywhere. this is, like, we're trying to meet demand, okay? but the companies that need it are companies like nvidia, and nvidia, we have two people saying today that the new iteration they announced at their conference, blackwell, they can't meet demand. it's incredible. >> ubs takes nvidia to $150. prior, $120. tsm, all-time high. the stock's up every day last

week. >> tsm was struggling in the 140s, because people felt that it was one and done, and then look at this run. i know that you could say, well, listen, that's -- nvidia is up 150%, but this is something, because this is a foundry company that makes this stuff, and everyone had been worried about china and the possibility of some sort of invasion, had a discount. i don't think anything's changed to make people feel that china might do something, but the discount is rapidly closing. >> the one thing we haven't mentioned, jim, was weaker ism, ism services down five. unemployment to 4.1%. powell speaks tomorrow and wednesday. >> if we have a cpi number that's good later this week, i think we're going to start talking about the three good ones that you have to have in a row. have to have three good ones before you set the table. i thought friday's number was extraordinary. the biggest job growth was government. you take out government, which has nothing to do with the economy, you didn't have much

growth at all. >> health care and education, i believe, were the other areas that were -- showed some strength. but generally, the reception to the number was a positive one in the sense of, because of the weakening, even though it was a strong number at 206,000, unemployment rate going to 4.1%. nonetheless, there was some weakness underneath who encouraged those who already believe we'll get a cut in september. >> we still don't see any companies going bankrupt. we don't see -- i keep saying, when is rite aid going to close? when are they going to close the walgreens and the cvs's. >> they certainly are starting at walgreens. >> yes, they are. i look at these companies and i think, usually at this point in the cycle of a fed tightening, we would be thinking about the mall and how many stores -- the industrials and how many would be in trouble. instead, i think ford's breaking out here. ford. >> real estate is the one area. and we've talked endlessly about

commercial real estate not just because of higher rates but because of a significant change in terms of occupancy trends overall. that's the one area that, as much as it's a slow-moving train, seemingly, it's one we have to keep an eye on. there are still banks that are certainly under pressure in terms of their portfolios. >> negative piece about key today, which i think does matter. >> although, upgrades for schwab and pnc. >> i know. i mean, look, we're going to have some truth-telling at the end of the week. it's really crowded week. i think between now and then, we're just going to be just, you know, just making book on what powell is going to do. but i come back and i say -- >> the end of the week, by the way, when we get the bank earnings. >> friday was seminal. we have seen one stock become the great stock of this period, and it's not tesla, which we can get to. >> i was going to say, tesla? >> it's apple. i mean, apple was bad at $165. it was bad.

people told you to sell it. there were more downgrades between $165 to $175 than i recall right before one of the great runs. >> wedbush, signs of stabilization in phones. this great b of a note on apple pay and how ubiquitous it's become. it's only 1% of revenue. >> when you talk with them, they've got a lot of things in mind for finance. it wouldn't shock me if they didn't be involved with stocks directly. maybe even programming. these guys have -- they sit around, and they think about what they want to do, and then they want to dominate. i mean, they just like to be last and best. >> right. they are not worried about being first. when you have an install base that they do, you cannot worry about that, i guess, because ultimately, it's what you decide that makes -- that leads the herd, so to speak. >> what's so exciting is you get the situation where people say, well, everyone ones the enterprise, the enterprise, the enterprise, and meanwhile, openai says, listen, can we please partner with the greatest

consumer product of all time? and i know that our friend, ben righteous, has another piece about a.i. laggards and those are connected with apple. i come back, and i say, this is the most missed apple move, except for a fellow who was on this morning. >> tony? >> he's talking about an $8 earnings power, making the stock cheap. t tony saconagi. >> i do wonder what's going to change this whole narrative? are we getting a little frothy, just listening to you talk about this? seeing what we're -- you know, you just have to wonder. >> well, these companies are great. >> sit going to be years? is it going to be years that we sit here and keep talking about this? >> maybe what happens is somebody -- lilly buys this -- maybe they can break into the trillion dollar club. what's the matter? >> we'll do the lilly deal.

>> irritable bowel and crohn's disease. >> big premium as is often the case. >> m&a sweet spot. i haven't been with him in a long time, but i know he's got that beat. >> it's like a racehorse in the gate, right? let's go. >> secretariat faber. >> it's a deal we haven't heard anything about at all. it's a new name in m&a. it's called paramount. never talked about it. i haven't been talking about this at all. we got our deal, as we told you we would, of course, late last week when the special committee of the board of directors of paramount started its work, but we knew it would be very -- relatively quick. they did work long into the day and the early evening on west coast time before they got this press release out yesterday. let's give you some of the details of a deal that we have talked endlessly about. that is quite complex. first of all, skydance. remember, this is what david ellison runs. this is the future of media if you listen to the conference call that continues right now.

and they're getting quite a nice value there. the owners of skydance are redbird private equity firm that is a partner in the skydance investor group that's buying paramount. t the ellison family, led by larry ellison, and kkr. kkr is not a new investor in the additional transaction that follows that valuation. by the way, you value at $4.75 billion, so what do you do if you're paramount? you issue 317 million new shares. they go to redbird, ellisons, kkr, and then you turn around and you're the skydance investor group, you're not just buying nai for $4.2 billion. that does include debt. it's about $1.75 billion they're paying for the equity. you're also turning around and buying 48% of the b shares at 15 bucks a share or at least giving the opportunity to shareholders to sell that to you.

that costs you $4.5 billion. then you're putting $1.5 billion on the plbalance sheet as well delever the company. the hope is that it will help with delevering. the new owners, and i'll get to them in a moment, they own all the a shares, because they're not just tendering, by the way, for the bs at 15. they're also tendering for the other as, the other as that aren't owned by nai at 23. so you basically control the company. you leave out a 30% stub of the b shares. you want to participate with these guys in this turnaround that they are going into great detail in. by the way, kudos to them. the slides are serious. >> good slides? >> they're pretty good. >> good slides, carl. >> i think -- i'd be curious to get your mark. >> why do i want the b? i've dealt with this with constellation brands. >> because you're a believer in larry ellison, in jeff shell. these are the owners, by the

way, as well, of this company. and to turn to that for a moment, just to put it in perspective, there's david ellison. jeff shell, by the way, giving him quite a shoutout on the conference call, talking about he is, in shell's opinion, the right person at the right time. >> what did he say? if you went to a lab looking for entertainment -- >> exactly. this is what you would come up with, that combination of technology savvy and media savvy. going from a table read to being able to code is what he was talking about. david ellison. but the other name here, of course, that has to be mentioned is larry ellison, one of the world's wealthiest individuals. incredibly competitive 79-year-old father of david ellison. when it comes to the capital that is the new capital that's being put up here, right, you're talking a little over $8 billion, let's call it. my understanding is roughly $2 billion of that is coming from redbird. huge bet there. a huge bet they're making as a

private -- not one of the giants in private equity. so, if this deal doesn't go well for them, they got trouble. $6 billion is coming, roughly, from larry ellison. or the ellison family. >> they have unlimited -- okay, so, david, this is linear and this is sports? >> in one day on the oracle earnings, i think his net worth went up by $14 billion. he's probably worth close t to $200 billion. he's got so much other stuff out there. that's your name. that's who's going to control and own cbs and, of course, this entire media company with these plans, carl, to have a major turnaround that also will see them saving as much as $2 billion in costs, 50% of which they believe they can actually realize within one year of close. >> i see goals of investment grade by 2026, and the go shop is -- will come and go? >> go shop, 45 days, hard to imagine. you know, sometimes, when a potential buyer sees something in print, they get kpexcited.

