it is 5:00 a.m. here at cnbc global headquarters. i'm frank holland and here is your "five@5." is the rally at risk? stocks hit another record close and investors bracing for the cpi report today. global stocks moving higher after hotter than expected growth data from the uk this morning. we get a check from london this morning. and growing calls from politicians and celebrities for biden to pull out of the race for the white house. and costco raises membership

fees for the first time since 2017. and tesla does something for the first time in more than a year. it's thursday, july 11th, 2024. you're watching "worldwide exchange" right here on cnbc. ♪ good morning and welcome to "worldwide exchange." thank you so much for being here with us. i'm frank holland. let's kickoff with the check of stock futures. pressure ahead of the big market event of the june cpi report. investors are deciding what this could mean for the fed and rates. we have red across the board. the dow would open 25 points lower. back to cpi. economists are looking for the headline number to rise .1% month over month and .3% year over year. today's report will be the latest test for the red-hot

rally with the nasdaq and s&p riding record streaks and record closes. if you were keeping count. a big part of the move higher is tech. the sector is up 10% over the past four weeks and sitting at an all-time high all its own. the big gainers on the nasdaq 100, tesla is up over 32%. followed by arm holdings up over 14%. another chip maker amd and intel. not just here at home, green arrows for equities around the world. silvia amaro is in the london newsroom with more action. silvia, good morning. >> good morning, frank. indeed, the positive most men tempe most men tmentum we saw on wall yesterday. some of these moves are related to the growing expectations we

will see the federal reserve cutting rates in the near future. thinking about some more european stories this morning. the ftse 100 is currently up by .4%. early this morning, we got new gdp numbers suggesting the economy grew by 0.4% in the month of may. that was double what analysts were expecting. over in germany, the dax is trading higher at this stage. early this morning, we got con v confirmation of german inflation easing. let's show you how they are trading. equities have been trading for two hours in europe. i want to take you to oil and gas. at this stage, the worst performer down .20%. early this morning, we heard from the iea in terms of the outlook for demand of oil. more importantly, i should say, some of the downward moves are related to out analysts are downgrading a couple of stocks

in this space. i also want to take you to asia. as i was telling you earlier, the positive momentum we saw on wall street is continuing in europe. it was also boosting some of the momentum in asia. briefly, we saw the nikkei 225 crossing above the 42,000 mark. when it comes to japan, all of the recent momentum behind japanese equities relating to the bank of japan meeting later this month. frank. >> silvia amaro in the london newsroom. silvia, good to see you. let's bring in our guest here. she leads the global innovation and global tech funds which are meeting their benchmark year to date. claire, good to see you. >> thank you, frank. >> we have to pick up where silvia left off. jay powell on capitol hill for two straight days. keeping them too high for too long is putting the economy and

jobs at risk. do you think we're getting that september cut? >> i'm sorry, we're not in the business of predicting fed moves. we are hoping to see less restrictive policy going into the second half of this year and we think this is key support for u.s. equity markets and key support for the fund when we think about investing in the companies with the ten-year yield at 4% is an anttractive st up with rate cuts are coming as soon as september or even if they don't come until november or december time. this is a cooling inflation which we're anticipating to see in today's cpi print. the recent heat that's come after the fed and labor market that is suggested by the data in the last couple weeks. we do think it supports rate

cuts into the second half of this year after what powell said. >> it sounds like you are saying upside if we get the cuts. i understand you are not in the forecasting business. i see you managing a lot of funds. i want to talk about the s&p out of the mega cap tech stocks. bmo out with a note yesterday. we believe reasonable valuation h help. are you looking for opportunities outside of the mega cap teches and that's where the next rally comes from with the s&p 490? >> absolutely. if we think where the earnings growth is concentrated at the moment, that's in the big ten names. we think you've got to look beneath the names of the

magnificent seven to look for the most appreciated opportunities. it makes sense the narrow market leadership we have seen to date given where we are in the cycle fueled by a.i. these are the companies with the deepest pockets and investing behind a.i. for the longest. we are starting to see this broaden out. so, smaller companies who are proving to be integral to the a.i. buld out are starting to see earnings growth come through. if you take a company with a market cap of $2.5 billion. we look this to grow to 6 o0% nt year. that's 40% for the magnificent seven. this is the company that supplies the components that make the tools that make the a.i. chips. this is preccisely what we mean by peeling back the onion and

