we'll be watching. thank you. going to be -- first, they've got that meeting with the senate -- biden's -- 5:30. >> the big boy press conference that they keep talking about. >> futures have turned negative, by the way, after cpi, after that deflation. >> or after -- >> surprising turn of events. >> or after his comments. >> thanks for being here. make sure you join us tomorrow. "squawk on the street" is next. you have a phone call. ♪ good thursday morning, welcome to kw"squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. futures tried to erase some morning losses as june cpi gives us our first month on month deflation in more than four years. shelter slows down dramatically. ten-year yield drops to the lowest level since march. our road map begins with a rate cut outlook. inflation does fall in june. >> plus delta shares are tumbling this morning, the

outlook of the company despite what is strong travel demand. pepsi shares also under pressure in the signs of weakening u.s. demand. and that guy is going to join us as well. nfl commissioner roger goodell. let's begin with the market reaction to cpi after yesterday's sixth record close in a row, jim. everyone's pointing to super core, down two straight months. core ex-shelter, down two straight months >> these numbers are the kind of numbers that if you were jay powell, you say, listen, i'm there. i'm ready. i said that we have to be a little bit more worried about balancing things, and looking at these numbers, i think that, unlike delta, which has a lot of turbulence, this thing is perfect. look, it's okay to say it's perfect, david. so many things are not perfect. >> so many. >> you want to know the line that's not perfect? >> tell me. >> indoor plants and flowers. much higher than i thought. >> i thought when you were

talking about things are not perfect, you were talking in a broader sense, but sure. indoor plants and flowers. >> clocks were okay. >> they do get very granular there. do we get a cut before september? >> that -- that speaks to panic, and i don't think there's a need for panic. we're going to talk about food today. david, we're going back to the -- it's the end of hyperinflation, the end of covid, we're back to where we were for many lines, and other lines, obviously, we're not, and we need things to be pushed back. but i like these numbers, and i think anyone that doesn't like these numbers right now is saying, i got to talk this market down because my investors are saying, what are you doing? >> well, we just looked at the ten-year. it is hovering and now below 4.2%. >> how about how much money you made on a ten-year auction? these are the days. i mean, like, carl, i got to emphasize -- see, here's a good one. i watched the tape. david doesn't like that. apple is down $1.28. i saw a very nice piece this

morning about bank of america raising numbers. do you think that's going to be down by the end of the day? i don't know. >> not necessarily with rates falling the way they are as well. >> so, who's selling it? who's selling it, somebody at robinhood, trying to knock it down? >> maybe there's some other names as opposed to just the same five names that go up every day. >> the names that are going down are the names you want to go down if you are the president of the united states. because what the president was railing against was shrinkflation, and i think we're going to have have a little shrinkflation. i think con conagra has turned the corner. pepsico, i think they raised price too much and the consumer is balking at the price of potato chips. >> pepsi volume, down. frito volume, down four. they made it up. they made it all up in price. >> i've got to tell you that i think they're going to have -- i think they may be out of value.

i think they literally have to kind of make it so that they do cut price a little bit. now, conagra did a food promotion, and that's why i think that stock shouldn't be down, but carl, when i look at pepsico, what i say to myself is, somebody has to bite the bullet. now, i know costco, which we'll be talking about, has said the only thing that hasn't worked for the premium kirkland signature brand is they've never been able to knock off soda. they tried to knock off coke and pepsi, they couldn't. but frito lay, i checked in my ollie's army, they are discounting potato chips like they're going out of style. he herrs. from philadelphia. >> why do you think that is? discounting these chips? >> potato chips got too expensive. >> they did? >> not that he would -- pepsi is going to say that. they're very abject about it. i will say this. you're selling that stock at an

incredibly high yield. you're selling that stock when that he had a great july 4th. you're selling this stock when the company has the optionality to do a lot of different things. the international numbers are the best they've ever been. i may be willing to take the other side of the trade on this. >> we've been watching a lot of staples, whether that was general mills. lagurata today did say price sensitivity across all income groups -- here's what he said. >> in the u.s., there is clearly a consumer that is more challenged, and there's a consumer that is telling us that in particular parts of our portfolio, they want more value to stay with our brands. that is not for all the consumers. it's some consumers. that is not for all the portfolio. it's some parts of the portfolio. and we have been working different tactics to give the consumer what they want. and we see that it's working. that's why we feel comfortable about, given the oxygen that we

have in the p&l, that we'll be able to deploy in a very targeted way. >> well, this is very interesting. what you're basically saying, listen, instead of being able to buy, say, five bags for 20 bucks, they want to get it down. they want to do -- they want to be able to say, we're going to do one bag at a time. the customer is balking at anything that's 20 bucks. that is really something. mentally, the customer doesn't want to pay -- they're spending $50 at the grocery store, and they're balking at a very high price point pepsi. >> what wins out, jim? does high margin -- for the company. from an investor standpoint, higher margins or lower volumes? >> they -- okay. right now, lower volume is hurting them. >> is overtaking consumer -- more concerning than the higher margins they are seeing? >> the low price point. it's $10 is the psychological level. the input costs here went up 40%. think of it. it's cooking oil. fertilizer.

corn. you're talking about heavy russia. so, they have higher input at the same time they're not giving us the volumes we want, but they can fool around with those volumes. >> and do we think that there's any real impact yet from glp-1s? >> they're telling me, jim, drop it. drop it. conagra is saying, drop it, enough with the glp-1. and they're using focus groups. it's not what's dropping it. >> would they know? >> i've got to take their word for it. i've known these guys for 25 years. >> i think market research would argue, yeah, they have a clue. >> they do. these are really good companies. >> they sit people down? >> yes, they do. >> focus groups bz and say, areu on wegovy? >> $10, i'm not spending this much for potato chips. you guys have raised the price too much. that's what they're saying. they're not saying, i take glp-1, and i can eat just one

>> it doesn't sound like you're that impressed with pfizer's oral formulation. >> like the chief scientist the other day. listen. dr. borla, i'm not saying he's overpromised and underdelivered, but there has been a consistent issue with pfizer that they haven't delivered. period. haven't delivered. dave ricks has got a phase 3 pill, okay? phase 3 is well ahead of phase 2, david. i don't know if you know that game. and he's building factories to do the pill. so, you know what, pfizer? go pound sand. i am not going to buy pfizer on this. i am not, because pfizer is not been a delivery machine. you know they said they couldn't make this. now they can make it? what is that, david? what is that? >> yeah, no, it does raise a question as to why they're -- listen, it's an enormous market. it doesn't need to be dominated by two companies, conceivably, but that said, unless you have an entrance that, in some way, is either going to be lower

priced and almost as effective or more effective, why would you bother? >> okay. we know it is a big market, so like cholesterol market where everybody came in at the end. >> there are certainly plenty of winners there. >> yes, there are. >> the greatest was lipitor. a warner lambert drug. >> you're looking for the warner lambert. >> you're looking for the leapfrog. >> they did not leapfrog. people don't understand, jacobs makes these plants. these plants are much more complicated than a typical -- >> you said this before. >> right. if it costs $5 million a plant, and borla is fooling around with, like, a phase 2, maybe, maybe not, he's hamlet. >> is he? you think he is? >> to make or not to make, that's the question. >> their biggest investment was in cgen and oncology. >> we're waiting. now, look, maybe borla has a magic ball here, but i don't

want people to buy it on this, and there are some notes out on lilly that are so positive, and david ricks has been money. and he's got phase 3. and i'm doing a drug right now, believe it or not, and i'm talking about what's phase 1 to phase 2. not so bad. phase 2 to phase 3 when you already have a drug, the fda is not interested in promoting a lot of new drugs if you have a drug. that's the way the fda works. i don't know. i would say, take it with a grain of salt. lilly's had a great run. >> really quick, are you surprised that futures couldn't benefit more from this print? >> i think yesterday was a fantastic day in anticipation of great numbers. >> we're going to talk a lot more about it and what it means for certainly september odds, now above 80%. when we come back, the business of football in the streaming era, an exclusive with the nfl commissioner, roger goodell, live from sun valley. julia boorstin's got that. we'll get to ctcoso, microstrategy, vw quantum scape when we come back.