i talked about sony, apollo. that's not there. you've got to work a deal for nai that is to the satisfaction of the control shareholder, as we know. they've done that here, not without some difficulty. hard to imagine somebody else comes up who can really do this, you know, yes, warner bros. discovery would have enormous synergies. it would take a very long time to close, and by the i metime t closed, half those synergies would be gone. >> any hope that this is connected at all with the new nvidia video product where they own a ton of video? and by the way, who knows a.i., honestly, better than safra katz and is larry ellison? not many. >> not many. and they are talking a lot, jim, here about cloud, about a.i. >> it's the combination's a winner. >> a combination in terms of

what they can do with the near paramount plan. i'm looking through the slides here. they have some of this there. evaluate ttc investment as well with a focus on profitability and partnerships, studio in the cloud, they're talking about. an animation, studio in the cloud in partnership with oracle and of course, utilizing a.i. tools to enhance creativity while driving production efficiencies. meanwhile, this thing may not get done until the second half of -- first half of next year. >> it could be a so-called trump stock. we haven't talked like that on the show, but if you have a different ftc, a different justice department, then maybe there's some room. >> maybe it moves quicker. maybe not. always hard to say. they're on both sides of the political divide, i think. david goes one way, and his father seems to go a bit of -- at least in terms of their giving. >> this great reporting. you killed the beat. you know that. the "b" was up and you killed the "b." >> why did i kill the bs?

the numbers are the numbers. >> the forecast is the forecast. doesn't matter. you killed the "b." you started talking. you killed the "b." >> you're not going to get your 15 bucks for a long time, so you got to figure out how long it's going to be until close. >> i feel like they were on the verge of 15 until david came roaring back or at least us together. >> it lives. it doesn't die. it's not dead. it's alive. >> it was up 50 cents. i bet if you put up the "b," it's already down. >> when we come back, we will get to boeing this morning, agreeing to plead guilty to a criminal fraud charge. meantime, watch futures. we'll get to disney, tesla, ckve, lilly, devin when we come ba. something amazing is happening here. climate researchers are weathering a data storm. that's because cdw transformed their devices and infrastructure with lenovo thinkpads and powerful edge to cloud solutions, delivering faster insights and increased performance,

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"mad dash" with jim as we are all back together. see? get a little applause. >> they like us. >> you want to talk a little servicenow. >> this is heresy, david. one of the great-performing enterprise software companies of our lives is, well, servicenow since bill mcdermott got in. this guggenheim piece suggests, in its sell, get this, that the generative a.i. monetization is not happening en masse, not likely to materialize this year. they are thinking that you're not going to get the big gen a.i. push from servicenow and david this is worrisome, and i'll tell you why. the stock has had one of the great comebacks. this was a decent quarter, but it fell because enterprise software was so bad. remember, salesforce missed the number. and then, boom, it's come all the way back in the -- this analyst, john, really has timed this thing very well, because it's so overextended,

technically, that you can see this thing get hit. now, what do i think? i think that bill mcdermott is money. he's beaten, beaten, beaten. he's said over and over again they're making money off a.i. i'm not going to disagree with him. this analyst had a hold on it. it's been a winner. the stock has had a big run and a lot of people think it was just multiple expansion, and you know that's going to be something we're going to be having to talk about a lot of the time, a lot, multiple expansion means paying a little bit more for the same amount of earnings. i saw a piece today about meta that's like that. well, service now has been a little like that, and i got to tell you, david, that's the real worry is that suddenly people say, you know what? i'm going to pay more for what the guy paid last week, because you know what that's called? the greater fool theory. >> as we move into earnings season, we'll start getting some initial answers, and you'll be obviously -- >> it's such a big week. >> listening to those conference calls every night or reading them. >> it starts. >> you and chatgpt.

chatgpt reads the conference calls now. >> i think chatgpt -- i was on it five times today. >> got to get best practices on that. opening bell right ahead for you, five minutes from now. you can always catch us any time and anywhere by listening to and following the "squawk on the street: opening bell" podcast. with absorbine pro, pain won't hold you back from your passions. it's the only solution with two max-strength anesthetics to deliver the strongest numbing pain relief available. so, do your thing like a pro, pain-free. absorbine pro.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. boeing agreeing to plead guilty to criminal fraud charges connected to the fatal 737 max crashes. under the deal with the doj, the company also agreeing to pay about $243 million fine as well as have a third-party monitor oversee compliance at boeing for three years during this probationary period. still got to get signed off by a court, jim. >> right. >> a lot of implications here. >> now, it always seems like when people at home see the stock up, that's because there's always a more worse case, so to speak, maybe they would be banned from government work. that would be something that would be devastating for them. maybe they wouldn't be allowed to sell any planes this year. none of those things happened. they have to pay a fine.

no one said anything about the merger with spirit, which i guess can still go through. david, that's a big m&a case that we haven't really talked about. that's bringing back spirit to boeing. >> right. >> it's a lot of not cashout because it's stock. >> it's no longer shrink to grow. >> no, it's not. >> it's grow to deal with your supply chain issues or your -- i don't know what you want to call it. your inability to build an airplane the way you want to. >> i remember when they split that up to be able to totally financial engineer a better quarter, better year. well, better luck next time. >> it doesn't sound like you think their defense work is threatened by this would-be felon status. >> no, and i always think that, okay, what happens in these cases? people should be outraged. what happens is management doesn't have any problem. but you have to -- shareholders have to pay. shareholders are paying for that. isn't that crazy?

>> yeah. >> they write the checks. >> it comes out of shareholders' pockets. >> families wanted a lot more. >> true. >> let's see what that means for certainly their executive search in the weeks to come. >> yeah, i mean, i think that -- everything else. but there's one thing very clear. that is the thing. >> let's get the opening bell here in the cnbc real exchange. it's west rock celebrating its merger and first day of trading. over at the nasdaq, u.s. olympic men's soccer getting ready for their olympic appearance in paris later this month. of course, you can watch the olympics on nbc and peacock. >> we're doing a piece, ben stiller and i, for "mad money" tonight, and what we were talking about is, two quarters ago, there were -- nike, a lot of it was about the olympics and how exciting that's going to be.

but now, david, on the verge of nbc olympics, what happens? things are so bad, they didn't talk about it. >> wait. what things are so bad? >> things that nike -- they didn't talk about olympics much at all, and that had been -- >> it's funny you're starting -- well, you mentioned all the tech names that have been up so much, but you're starting with a name that has been down a lot. >> that's a senior growth stock that we used to look to, along with one that my travel trust owns, david. i'm ready. this is david, right now, he's going to -- right between the eyes. starbucks. >> what about it? >> my travel trust owns it. >> i know it does. >> go ahead. say it. >> your charitable trust was calling to ask you, why do we own this, jim? >> okay. i believe management is going to get it together. i still hold out -- wow. yeah. >> wait, what? we're not talking nike. we're talking starbucks now. jim, wait, are you making a turn on starbucks? you were ready to put them on the hall of shame wall. >> listen to me.

