sunshine right next to me today. "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 melissa lee along with joe kernen. becky and andrew are off today. nice to be back on this friday. >> nice to have you. >> let's start off with the markets. tech stocks down. nasdaq in yesterday's session closed 2% lower. s&p 500 fell .9%. breaking that seven-day win streak. the dow closing slightly higher here. among the big tech decliners, tesla down 8.5%. nvidia down as well. the drop in tech stocks is the

russell 2000. yesterday was the second day, just the second day since 1979 when the russell 2000 rose more than 3% and the s&p 500 declined. what does that tell us about yesterday's session? >> i immediately was -- >> equal weighted. >> i was thinking about the nasdaq. that's what i was looking at today just to get some p persp perspective. i'm not saying it's 1999. no. a.i. is very powerful, but in october, how long ago? nine months? 12.5. now 18.2. if you go back a little bit further. >> in terms of the run. >> that's almost 50% in nine months. if you go back to late 2022, you're basically talking about

10,500. you are talking about 80% since christmas. right before christmas in 2022. when you look at the chart, i mean, it looks like, you know, a tree growing to the sky. a.i. is very powerful. nvidia. i understand all that. building it out makes nvidia very profitable. there better be real profits from a.i. for everybody else to justify. >> justify the spend. >> justify the spend and where the nasdaq is. i don't know. it's not 1999. don't you think maybe we're ahead of ourselves? >> maybe it's time for the other groups to participate which is what we saw in yesterday's session. the russell 2000. that is what ada advanced in te of the s&p 500. no surprise in home builders and

reits. >> you get to say all this stuff because you summarized everything that happened yesterday at 5:00 p.m. that's invaluable. i should watch. >> you don't watch? >> i don't all the time. there's only so much business news after watching it every hour throughout the day. >> you watch every hour throughout the day and you stop at 5:00? >> that might have been exaggeration. i do. i do think it helps. you have all those guys and talking about bio-tech and everything that made moves yesterday. really a quarter point cut is so great that all this is warranted? that's also it, too. >> when the odds go to 90% of a cut in september. >> maybe it is the end of the tightening cycle and maybe

inflation's under control and maybe we don't need to keep tapping the brakes on the economy. those are all good things. >> futures at this hour are higher across the board. s&p 500 is higher by eight points. nasdaq looking to gain 15. treasury yields, meantime, after yesterday's decline. 4.229%. higher on the ten-year. >> do you have a fast money planner? you don't have a fast money planner? >> i guess we don't plan. >> you don't plan squat. >> we don't plan squat. we lent it to you. we allowed you to use it. >> we have a squawk planner. >> thank goodness. i don't know what i would be doing today if not for the squawk planner. >> ppi. we get the june read at 8:30

a.m. eastern. we'll have a panel and talk about it. >> i'm writing that down. >> we had a panel yesterday. >> this is big. >> it actually got into, you know, it's just -- you cannot get politics out of -- you can take politics out -- it still came to that because one individual is talking about the reason that real wages haven't risen is because of all of the low-income jobs from all of the illegal immigrants that have come in. i said, that's part of the problem, isn't it? she said no. these are people seeking that are here seeking asylum and it's all fine. 10 million in a couple of years is okay? yes. even a business discussion. luckily, it does, because november's coming. we will talk about last night. >> we will talk about trump's policies and now inflationary they are perceived to be.

>> you did yesterday. ten-year after the debate, it looked like the ten-year went up 20 basis points in yelleield. earnings season kicks off. wells fargo and citigroup. and at the nato summit and we have the take ways and reaction from democrats. we have megan cassella with more. >> good morning, mess li meliss. biden declared over and over he was staying in the race and the best candidate to beat donald trump and he was physically and mentally up to the job. >> i slow down. i can't get the job done. that's a sign that i shouldn't be doing it. there's no indication of that yet. none.