looking beneath the magnificent seven. nvidia is enabling for the entire ecosystem. that is where we see the valuation outside. >> i know you are looking way outside. you are looking at bio-tech. you are saying this is an area where you see macro headwinds. this is a case for bio-tech. i'm looking at the etf. shares are up 3% year to date. >> exactly, frank. this is an area of the market that got left behind last year and had a lot to do with the interest rates. we saw a complete funding crunch for this sector. as a result, this is an area we think is an attractive area for investment. we have the tailwinds accelerating into the back half of this year. innovation in the sector hasn't stopped. we just have been looking at a variety of companies. there are some real milestones achieved in the industry over

the last couple months. we had the first genome therapy come from vertex and we had great data proved in june there. we think the market breadth continues into this year. we don't just see technology leading the pack. this will have a lot to do with the interest rates coming down, but the fundamentals of bio-tech companies. >> it is all connected with a tailwind for equities in a number of areas if the rate cuts come, excuse me. clare, great to see you. thank you very much. we turn attention now to the campaign trail and the growing call from celebrities and politics for president biden to pull out of the 2024 presidential race. this as the president prepares for his first solo press

conference in eight months. we have nbc's brie jackson joining us from washington to see what's at stake for the president and his campaign. brie. >> good morning, frank. senator peter welsh is the first to call for president biden to bow out of the race. after hosting a fund-raiser for the president, actor george clooney, is also weighing in. the clock is ticking on president biden's re-election bid. >> it's up to the president to decide if he is going to run. we're all encouraging him to make that decision because time is running short. >> reporter: so far, less than a dozen democrats on capitol hill are publicly calling on the 81-year-old to step aside citing fears he won't beat former president trump. the majority are backing him.

>> i will tell you what i'm telling my constituents at home. it was a very rough debate night. if you elect donald trump, it will be four years of who horrifically tough nights. >> trump tied to overturn the election. >> reporter: former president trump said he believes biden will stay in the race. those are trump's short list for vice president agree. >> i think he is pretty dug in. >> reporter: major democratic fund-raiser and actor george clooney is among a growing number of people urging the party to pick a new nominee. writing, we are not going to win in november with this president. some americans say they'll support the top of the ticket no matter what. >> i'll back the democratic nominee. period. either way. to save the country.

>> reporter: today, president biden is seeking to make his case to the country during his first solo press conference of the year. that is certainly going to be a high stakes press conference. this afternoon, senate democrats will hear from senate biden advisors and the biden campaign during a caucus lunch. frank. >> brie, the president's campaign was raising record amounts of money before the debate. has that changed? >> reporter: sources close to the campaign say there has been a major slowdown in donations. one source calling it disastrous. the campaign says they are bracing for a huge fundraising hit, but some are pushing back saying grassroots fundraising in july has been very strong. >> the debate an inflection point for the campaign. brie jackson in d.c., thank you. and eu anti-trust regulators

accept apple's offer for open mobile payments. shares of apple lower right now. i'm not sure if the stock is moving on that news. we have more to come here on "worldwide exchange," and including the one word investors need to know today and first the big tech rally ahead of today's cpi record. and oppenheimer naming names with the sllma and mid-cap stocks. a very busy hour when "worldwide exchange" returns.

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powering 5 years of savings. powering possibilities. welcome back to "worldwide exchange." let's get a check of the top corporate stories with silvana henao. silvana. >> good morning, frank. we start with shares of costco which are popping ahead of the open. the wholesaler is raising the membership fees for the first time in years. they are boosting the executive plan to $130 a year and also raising that tier reward cap. the changes go into effect on september 1st. we are watching shares of citigroup which are under pressure now. this coming after a pair of banking regulators said they are fining the bank a combined $136

million for violating consent orders dating back to 2020 for problems of risk management. the regulators say citi has made insufficient progress remediation its problems. the ftc is suing pbms over alleged questionable practices for drugs like insulin. the ftc will argue the three companies tactics contributed to inflated drug prices. in a statement to cnbc, cvs and express scripts say they stand by their work. >> looking at those stocks. not a lot of movement right now, but we will continue to watch. silvana, i know you are celebrating the copa.