starbucks, i think, goes -- starbucks goes to $90 before nike. >> starbucks to $90. >> before nike. >> before nike. >> interesting. >> big, big, big. david, big. i'm not talking about here. i'm talking about big. >> what -- what is emboldening you to make this kind of a call, jim? >> i think that a lot of the political turmoil that upsets starbucks may be behind them somewhat. but david, that stock has cratered because of -- everything had been going wrong. i'm betting that something is going to go right. whereas, nike, everything's going wrong, and i can't find anything going right even jordans. >> best buy was a little around this price when you said it would go to $90, and it did. >> i'm going to get the new pc. the new pc is a godsend versus this one where the battery burns out after three hours. >> nike and starbucks have one other thing in common, which is, china's very important to them, and then you -- apple and tesla.

when i think about sort of the four names, apple, tesla, nike, starbucks. >> right. >> in terms of how important china is to all of their businesses. >> and don't forget win for macao. the problem with nike, if anyone goes over to that conference call, that was a call of despair. it was a call of a company that is not going to be in the playoffs for some time. it was almost as if it wasn't -- they were so downbeat about themselves that someone should have gone up to them and said, get your head out of your on ons, i don't know. >> you mean, pick yourself up, dust yourself off? >> this is one where you need dallas goddard going to jalen hurts and saying, will you get -- >> what's going to change things for john donahoe and company? >> that's a great question. everything was bad. direct to consumer was bad. relaxed fit was bad. lifestyle. i think they have to get a product guy in there that's a

real strong product guy. see, donahoe is a tech guy. like kj, kevin johnson when he came in at starbucks. these two companies are so alike that we could do a series on apple + about these two, but i will tell you that right now, i don't have any reason for nike to go up, and maybe that's -- >> well, before you left on your break, jim, we were worried about walgreens and general mills and levi's and nike. we were asking questions about the consumer. >> the consumer is frugal. the consumer doesn't want an expensive nike. the consumer doesn't want to pay up for general mills pet food. they don't really care about blue buffalo all of a sudden. the consumer seems to be rebelling at the higher price of levi. all these speak to the frugal consumer, except for one thing. the frugal consumers are willing to spend on the tech titans. >> you mean, on buying their stock or what?

>> no. like, you know? >> on apple? >> buy the phone. they'll buy the -- if chat were to charge me x, i'd pay it. >> apple, you're buying a product, but meta and alphabet and microsoft, you're not. they're more enterprise. >> well, no. no, meta's not really -- >> small and medium-size businesses are what fuel them. >> they want to write a check to meta so badly. you know what a meta sales person is like? you want to buy this? just a second. what do you want? how much? $2 billion? no, no, don't have the time. the billionaires are pushing out the millionaires. >> do they really have salespeople? isn't it all automated at this point? it's all a.i., isn't it? >> well, that's a good point. >> thank you. >> but to be a salesperson there is to pick up the phone. what a great thing. >> jim, you mentioned lilly earlier. and this purchase of morphic. about a, what, almost 80% premium to the july 5th close. >> well, lilly has a -- a drug. i was surprised that lilly was up five. that was silly today. but lilly does have an

immunological portfolio where they're doing clinical trials on the diseases that these guys are using a pill to control, and maybe it's just better to go spend $3.2 billion. >> that's nothing for lilly. we're talking ulcerative colitis, phase two study in crohn's disease. phase two studies in ulcerative colitis and one phase two study in crohn's. that's where morphic is focused. >> abbvie does have a good product in this space. >> when lilly comes into something now, i give them the benefit of the doubt. >> you have to. >> because they are alone. they are alone, jim. as they approach $900 billion market value, lilly's market cap is twice that of its next competitor. >> when the stock was at $400 billion, told you -- >> j&j and the $354 billion market value. >> j&j has a talc issue. eli lilly, last i looked, has a

problem that people are losing too much weight. >> merck, $322 billion. these guys -- i don't know. they're buying this thing for a big premium and it gets them into a new area or one they're already developing, and they get some compounds on phase two. maybe it will work. >> you know -- >> and it doesn't, does anybody really care? >> the news is that there may be a cancer indication for glp-1. there's an alcohol -- i mean, the last week, constellation brands reported, and the stock opened down eight, and i think a lot of that is just a belief, you know what, twilight of the idols. when you have dark liquids, take a look at one of the worst performing stocks -- >> how did we get on this? we moved to constellation. not constellation energy. no. >> that had a great week last week. constellation energy. >> glp-1s make you consume less energy. >> i don't blame them in the control room. i'm sitting next to you and i have no idea what you're talking about. >> they're in there like, which ticker?

i have no idea. >> constellation energy is the largest owner of nuclear power in the country and they're going to start selling nuclear power plants, all the output to one datacenter. >> i once went to hear the great legendary robin williams, and people would shout something at him and he immediately had a joke. constellation energy. nuclear energy >> i just went there for you. largest owner of nuclear power plants in the country. the stock is up a lot. >> it was at dangerfield. >> tsa, new record, sunday. we didn't mention southwest naming a woboard member in this face-off with elliott. >> i got to tell you, i think elliott is very -- they would like everybody to go, okay? they want everybody to go, and it's kind of ugly. no, it's real ugly. that's just a reputation of everything that these guys are doing. i did -- i was hoping david would mention, apropos of the tsa, disney, which is suddenly

got a positive comment. i'm going to save disney. >> why? >> because someone in my ear said, save disney. >> i can barely hear anything in my ear anymore. >> jpmorgan raises numbers on disney after some of the successes at the box office, which we'll talk about in a minute. we want to get to d.c. this morning with emily wilkins, breaking news on the president. >> president biden is out today with a new letter to congressional democrats. n in it, he makes the case that he is going to stay in the race, continue running. he says, look, i wouldn't be running again if i did not absolutely believe that i was the best person to beat trump in 2024. that's part of the letter. he also says that voters made their decision during the primary, who they wanted to vote for, and that they have picked him. of course, this comes as lawmakers return to d.c. this week. it's the first time that they're actually going to be in town, having face-to-face meetings since that debate at the end of june. and really, we're expecting to see a number of lawmakers speak up a little bit more and say, hey, we do have these concerns about president biden, and we're

looking to make them public. clearly, this letter is biden trying to get ahead of all that and make his case directly to congressional democrats this morning. >> it will be a busy week with the nato summit in town, of course. emily, appreciate that. emily wilkins. jim, overall, the markets. we haven't talked a lot about powell's appearance tomorrow. senate banking. but certainly, as we get closer to election season, the future of the fed chairman, at least, is going to come into view. >> i think people have to understand that jay powell is providing over, i think, the -- one of the great fast tightening cycles and then perhaps soft landing. david, it's been very reassuring. what are you going to say, he's been bad for the market? he's unbelievable. it's not necessarily the president, who used to tell me he did not care at all about the stock market, versus the previous president, president trump, who would call me and say that his dow numbers were good. the dow numbers look real good. >> he would call you, wouldn't

he, sometimes? >> he would. >> when he was president. >> he would call me to tell me he was going to knock my show off with the 6:00 briefings about covid, and then he called me after they were canceled and congratulated me. you didn't knock me off. i don't know. could you please hold for the president of the united states? you bet. jim -- >> all right. zip it. servicenow is down on that downgrade. and paramount is down 1%. guys, listening to the call -- >> it was up big before you started talking. >> the numbers are the numbers, as i said earlier. it's not about me saying anything. there are many challenges at this company. by the way, it's going to be sometime until they close the deal, and of course, there are operating -- interoperating agreements, but you got to -- three guys running this company, paramount, that's going to continue for the foreseeable future. >> it's like, new york community bank. >> it's not an easy world.