>> biden spoke at length about foreign policy and the economy. many of his allies saw that as a strength. they heard from one who told me this isn't a man who has dementia. there are moments critics are seizing on as evidence he does need to step aside. >> i wouldn't have picked vice president trump to be vice president if i didn't think she was qualified to be vice president. number one. the fact is that -- >> now, all of this still leaves democrats in limbo. three congress members, jim himes and scott peters and eric sorensen calling him to resign. guys. >> there are reports, too, megan, that the uaw is meeting

to evaluate their endorsement of biden? >> yeah. reuters is reporting that they are concerned they are not seeing a path forward and debating what to do next. they had endorsed him. that is something that is crucial because president biden has long prided himself on how close he is with unions and labor leaders. there's been a lot of talk this week about with the chattering class, the pundits and elites and donors and billionaires coming against him makes him dig in his heels more. i'm not running for those people. if we start to see more defects among union leaders, that could dig into his ethos more and something he might start to listen to. >> megan, thanks. megan cassella. >> you watch. i thought, okay, there are times when you are thinking about your

next sentence and you put a word in. that only happened twice. it was not the debate biden. he was cogent and lucid. democrats -- enemy of my enemy. democrats who are now in vulnerable positions themselves were disappointed he didn't screw up more which is a sick situation. >> they want the strengthen the ticket. >> that was the same joe biden. it was dark. he whispered. inappropriate smiles. all the things we have seen for years. that's the same joe biden that they gave all the delegates to willingly as the head of the democratic party. that's the same guy. if they don't like him now, after last night, it's because they're looking at the polls. just like the uaw is looking at the polls. suddenly, george clooney. >> you can't fault them for looking at the polls. they want to beat donald trump.

>> they want to stay in power. >> they want to stay in power. they want a strong down ballot. >> there's no loyalty to the guy that got him to this point. >> that's polipolitics, joe. >> it is. he's got all the cards. he can stay. he has the delegates. you know what he can say. i'm not going to say it. you know what he can say. tell them what to do. i think he's still going to. just like they the democrats said, you know, i didn't like everything. it didn't change my mind. no one can say there's a smoking gun from last night. oh, he wasn't. he was the same guy that we have seen. i disagree with inflation because corporations are reedy. the faux outrage of guns. the same stuff from him again and again.

the same joe biden. george clooney, if you don't look h like him now, this is you. >> it's all about what an individual or group. >> how does it relate to me? okay. >> >> we do have a programming note. president biden will sit with lester holt on cnbc. up next, are we seeing the start of the rotation out of the mag seven tech stocks? we'll talk technicals after this break and he has been called the whisperer. nick timiraos llwi join us on the soft inflation data. "squawk box" will be right back.

[ put a little love in your heart by david ruffin begins to play ] my bad, my bad. good race. - you too. you were tough out there. thank you. i'm getting you next time though.

oh i got you, i got you. down goes jewett. jewett and amos are down. what a lovely sign of sportsmanship. you okay? yeah. ♪ ♪ tesla shares tumbling yesterday. it's been up how much? it's down a little bit. this came after bloom better reported the ev maker is delaying the unveiling by the robotaxi by two months. tesla is pushing back the launch from august 8th to october. this set tesla back. >> the 11-session winning streak

broken violently yesterday. we did dig into the downgrade by ubs. let's dig into the big tech moves this year. the next guest says the mega tech stocks are rising from the average stocks creating a durability issue. for technical analysis, let's bring in ted stone from strategis. great to have you here. the durability issue and the march has gone on. we saw glimmers of hope yesterday of broadening. >> for the rest of the market. mag seven is 30 days above the moving average. it can create a summer speed bump with the election cycle starting to kickout. you can get corrections during an election year. i would not be surprised if you saw profit taking. when you start to get the big

waves which are influential. i like the large cap names pause, but good internal strength. >> we had 400 of the s&p 500 stocks actually trade higher today which was a real positive sign. when you take a look at the leadership with the a.i. trade, it has been semiconductors. i think what was really notable in the month of june, we saw really interesting moves, particularly among nvidia and broadcom. reversals on june 20th. that week. they haven't really regained or back to highs at all. should we be more concerned given the speed bumps exhibited by some of the components? >> i think the expectations are so high. we have earnings coming up and you see outside reversals on high volume.