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some prominent business leaders convening at allen and company's conference. our julia boorstin is there this morning with a very special guest. good morning, julia. >> good morning to you, carl. i'm joined now by nfl commissioner roger goodell. thank you so much for speaking to us here this morning. >> sure. >> in sun valley. >> glad to be here. >> before we get to all the conversations here and the implications of streaming and media m&a, i have to ask you about the lawsuit, because i last saw you testifying in this directv -- this lawsuit about directv's sunday ticket package. and you lost and then appealed. what do you expect to come from this lawsuit, and how do you think it will impact sunday ticket and other deals going forward? >> well, we obviously disagree with the jury verdict, and we are committed, obviously, to following the legal process. it's a long process. we're aware of that. but we feel very strongly about our position, our policies, particularly on media, that we

make our sport available to the broadest possible audience. sunday ticket is just a complimentary product, so we're committed to following the litigation all the way and making sure we get this right. >> we will continue to follow that trial. now, speaking of rules, there has been a lot of discussion about the rules about private equity investments or ownership of the nfl teams changing. what's your perspective on that, and where is this going to go? >> well, we have been very deliberate on this. just looking at our ownership policies in general, and as sports evolve, we want to make sure that our policies reflect that. we created a committee last september that looked at all aspects of our policies, including debt, and including private equity. we have had a tremendous amount of interest, and we believe that this could make sense for us in a limited fashion, probably no more than 10% of a team. but that would be something that we think could complement our ownership and support our ownership policies.

so, we think we're moving at a very positive direction, and hopefully i'll have something by the end of the year. >> no more than 10%. other leagues have capped ownership at 30%. >> we're not other leagues, julia. i think we're going to do what's right for the national football league, and we like our ownership policies. we think this is a complement. but this is also something that's the initial cap. could we raise it at some point in time? of course. >> certainly potentially some owners or investors here as well. of course, in sun valley, everyone always talks about m&a, and the big deal this year is the one that was just announced between paramount global and skydance. there's been some discussion of the fact that if there's an ownership change of cbs, which broadcasts some nfl games, then you could renegotiate with cbs because of its new parent company. do you plan to? what do you expect to happen? >> well, listen, cbs has been a great partner for us, back to 1956, i think.

they have been extraordinary right up to the super bowl this past year where we had record ratings at the super bowl, over 200 million people watching. so, they have been a great partner. we'll obviously -- paying close attention to the process. we know skydance. we're partners with skydance. they've done a terrific job with our relationship. so, we'll look at the structure of the deal. we'll see how it impacts us, see how it impacts our business, and we'll make the best decision for the nfl at that point. >> but given the fact that the nba is now negotiating for its rights, $75 billion package, roughly, do you think you're underpaid for nfl rights? i mean, you negotiate a -- >> there are probably a lot of people in the nfl think they're underpaid, but i think, listen, we have great relationships with our networks, and a lot of our media is not about the dollars as much as it is how do we reach more fans? that's the primary objective for us. obviously, we want to be paid fairly, but for us, it's about reaching fans and being on a free platform like we are allows our fans to see that, and i think that's what's led to the

great not only popularity of the league but also the great ratings. >> speaking of new partners, netflix, announced christmas day, games on netflix. i saw one co-ceo here in sun valley. explain to me the strategy of partnering with all of these different platforms, especially whenthere does seem like there's a risk of fragmentation or something making it very expensive for your fans to watch all the games. >> over 85% of our games are on free television. we've committed, even when it's on a platform that is a pay television platform that in the local markets of those two teams, it will be on free television. so, i think we're going where the fans are, jeulia. you see the changes. fans are moving off paid television platforms. we want to be where the fans are. netflix has close to 300 million subscribers on a global basis, which was really attractive for us in being able to reach that global fan. as you know, international is a huge initiative of ours, and i think they want to really make

this an event at christmas day, and we think that's important, just like thanksgiving. and so, we've seen that. i think the three games we played on christmas last year were the top 25 of the entire season. so, i think they're going to take this, they'll globalize it, put, you know, a netflix twist to it, and i think it will be great for the fans. >> so, what does that mean in terms of international expansion? more games? more games for netflix? >> maybe all of that. i think our objective here is to try to globalize our game, and so we're playing five international games this year, including a new one in brazil that will be part of a super kickoff weekend with nbc. we'll kick off on thursday night in kansas city and come back on friday in sao paolo, brazil, so we think that's going to be great, and come back on sunday night with nbc. we believe that the game is going to be incredibly popular, globally. we just have to bring more games to them >> unfortunately, we're almost out of time, but i have to ask you, because it is so dominated

the conversation here in sun valley about politics. the nfl's letting the whole nation watch and just looking at the ratings, especially for big events like the super bowl. are you worried that a fopolarid election season could impact your viewership, or do you think that you're worried that some of your players might speak out about the election in a way that could impact the game? >> well, julia, it's always, you know, a difficult period in the country when you go through an election, and i think it's an important to hear voices. we support a program called nfl votes. we ask our players, our teams, our partners to stand up and say, to our fans, go vote. that's the democratic way. that's what we all support. so, for us, that's the important platform. but we understand our platform. we understand, frankly, that we unite people, and that's what we like to focus on. so, hopefully, we're that harbor where people can come together and get away from politics or anything else and enjoy football for a day. >> well, we have so many more questions for you, commissioner

goodell, but unfortunately, the bell is about to ring. we'll have to leave it there. thank you so much for joining us. guys, back to you at the nyse. >> julia, appreciate that. we'll chew on that and after a short break here, we get ready for the opening bell. jim, any immediate thoughts on 10%? >> it's high. for that -- to do that? i don't know. i did think that -- one thing i did think about roger's -- i was shocked that he just said, listen, cbs, great partner for a long time. we're going to stick with them. why? i mean, amazon is doing incredible product. why not just say, listen, amazon is possible. they want to -- we see guys. we see the hyperscalers. willing to pay far more. who cares? who cares? i mean, amazon product on thursday nights, every bit as good. i'm just surprised that there's any loyalty, and i say that because as a season ticketholder for the eagles, i see no loyalty whatsoever. none whatsoever. >> yeah, but they want to have a diversified platform.

they want streamers, but they also want over the air. they want to make sure as many people as possible have access to the games. they have a long-term relationship there. they have a contract in place. i think it's very unlikely that they would break that deal. >> 85% is free. our first game is in sao paolo. i'm not going. i don't know. i mean, like, i was looking. the subway to sao paolo is very expensive. >> what does that have to do with anything? >> they'll do anything for money, and i love the nfl, but the nfl is jump ball when it comes to money. it's jump ball. that's because the owners are, i think, overall, recognizing that the product is the one thing that people really want, and they can go to amazon. they can go to alphabet. they can go to any hyperscaler. >> alphabet does have a youtube contract. >> right, but they could -- >> amazon does have an nfl contract. >> they could take everything. apple could take everything. microsoft could take everything. >> there's no doubt that there could be significant competition for even more from those, but the nfl's approached it in that

way. maybe as the landscape changes even more dramatically and so few people get anything over the air, maybe you'll be right. these contracts are in place for many years to come. >> younger people do not care where they get it. they don't care, and i wonder, how did these companies get to be $3 trillion? and the answer is they get anything they want. anything they want. >> sounds like a case for the department of justice. >> well, look, i'm watching warner bros. discovery, i hope we hit that, because they need a level of concentration to this industry that's not possible. >> that's what zaslav was saying in sun valley, that he would like to see consolidation. we talked about it yesterday. we don't need to go into it again. >> amazon got a friday -- black friday game. they'll do anything. they'll do anything. and the gross margins -- i'm sorry. i'm just saying. >> they're getting the nba for streaming. of course, warner bros. discovery may very well compete with that and/or even litigate

because of the difference in sort of approach in the nba in terms of the streaming versus the hybrid that warner bros. discovery would offer. >> when you're offline, do these people not tell you who they're most concerned about and scared of? >> everybody's scared, of course, of the enormous power of apple, amazon, alphabet. >> cbs has a 50-year record. who cares? >> you can't compare the two. >> come on. look, i love the nfl and cbs. i'm just saying that it's just highest dollar, and we all know that. >> we're not like other leagues, julia, as roger just said. >> highest dollar. and let's stop fooling around. let's accept that they don't care about the season ticketholders that much at all. they'll do anything. any time. they'll run christmas day games. they don't care. >> we're going to miss the op tki..bell stalng >> we'll get cramer's "mad dash" and countdown to the opening bell. don't go anywhere.