jeff shell, our old boss, on the call is talking about the linear business, namely -- i'm hearing this a lot lately. cbs is undervalued. there's a lot more there. he said it's going to be a strong business for decades to come. i think we'll be sitting here in 10 years, 20 years, talking about a significant amount of viewership on cbs network, but it's going to become part of the equation as opposed to the driving part of the equation. he also had some interesting things to say about david ellison. it's a name we're going to start to hear about in the media world because he will become the chairman and ceo of paramount. take a listen to shell, whoc wa, of course, the man who ran nbc universal for some period of time, has to say about the incoming president of paramount about his new chairman and ceo. >> literally designed almost ideally, you know, for -- i'm excited for everybody to see behind the curtain at skydance, because it's literally designed for paramount. it's been a long time since a creative executive ran one of the big hollywood companies. and i think it's really

important when creative is the core, working with artists is the core of our business, to have somebody like david running the business and if you went into a lab and designed the perfect executive for the next generation hollywood company, you would literally spit out david ellison because he can not only go to a table read, but he can go to the next room and code too, and this business is heading toward a technology-media hybrid and david is perfect to lead it. >> obviously, it will help, one would think, to have the founder of oracle as your control shareholder. essentially. along with redbird, but as i poip pointed out earlier, big takeaways here, $4.75 billion valuation for skydance. interesting that one of its owners, kkr, is not a part of the new deal and, in fact, may sell into the purchase that then skydance investor group undertakes for the "b" shares, and then -- and shari is selling all of her shares. everything. everything is a part of that. and larry ellison ends up probably contributing as much as

$6 billion or the ellison family. >> if you wanted to develop programming that needed the datacenter, can you think of anybody better than the guy who's building the most datacenters? your biggest investor? >> no. >> there is some synergy. this is not all just what's going to happen with the godfather or tony romo, right? it's not just about tony romo, is it? >> it's not about tony romo's contract. >> the masters. what else do they have? they got shows -- >> they got "star trek." >> "yellowstone." >> by the way, nobody's going to question their ability to compete for the nfl rights. when they come up many years from now, when you got one of the richest men in the world there, it will be like, no problem. >> by the way, we can produce al michaels, his voice. >> you can regenerate. >> kurt gowdy, remember? >> yeah. >> well, when you grew up with one station that had football -- >> meantime, inside out 2, now $1.2 billion. that is enough to have jpmorgan

raise its numbers on what they call positive direction in the creative group over at disney >> i thought that was incredible. especially because the stock seems to have been in a bit of a rut, david. this thing has since peltz sold, perhaps? have you noticed the trajectory here? >> yes, jim. i have. >> well, you probably want to comment on it. >> i don't really have a great deal to share. we'll continue to monitor. >> okay. i thought you might have something. >> i got nothing for you. where are you going? >> jeff probst is my partner? >> cbs. >> hey, some people think that the show, "the traitor" is about somebody on a big hedge fund desk. you know the trader? >> is that a-i-t-o r or a-d-e r? >> it's one of those movies that you're always in. i don't know why you're in every one of them. you're in merger and acquisitions but dead money and

stupid money. >> i'm in "dumb money" and "arbitrage." >> jim, tesla was up nine days, giving a little bit back today, but up 27% last week. lucid with an 8% pop at the open. >> you know what, i think that lucid has made it. that's the point. are they going to go to georgia or not? i don't know. tesla, a lot of people felt this was the -- like they had them on the ropes, but you don't get elon musk on the ropes. he's not a guy who's in the corner. elon musk, david, he floats like butterfly, and you know how he stings? >> like a bee. >> there grow. >> yeah, he does. >> is it about a.i. or cars? >> it's about the august 8th self-drive. and also because he's back. exciting. maybe he's not distracted by delaware. texas, inc. >> okay. i'll accept all those. >> well, you know him better than i do. >> i can't say that i know elon particularly well. >> no? >> no. but i do know him better than

you, props. >> i know you call him montoya. i don't get that. >> listen, you know, tesla is, as we pointed out, back to more or less, let's call it flat on the year. it is down in this session so it's down about 1% for the year. this was a stock down as much as over 30% for the year at one point. so, delivery numbers from last week seemed to encourage people to believe they're going to at least meet if not exceed the 1.8 million vehicles that many analysts who follow the company expect to be delivered in the year. and to your point, both july 23rd, when the company has earnings, and we'll get more granularity around those delivery numbers and everything else, and august 8th for full self-driving when they have the big meeting telling us about what they're going to do for robots, robot taxis, those are important things. musk himself has said any number of times, i'm not a car company anymore. if you want just cars, forget about it. if you want robots and automation, and self-driving and robotaxis and a.i., then you want to be in tesla.

>> right. well, look, i think that tesla's overvalued, but what the two that are really in my craw here, i mean, you have microsoft at 40 times earnings for future earnings. >> what was that number? >> 40 times. >> whoa. >> yeah, i know. and you have amazon selling at 43 times next year, at an all-time high. if someone wants to make the claim, the magnificent seven are over, those are much higher multiples. >> i didn't realize microsoft's multiple had gone to 40 times. >> the expansion is really strong. >> are you concerned by that? >> not at all. >> okay. >> you sure you don't want to think about it? >> no. look, i mean, i wrote a piece this weekend and said, look, those are the ones that are the achilles heel. no one talks about it. no one says, i'm worried about amazon or microsoft, because they are machines. >> well, nobody's worried about ge when it was trading at 45 times earnings on a $60 stock price and a half a trillion market value. >> he could have done world com, but he's self-effacing and has

some humility. >> i'm bitter. they didn't price our options. they repriced management's options but not ours. i haven't forgotten that. >> bitter, table of one. >> geez, okay, project 2025. >> i'm coming for you. >> all right. as we go to break, watch bonds. busy week in macro, of course. powell's appearance on the hill this week, cpi thursday, ppi friday. ten-year just south of 4.3% as we got all-time highs for the s&p and the nasdaq. stay with us.

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trading. >> people forget this is a huge earnings week. it is not just the banks. pepsico reports. pepsico reports on the 11th not far from here. today bank of america basically lowers the boom, says look, we're lowering our organic growth, sales, earnings estimates. i think that they're not too crazy about frito-lay. frito-lay is in the cross heirs of glp-1. this is the quarter where we hear people say we don't know about our volumes but they're not up to snuff. i think it's going to be the impact finally happening. you're going to get it from the basket and hear from some of the grocery stores. it's going to be difficult. no one wants to admit it. just like -- on the ground floor it's not cannabis or glp. suddenly you don't like jack da daniels a staple. >> conagra on the same day. >> jim, how about tonight? >> i'm going to determine whether nike will go up or down. nothing to do with my bet with

david and starbucks. i'm going to tell it as it is. >> nike on the brain. >> remember john -- >> we got to know john when he was at ebay. >> excellent relationship. >> let's see if it survives tonight's piece. >> oh, boy. >> that does not sound good. >> john is good. there are a lot of things that aren't at the company. >> tune in, man. jim takes apart nike tonight. >> i'm not taking it apart. >> no, i'm not. you don't take it apart at 175, you take it apart at 150. i have 120. in the back i have 95. that's what's going on there. >> the auction eyre. >> you bet you. dow up 200. stay with us. .