2x leverage on nvidia is very uncommon. usually it's your spys or iwm. you are setting yourself up for a correction. if i'm a manager, i have ten stocks that are 40% of the s&p and 60% of the growth. i want to look away. i want to look at healthcare and financials. as big tech has paused, those names are breaking out. there is opportunity away from mega-cap growth. >> going to the sectors that showed glimmers of life yesterday. reits had a good day yesterday. home builders on the pull back that the fed will start cutting decisively in september. are those moves sustainable? >> the reits are interesting to me and a lot in the small-cap space. the russell 2000 has gone 720

trading days. only following the tech bubble and financial crisis. small caps to work is really low. tech has worked for good reason, but i like the idea of that broadening out and looking away to the stuff that has not work really in two years. s&p 500 has been sideways since january of 2022. the sentiment environment is really supportive. it is nowhere near the euphoria we saw years ago. >> we talked about tesla before we came to you. it was up 40% in that run-up that its had. is there any concern about the velocity of this move? >> i won't expect anything less from the tesla stock. my issue with tesla, it is the

sloppiness of the mag seven. meta, google, they are extend. tesla is the hardest call because there is no trend there. you had volatile moves. 40% down. 40% up. i don't know if i have a great call there. i expect the sentiment will get worse. it was pretty bad a few weeks ago. you still have 13 or 14 sell ratings. the most of any large-cap stock out there. low bar, but the trend is difficult to pay on tesla. >> also in the category of making run-ups with banks. >> i like how the big banks have acted. jpmorgan chase is still strong. citi and bank of america have pushed to new highs. they had a nice week. that goes along with small caps. again, i don't see mean flows to etfs. the bar is really low for the stocks to work. goldman and morgan stanley is breaking out. this is more evidence there is a

want to broadening out the influential stocks. there is a way to diversify away. >> forced to choose? equal weight? >> i think equal weight in the back half of the year. >> todd, thank you. todd sohn. twitter or x. the latest on the u.s. tech company in the crosshairs of the eu at this point. regulators charging the social media company with breaching online content rules. regulators said x's verified accounts with blue check marks do not kcorresponded to industr practice and make the authenticity of the accounts they're interacting with. x has also failed to comply with a searchable repository of

advertisements. x blocking research from public data. the company could face a fine of up to 6% of global revenue if it is found guilty of the digital services act. they don't need an economy anymore, i don't think. they can just -- >> collect global revenues. >> like they sponge off us for all their defense need and don't really pony up. now they don't need an economy. they get 6% of all our companies. coming up, chili's should have stuck to the baby back ribs. they are sued by the beatie boys. details next. big banks set to report. jpmorgan chase and wells fargo set to report.

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the beastie boys are suing the parent company of chili's. the company used its song would you tell us a license. the lawsuit says they do not license their songs for product ads. the member included a provision in his will prohibiting such uses. the group is seeking $150,000 in damages and an order from brinker from using their work. the beastie boys won a verdict

against monster beverage in 2014 for using its music without permission. a u.s. appeals court ruled yesterday that college athletes in division i revenue generating sports like football and basketball rejects the athletes are not workers, but playing as as student agthathletes. t it establishes rights to overtime pay and restrictions on child labor. the term student athlete is a marketing invention of the ncaa and it would not use a term with such a dubious history to define the economic reality of athletes' relationships to their schools. the court also said that, in their words, revered tradition

of amateurism was not a valid reason to prevent athletes or bar athletes seeking worker protections. the appeals court denied the ncaa bid to dismiss the athletes' case and sent it back to the trial court to proceed. the ncaa has paved the way for athletes to be paid as a result of the separate settlement that had been seeking to hold the line that players are not workers. we will talk more about this with sports business professor patrick rishe in the next hour. we may touch on something we care about, too. the olympics. >> yeah. coming up right around the corner. are you packing your beret? >> i'm going to buy one when i get there. >> you will leave the last one from the trip to paris at home? >> you know what color i'm thinking. >> for the beret? what color? red. >> raspberry.

you have to work with me. after all this time. >> all this time? i'm here once every five weeks. >> for three hours and we talked about what a long three hours it is. >> it is a long three hours. two and a half to go. coming up, new signs the auto market is cooling off. we have new numbers from jpmorgan and wells and citi. as we head to break, let's get a look at yesterday's winners and lo losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. okay, team! oh, thank you so much i couldn't have done it without you.