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but we're going to squeeze in a "mad dash." we got a little time for that. costco is the name you want to talk. >> the legendary rich galanti has retired, the cfo. he has always said it's just a matter of time. it's a matter of when, when they put through the increase for club membership. david, it's gone from $60 to $65 september 1 for the regular and for the premium, it's going$120 to $130. they're going to use it mostly to be able to bring back even more great things for members. but david, this is the first time since 2017. why is this significant? they were not going to raise the price of this until they saw inflation under control. >> interesting. interesting. >> right? >> they probably have as good a read on it as anyone. >> okay, i think they're the b best. rich galanti, i'm proud to call him a friend. he does the best conference calls there are. >> you talk about him every single day. >> let me tell you what

ellison's up to. >> get back to the inflation point you were making. don't get waylaid. >> they're the guys who say to companies, if you're going to come into our store and not lower your price, we're going to put kirkland signature premium brand right against you at a much cheaper price and we are going to -- i won't say crush you, but they, other than coke and pepsi, they've never been -- they're the only ones they've never been able to challenge. they've always been able to come in or, as i know from a product that i once had, they kick you out. that's too expensive. they kick you out. so, they are the first line of defense on deflation and walmart's the second. and i think anyone who doesn't know costco, if you want to get the -- these lower prices that the cpi is now reflecting, they had these prices months ago. so, anyway, congratulations to costco for not gouging, for doing great things. fantastic. there you go.

there you go. >> it's been a long time coming. seven years. >> seven years, and i'm thrilled. by the way, gold is not selling as well as it was. >> interestingly, not a bigger entry than it was in 2017. same dollar price. let's get the opening bell. at the big board, it's a oliver wyman, a community of ceos addressing climate change and geopolitical issues. at the nasdaq, stardust power, manufacturer of lithium batteries. recent spac. jim, this quantumscape news is big. >> remember, yesterday i said, david, you say quantumscape -- >> quantumscape is up. >> volkswagen solidified its deal with a groundbreaking agreement. this has always been the issue. how much is volkswagen really committed to their battery? i have to tell you, this make me feel -- there's not a lot of

money in this particular release, but i've been waiting this. maybe they watched the show, because everybody watches the first 15 minutes. >> and the next 45 minutes. >> and then we lose a couple people. this is that adam jonas was always hoping could happen when he did his teaching, but batteries have been a -- any sort of solid state battery, anything that makes it so you can charge faster, that's the holy grail. >> meanwhile, the drawdown in cpi used car and truck, biggest since 2009. >> isn't that something? >> i don't know if you've seen wholesale inventories of autos, all-time high. >> go to carvana. go to carvana. one of the things that's so great about that is really that was all supply chain related. they couldn't get the large form factor semis to make the new cars, so that drove up the price of used cars. that is so great for america. 50% of the people living hand to mouth in this country.

they need a car to be able to go to work. that's fantastic. jay powell knows that because he actually is very sensitive to this. >> 5,636 s&p. we did not mention ed yardeni, long-time constructive bull, taking his year-end target to 5,800. >> he does use the word melt up. i guess it's two words. it's continuing melt up. i just they that -- what can i say? it's one of the greatest markets ever, and i think it should be celebrated, because a lot of it -- yardeni talked about that in the piece. a lot of it is a.i., but yesterday, if you look at what happened with intuit, i said intuit is legislate people go and moving people around because of a.i., and a lot of people were saying, no, they're being hurt by a.i. but a.i. is so front and center, actually happening right now, and my prediction is that the company that would benefit the most from a.i. is? >> nvidia. >> no, they're the -- i meant a customer. >> oh. >> jpmorgan. >> that was unexpected. >> what? >> why?

>> because jamie dimon's going to spend more time with nvidia than any ceo in the country. >> there's been a lot written the last few weeks about a structural rerating in your cost basis and banks, and what that means for return on capital. >> well, that's why i keep thinking, how can jpmorgan stay at 12 times earnings? how is that possible? how could the premier bank in the country, in the world, sell at 12 times earnings? how is that possible? >> what should it sell at? what's a more appropriate multiple? it's a bank. >> let's say president trump becomes president. >> former president trump. >> former president trump becomes president. i don't think that the banks are going to be hurt by that. i think regulation is hamstrung. you know, we don't talk enough about this. chevron, because it's too boring, i know, but the chevron decision by the supreme court. >> yeah, the chevron decision was incredibly helpful for many companies. >> we don't talk about it enough. >> marion lake to reuters today has set an ambitious goal of

attracting 15% of the country's consumer deposits. >> i'm telling you, they can get it. and i wonder whether the concentration laws will finally be suspended, because jpmorgan's over anyway because they're the first republic deal. but look, david, this is what i'm talking about. i don't want to be -- i'm not hyperbolic here. the s&p 500 is trading, let's say -- it's a little high. geez. okay. its pe is 24. >> 24 times. >> yes. >> that's pretty high, jim. >> do you think that jpmorgan should be half of that? honestly. >> i don't know what it's historically been. >> certainly been higher than half. >> yeah, it has. >> and yet they're automating. they're the ones that i think can do the most with a.i., because these places have a lot of overhead. yesterday, we had a great interview with the person who runs tech for bank of america. i mean, billions of inquiries being handled by chats. chat bots. no one seems to mind.

>> people are wondering about the hollowing out of some of these banks, continuing to lose personnel to alternative asset managers. there's a senior person from citi that left to go to blackstone. >> that's absolutely true, and that's where the multiples are. i agree with that. >> although, frankly, when it comes to the alternative asset managers, if you own apollo, you're happy. bl blac blackstone, not so much. >> let's consider david solomon, who has done such an amazing job at goldman. all-time high today. that stock sells at 18 times. should goldman sell at that much more of a premium than jpmorgan? >> what's the multiple to book these days? >> they're both high. no one understands that one. >> you are always -- there is -- has to be some accounting for the risks you're taking on. i mean, yes, fortress balance sheet at jpmorgan. nobody ever thinks they're going to make a big mistake. bet on the economy, i guess.

>> the eight companies that are the largest who could go into the trillion dollar club, jpmorgan is a 580 unmillion. you get it to 600, maybe 700, but in the end, it's broadcom that's going to be next and broadcom and tesla are the two that will be the next trillionaires. >> yeah. we'll be watching for fdic chair confirmation hearings today for romero. visa/mastercard, 10% dlau d drawdowns this year. >> i can't believe that. i think michael at mastercard is masterful. i'm surprised at that. i want to take the other side of that trade. >> delta had decent numbers on amex renumeration, also bastion's comments about the guidance for the quarter, not the year, the quarter, is lar largely, in his view, about capacity where it's growing at 8% summer domestic whereas demand is up 4%.