good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, back together again, at post nine of the new york stock exchange. take a look at stocks starting strong, at least if you look at the s&p. about 0.2% higher. led by, guess what, technology stocks. nvidia up today, so are intel, super micro, a lot of the ai plays, qualcomm, hp, all powering the s&p. the financials, though, are higher by more than 0.5% ahead of earnings. industrials, materials, real estate, utilities, health care and energy, all sectors are up today. what's lagging? communication services and consumer staples. take a look at treasuries as we kick off a full week of trading. yields are a little bit firmer but stayed in that range. 10-year note yield 4.28%. inflation and powell on the docket. 30 minutes into the trading session. . paramount on the move after reaching a deal with skydance this weekend. more on what's next in just a

moment. eli lilly announcing plans to buy drug developer more fick holdings around $57 a share. the deal gives lilly to more fick's experimental drugs for inflammatory bowel diseases. boeing agrees to plead guilty to fatal charges of the 737 max charges. what that means ahead on the show. guys, i'm glad to be back because it's a huge week in the world of macro. we've got two days of testimony from fed chair powell tuesday and wednesday. the cpi report for june on thursday and then the ppi, wholesale inflation read on friday. we've also got bank earnings, of course, consumer like pepsico will come out on thursday. but the big thing right now is the fed because now there's a 75% chance in the market that the fed can cut rates twice this year. september and december.

and, you know, we spoke last week in sentra on the panel, and he made it very clear that that's still a possibility, even though they still don't have the confidence just yet to cut. here's what he said just as a reminder. >> we've made quite a bit of progress in bringing inflation back down to our target, while the labor market has remained strong and growth has continued, we want that process to continue. i think the last reading ant the one before to inflation, the one before it to a lesser extent, do suggest that we are getting back on a disinflationary path. we want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing how tight our policy is of loosening policy. >> so he said two things there, and i thought, david, that he was more confident than he has been in the progress they've seen on inflation, so the disinflationary progress is back on track, but, he still wants to

see, it sounds like, another reading that inflation remains in line, and he also really played up the dual risks, the risks on the other side of the mandate weakening jobs. and if they start to see a turn there, that will push them closer to cut. so i'm not sure investors should expect any different mess annual this week because we haven't really hadn't had any, besides the jobs report, any major -- >> jobs report was generally positive in terms of pointing to a potential september cut, 206,000 top line, but there were revision, 4.1% unemployment rate. so weakness at least people pointing to saying indicative of a soft landing. >> right. because we saw -- we're seeing a trend of softer hour average earnings, trend of higher unemployment. i made the unemployment chart as the chart today. we're at 4.1%, which is still benign, not terrible, however, we've come up off the lows of 3.4% and there's this rule a lot of economists follow thes sahm

rule from claudia sahm who used to be at the fed, three month averages on employment, coming off the lows in the last 12 months, almost triggering the sahm rule which would be intick different of recession. predicted every recession since 1970. i would say job market moderating, slightly pulling, nothing extreme, but to your point, david, the odds of the september cut off that jobs report went from low 70s percentage to 78%. so the market did see through the strength in the headline number and looked at some of the weaker elements of that report. again, nothing dramatic in terms of stress. >> this week though cpi and ppi will be more. >> cpi and ppi will be key. remember, pce is more key than those numbers. the last pce report of may, which i think powell was referencing there, showed it 2.6%, not 2% where they want to be, but moving closer to that point. great chart out of bank of

america and ml on the inflation as a preview to look ahead to thursday's cpi report. they say we're going to need a s sub0.2% monthly reading to get progress on disinflation going in the second half of the year. they look at all those scenario yos of the monthly readings. we don't want to see a 0.4% monthly reading or 0.3% because it goes back up. hard to keep track of thee monthly readings, but you want to see an inline report, which is 0.2% increase in prices over the month or less than that and that's what the fed would like to see to get that trands on track so they can move to this cut which they clearly are inching to do. they're phrasing it as an adjustment from the tight monetary policy we've been living under. >> it's going to be tight. bofa looking for sub 0.2 to keep this in line. >> which would be good for the fed and investors. the question to what extent

that's already priced in. >> they point in the base effects get tougher in the second half. >> always. it's crazy we're looking at things like auto insurance as a swing factor but that's the thing. rent prices and owner equivalent rent have been sticky. as far as the opponents, transportation services important to watch, airfares were weak last month and that was helpful for the overall number. we look at that core cpi especially the super core where you take out housing, it really gives you a snapshot of services. so that's coming this week. we're also watching the impact and the reverberations from the french election which kind of a surprise, right, that we did not see. >> it was quite a surprise, yeah, the far right party did not take control, so to speak. >> or do better. >> yes. >> coming in at number three. the question now for investors, it's been really a trade on sovereign debt because france has a deficit to gdp of 5.5%.

the eu rules have 3.5%. the bond market has started to throw a fit. we're going to get a divided government. does a divided government, is that good, gridlock is good? >> sounds like if the left is in control they want to spend more. >> that's the problem. it's not that they're in control because it's divided still. they don't have a majority? i'm done with that. i can't explain what they do next. >> it depends what mack roen does next and talking about free school and budget deficit busting policies. what can they get through and can france take the tough measures. the euro weakened as a results of that election. >> being anti-incumbency themes through these elections in france and the uk. the big week ahead including the fed chair's testimony. our next guest says it is time for the fed to cut.

joining us is mark zandi. you've been consistent in your arguments of late. i wonder if you think simtra and this week on the hill if you feel at least the narrative around the fed coming around to your point of view? >> i do. i think it's moving in the right direction. i think the chair powell has a script that he's going to continue to say he needs to see a few more good inflation statistic numbers in the months ahead. i think he'll get them. i think inflation is -- ul all the trend lines look good moving back to target and he'll get the numbers he needs and i would expect them to start cutting rates in september. if i were on the fed i would be arguing for rate cuts at the end of last year. i think they're taking an increasing risk of putting too much pressure on the economy and financial system and ultimately potentially breaking something, and i don't think that's necessary because the economy is at full employment and again inflation is headed back to target. you know, i'm not on the fed and

they have a different judge judgment, but they'll have the evidence they need to start cutting rates in september. >> you feel like july sets the t for september then? >> i do. i think they'll get -- you were talking about the cpi number we'll get that on thursday. that will be a good number. i think the headline will be flat, zero, no increase. the core excluding food and energy, will be up 0.2%. that's kind of right exactly where they would want to see it. with that, i think they'll have enough to kind of lay the groundwork at the july meeting for a september rate cut. >> what about the -- we were talking about the other side of the mandate which we're increasingly talking about, the jobs picture and how it's kind of moderating, cooling might be strong, weakening might be strong. where do you think that ends up? sometimes when you do see unemployment rate climb what are we 0.7% off the lows, you can really see that start to pick up. if the fed doesn't do anything about it. >> yeah. that's what i worry about. i mean, you know, the economy is

slowing. you can see it everywhere. you can see it retail sales, vehicle sales, you can see it in the gdp growth in the first quarter was 1.4%. in the second quarter based on the data it's tracking about the same, 1.4, below the economy's potential and why unemployment is moving higher. we're up half a point in the past year. the labor supply is playing a role. nonetheless it's starting to move higher. initial claims moving higher. how many hours worked are down. temp jobs are down. the revisions to the data we got last week would be consistent with an economy that's downshifting. you know, all that is okay, but, you know, the -- i get increasingly nervous about it. in the context of, you know, they've done what they need to do. we're at full employment and inflation is within spinning distance of target and heading in the direction. they're taking a risk here. >> is september too late?