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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. now it's the dow's turn to shine

as in previous sessions, we have seen the nasdaq and s&p outpacing the dow. nasdaq was down. it was 300 points. it was only 2%. it is still headed higher. a lot happening today though. the june cpi data showed cooling prices, but the cost of car car insurance remains red rhot. we have contessa brewer with more. >> it is the glass half empty, half full. car owners are getting sticker shock. auto insurance up 19.5% up over last year and up 1% from last year. if the car owners are investors and car insurance companies, glass half full. progressive shares up year to date more than 32%. allstate up 15%.

boa securities predicts the rate hikes are still catching up with several years of lagging as insurers are paying out in claims than premiums. we had a cat 5 hurricane, the earliest ever in the season. progressive in may got slammed with $722 million of net can task stro fee losses from piper sandler. it is four times a normal summer month in catastrophe loss. that is mostly thunderstorms, not hurricane damage. travelers announces next week. we will see if high cat losses reflect there as well. melissa. >> unlike other partsof cpi, this component might actually remain elevated? >> it is remaining elevated and will remain elevated for the months to come.

it takes time for the insure certifies to go state by state and apply for the rate hikes and get them. in california, they went years without getting the rate hikes they had applied for and are just now starting to catch up to that. so, you are likely to see car insurance stay high for months to come. >> contessa, thanks. contessa brewer. coming up, alex thompson from axios will join us on what he is hearing from democrats in washington. besides the crying and mashing of teeth. there are other things he is hearing about president biden's news conference. that's next. reminder, get the best of qua squawk pod and listen anytime. we'll be right back. switch to shopify so you can build it better, scale it faster and sell more.

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i'm determined on running, but i think it's important that i allay fears.

i let them see me out there. for the longest time, it was biden's not prepared to sit with us unscripted. biden's not prepared. anyway. what i'm doing is and i've been doing and we've done over 20 major events from wisconsin to north carolina -- anyway, to demonstrate that i'm going out in areas where we think we can win and persuade people to move our way. >> you know by now, popcorn sales soaring. first the debate. must see tv. then citstephanopoulos. last night. waiting for 6:30. >> and monday is the interview with lester holt. >> everybody is watching it. a news conference. it's really unbelievable. joining us now is alex thompson from axios.

alex, it is almost like appointment tv, like a sporting event. i'm going to put this out to you and you can disagree with me. i wish we could bet on it with draftkings. bet on biden. biden, last night, for the win. for the "w." disloyal, feet of clay democrats in areas for the "l" last night. what did you see? >> i think you saw a president that is very dug in and has no intention of getting out of this race. he and his inner team just have a disconnect with a lot of these democrats. the thing you have to understand about joe biden, he articulated it both last night and the interview with george stephanopoulos is he believes he is the most electable democrat against donald trump. if you believe that, why would you take yourself out of the race because house democrats are complaining and worried about their own races. >> alex, what indicated to you

last night that he was any less cogent or lucid than pelnancy pelosi or steny hoyer? i think democrats have a tough case. i disagree with almost everything he says and policy and everything else, but we have the same with kamala harris. this is the same guy that i saw a year ago. you know, he starts whispering and he has that weird smile that comes at inappropriate times. it's the same guy. he is lucid. do you think he had dementia last night and unable to put thoughts together about foreign policy and policy in general? >> i'm not going to say the "d" word on national tv. >> you didn't. >> he did have a command of the issues. foreign policy has been, you know, one of this hobby horses and one of the issues he feels

most passionate about going back to his time on the senate foreign relations committee. you can tell when they ask him about why elect you for a second term beyond beating donald trump, foreign policy is one of his focuses. of course, some of the substance of his remarks was undermined by gaffes and earlier in the day introducing president zelenskyy as president putin and referring to vice president kamala harris as vice president donald trump. agreed. if you wanted or if you are a democrat that desperately wants joe biden to drop out of the race, last night was not helpful. >> i agree. i still -- earlier, someone said politics is a dirty business. i get that. a lot of these people were full-on in the biden camp until some of the poll numbers after the debate and what it meant for down ballot races. you can just look at the people that are most outspoken and the

earliest ones. look at where they are located and the prospects for re-election are and where they are coming down this. >> it is fascinating where the second round of polling coming later this week. the july 4th holiday made it difficult to get data after that initial wave of polls. you will see this second round of polling over later this week and into early next week. it will be really fascinating if the dam has more cracks in it. >> at what point is it concerning that the money is not going to the campaign? we heard about donor revolts and giving to downballot races as p opposed to the president. at what point is it concerning, alex? >> it already is concerning. there are deep concerns the money is going to dry up and they will be out raised this month and in august. there is a hope that if biden