>> we made it to the finals. >> congrats. coming up on "worldwide exchange," a closer read on consumer pressure and the bottom line pressure as my next guest is saying the portfoo liof products. the ceo coming up next. but it's not the critic who counts. with every swing and block, your game plan never changed. ♪♪ some still call it luck. let them. because you know what it's always been. inevitable. ♪♪ ♪♪

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excha exch exc exchange." we have a market share for wd-40. a 9% increase in sales. wd-40 maintaining guidance across all segments. shares up 12.5% right now. let's stick with the consumer as we await the latest inflation reading, that's cpi. it is expecting to show core inflation excluding food and energy, unchanged at 3.4%. if the cpi read is in line, that would be two months of inflation coming in at the lowest level since april of 2021. some areas remain elevated that directly impact consumers and consumer demand for business. electricity increased 6% year over year and housing costs have risen by 5%. last friday's job wages are up 4% year over year. joining me to discuss is the

partner of compass diversified. a holding company for the industrial brands. some of the holdings you know like sterno and ergo baby and. great to have you here. >> thank you, frank. >> let's talk about inflation in general. how does inflation impact your business and inflation has declined since the post-pandemic peak. >> when we have a lot of inflationary pressures, we push that to customers. in the last two years, what we have seen is the battle with our customers is get product. there's a lot of shortages that were out there and can you try to, you know, hold off on your price increases. it's really been interesting lately. i came out of the q1 board meetings with all ten of our ceos. for the first time, i heard something more like pre-2020. we are now fending off price

reduction requests from our customers or figuring out how we now transition going back to our suppliers using the strength of the dollar and the weakness in commodities to push down on our costs coming through. we had a lot of inflation over of the last couple years. it feels like there has been a market change starting in '24 where we moved back into the disinflationary feel that we in addition 2021. >> i want to move back to the numbers. the consumer sales are up double digits, but industrial sales are down double digits. what are industrial customers telling you? are they pushing back? >> two things happened in the first quarter. the first thing that happened is a lot of our input prices in our industrial business that we pass through to our customers and think of it as a toll. as those prices came off, we will pass those through.

those are contractural. units were saying much stronger than where our revenue was and we were able to hold dollar margin per unit. that was q1. in q2, we are seeing a more aggressive -- not only will you pass through decreases on the commodity costs, but we are expecting you to find productivity to give us price declines. what i would say, frank, really worried us, when i looked at orders coming in and the run rate to where the business is, it took a 5% downtick in run rate in q2 over q1 from what we are seeing. >> you say q2. the current quarter. >> yeah. we look at revenue production in the second quarter, we see a downtick based on new orders coming in and sales we are generating. it gives us pause that the economy is slowing a little more than people think. >> let's talk about the consumer

side. i'm looking at energy prices up year over year. food up 2% year over year. car insurance up 20% year over year. when you talk to the ceoss in the consumer space, what are they hearing from their customers? >> almost directly correlated to the income level. the lower income levels struggling, shelter costs, food, insurance. that customer for the last couple years has been sko opi so pinched and that is down. on the consumer side. that has been happening over the last year or year and a half. >> you are seeing the weakening consumer? >> not on the high end. the middle and lower end are really getting hit. >> one last thing i want to talk about is freight costs. i'm looking at trucking rates. flat year over year. down 20% from 2022.

what are you seeing with freight costs? are able to pass along some of the savings on freight to customers or are you enjoying savings on your end? >> freight costs are stable right now. they have come off a lot. of course, we want to try to capture it as much as we can. this is part the of the disinflationary trend. our customers know these costs are coming off. as much as we want to protect them, we see the costs pushing through. >> elias sabo, thank you very much for the real-time look on inflation and businesses and consumers. >> thank you, frank. we will take a quick look at tesla. coming off the 11th straight positive session. that stock is now on the longest win streak since june of last year after the better than expected delivery report from earlier this month. the stock is in the green after

lagging all of the mag seven peers for almost all of 2024. we are coming right back after this break.