>> i think all of us got very complacent because we've been on planes that are completely full. obviously, we are not on the routes out of new york -- new york must not be the case because i thought that ed is -- i love ed bastian, but the interview with phil was a little challenging because i didn't know they had great supply. i thought everyone was short supply because of boeing. well, that turned out to be c chimerical. this was an amazing interview with phil. ed was saying, experiential is still here but we have too many seats. if it's still here, how can we have too many seats? >> three million people are flying every day and these guys are -- these guys are -- >> david, they're back to the way they used to be. >> to ed's point, when you're growing routes at 8%, this is what bastian told phil earlier this morning. >> the industry brought more capacity for this summer. capacity is up 8% for the summer, i'm talking particularly in the domestic marketplace.

real demand in the summer anyway, and i'm saying summer between june and august, is probably closer to 4% in terms of real, organic demand growth. so, you do have an oversupply. >> so, they -- they left the full-year unchanged, jim. >> i know, and that made me think maybe the stock's down too much, but we're just so in shock to hear too much supply. carl, it was one of those interviews, and one of those sets of numbers that you had the -- it's like the old days. the costs are way up. even though, by the way, the consumer did well on gasoline. the costs are way up. there's too many seats. i'm listening, and i'm saying, too many seats? like, i'm crammed back there, david, in row 28, and i got the other people sitting next to me and the crying baby, which is fine, because i'm very pro-baby, but david, there's no seats whatsoever. i'm in the back row sometimes, and it's like, hey, man. okay. i get it. >> first of all, a man of your stature and age should not be in the back. it's just hard. do yourself a favor, sit in the front.

and i am happy to hear you're pro-baby. that's good. >> i'm just making a case for babies. >> as you should. >> 1.7 per family in country. it should be 2.6. >> we're never getting that. wow. >> cbs programming. i'm not done with that. >> can we talk nvidia for a second? >> nvidia? that's my middle name. >> i know it is. since the start of '23, 97% of nvidia's return has been driven by greater earnings versus just 3% from valuation expansion. however, year to date, nvidia's next 12 month pe ratio has increased from 25 to 42, and that accounts for 56% of the 165% year to date or 171% year to date return. so, margin -- excuse me. multiple expansion is pretty significant here. >> so, the way you have to look at nvidia is that if you look at how much they beat each year, you will see that it turned out that the stock was very cheap. and that's what you're dealing with. >> the analysts are

underestimating the ultimate revenue and earnings? >> i can show you from 2013 on, david, they beat, except for the 2018 quarter where they got hurt by the people mining bitcoin. >> yep. >> and what you'll see is that, oh my, you thought it was selling at 30 times earnings. it turned out, in retrospect, it was selling at 15 times earnings. that's the story with nvidia's multiple. the great defender of nvidia has spoken. >> defending yet again. not worried -- so, not worried about what appears to be the multiple expansion because, ultimately, that's actually ephemeral because, in fact, the multiple is lower than it appears, given the earnings are going to be far higherthan analyst expect? >> david, you said it much better than i can. >> just making sure i understood. >> that's fantastic. by the way, carl, the price tag for nvidia's blackwell is about $35,000. that's much higher than it costs to make, but jensen huang, the

ceo, will tell you, listen, we've spent billions on this, so we're going to get our return and that's another reason people are surprise bid the price tag. >> given what cpi gave us today, russell is up almost 2%. is now the time to start buying iwm and everything else? >> i still like so many of these companies that are connected with datacenter. >> really? >> i find it -- >> what level of inflation or rates would get you interested in small caps? >> small caps are so hard, because they're in the scrum. they're just in the scrum. when you go and you look at the -- well, wd 40 was one of the rare ones. >> lower rates help. >> well, yeah, i know, but when you had -- you can go buy the index, but when you do the granular nature, you find, wow, that one's not doing that good. that one's okay. that's what i'm saying. i'd rather by micron, say, at $132. >> we got a cool inflation number and the s&p is down, or flat, let's call it, and the nasdaq is flat. >> tell me something new. did i really not think there was

a core inflation number after listening to jay powell for two days? he was so patient yesterday. >> he definitely kept his cool in some of those questions. >> he's so great. >> we have an upside preannouncement today, although the stock is not moving. >> i was surprised at that. the metals have not been that great. copp copper is up a little for datacenter. i think that when i come back to looking at the very simple building blocks of the economy, they're not doing well. i saw dow yesterday, $51, all the way back. all the way back. it was at $59 not that long ago. when you look at the premier steel company in the country, nucor was at $140. it's bounced to $155. i don't want to own it here. i do not want to own it. >> really? >> no, because i don't think they can make their numbers. steel. not great. cleveland-cliffs. i don't know. >> a deal to buy u.s. steel at 54 bucks a share.

>> i'm just saying that these are the weakness, and on -- i don't own the small cap. give me one that i'm not worried about, you know? >> okay. >> small cap. rpm, maybe. they do good. rpm is good. rpm speedway, you don't know them? >> no, i don't. i know reo speedwagon. >> wd-40 is up huge. niche. it's niche. almost everything that's sold in home depot is struggling. almost everything that's sold in costco is struggling. anything that goes to the enterprise, like enterprise software, struggling. the smaller guys are being hurt. the larger guys are winning. i don't know how else to say it. >> and you mean that in tech. i assume you mean that in finance. >> everything. do i want to buy comerica, which is like the value play or huntington bank shares?

no, i would rather buy wells fargo and jpmorgan. we are in an economy that despite the fact what ftc might want or justice, the winners keep coming back to the same stocks and the companies that supply them. >> sound like you're building a case for khan, wu, and kanter. >> i actually think these companies are excellent, and i don't mind them. i don't think this is standard oil where they had 100% of the market and they take -- >> no, but do you listen to yourself? at the beginning of the show, you were talking about the incredible power of them and how they can do anything ethey want and everybody's afraid of them. >> i don't know if i listened to the debate. >> my mother, my daughter. that's you. you don't know which side you're on. >> i'd rather buy big companies than small. that's okay. >> that's fine. >> i'd rather buy lennar and toll brothers. >> what if you were someone who was interested in starting a small company? >> good luck. >> yikes. >> guys, in the brief time we have here, i do want to come back to a story from three years ago that we followed pretty closely, archegos, because it is

worth noting that bill hwang, a fund that we were unfamiliar with, that had $36 billion, levered up to $160 billion worth of buying power, he was convicted. he was convicted of essentially fraud and other charges. it was a manhattan federal court. one of his associates also kwibkw convicted as well. it was 10 of 11 criminal count against mr. hwang. remember warner bros. discovery and viacom? >> remember, at $90, i said, what the hell is going on, david? >> unable to figure out exactly what was going on because so many wall street firm didn't know what was going on because so much of his buying was done through total return swaps with different firms that didn't have the -- there was so much opacity, they didn't know what other firms were doing. that's part of the fraud, of course. >> credit suisse. >> basically went out of the business. that was the last straw in many ways, although they had one more

to come. they had the -- they had the other subsequent scandal before credit suisse and then, of course, they went out with the banking crisis we had in march of 2023. >> why did this not get more talked about? >> i think because it was hard to understand. the current paramount, they benefitted. they sold $2 billion worth of stock in a secondary led by morgan stanley right near the top. that actually had the effect of toppling these things. i was hoping wek could just remind people and take a look back with long-term charts. warner bros. discovery was unable to do a secondary, in part because -- that's not helpful. in part because they were in talks with time warner about doing their huge deal. and so, there it is. look. it's that tiny little empire state thing, that shard. look at that. >> that would have been when shari should have sold. >> but where we end up is, years later, fraud charges, jury finds

guilty. and the losses were enormous, but not -- you know, it's funny, because this was larger than madoff in terms of fraud in some ways but not at the expense of investors since it was mostly his money. of course, he had been a tiger asia. he had run that for years. amazing, though, $36 billion. we didn't even know. we had never -- who'd ever heard of archegos before that? >> i'm not saying we dropped the ball, because it was hard to understand, but having applied the credit suisse -- >> also it went on from there. morgan stanley and goldman-sachs, still involved in litigation as a result of it. morgan stanley leading that secondary as i pointed out for paramount. right before the collapse. >> wow. i'm glad you brought that to us. so important. in the meantime, it is the small caps that are still leading. it's the travel stocks that are getting killed.

and the home builders are back because i think mortgage rates, carl, coming down. >> 4.19% on the ten-year. jim's right. big laggards are all the airlines and the ucruise lines and it is the best day for small caps on a relative basis so far. s&p is up three points. watch bonds as well. look forward to ppi, jim, where people are not as sanguine, given the different construction of that index. we'll be back in a moment.