you think they're going to wreck the recovery. >> no. i think september is okay. it's fine. but the odds of them making a mistake are higher. you know, the risks are mounting, so, you know, i think odds are that we'll be just fine and september is soon enough, but, you know, why take that chance? why take that risk? you know, it's not only about the real economy, the financial system is also under tremendous pressure. the yield curve is still inverted. short rates are higher than long rates and that's not consistent with the well-functioning economy or financial system, and the banks and other financial institutions are -- markets are under a lot of pressure. again, odds are it won't break before september, but why, again, take that risk? >> all right. we'll be listening closely tomorrow and when we start to get bank earnings on friday. mark, as always, our thanks. mark zandi. >> take care now. >> as we head to break our road

map for the hour. boeing pleading guilty to criminal fraud charges tied to the 737 max crashes. what it means for the plane maker from here. >> paramount's merger sag gra draws to a close and ends. they have a deal with skydance. >> big tech spending billions on ai powered hume oids robots. you have to sea what we have in e re" ntuewkn when "squa o thstetcoins. the future is not just going to happen. you have to make it. and if you want a successful business,

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take a look at shares of paramount down sharply now, as you see. you're going to get the opportunity to sell as much as let's call it half of your shares at 15 bucks a share, this under the deal that's been agreed to by, of course, control shareholder shari redstone, signed off by paramount special committee. it's official. skydance will take control of paramount when the deal closes. it's a complex deal, as we have splands to you many times. why is the stock down? the isn't any other expectation that a company will step up. you have to figure how long this will take to close and how much difficulty it's going to, you know, ensue, you're going to have the fcc involved, broadcast network being involved as well. all that said, the details are as follows -- they're value skydance, run by david ellison, created by him, funded in part

by the ellison family, namely larry ellison, at $4.75 billion. and so paramount is going to get 317 million shares to the owners of skydance, basically the ellison, redbird, kkr. interestingly, kkr is not a part of the deal from there and kkr may sell some of those shares back to redbird and the ellisons when they tender for the 48% at 15 bucks a share. they are spending, it's really $1.7 billion for the equity, but when you include debt it gets up to $2.4 billion. 48% costs them 4.5, another $1.5 billion, pretty big check. redbird as i reported hearing, perhaps, stepping up for as much as $2 billion. probably has invests with that. larry ellison, one of the wealthiest men in the world, probably writing a check around $6 billion. the ellison family. and then they got to go about

actually creating a growth path and a de-leveraging path and a path to viability long-term for paramount given all of the headwinds in the industry. david ellison on the conference call this morning discussed in part what their thoughts are when it comes to rebuilding paramount. take a listen. >> our intention is to rebuild the paramount plus platform and believe with the technology and relationships that we have, we can expand our business. you've watched some incredibly powerful technology companies move into the basic media space and do so very successfully. we believe it's essential that we, obviously, move towards that direction of the tech company which goes back to what my core competency, obviously, is and back to the key thesis in skydance, which is that by bringing together technology and media, that's actually -- that's what is essential to kind of be able to chart a course forward in this environment.

? so sara, you're going to hear a lot i think about the cloud, generative ai when it comes to at least the strategy of this new company when it is completed. that is the merger with skydance and the significant change in ownership. these guys will own 100% of the vote and roughly 70% of the equity outstanding. >> i mean it seems like a good strategic fit, right, if it's going to be more tech enabled and empowered. they already have a strong partnership, right? >> yes. right. in terms of financing and, right, the "mission: impossible" franchise, maverick franchise, all that gets consolidated as well. >> i like the jane fonda stuff they do. >> open to sell assets to others. >> sounds like they're open to the significant partnerships that might even clu changes in equity ownership. is it conceivable at some point you'll see something with max or peacock, certainly seems possible, though i do wonder, carl, whether something like

that could take place in the interim period, which is not an insignificant amount of time, before the new management team takes over, namely david ellison, as ceo, and jeff shell as the company's president. >> we keep thinking the final chapter. we'll see, right. >> yeah. >> in the next 45 days. >> 45-day period. could apo lo or sony come back? >> i don't see it as likely given the last reports i had sony was not interested in the whole company deal. the stock went down in that week they were thinking. >> boeing pleading guilty to criminal fraud conspiracy. what investors need to know when we return.

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so you can fix problems before they become problems. - hmm! get paycom and make the unnecessary, unnecessary. - see you down the line. welcome back to "squawk on the street." pressure continues to grow for the president when it comes to high-profile donors and the election. let's get to meghan ka cella with those details on the heels of his call in to morning joe. >> the pressure is building and president biden is digging in more than ever and committing to staying in the race. he called into msnbc and vowed he would not let up, frustrated

with party elites who continue to call for his resignation. >> i'm not going to explain any more about what i should or shouldn't do. i am running. i am running. >> biden said he's confident the average voter still wants him to run, and he highlighted his economic plans saying, quote, you don't see a lot of ceos flocking to trump. biden is looking to move past the debate performance but under increasing pressure as you said to step aside, from lawmakers as well as wealthy donors. billionaire rick caruso the latest to say publicly he would like to see biden resign and joins a growing group that includes reed hastings and abigail disney and sent an e-mail last night brushing off these calls calling them nonsense and the pundits always get it wrong. the uncertainty is having an impact. attorney general john morgan remains al in for biden and raised about $1 million for him this year. he's paused his efforts because he's not sure an event that had been planned for late summer

will still move forward. he's not even sure who the democratic candidate, guys, will be by then. >> i wonder if there's any discussion -- it feels like the market has started paying attention post-debate and the supreme court ruling feels like -- started to see moves on treasuries selling off a little on improved odds that president trump would regain the presidency. i'm not sure the fiscal situation if either party wins would be great. i wonder if there's any discussion about that. >> there is. we saw those betting markets last week start to play the odds a little bit. there's much more recognition that this is a very close race, if not swing actually in former president trump's direction. but i think at this point we just don't know. we're going to have a very big week from here moving forward and there's still an open question as you said, we're still waiting to see the details of policy platforms that generally we would be focusing on ahead of the two-party conventions. but there's a question about which of these candidates specifically will be better for

business. we don't know that at this point and that's one of the points president biden was making on his interview today he thinks he's the one that's going to be better for business this time around. >> came. meghan, thank you very much. keep us posted. meghan casilla in washington. after the break a look at silicon valley's rise of the robots what it could mean for labor markets across the globe. that story next, stay with us, with the dow up 7.16 semis leading again. from full . ...to empty nest... ...to free birds. vanguard personal advisor can help you prepare for every chapter. we got this. that's the value of ownership. [♪♪] your skin is ever-changing, take care of it with gold bond's healing formulations of 7 moisturizers and 3 vitamins. for all your skins, gold bond. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate

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. welcome back. i'm silvana henao with your cnbc news update. a tornado watch in effect near houston and galveston right now as category 1 hurricane beryl bears down on texas. the storm made landfall earlier today on the state's gulf coast. at least one death has been reported from the storm after authorities say a tree fell on a home near houston killing a 53-year-old man. indian prime minister narenda modi arrived in russia

today for a meeting with president vladimir putin in moscow. it marks his first visit to the country since russia invaded ukraine. the kremlin says the two leaders will reinforce traditionally friendly relations between the countries. and starting this fall, johns hopkins medical school will offer free tuition for most students studying to become doctors. it's thanks to a $1 billion gift from bloomberg philanthropy. the university says students who come from families earning under $300,000 each year are eligible and the school will also cover living expenses for those whose families earn less than $175,000. carl, good news there. >> that's an incredible gift. thanks. silicon valley making a bet on ai powered humanoid robots to help solve the global labor shortage. kate rooney has that story. >> these humanoid robots are built to resemble people and humans and getting smarter

thanks to artificial intelligence. robots like the ones you're about to see are catching the attention and billions of in investments from the likes of amazon, google and nvidia, tesla and microsoft. recent leaps in generative ai have accelerated what the robots are capable of. it's made them capable of understanding commands and making their own decisions about how to act. it uses the same technology behind ai powered chat bots. >> robotics is where ai meets reality and that makes for some very interesting new combinations that i think even five years ago we could not imagine. >> one major justification for spending on these robots startups and tech companies point to this jobs shortage that by 2030 goldman sachs estimates will grow about 2 million workers. tech companies argue these robots you're seeing will fill the jobs that are too dangerous or people don't want to do.