still sticks this out and is nominated in chicago on august 22nd, the day he is supposed to be nominated that donors will come back and rebound just to beat trump and get them over the line. donors, there's an emotional aspect to this, too. donors were told by jeffery katzenberg that biden is fine. that the debate biden did not exist. that frustration and anger is leading a lot of them, if not completely outright quit, but quit. they are not giving as much as otherwise. >> right. when he said, well, if god comes down and tells me i got to leave the race, then maybe i will. i'm starting to believe him. alex, when push comes to shove and the rubber meets the road, is it up to him? >> yes, there are very few mechanisms to actually push him

out of the race. he won the nomination. he has the delegates. he is the presumptive nominee. this is a personal decision. it is unclear who can actually sway him. this idea that barack obama will come in. their relationship is very complicated. i was talking to somebody just yesterday about that dynamic. they said obama already pushed him out of one presidential race back in 2015. that's how the biden world feels. they basically said he already did it once. you don't get to do it again. >> i find myself in a unique position. i would be furious if i knew that obama and george clooney were having conversations on the phone about me and whether i should stay in the race and go head -- i'm behind the op-ed, i think my head would explode. i don't know what i would do. he wouldn't be having lunch with former president obama any time soon in the white house. some of the other individuals, if he is reelected, if he runs

again and is reelected, hell hath no furry. i think they might not be welcome. they might have bigger problems than the re-election. >> joe biden has tried to argue he does not hold grudges. that's just not true. >> i don't either. alex, i have none with you or melissa. believe me. thanks, alex. coming up, a new report about the timeline for the hess and chevron acquisition. oms we are awaiting the number fr jpmorgan and wells fargo. we will bring you the numbers as soon as they cross. what is cirkul? cirkul is the fuel you need to take

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wells fargo and jpmorgan are out. l leslie picker is here with the latest. >> i see the beat on the top and bottom line for >> i see a beat on the top and bottom line here for wells. but the stock is declining pretty significantly, down about 5.6%. and i believe it is due to this net interest income number. that came in at a miss. 11.9 billion, down 9% year over year, below expectations for the street. there is also some net nii guidance as well where they reiterated the guidance. the full year guidance they had previously given was for net interest income to be down 7% to 9% year over year and now the firm says they expect that to be closer to the 8% to 9%. so more of a steeper side, steeper declines of that prior range that was given.

now, how they got to the beat on the bottom line was from noninterest income. this is 8.8 billion, up 19% in a beat on expectations. so that overcompensated for the miss on nii here. that is driven by investment banking fees. those were up 70% to 265 million, though last year, you'll see this a lot is my guess, across the banking system, because last year was such a low bar in terms of investment banking and also advisory fees, brokerage commissions, those were up about 11% and net gains from trading. in terms of the provision for credit losses, the firm says that will be $1.24 billion, so a slight beat relative to expectations there. and then there is also some net interest expense guidance, that was updated to $54 billion from prior guidance of $52.6 billion for the year, due to higher revenue related compensation expenses, what the markets have

done so well. as well as operating losses and other customer remediation-related expenses and fdic special assessment we saw in q1. wells also saying they expect to increase the common stock dividend by 14% to 40 cents per share. so wide ranging release here. shares have come back a little bit, but still down about 3.76% right now. >> thanks. jpmorgan initially traded up. now it is down a little bit. the number looks like it has special items in it. $6.12. the range, $6.12 is what they started. the range was $3.96 to $6.43. so probably -- we'll see whether that's, 50.2 billion was above expectations on revenue.

49.87. what i always look at, and the book value, $111 now, basically, and rarely do you trade it almost two times book. it is the best of the banks and commands the highest valuation. some of the other things, did you see, melissa, they're talking about chargeoffs. seems ls like a big bank, but $ billion worth of net chargeoffs. and credit costs of $3.1 billion, but i think most of these numbers are probably best in class, we always know -- we don't usually have to check for jpmorgan. it is a head and shoulders above most of the other major banks that we talk about. assets under management up 15%. leslie, you did a -- you had estimates for a bunch of these, like, noninterest, net interest income, all those different

things and they're all out here. you're going to hang out and look at -- >> i'm hanging. >> and do all those as well. it seemed like it was moving higher. wells fargo's numbers came out, it seemed like jpmorgan got affected too. although i don't know whether there is actual credit issues or not. maybe -- >> we're down a percent on jpm right now. let's bring in stephanie link, from hightower and a cnbc contributor. they just crossed, but what do you make of jpm and what do you make of wells? >> so, both these stocks are up 21, 22% year to date. so, they always trade crummy on earnings, melissa. you know that. and i think it is an opportunity because i think you are seeing a cut of the trough in net interest income and net interest margins. as the yield curve has been steepening. so i think wells fargo is being totally conservative in terms of their guidance for net interest income. appropriately so.