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it is just before 5:30 a.m. in the new york city area. there's still a lot more ahead on "worldwide exchange." here's what's on deck. investors are looking for the latest cpi as expectations grow that the fed may be moving closer to a rate cut. the s&p 500 crossing a new

milestone. the 5,600 mark for the first time ever. we have had a lot of guests here on "worldwide exchange" bullish on stocks. they are looking at a small cap play that oppenheimer says could be a rally. it is thursday, july 11th, 2024. you are watching "worldwide exchange" here on cnbc. ♪ . welcome back to "worldwide exchange." i'm frank holland. we pick up the stock futures ahead of the big market report. the june cpi report. we will take a look at futures. they are in the red across the board. still about the same level as we saw earlier today. it looks like the dow would open up 26 points lower right now. today's cpi report is the latest rally with the s&p and nasdaq at record highs and seeing

seven-session win streak. 37th and 27th if you are keeping count. a big part of the move higher is the s&p which is up 10% and sitting at the all-time high. up 10%. we are checking the bond market. right now, the benchmark at 4.27. that leads us to look to the cpi report. the june cpi report expected to show a slight increase in headline inflation on the monthly basis after no change in may. the forecast expected to slow to 0.1%. core cpi is expected to rise to 0.2%. that is the smallest back-to-back increase in nearly a year. the annual forecast expected to stay at 3.4%. this is staying high because of costs of housing and recreation and travel.

joining me now is the senior u.s. economist at the bank of america here to talk about the inflation and everything else. good morning. >> good morning, frank. >> your forecast is a tick above the consensus. what are you expecting? expecting to be sloit ightly hi. what do you expect to dig into this report? >> we have core inflation rounding down to 0.2%. maybe just a little bit stronger than consensus. we think core goods prices continue to fall which is good news. we also have housing inflation sticking a little bit lower than last month. that's really important for the fed b fed. as it moves down, they can have confidence it will remain low. the third component is core services outside of housing. there, we were actually down in terms of price levels. last month, it was unusual with

the i'ddiosyncratic issues. >> pce is the preferred gauge and it is focused on cities and urban areas. >> cpi gets more attention. it is more widely viewed and it's in the press. it is also what drives break-even inflation. the differences between the two really show in that last component that i talked about which is core services outside of housing. there, i think, you really want to think about which components. if you get a cpi report that is consistent to what we are expecting, the fed will say this is another step in the right direction. >> is the right direction a cut in september in your mind? >> we still think the fed only starts cutting in september. the risks of the september cut are rising and will continue to

rise if you get a softer inflation print because the economic data has cooled down. that is something that chair powell talked about in congress. >> i want to talk about the sticky inflation. energy up 4% year over year. how do those pressures ease long term? it seems impossible especially with car since. once the rates go up, what leads them to go back down? >> the fed doesn't target price levels. it targets inflation. there is a one-off shift in price levels. the fed will not try to bring those prices down. to do so, they would inflect too much pain on the economy. the other thing worth noting is that auto insurance in cpi is not what goes into the pce. >> interesting detail there. one other thing we have to talk about is oil. over in europe, the fed

counterpart is the ecb, which is concerned about the oil prices. we have seen a rise in oil prices over here in the u.s., but actually globally. are they worried about the inflationary impact? wti crude up 5% in the laust month. >> the fed excludes energy prices. >> is 5% a large increase? >> it's moderately large. energy prices are more volatile than other prices which is a reason to focus on the core. as far as the last month, energy prices were down. that's why we expect headline cpi to come in softer than pci. >> what about the trend? the upward trend? >> again, they would look at strong inflation. they would not look at the upward trend from myprices.

with energy prices and food prices, the mandate is headline inflation. they have to be concerned about those because they affect the cost of living. when it comes to which parts of inflation are more forecastable and in control of the fed, it would be core. >> great to have you here. thank you very much. coming up here on "worldwide exchange," it's music to tas stors' ears. deilon why jeffries is calling spotify a buy. more details when "worldwide exchange" returns. (man 1) can you hear me now? can you hear me now?