>> i believe we are really at the cusp of solving one of the grand challenges of humanity when we introduce robots now into the workplace. that will be the start of it and it will change labor forever in the next five years, in the fields that i spoke about, retail, third-party logistics, warehousing, starting health care, but more broadly, eventually we'll see robots in our houses doing tasks and things that none of us like to do. >> it sounds great. there are still a mountain of roadblocks when it comes to the robots. cost is the big one. a lot of money to build and scale these. safety concerns around having robots working right alongside people. then questions over how to regulate had the space, similar to what we're hearing about how to regulate ai staying competitive with china which leads the world in deploying these robots. for a deep dive check out cnbc.com. we worked with our digital video

team on this one, long form story and you can see more on our dotcom site. back to you. >> kate, first question for me is what your last thing you just mentioned, what is china doing that has them ahead of everybody else? >> so the cost is lowering in china. manufacturing is easier there. so they've gotten these out there at a larger scale so they're in warehouses at a scale you don't see here. right now it's amazon partnering with this company. they kind of have a different style and seem more comfortable with making these more liv-like. that is one of the big differences here. you saw the videos for the most part these don't really have faces. they still look like a robot. in china, you really do see some of these robots look just way more like people and that's just sort of a design difference where here, people don't seem as comfortable really with those especially human like robots. you're seeing these design differences. costs i would say is the big differentiator between east and west at this point.

>> i thought you were going to ask what could go wrong? >> that's a long list. >> how much time do you have, exactly. i will say the digital video gets into a lot more of these nuances, twice. >> we will check it out for sure. kate, thank you. >> thanks. >> nightmares. kate rooney. the ai boom certainly helping lift many of the big technology companies, apple's stock, meta, alphabet, amazon hit new highs on friday, down a bit this morning. the sect is coming off fresh records. our next guest says generative ai may not be ready for prime time. he says it could be a bubble. joining us to discuss elevation partners roger mcnamee. in a recent post i think on x you said for high value uses have emerge. deep fake porn, disinformation, span and plagiarism. everything else is a claim with limited or no evidence. why do you believe that's the case? >> look at what's happening in

the case. there's a big report out friday from goldman sachs in which they make the point that the amount of capital investment in this sector, which is billions of dollars now, is -- it's so large it's almost unimaginable that we're going to get a rate of return on it over the next few years. microsoft is investing i think roughly $10 billion a month in new data centers and i think the industry is putting out 15 or so a month. we need to see a number that looks like roughly $600 million of revenue to justify the amount that's already gone in. that number from sequoia capital, the venture capital firm. i look and say it's fun and it's very profitable. the thing everybody needs to pay attention to is that you're making assumptions about what this technology can do that we haven't proven yet.

as a consequence, we're applying it in places it may not work. if that's true the mania will come to an end and the largest stocks in the s&p 500 are all going to be very heavily affected. and i just think every investor needs to take a moment and ask themselves, how much longer they want to be on this ride and whether there is any evidence the products are going to deliver value at a large enough scale to justify the investment we've already made and planning to make next year. >> i'll come back to a period you and i remember well which is the mid-90s and the hopes around the internet. there were assumptions made then that were not proven to be true in the near term certainly. there was an enormous amount of capital that went into companies that ultimately went bankrupt. that said, many of the things ultimately that came out of it, were in fact what was talked about, may have taken longer and the returns might not have been there for so many of these companies that went bankrupt. others like amazon are certainly

great beneficiaries of that period. >> david, the beauty of being our age is that we remember the fundamental truth about american culture. america loves financial manias in a way no other country in the world does, and we've been blessed over the years by having manias followed by train wrecks. yet, from that train wreck, has consistently emerge something of great value. and iabsolutely believe that's possible here, too. the one point i would make, though, is we're up on a giant spike. and when you're up on the giant spike you have to remember, that the value that follows may not, in fact, favor the companies you're in. so you just want to be prepared for the possibility that this could be disrupted, and it may take a lot longer and the thing that comes out the backside may be different than what you're looking at today which means different winners, different use cases in all of that. >> roger, i wonder if you were encouraged by this journal piece about small language models and

medium language models more slimmed down models that are looking not to answer everything in the world, but more specific tasks? is that rationality in progress? >> absolutely. carl, in fact, i think this is the path forward. when we look back at the previous generation of technology, predicative ai, the key thing there, when you see suf like protein folding or language translation, where you have actually seen successful use cases, in both of those cases, the data sets that we're working from were highly focused, incredibly tightly cur raitsds and i think that is the path forward. the thing that we're looking at today is that openai and microsoft as a team, google, amazon, meta, all of the big companies, are looking to have a global monopoly, and the only way to do that is to boil the ocean. sit there and make the argument that if you gather all the world's data you process it all

into one giant training set, and then from that, you use generative ai in yours to produce the answer that people are looking for, that hypothesis we can safely say today, is, at best, flawed, may be complete bologna. the thing about small language models, focused narrow stuff, there are a lot of use cases where that already works and so in my mind going that way, seeing thousands of different ais, each targeting something very specific with the data set that's not stolen from the people who created it, but actually built by people, domain experts from their own data or data they legitimately licensed, i think that's incredibly exciting. if the world went there, i would be very optimistic. the problem is what do you do with all the investment that we've made that's on the assumption that the language model -- >> where do you think is the most over valued and over behind

part? because the semiconductors that's resulting in orders. you think it's the hyper scalers, spending so much? >> the way i look at this the orders for semiconductors today are based on a set of assumptions that i think are dubious. i worry you're going to see future revenues for a period of time that will be lower than current revenues. that would be my fear for nvidia and the other companies. the folks who are producing the data centers have a really interesting set of problems because what if it turns out that the architecture that they're deploying from a perspective of semiconductors doesn't actually match the need of what people are going to need with these smaller language models or whatever it is that emerges as a winner. that's the real problem. that we're investing a ton of money in something that may be a technological or architectural dead end. it wouldn't be the first time we've done that, and it's not the end of the world, but we're

talking tens of billions of dollars spent every month and -- >> we're also talking about the biggest companies in the world spending it, those that can at least ostensibly afford it to your point may not get a return on that capital but nobody will be talking about them being in any sort of financial danger. >> exactly correct. david, that's what makes this whole thing interesting. these companies, which have been like the federal reserve in terms of the amount of cash that they have, are spending it with a level of intensity that's actually shrinking the numbers they have. they're spending the money faster than they're bringing it in, and that produces, i think, an issue for investors in the investment they make today aren't going to pan out. goldman sachs is raising this as an issue. i believe par clays has raised this as an issue. sequoia capital has raised it as an issue, i've raised it, others have raised it. that doesn't mean we're right, but i think if you're an