microstrategy .

the delta impact having its voice heard around travel stocks today. take a look at at some of the biggest laggards on the s&p as they guide lower on fiscal q3, but they keep the full-year guide unchanged. a big discussion about industry demand versus capatyn e

ern the u.s. we'll get in a mi-- we'll get sp trading with jim in a minute. s&p up about 3. tim, you are . using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

dave's company just scored the comcast business 5-year price lock guarantee. high five! high five... -i'm on a call. it's 5 years of reliable, gig speed internet... five years of advanced security... five years of a great rate that won't change. yep, dave's feeling it. yes. but it's only for a limited time. five years? -five years. introducing the comcast business 5-year price lock guarantee. powering 5 years of savings. powering possibilities. we were going to do stop trading but you have thoughts on top states for business. >> look, i happen to love it, and it's such a good job that it

was virginia and i started rethinking about a time i sat next to legendary dave matthews, and he told me he started a vin-yard in virginia, and was telling me look, the things that you don't know about virginia. i felt i heard things i didn't know about virginia and i think the network does a great thing. a lot of people thought it was going to be tennessee, florida. we play the guessing game and enjoy it. i point out this. >> the worst state, hawaii. >> oh, yeah. >> the cost of doing business and climate risk. >> yeah. that's all true. >> i would have thought we were up there in new york. >> only if a few president is elected. >> he's going to make life difficult for new york. i think that's true. we had the most important company in the world wanted to be headquartered here, we said get away. amazon. >> that was in queens. who wants to be in queens. >> everybody.

>> we have micron. >> upstate we have micron. >> look, sometimes you just want to say, great job. that's all i'm saying. great job and dave matthew, one of the nicest people in the world. >> i didn't know you and d.m.v. were close. >> why not. >> what's up tonight? tonight i have the stock that's down right now, probably about the most or in the top five. i have conagra. yields 5%. they have to get to the bottom of what's going on at the supermarket because the super market is the battleground for the presidency. don't forget there is an economic issue not just kind of a -- i don't want to use the word. but there's an economic issues in the battleground to the supermarket and who's trying to hold the line. costco, i know it's down. it's important to see who is raising prices and whose prices are coming down. >> important day. see you tonight. "mad money" at 6:00 p.m. eastern. >> i'll be in brazil for sao paulo. >> you should go. >> i'll go to brazil instead of

philadelphia. use david's jet. >> that's where the white space is, jim. brainard with the reaction to the inflation data as the small caps up almost 2.25%.

. good thursday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live as always from post nine of the new york stock exchange. take a look at stocks kind of tentative rally here. we lost it and then it came back. now the s&p is a little changed in the wake of the cpi numbers. we've got real estate as the best performing sector. why? because interest rates are falling and real estate loves those lower yields. utilities at the top of the market, materials, consumer discretionary, all rallying today. it's tech that's under performing. consumer staples, information

technology and communication services are the worst performing sectors in the market right now. the nasdaq that's why it's lower. it's still up a nice 1.5% week to date so far and still have a number of winners including tesla, which is higher today. take a look at treasuries. in reaction to the cpi number which came in soft both on headline and core, bonds, bid, yields lower, 10-year below 4.2, 4.177%. 2-year yield 4.5%. 30 minutes into the trading session here are three big movers we're watching. pfizer is moving higher after the company announced plans to proceed with a once daily version of its weight loss pill following what it says is encouraging data in early stage trials. shares of delta tumbling, dragging other airlines lower following its weaker numbers and guidance. more on that this hour. pepsi missing wall street estimates for second quarter organic revenue following weaker

demand. more color from the ceo i spoke to coming up later this hour. we have to talk about this inflation number it was very good for investors, for the federal reserve. you know who is most happy about it probably? the japanese. if you look at what happened intraday to the dollar/yen it was falling like a stone. why? because with -- crazy move. i mean some people are wondering if they intervened because it's a huge move. >> big move for a currency. >> it's a wild move. this was a trade that had gone all the way up for a really long time. now that there's more definitive proof that the fed is going to cut rates which came in this morning's cpi number the dollar sold off, seeing it against the pound too. sharp move there. what did we learn? we got a negative number as we've been talking about on the monthly number, negative 0.1% inflation overall headline in the month of june from may. that was the lowest since may 2020. onset of the pandemic.

haven't seen a number like that. overall it's 3% on the year. the fed wants to get to 2%, but 3% is definitely a step forward and the lowest it's been in years. >> core cpi 2.23% over the past two months. >> it strips out food and energy which is more volatile. you're looking at the three month blended number. i mean. >> that's me. i'm looking at the three month blended. >> good to look at the average, not blended. average. but the core numbers were better too. they were 0.1% on the core was more benign than what was expected and more benign than what we had been seeing in the early part of this year. look at the trend there. that is pretty good. and if you look inside and what's part of that, stripped it out into some of the key culprits we've been seeing as far as inflationary pressures recently about where the inflation is coming from and where the relief is coming from now, used cars, for instance, we knew that was going to be a drag. that turned out to be a drag.

the new cars also definitely a drag. food at home, 0.1% increase on the month. that's good. grocery inflation is coming down. people will likely be happy with that. food away from home is elevated so at the restaurants that's been an issue. energy subtracts 2% on the month, so that was a big factor with oil prices down and then i mentioned the cars, which was a part of it. you know, you can get granular in the cpi data which i love to do. >> yes. >> and in some of the food spots real relief. deflationary monthly numbers in rice, in cereal, for instance. not so much in meats. there was a big jump in bacon this month. hot dogs too. very strong right now. but overall, the numbers have looked better and you can tell where people are spending and what part of the economy is hot, david. admissions to sporting events, 15% jump from last year. because we're paying more. we know. that's where people want to do. >> yeah. >> although a better time to fly.

airfares fell 5% in june. >> we've seen delta's stock price reflective of over capacity and the need for a bit of discounting. all right. what's mr. powell waiting for, sara? >> he's got more evidence and potentially more confidence on this. he's going to get two more inflation reads and two more jobs reports before the september meeting. so it would be nice, i think he would think, for him to see continued progress or in line numbers like this as we get to those meetings. that's the market's view is that this -- he's got it. he can start hinting at cutting. maybe he will start hintinged at cutting in the next meeting. overall the two days of testimony, he didn't break new ground but made it clear they are thinking about when the time is to cut. they are watching things like the cooling off in the labor market and the disinflationary trend to make sure they have the confidence to do so. today was another big move in that direction. you know, they always say we don't want to make too much of

one data release. a few in a row now that have been better. i also -- this one gets no attention, and i'm going point it out, john williams, i asked him a few weeks ago what his favorite indicator was that people don't talk about, multiinflation. this is from the new york fed. only they do this. it's kind of a dynamic indicator that looks at the persistence and breadth of inflation. and it's a little old because this is the latest number is released in july, but it's for may, and it comes in between pce and cpi. all i want to show you it's come down a lot. it's 2.4% in may from 2.5% so for those key voting members like williams, for instance, they look to confirm that okay, inflation is really coming down for real, this disinflationary number here's another indicator they can look at. >> all right. >> who else is going to show multi vary core inflation. >> i'm glad our viewers got to see that.