but given where the yield curve is, i think those numbers will wind up beating. in terms of jp, my gosh, they crushed the revenue numbers at 50.2 billion. expectations were for 42 billion. in my mind, you're going to get an opportunity to be buying these stocks, and i think you want to own the financials, because i do think, again, going forward, that interest income, net interest margins will go higher, given the yield curve. i think the bond books are actually better because, of course, they get mark to market every day and bond prices have actually gone higher. in addition, regulatory situation seems to be cooling off a bit. everybody passed with flying colors on the stress tests. and then going forward, just the base business. investment banking fees are going to grow double digits this year, capital markets are going to continue to climb higher and the pipelines are also very robust. so, i think you want to pick whichever one you like. i think jp is a little expensive at 1.9 times book. i happen to own' and like bankf

america. >> i know we're going through the numbers. but it does look like a beat on revenues for jpm. we have it by a smaller margin. >> 47, 51 was the range. and the consensus was 49.873. >> still a beat, but just a smaller beat. i guess that's -- you mentioned the runs the banks have gone on into earnings, and i think what we, i don't know, it seems like what we want to have confirmation of in this quarter is there is an inflection in net interest income. that's going to -- you mentioned the improvement into the back half. this was some sort of a, you know, a trough that we will have seen in the second quarter. >> i mean, i think so. i wasn't expecting much given what the -- looking at the yield curve, right? i wasn't expecting much on net interest income or margin. but i do think that going forward in the back half of the year, and into next year, i think you will see tailwinds, again, given the yield curve.

so i think you just -- companies are -- they're all pretty conservative, they typically are. but you have to see what's going on in terms of, you know, the yield curve and i think that you're going to continue to see revisions higher as you work through the -- through the year. these stocks are not expensive. other than jpmorgan, that one is expensive, right? it always is. and we know why. but the stocks are not really commanding really a huge multiple. so i think you're going to get looks. you buy on weakness. and, again, i like bank of america and morgan stanley. >> stephanie t, thanks. >> we're getting headlines from the press release. jamie dimon saying interest rates may stay higher than the market expects. everything he says, often very conservative. >> he's been saying that. coming up, much more on the big bank reports.

we're going to hear from citigroup around 8:00 a.m., totally different animal, and major restructuring. and also in the 8:00 hour, former activision blizzard ceo bobby kotick will join us live from sun valley on his next venture. "squawk box" coming right back.

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it is 7:00 a.m. now, just past, on the east coast. you're watching "squawk box" on cnbc. i'm joe kernen with melissa lee. and among other things, there is some top stories. more inflation data is ahead. we'll get the ppi, june producer prices at 8:30 a.m. eastern. you saw the cpi yesterday, pretty friendly numbers for the

fed and anyone worrying about the cost of living. there you can see the futures this morning. dow is now up, even though jpmorgan turned around, haven't looked at it, but initially we did -- >> flat, down half a percent. >> that's not really hurting that much as far as the dow. at&t disclosing a new hack affected data from around 109 million u.s. customer accounts. the company says the compromised data includes files containing at&t records of calls and texts of nearly all of at&t's cellular accounts. and the land line customers, both of them, interacted with cellular accounts between may of 2022 and october of 2022. the telecom company said stolen records didn't include the content of messages, names or credit card numbers, and at&t said that doj determined that a delay of public disclosure was

warranted and it now understands that at least one person has been apprehended, related to the hack incident. >> the federal trade commission plans to delay its decision on whether to block chevron's takeover of hess until an arbitration case with exxon is settled. that's according to a bloomberg report that says completion of the embattled deal could be pushed back from the third quarter to at least the fourth quarter if it isn't blocked altogether. exxon claimed right of first refusal over the asset in guyana. president biden saying he's the best candidate to beat donald trump in november. megan cosellia joins us from washington with more. hello again, megan. >> good morning, guys. it was a rorschach test of a press conference, a president who spoke in depth in policy issues for an hour, but his critics honed in on a couple of verbal flubs.