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welcome back to "worldwide exc exchange." time for your morning call sheet. jeffries is saying it is confident in the streaming jgiat ability for streaming growth of 15% or more. costco on the back of the decision to raise membership fees. barclays raising target from $765 to $830. a price target increase from wells fargo moving it from 190 to $205 a share. the bank is positive on the ability to gain share in the pc market and data center gpu. time for the global briefing. the nikkei crossing 42,000 for the first time powered by gains in tech stocks despite an unexpected decline in machine orders for the second straight

month. weak orders could signal fragility which could complicate the plan. and uk gdp shows a growth in may and heemerging from the technical recession this year. and eu regulators accept the apple offer to open the payment system to rivals. it settles a four-year long investigation. coming up on "worldwide exchange," we have the one word that every investor needs to know today and moving beyond the mega caps. we dig into what oppenheimer thinks is a small-cap stock that investors should roll the dice on. we will give you the name in the mystery chart when "worldwide exchange" returns. to help you see untapped possibilities and relentlessly work with you to make them real.

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>> let's start with the mystery chart name. why are you bullish on this stock? >> we're bullish for the simple reason. one, we think as you see more consolidation around the sports betting space with fanduel and draftkings, the data is more valuable that they can't be disrupted and you are not getting exposure to the competition of the consolidation. the other thing why we like genius sports, you are getting a regulatory catch which we saw in florida when that market got legalized. genius sports will have to be used. the other thing we like about it is all their key contracts are now locked up for the next four-to-five years. they now have a very good financial visibility especially when they go into contracts with the leagues this year.

on a financial perspective, the company's free cash flow and they trade at an attractive valuation of 12 times 25 ebita. >> you actually gave us other ways to play the a.i. trade with the smid-cap names. one that caught my eye is cogent communication holdings. you say this is an a.i. play, but it is down 20% year to date. you think that rate cuts alone will fix the story when it comes to this? rate cuts will allow the investors to see the upside opportunity in the trade opportunity in the midcap? >> we don't cover cogent. i will go back to genius. if you look at the a.i. trade, if you look at a.i. and the augmentation they provide to the partners, that's one of the reasons why the nfl invested into jgenius. they provide a lot of valuable technology. when you look at what they are doing for amazon with the

thursday night football alternative feed. they are providing a lot of the augmented technology. they do that with the nba with the player movement. we actually think their ceo is a technologist at heart. he does a lot of this a.i. trade. if you want to play and looking for a small-cap way to play a.i., it is sports betting. genius is an excellent pick. >> overall, a lot of the thesis with the small cap or midcaps are rate cuts. what what hahappens if we don't rate cut this year? >> i'm not an equity trader. we have seen small caps perform relative to midcap. that is why genius has under performed despite beating and raising on the first quarter. we have seen people want to own the a.i. stocks. if you don't get an a.i. trade,

small caps would likely under perform. highlight to why you have us on which is genius, if you look at them, nfl owns 10%. we taught the nfl on this story. they were pro technology and liked what they were doing. that's why they locked up the contract. >> midcap with opportunities. jed kelly, great to have you here. thank you. coming up on "worldwide exchange," we tee up a critical trading day with the latest look at ilaonnfti and the fed's rate cut plans. we'll be right back after this break. trade from morgan stanley, we're ready for whatever gets served up. dude, you gotta work on your trash talk. i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right?

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welcome back to "worldwide exchange." time for the "wex wrap-up." we start with senator peter welch calling for president biden to pull out of the 2024 presidential race. archegos founder bill hwang has been found guilty of fraud and other charges tied to the

collapse of the $36 billion private investment firm. the sentencing is set for late october. shares of costco pop as they raise the membership fees for the first time since 2017.$65 a. shares of citigroup under pressure with banking regulators fining the bank $136 million for violating consent orders dating back to 2020 tied to insufficient internal controls and risk management. the ftc is suing optum and cvs and cigna over questionable practices with discussions of prices for insulin. and federal reserve governor lisa cook is predicting a soft landing for the u.s. economy. her baseline forecast saying the it will move to 2% without much

impact on employment. the central bank is attentive to labor risk. and here's what to watch before the open. we get the anticipated p cpi report and jobless claims. we get earnings from delta airlines with ceo ed bastian will speak on "squawk box" after 7:00 a.m. and sean connolly will speak with jim cramer at 6:00 p.m. we will hear from two central bank presidents later today. the cpi report is key to the market action with the nasdaq coming off another record and the s&p closing above 5,600 for the first time. this is not proving good for every investor. bob pisani explains. >> re . >> for passive investors, new highs with low volatility.