>> first reaction to the cpi from the white house. lael brainard, national economic council director, joins us now exclusively. director brainard, good morning. welcome. >> good morning. >> you must have been thrilled to see a negative in front of the monthly cpi number. what was your reaction? >> today's report was very positive. it showed that we are convincingly on a path to achieving more normal levels of inflation, and it was good in a variety of areas, as you said. inflation actually fell slightly this month. it was flat last month. core inflation is the lowest in three years on a 12-month basis as well as on a three-month basis. housing showed some softening. we've been waiting to see that. and we saw price decreases now over the past year, in important

categories like cars and appliances, airfares, hotel stays, and even grocery prices appear to be turning the corner, so those are all positive developments, although for the president he's going to want to see more progress on those categories that matter most for consumers like groceries and housing. >> and yet, i mean even with this very good news and right direction that you want to see, you still have consumers that are stretched. i spoke to the ceo of pepsi a few minutes ago, prices for things like frito snacks and chips and they're not alone are up 35% from where they were in 2019. so it's good that those prices are still not climbing at the rate that we've seen in the last few years, but cumulatively, it's very painful and consumers are pushing back. >> absolutely. and the president is pushing back too. grocery prices have got to come down, and we are seeing over the

last five months they're flat. we're seeing large grocery chains actually lowering prices on thousands of goods and answering the president's call responding to consumers, but some of those consumer brand companies really need to bring their prices down. they basically have seen reductions in their input costs, their margins are up. they need to bring prices down and pass those along to american consumers. >> they say that their input costs have risen more than the price they've passed along to consumers and their operating margins are not different than where they were in 2019. so it's not -- it's not necessarily the whole -- the shrinkflation blame that you guys are ascribing to it. >> we have looked really carefully at this. global commodity prices have actually come down a great deal in the foods area and supply chains have been largely fixed.

margins look like they are up. they are elevated relative to historical norms. there's room for the consumer brands to pass along those savings to consumers and we believe that they will in coming months. we're glad to see the large grocery chains already passing along savings to consumers. it's incredibly important to working families' weekly budgets. >> are you worried about the cooling off in the labor market? we heard a lot from chair powell last week when he was in crintrel and talked more about it on capitol hill. unemployment rate up to 4.1% from 3.4. what are you seeing as far as the level of stress in the labor market and what's to come? >> well, we certainly are seeing inflation moving down now in a very convincing way, continuing the trend that we saw late last year through the second quarter. and the labor market has seen a lot of cooling.

the labor market still is strong, so 206,000 jobs created last month, 15.7 million jobs since the president took office, and we're seeing americans participating in the labor force at record levels, particularly for working age population. the economy does seem to be in good balance with inflation coming down, so i think the overall picture is the kind of picture that is good for americans leading to real income increases. that means their wages are up by more than prices are up. >> you mentioned the president a number of times, director brainard. how often do you meet with him and do you engage with him on economic policy? >>, you know, just yesterday r he was asking me questions about exactly that issue, making sure that americans are seeing increases in real purchasing

power andasking some good questions about how much wages have increased relative to prices, continuing to focus on the strength in the labor market, the strength in the economy overall. >> so is it like once a week? is it a regular thing? just when you -- >> absolutely. we talk about economic policy pretty frequently. just prior to that, i had some good engagement over beef prices where we have not seen the kind of progress we've seen elsewhere and really pushing on us, pushing on secretary villsack to better understand some of the problems that we inherited from the previous administration hadn't invested enough in beef, cattle supply chain capabilities. that's beginning to turn around, but the president really probing on questions there, too. >> i clearly ask because there

are questions right now about his fitness and sort of level of engagement. has it been a distraction inside the west wing, director brainard. >> no. the president's very engaged and he really cares about these issues that matter for american workers and families in terms of their household budgets, their breathing room at the end of the month. the president is exceptionally engaged on those issues. >> got it. thank you very much for joining us on the back of the cpi numbers. >> thank you. >> and some of the color. lael brainard director of the national economic council. >> as we head to break, a road map for the hour. shares of delta are down rather sharply because of a revenue miss at the company. we'll talk about what is ahead for that airline. >> pepsi shares are down too. earnings beat estimates but demand in the u.s. weakening. fresh color on the results coming sdup. >> shares of pfizer getting a

pop. talked about it with jim. we'll break it down when "squawk on the street" continues after this break. the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai.

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people coming in here. take a look at the first quarter for delta. they did hit the expectation in terms of earnings per share at 2.36, revenue a smidge under expectations, total revenue of 15.41 billion. it's the unit revenue or revenue per available seat mile. this is the key metric that people focus on within the industry and in the second quarter it was down 2.6% for delta. the problem is, their guidance was flat to negative 2%. it was worse than expected and the reason why, the industry has an oversupply of seats, particularly at the lower end, that is pressuring fares. here's ed bastian. >> the industry's already correcting for the oversupply so that by the end of august, that 8% is already back down to 4%, more in line and in balance with the consumer demand and as a result of that, we expect in september, our domestic unit revenues will be back inflecting

positive once again. >> take a look at shares of delta in the last year and you see there's another issue here that perhaps is putting a little pressure on shares not only of delta but the other airline stocks. it's the third quarter guidance. delta coming in with guidance of 1.70 to $2 a share. well, the street going into today was expecting 2.50 in the third quarter and revenue expected to be lower than previous expectations that are out there on the street. overall, what you're seeing, guys, is an industry that is grappling with something we talked about for months, that there's an oversupply of seats, particularly on the coach, lower end of the market, not the premium seats, the lower end of the market and because of that, it's brought fares down. fares right now are much lower than they were a year ago but that's hurting revenue for companies like delta. >> phil, i was looking at some numbers today the number of people, i think it's bofa report who are traveling abroad is like 30% higher than 2019. that feeds right into delta's

network, right? >> absolutely. now international was up 4% year over year for delta. premium in terms of premium seats in their airplanes, up 10% year over year. so the issues for delta is not are people willing to pay up, they are, whether for premium or to fly internationally, the issue is, delta, like everybody, domestically just sees too many seats out there in the system right now and as you heard ed bastian mention that will start to correct within the industry once you get past labor day. >> phil, thank you. phil lebeau. delta under a lot of pressure there taking the rest of the airlines with it. pepsi shares under pressure. the snack giant reporting mixed results hurt by weakening demand for drinks and snacks in the u.s. and pepsi narrowed its revenue outlook from the year, they went from organic sales of at least 4% this year to approximately 4% this year. i did speak with pepsi's ceo ramon laguarta about the latest

results. he says as it relates to what they're seeing is the weakness is from fritond at consumer is stretched. it's a macro story. although inflation is starting to show down, throughout income levels he says the consumer is making choices. they're thoughtful about how they spend the money. an example of this, guys, that we talked about is that they don't want to pay more than $5 for chips. and whereas the industry would say, okay, pay $20 for three bags of chips, that's no longer acceptable for consumers. they want to pay $10 for a few bags of chips or under $5 for one bag of chips. they have to readjust basically the value proposition and on this pricing strategy which we talked a lot about, he says, there has to be a reinvestment in the resetting of the value of the food business. he said it's going to be very granular and surgical and they've. testing it out and so far, according to laguarta, they said it's great fourth of july weekend and they're starting to

see volumes improving. if they get that right on the value adjustments, then he thinks and he's confident the consumer volumes will improve. wall street says okay, what about margins? the company reaffirmed their full-year guidance and on the margin front he said that productivity is very strong and that's been a story for pepsi for a few years now really. and that he thinks he said there's enough oxygen there to make those adjustments while still growing margin, and he says that the margin will grow this year. so it's really a macro affordability story, david and carl, and lwhen it comes to pepsi, it's unusual, thank you to robert on the data desk, this is the second revenue miss for pepsi in six years. so they haven't done that, but it does make you wonder about what the rest of the industry is pepsi has so much scale and -- >> well off the lows, but i looked at a three and five-year it's not particularly impressive in terms of the performance of

that stock price. i don't know what it looks like versus its peers and margin expansion doesn't seem to be carrying the day. >> if you look from 2019, okay, like as a baseline here for some of these consumer companies, this is a business that's grown revenues by $30 billion over the last few years and operating margins unchanged because input prices have gone up sharply. >> look at that. they trade almost in tandem. >> consumer staples are not an exciting place to be and they haven't been coming out of the pandemic. >> i'm glad you cover them. >> it excites you, though. >> everybody needs them. and everyone buys them. >> does everybody need potato chips? >> i think america is a snacking kind of country, so yes, i do think we are in a place where everyone needs potato chips. then again, usually the stocks do well when we're in recession and it's a good sign we're not that because everyone does need bottles of water and their

little potato chips at convenience stores. >> huge marketing budgets that's for sure. we're going to see what happens if we end up in an environment. when we come back a look at the market reaction to cpi as we to break, watch tesla going for 12 straight. russell zeroing in on a 3% gain this morning. stay with us.