in the hours immediately following that press conference, we saw another three democrats call out -- come out and call for biden to resign, bringing the total number of lawmakers doing so up to 17. biden was adamant throughout that he would not withdraw. he said repeatedly that he was the best person to beat trump and that he was physically and mentally up for the job. >> every single day i'm surrounded by good docs. if they think there is a problem, i promise you, even if they don't think it is a problem, if they think i have a neurological exam again, i'll do it. no one is suggesting that to me now. >> the key to watch today, joe, will be whether more lawmakers come out and call for him to exit now that the nato summit is over. biden made clear he won't step aside easily so the party has to decide now whether to keep pushing on him or to refocus and try to reunite on beating trump. >> yeah. it is episodic. nothing was decided last night,

like you said it was a rorschach test. neither side got, i think, a knockout they were -- it is weird, because neither side, you're talking about one side, the democrats, and they're totally split. have you decided what we call it, hot mess, dumpster fire, an s-show. >> disarray is getting thrown around a lot. >> s-show or s-storm. >> snowstorm. >> snowstorm, yeah. >> it is interesting, joe, yeah, exactly. you saw what you wanted to see. i don't think this goes too far towards settling anything. unless you're somebody who feels like the longer this goes on the more damaging it is. like you said, because it is something maybe of a dumpster fire and critics can key in on that. i talked to a couple of donors last night who were sort of -- they stayed where they were, if you liked it, you already liked him, you still liked it. some of them were a little bit

discouraged because they felt like the vice president trump flub was going to take the headline. others told me they thought it was mi andemeandering and halti some stuck where they are. >> i watched the whole thing. it was unfortunate. the vice president trump and saw zelenskyy's face. immediately corrected himself on the zelenskyy thing. the other one, i don't know, if you're on tv, there are times when you put someone's name in and you mean -- talk about steve balmer and i said steve bannon. senior -- you'll see some day. megan, you got plenty of time before you have any senior moments. >> hey. >> but it does -- it might have -- here's what i was going to say. happening now. when i read about some of the campaign staff or some of the president's staff coming to grips with what is happening, it always says these are sort of outside, far away from the

center of the biden universe, the people that are expressing some of the doubt that that core of, whether it is dr. jill biden or his son or whomever represents the core, they haven't wavered one iota on whether he should stay and doesn't appear he has either. so i don't know if 17 democrats and you don't even -- some of the names i don't even recognize, i don't know if that's going to be enough. >> i agree with you. it certainly isn't as of now. you're right, that inner core has not wavered at all. that's really where joe biden has always pulled his strength. and right now we also haven't seen democratic leadership in congress come out, really strongly, saying he needs to step aside either. i think those leaders are going to be key to watch. i think it will be really hard to get him to step aside at this point. that's one of the clearest things to me from last night. he said he wouldn't step aside if he was presented with polling showing that harris had a better likelihood of beating donald trump. he said he would only do it if

he thought he personally had no chance of beating donald trump and he didn't see that in the polls just yet. we did see reporting yesterday, nbc news was reporting that some within his own campaign were starting to say that they didn't see a path forward. that was a new development because it shows that, you know, starting to get closer to that inner circle. they have doubts. but that core group, you're right, they're not wavering. >> yeah, they were like pluto and then there is mars and venus, there is the inner -- and then way out -- i don't know who they're talking about that they got for that. very good. at this point, he's -- he seems like he's dug in, and that's probably not great news for democrats at this point, if the eventual outcome is a different candidate. i don't know what i was going to say. came back to it. >> was that for effect? >> abc/ipsos, tied. tell me that didn't -- after the

debate. trump versus biden. i guarantee you that emboldened his people. and probably the president himself that this is still a winnable contest for him. he probably thinks, after that poll. thanks, megan. >> absolutely. that really reinforces that confidence and, you know, 51 people watched that debate and we keep hearing you can't unsee that debate, we don't know how many millions yet watched last night, but i think there is a lot of concern among democrats about how it would look to just bypass the candidate that was chosen in the primary, they don't want that to backfire. the polls stay strong, millions of people watched him look strong last night, how can they really bypass him, that's an argument we're hearing. >> they want to protect democracy, except with the way they pick their candidates, right? yeah, so much for the voting. >> coming up, is a rate cut in september back on the table? we'll talk about yesterday's cooler than expected cpi reporting, get you ready for today's producer price data. "the wall street journal's" nick

timiraos joins us after the break. and signs of consumer spending is slowing. we look at the latest retail monitor data. "squawk box" will be right back.