it doesn't get much better than that for passive investors. for active investors, not such great times. active investors want high volatility so they can quickly profit from wagers. they want reversion to the meme trades. that's not happening. market volatility is near multiyear lows and the breadth has been moving down more if you understand move down for months. everything else is taking up the rear. with tech the only big play, momentum players are having a field day. momentum is a simple strategy. hold stocks on a winning streak and sell stocks in a down trend. itsimple, but there is a problem. stock prices trend toward the average price over a long period of time. okay, how long a period?

that's the problem. nobody knows how long a trend can last. not surprisingly, momentum etfss are big performers. the inn fevesco etf is up 19%. these are the big winners of nvidia and microsoft and apple for exakexample. buyer beware. these can out perform in bull markets, but underperform in down markets. most of these funds are re-balanced twice a year. re-balancing twice a year can be a very long time when you have a rapidly changing plmarket. it means the fund may be difficult to catch up with trends. buyer beware. back tao you, frank. >> for more, let's bring in

joanne feeney. >> good morning, frank. >> bob pisani laid out the momentum trade and the risk to play that momentum continuously. how are you viewing the rallies with the s&p and nasdaq hitting record highs? >> frank, we have a bit of an shrank as we are investors for the long term. we want to look at the fundamentals. some have been supportive of the valley. y rally. we are not talking about the ones at the top that experienced a fair bit of momentum. look farther down into industrials and healthcare where earnings are really starting to look better than when the higher interest rates hit them. you combine the earnings fundamentals with opportunity,

it has been a pretty good season so far. >> i'm looking at the estimate. after that, double digits. 15% for q4. 15% for q2. how important is it we maintain that earnings level growth? >> you know, clearly, frank, some of the rally that we have seen is because of small set of stocks. a.i. driven innovation wave has impacted valuation here. to your moinpoint, we have a lo valuation. this earnings season is pretty telling. we will watch for not just what the company delivered, but guidance. when you own a company, not what it has done for you in the past, but what it can do for you in the future. you have to be really particular at this point in time. we woown 40 or 50 stocks. we can pick and choose. we are looking for garp names.

value and income. >> we get a read on the consumer today with delta and pepsi reporting today. we will look at the earnings and guidance today. cpi. how do you think the market res re reacts? >> expectations are modest at this point. constant in terms of the year over year numbers. we are expecting that to hit a hiccup in some of the inflation sources like that auto insurance for example. overall, longer term trend does look like it continues to move in the right direction. obviously, chair powell's comments this week signal more attention in the labor market. that may give the fed some wiggle room. we are not of the camp that we expect a lot of rate cuts. we do believe the fed is going to be cautious of when they cut and by how much because they

really do want to stuff the inflation genie back in the bottle. >> i want to move on to your picks. i want to get to the picks that hedge markets. you are looking at risks geopolitically and macro level. two were interesting. palo alto networks and raytheon. why buy those two today? >> yeah, we view the cy cybersecurity space as almost like a utility. we keep seeing hacks and these hacks are expensive. companies are viewing this of something we'll get around to eventually to something they have to do now. palo alto, in particular, had to adjust their business model to help companies overcome the big switching costs of moving away from discreet pollution solutio platform solutions. this is a real opportunity. we held this one for a long

time. it will be a good holding going forward. >> joanne feeney, thank you. one more look at futures. they are in the red across the board after s&p and nasdaq closed at record highs. the dow would open 25 points lower. that does it for us. "squawk box" starts right now. good morning. once again, gains in the tech sector lifting the s&p 500 on its seventh straight day. it's all tech. we will show you what's moving ahead of the key inflation data. it's starting. earnings season. we hear from delta and pepsi in the next hour. we see the big banks tomorrow morning. costco members will have to pay more this fall. the warehouse is hiking fees for the first time since 2017.

it's july 11th, 2024. it's a special day here on "squawk box." we have kelly evans here. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm keflez kelly evans along wi joe kernen. andrew and becky are off today. >> your groundbreaking afternoon show still on today? >> it is. >> a nap before? coffee?