welcome back to "squawk on the street." stocks enjoying some mixed gains today. dow up 42, s&p down just a touch. joining us this morning edward joins investor strategist. mona, what an interesting day when you have this reversal on small caps relative to the s&p. you can point to why it may be happening. do you think it lasts? >> yeah. it's a great call out. look, we were happy with what we saw in the cpi report this morning. not only headline inflation moving lower we got that notable move or trend lower in the shelter and rent component of cpi which is what we've been waiting for. so core cpi looks poised to continue to trend lower over time as well. so a good reading there.

what we're also seeing aside from the inflation readings moving lower, is the broader economy starting to show signs of softening as well. jerome powell and the fed have referenced this as well. a cooling labor market, service, pmi dipped into contraction, gdp at 2%. cooling not collapsing. what we think broadly is this still supports an environment where the earnings growers will probably do best, so probably still the mega cap technology growth part of the market continues to show some leadership here while we may get days like this where we get a reversal in small caps and broadening in participation, we think that won't be really sustainable until we get a fed that is really starting to cut rates and that sparks, perhaps, a re-acceleration in the consumer and growth as well. so. >> right. >> a mix. >> so to that end, we still got to chop our way through ppi. there are some who are saying don't be too rose colored glasses on this one because pce

does look at housing a little differently. is there a reason to think maybe this is not as good as it looks. >> yeah. it's a fair point. pce is not as heavily weighted on shelter and rent and we won't get that benefit as much. it's more heavily weighted on ppi components which we'll get tomorrow. broadly we're also seeing the same trend in pc inflation which is the fed's preferred measure. we're sub-3%, closer to 2.6%, on its way we think, bumpy path lower to 2%. we think ppi trends will be important tomorrow but the broader message of a cooling economy will generally lead to softer consumption which leads to lower prices. we saw a little bit of that in the wage gains figure in the jobs report this morning which ticked below 4%, 3.9%. softening wage, softening consumption. i think the fed wants to see that. we're seeing it in the markets as well not only are treasury yields plummeting but we're seeing the probability of that september rate hike up to about 80% or so. so we think two rate hikes look

more and more likely for the fed this year. >> and steepening of the yield curve which i meant to mention, more clarity there could be a good thing, mona. i just wanted to pick up on something you said. you said for the rally, the broader rally, the market, you know, broadening out like small caps, which are really moving today, to work you need to actually see those fed cuts because some are wondering if it's buy the rumor sell the fact when it comes to the fed actually making the move. >> yeah. i think we need to get closer to a fed rate cutting environment and clearly we're getting there. of course we've gotten two back-to-back months of better inflation, as i mentioned the economy seems to be softening a bit. in addition to fed rate cuts happening, keep in mind things like small cap stocks and more cyclical parts of the market they're leveraged to economic growth first and foremost and if the economy is softening it's difficult for them to, you know, kind of mount a sustainable period of out performance or rally until we get the reasons that they like to see fed cuts

is because lower rates lower inflation means higher consumption and higher earnings growth and threat the environment we need to get to or start to see before we can start to see a meaningful rebound in small caps and so yes, we're getting closer to rate cuts, but we're also getting an economy that's softening so until we get the rebound and re-acceleration that's when those parts of the market start to show real leadership. we have some time to go we think still for that environment to play out. >> that's good color. mona, as always appreciate it. good to see you. thanks so much. >> thanks. >> time for a news update. silvana henao has that for us. good morning, sylvania. >> good morning to you all. china lashed out at nato accusing it of smearing the country after the alliance called beijing a decisive enabler of russia's war in ukraine. it's the first time that nato has accused china of involvement in the conflict and the alliance called on beijing to cease all material and political support to russia's war effort.

china responded saying it rejects the accusation. the treasury department and irs announced a big milestone today of collecting more than $1 billion in tax debt from millionaires over the past year. in september, the tax agency announced a push to expand scrutiny of high income earners. it came on the back of an infusion of funding from the inflation reduction act. and the white house announced $244 million today to expand and update the federal government's registered apprenticeship program. it comes as president biden has pledged to boost opportunities for blue collar workers. the latest labor department figures show there were 641,000 registered apprenticeships in the u.s. at the beginning of the year. a 6% increase from 2023. sara. >> okay. sylvania, thank you still to come, pfizer moving forward with its once daily version of its weight loss pill following early setbacks giving

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about an hour into trading and a split market today. s&p down about 18, although some real strength in the small caps as the russell is up almost 3%. watching chips as well. stocks under pressure trading around all-time highs aiming for sixth positive session in seven. broadcom, nvidia, qualcomm in the red. one name to watch is on semi. morgan stanley cuts the stock to underweight citing top line headwind concerns that cap the opportunity for multiple expansion the stock bouncing back from earlier lows down around 8% for the year to date.

>> let's turn to pfizer, we're keeping an eye on those shares up a bit. they had been a little bit higher this morning. the company said it will move forward with a -- developing a weight loss pill. angelica peebles is back at headquarters. i mean it's not like this isn't already a somewhat crowded field. why are they doing this? >> yeah. well, they're planning to start more studies of an experimental weight loss pill later this year after encouraging results from early tests. now these next studies will focus on finding the right dose of the drug. pfizer telling me that that work should be done in the first quarter of next year. this is a pill that's taken once day. pfizer was originally testing a version of the drug danuglipron that needed to be taken twice a day. they scrapped that last year after so many people dropped out of the trial because of side effects like nausea. this reformulated version kiz to keeping pfizer in the obesity race. like you said it's crowded but they have other experimental drugs in the pipeline and this is the one that's furthest

along. we should note that this work is still pretty early. pfizer needs to study the pill in much larger and longer clinical trials. evercore pointing out that pfizer at this point is not commanding to running a phase three trial and analysts are skeptical about this update without seeing the data that pfizer is saying is so encouraging. and there's a lot of interest in weight loss pills since not everyone wants to take a shot like novo nordisk week ago or eli lilly's zepbound. so we'll listen for more updates when pfizer reports earnings this month. guys? >> angelica, when it comes to pill form, who conceivably is, if there is a leader in terms of developing a pill, is it the leaders already in novo and lilly? >> lilly is the leader here and we're expecting phase three data from them next year. they have a pill that's the furthest along, and pfizer, a little bit ago at the goldman sachs health care conference, was saying they see lilly as the leader, them as next and then

astrazeneca. those are separated by a few years, so it is a crowded market, and there is a lead there for lilly, but pfizer still thinks they have a role here. >> definitely trying to play some catch-up today. thank you. angelica peebles. still to come the growth of evs and the ai boom. a look at how some power companies are dealing with this massive surge in demand. coming up on "money movers" this morning former nec director and goldman director gary cohn. we will break down today's cpi number and look forward to the big bank earnings moow ttorrhat begins at 11:00 a.m. eastern time. stay with us.