investor in these things it's a question you should be asking and looking for a safe place to land. just in case. and, you know, again, we've all seen this movie before. it doesn't have to end like, you know -- it doesn't have to end in a shootout. it can actually end going to the hospital and getting well. >> okay. always thought provoking roger mcnamee. thank you. >> my pleasure. watching shares of boeing today after the company pled guilty to a criminal fraud charge tied to the 737 max crashes. phil lebeau joins us with more on what this means for the company. phil, was this a big surprise that they pled gilt guilty. >> no, it is not a surprise. this was widely expected by many people. boeing didn't want to plead guilty but the doj has been adamant that it has to be as forceful as possible and this is probably as far as the doj could go without actually going to trial. so here is the plea agreement. it's not finalized by a court,

but boeing has said it will plead guilty to conspiring to fraud the government, that is a felony, an important distinction. we'll talk about that. it will pay $243.6 million as a fine. commit another $455 million that will go towards improving its safety and compliance programs. who's going to make sure they're doing what they say they're going to be doing? that will be a court-appointed, independent monitor. somebody from the outside who is going to report hey, they're doing this or not doing something. the max victims' relatives are furious with this deal and think it's another case where the doj has agreed to a plea bargain and it's going to make no changes at boeing. as for boeing itself it is declining at this point to comment on the details of the plea agreement. waiting to see what happens once the court finalizes it. take a look at shares of boeing as i mentioned, a judge still needs to review this deal likely in the next couple weeks we'll get filings in court. that's maybe when we get a finalization. boeing's q2 results don't forget

are july 31st. the question becomes, what's next for boeing? why are shares up today? they're up because this is another hurdle cleared in what the company needs to do. the next big task, a ceo. ceo or boeing chair is leading the search. the deadline at the end of the year, a couple possible candidates out there, pat shanahan lead spirit aerosystems which boeing has committed to acquiring, boeing commercial airplane ceo stephanie pope. that's another possibility. how much will boeing shares rally relative to their competitor airbus. with the sell off in airbus when they cut their guidance, guys, it's still substantially higher for the year than boeing and remember we get the air show in a couple weeks and we will likely see large orders announced there. the expectation you will see large orderers for air bust. will we see them for boeing? yeah. you will not see boeing be shut out. it's going to be an interesting

show, to say the least. >> besides the commercial business what about the government contract business? does that get affected by the company being branded a criminal, felon? >> being branded a felon? yeah. potentially. generally speaking, government contracts cannot be awarded to companies that have committed corporate fraud, that are considered a felon. however, i've talked with some folks who said that boeing is of the belief that let's talk about defense contracts, that if there's particular contract that they may be the best bid in for it, that they could get a waiver potentially from the department of defense. it's a gray area. i would be surprised if boeing gets completely shut out from defense contracts. we have a limited number of defense contractors in this country, boeing did billions of dollars worth of contracts or were committed to billions of dollars of contracts last year. that's going to continue in some fashion. i would imagine.

if they are completely shut out, that changes the game in terms of defense contractors. >> thanks. market doesn't seem concerned about it for now. after the break financials under performing with bank earnings around the corner. we have your playbook xtne.

welcome back to "squawk on the street." the big banks getting set to report later this week. report cards from jpmorgan, wells fargo and citi before the bell on friday. our next guest out with new calls on the financials upgrading pnc to buy, downgrading keycorp to neutral and joins us with a playbook heading into earnings. erica najarian, consumer finance analyst joins us now. the stocks have been acting well, the s&p, trading near the highs. how do you pick winners from here into earnings? >> look, i think at the end of the day, we have pretty overwhelming macro catalysts. you had the presidential debate and i think the, you know, let's call it the election future

started pricing in a trump victory and i think everyone was dusting off of 2016 playbook. additionally, i think the jobs number had increased the probability of a september rate cut to 75%, which also, you know, brought up the rate playb financials. i think that's why you're seeing recent underperformance. but the way i think you can distinguish from here is, you know, who has the capital to do better if we do have a pretty stable economy. you know, at the end of the day, the stress test results we got the wednesday before the presidential debate was actually quite differentiated in terms of winners and losers. you know, that's really part of the genesis of the upgrades and downgrades this morning. >> right. so, why pnc? i do wonder if regionals -- i know they don't like being called a regional. they're much bigger than that, but are a play because they've

lagged? >> oh, absolutely. i think the regionals are at play, to use your words, would probably be smaller than pnc in terms of the kre stocks. keep in mind the midcap stocks are very much feeling, you know, the brunt and the memory of the regional banking crisis of 2023. when we took the six rate cuts off of the table that everyone was expecting in january, and you still had lingering commercial real estate concerns, and they became super unpopular. and i think that the trump/rate cut playbook very much benefits the kre. i think pnc is a different story in that they have excess capital. they've had a good result from the stress test. they're one of two banks, jpmorgan is one of them, that still retained economic interest in visa class b shares, so they had an excess source of excess capital when they monetized that. so, they're ready and willing to play offenses organically and potentially down the road

inorganically in terms of growing above peers and they have interesting inflection points in net interest income from lower yielding assets being replaced by higher yielding assets that could be an extra boost for net income. >> thanks for joining us with a preview. >> thanks, sara. still to come on "money movers," oppenheimer chief strategist takes the year-end target to 5900. i'll take a look at companies having booze companies betting big. every day, more dog people are deciding it's time for a fresh approach to pet food. developed with vets.

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good race. - you too. you were tough out there. thank you. i'm getting you next time though. oh i got you, i got you. down goes jewett. jewett and amos are down. what a lovely sign of sportsmanship. you okay? yeah. ♪ ♪ some new laws on the way that could be a big boost for booze sales. brandon gomez joins us with more. what are we watching? >> this is one that's been in the pipeline for quite a while. a new law in pennsylvania awaiting final signature would allow spirits-based canned cocktails to be sold at 10,000 grocery store and convenience stores. similar laws up for votes in other states as well, like california. might you be asking, isn't this already legally? generally, no. sales have been limited to sales

of spirits and high-proof alcohol sales. that would change that. that's a big deal for big beer brewers like constellation because it means shifting shelf space away in stores from beers. those canned cocktails in 2023, called rtds, ready-to-drink cocktails, they grew by over 25% into a multibillion dollar market. what does it mean for investors? it means people are leaning into this new trend, this new craze. anb bev with cut water mai tais. constellation brands still figuring out the spirits business on their call and their wine business. >> this is very risky business because they look like kid-friendly drinks. they're colorful, pretty. a lot of seltzers are flavored.

>> because of the alcohol content, similar proof to beer brands, maybe around 5%, but laws are pertaining to what you might see as 100% proof alcohol. >> i don't need that. i don't need my 6-year-old drinking that. >> i don't even need my 18-year-old drinking it, but she does. brandon, thank you. brandon gomez. taking a quick look at our markets. we are seeing at least some weakness in mega cap tech, with tesla up along with nvidia. mo mkecora cinreart vegeomg straight your way in the next hour. cancer. my fear of recurrence could've held me back. but i'm staying focused. and doing more to prevent recurrence. verzenio is specifically for hr-positive, her2-negative, node-positive early breast cancer with a high chance of returning, as determined by your doctor when added to hormone therapy. verzenio reduces the risk of recurrence versus hormone therapy alone. diarrhea is common, may be severe, or cause dehydration or infection. at the first sign, call your doctor, start an antidiarrheal, and drink fluids. before taking verzenio, tell your doctor about any fever,

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good monday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live at the new york stock exchange. oppenheimer raising their s&p target to 5900. now the second highest on the street. we'll talk to john stoltzfus later on. the fallout from the french snap elections and what it means for he can whatcies and currencies. later, every solar stock is down, except for one. why shares of