shares of costco giving up gains. the company raising its membership fee for the first time since 2017. annual memberships are going up by $5 in the u.s. and in canada. higher tiered plans will

increase by $10. the stock is down 3% though this has been such a winner in this value seeking environment. it's up 30% this year and almost more than 60% in the last 12 months frms yeah. inflation fighter. costco. >> let's turn to energy. the u.s. is facing huge demand for power to fuel the ai boom. forecasts show the demand now through 2030 for data centers and evs alone, that's equal to the entire electricity demand from the country of turkey. tech giants such as alphabet, meta, microsoft, amazon, while they're urgently requesting more and more power various utility executives warning failure to meet this demand will jeopardize economic growth. our next guest one of those executives runs dominion energy serving gas companies in virginia and north and south carolina. dominion energy president and ceo and richmond board member,

good to have you. start with virginia. i think recent system are electricity demand is projected to grow 5.5% a year for the foreseeable future. that would mean doubling the electricity load in that state in 13 years. are you up to that task? >> we're absolutely up to that task, david. thanks for having me on. it's a great opportunity for the commonwealth of vas. -- virginia. it was exciting to see cnbc ranked virginia the number one state for business. that's the way we feel. we're going to do our part to make sure we meet this increased demand. we've got plan to invest $35 billion in our virginia utility and new generation, in transmission and in distribution to make sure that we keep the power flowing and the lights on. a great opportunity for us and for the commonwealth going forward. >> yeah. you mentioned, of course, best day for business. i mean, northern virginia the

largest data center market in the world and that is going to require an enormous amount of additional power. we talk about it here every day, generative ai. what is that going to meet for rate payers? when they're pulling so much from the grid these hyper scalers, for example, is that fair to everybody else who's conceivably going to having to pay more so they can generate enough power for these enormous data centers? >> they're paying a lot, our data center customers. we've connected, david, over the course of the last five years, more than 90s data centers and expect to connect 15 this year. we've been doing this for a while and work well with our data center customers and they pay for the infrastructure that we build for them and every two years, we go in front of our regulators at the virginia state corporation commission, the public utility commission in virginia, and they evaluate all of our classes of customers, whether they're residential customers, commercial customers

or a larger customers like data centers. our residential customers in virginia despite the growth we've seen over the growth in the last decade, are paying 15% than the national average for electric it. we can add centers without overburdening other customer classes and we expect to be able to do so going forward. >> you're trying to increase the renewables as a percentage overall of your power generation. i mean, how do you go about doing this in terms of the mix needed to, again, meet this unprecedented demand? >> it's a really important question, and you had governor youngkin on this morning. i had a chance to see him, talking about his all-american, all of the the above energy plan, and what he's saying makes perfect sense. we're fortunate to have a governor focused on reliable, affordability and clean energy which is the mission of our company.

so we built a substantial amount of highly efficient natural gas generation in the last decade. that has allowed us to add in quite a few renewables. we're building a substantial amount of solar and building the largest offshore wind farm in the united states. we're going to need to add more natural gas as well, and we have plans to do that. there's no silver bullet and i think that's a mistake some people make in addressing energy challenges, is that there's one approach that's going to solve all of the challenges. that's just not true. it requires some of everything. it requires renewables, it requires continuing to operate our existing nuclear fleet. they are the work horses of our fleet today and they are carbon free. it requires adding some more natural gas, and it requires investments in transmission. the big wires that are moving electricity around our area. in yeah. >> we can do all of those things. it just requires us to do a

little bit of everything. >> right. and expend a lot of capital. on transmission to get granular here, i've heard there may be some supply chain questions, at least, or issues with transformers. does that kind of a thing play in here as to your ability to continue to expand? >> for large transmission transformers, there has been for some time, the need to plan well in advance. it takes a while to build these. the supply chain does not crank them out as quickly as smaller transformers. we've been doing that for a while. there's going to be a made to increase that capacity going forward. that's topic that we're highly focused on. we've been investing at dominion energy virginia about a billion dollars a more or year in electric transmission over the course of the last six, seven years. we're ramping that up to $2.5 billion a year in electric

transmission company wide. we're going to need to make sure the supply chain is there and we're working with suppliers to do that. >> bob, just more in the present. i'm curious what you're seeing in terms of electricity costs and prices. we had an inflation report this morning and especially given how hot it is across the country, it feels like it's getting worse, those electricity bills. what do they look like? >> bills are reflective of demand, and in our case, demand has been going up. we set a record for the highest peak demand on friday of last week. that record was short lived. we broke it on monday of this week. eight of our top ten days in our company's history in terms of electricity demand have occurred in the last year. so when people use more electricity they pay more. what we need to do is make sure we keep their rate, the amount they pay per unit of electricity as low as possible and we have fared well on that metric as i mentioned before in virginia,

15% below the national average. the same true at our south carolina utility where we are well below the national average. we need to be efficient with our shareholders and customers' money and as natural gas prices come down, that also helps because we're spending a lot on fuel, if fuel prices are lower, that translates into lower costs for our customers. >> finally to come back to the bigger question here, i sense you are confident that the country can meet this demand, this growing demand. some of the data centers can consume as much power as a small city, but you're confident that, in fact, we can meet this growing demand that increases literally every day? >> this is what we do. we're going to have to be smart about it. people canterbury their head in the sand here. it's going to require substantial investments in generation, in transmission, in distribution. our industry is up to the task. i know our company is up to the

task. we've been doing this for a long time, particularly working with data center customers for a long time and we're ready for it and looking forward to it and excited about it. >> all right. well appreciate the update because it's, obviously, a subject that we cover very closely here as well. thank you, bob. >> appreciate the opportunity to be on. >> coming up after the break, o top state for business from cnbc. our scott cohen is live. good morning. >> reporter: not the top state for weather, carl, but we'll take it. and it ties in really well with what you're talking about because one of the things we did this year is we took a close look at artificial intelligence. we'll tell you the top states for a.i. coming up next.

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this year's metrics include data on artificial intelligence. scott cohn joins us from virginia to go behind the numbers for this annual cnbc

survey that it really gets a great deal of attention, as deserved. scott? >> well, thank you, david. we appreciate it. yeah, we wanted -- we try and keep this relevant every year, not just for the basic issues of competitiveness, but whatever industries are emerging. obviously, as you guys talk about every day, a.i. is huge. so, we've incorporated some metrics on a.i. into our technology and innovation categories and our business friendliness categories. and from that, we can then glean these top states for artificial intelligence. we use some of our own data and we also got some help from researchers at stanford university. for all the subjects they study at stanford, only a handful warrant their own institutes, like foreign policy, neuroscience, the economy. and since 2019, artificial intelligence. that's how big a deal they say this is. >> this technology is a general purpose technology that's going

to affect everyone and everywhere. >> reporter: in addition to helping shape the future of a.i., they're measuring the present. where's the innovation occurring? where are the jobs? who's regulating it at a time when the industry is asking for direction? >> right now we kind of are in a wild west in this space. >> reporter: using data from stanford's 2024 a.i. index report and our own data on technology, workforce and computing power, these states are leading the way. texas with america's top workforce overall is a mecca for a.i. jobs. 36,000 posted just last year. virginia isn't far behind. plus enormous data capacity. maryland is helping to shape artificial intelligence law. washington, the home of microsoft, is a center of innovation with 12 a.i. models developed by washington companies just last year. the leader in a.i. is california. >> california, by far, is the leader of the pack. and not by just a bit, but significantly in comparison.

>> reporter: home to the biggest players, by far the most jobs, and massive computing power. california is also a leader in regulation, which right now at this stage of artificial intelligence lifestyle -- life cycle, that is, is considered a good thing. stanford university told me to be careful with that because companies like to be regulated right now until they don't. and that's a slippery slope, especially in california. you can read more about all of this and about all of our top states, subrankings, the study, where your state ranked at topstates.cnbc.com. guys? >> you know, i always think about the politics here. i wonder how much that plays a role. i know governor yo-- i wonder h his performance plays into all

this? >> reporter: i guess we'll see. you're right, virginia has won it six times in the 17 studies we we've put out, it's won it under democratic administrations and republican administrations. so, we'll see. you know, i think that the data is what it is. they also have divided government so there's some democratic credit to be had as well. >> scott, thank you. look forward to future reports as well. you can check it out on cnbc.com. our live markecora ntuerit after this. car, this isn't the way home. that's right james, it isn't. car, where are we going? we're here. (♪♪) surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf.

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(aaron) so whatever's next... we're cooking with fire. (vo) switch to the partner businesses rely on. good thursday morning. welcome to "money movers." i'm sara eisen with carl quintanilla live from post 9 of the new york stock exchange. coming up, ibm vice chair and former national economic director, gary cohn weighing in on cpi and chair powell's takeaway. marc metrick on their deal to buy amazon. ron temple on whether the momentum ithma