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our next guest's latest piece outlines how milder inflation numbers could open the door to a possible september rate cut. joining us now, nick timiraos, "wall street journal" chief economics correspondent. nick, it is good to see you. good morning. >> good morning, joe. >> how many -- what is your count? how many friendly numbers do we have now on inflation after the tough ones at the beginning of the year? >> well, obviously the last two, you give them an a or a plus. but i think the big reveal this week, joe, isn't so much that we have to get straight as anymore, it is that a couple of bs are

actually okay, and that's because of what's happening in the labor market. and that's what makes this different from some of the optimism or expectations around a rate cut in the first quarter of the year, when it was really just being based on inflation being better, because now you do have the unemployment rate creeping up, obviously, still at a low level of 4.1%. but, better inflation with the unemployment rate going up, i think is a different scenario from better inflation with the unemployment rate going down or staying, you know, below 3.5% or something like that. that's what's changed. chair powell in his testimony pivoted this week when you're focusing on both of your mandates again. to me, that's a real pivot as opposed to the kind of accidental or confusing fake pivot that we got at the end of last year. and so, that was really the story this week, that chair powell is focused again on, you

know, achieving the soft landing, sees a bigger runway to do it and is talking about a cooling in the labor market. he said that again and again. and so, you know that doesn't require tea leaf reading or whispering, he's saying it out loud. >> still maintains we're in restrictive territory. do you think that the action in the nasdaq causes anyone to really wonder how restrictive we are or whether financial conditions are actually, i don't know, able to shake off wherever we are on fed funds right now? things are still pretty frothy in a lot of areas. not so much in -- like you said, it is bifurcated, not so much in other areas, but we're still rocking and rolling with the nasdaq. >> yeah. you know, i think a lot of commentators probably put too much attention on the equity component of financial conditions. so they'll say, well, the stock

market went up, financial conditions eased. i don't think that's the way the fed are look at it. look at the housing market. you see mortgage rates, yesterday they came down below 7%. for most of this year and second half of last year we were looking at a mortgage rate above 7%. so you have to wonder how is that actually stimulating any increase demand for housing, for construction. it is not. and so i think, you know these moves in the equity market matter over time, of course because price setters and wage setters will make hiring and investment decisions based on them, but i don't think that's really looked at quite as much by the fed as the way sometimes commentators hold it out. >> nick, you know, last week, the renewed emphasis on the unemployment picture struck me as well. do you think the market is underpricing this risk that, you know, he said there are two

risks now. it is inflation as well as the jobs market. do you think the market is underpricing in that, you know, the 90 plus percent pricing in of a rate cut in september and no rate cut before hand, if we have a tick higher, significant tick higher, that a rate cut could actually be sooner or could be -- or the path could be steeper or decline more quickly in terms of rates because of the employment picture. >> it is certainly possible. it is hard to see how you change the pricing for the july meeting just given there is not going to be that much data, not another payroll report. you get a couple of unemployment claims readings. i think the big development for july will be on monday when we hear from chair powell. he's speaking in washington and so that's really his last chance to set expectations around the july meeting. i think, you know, the big debate is most likely to be at the july meeting over what are you going to do in september,

how much do you set the table for a cut in september. they have been pricing their flexibility so maybe they don't want to lock themselves in with changes to the fomc statement that really put, you know, september kind of really well pointing to september. but at the same time, you're starting to hear from some of the doves on the committee, austan goolsbee last night, for example, saying this is what we wanted to see, inflation is on the path 2%. if you think policy is restrictive, if you're seeing evidence of that, if you think that the elevated inflation you have right now reflects lagged catch-up pricing on shelter and things like that, and if you think the labor market is no longer a source of inflation heat, then, you know it does raise the question what are you waiting for, and so i think that's kind of where the trick is going to be in july, is that if you're saying, you know, everything is okay to cut, why aren't you doing it now, what are you waiting to see?

i think hthat's the big questio right now. >> i was going to take credit for nicky -- when i hit it up, your twitter account on google, your twitter account does come up, if you hit up nicky leaks and then something about nicki minaj. is it you or -- what is really happening? who came up with it? can i say i came up with that? how long have you heard that? >> you can take credit for it. i have no idea who came up with that. >> really good. really good. you don't want to jail, i don't think. he's out now, i think. julian assange. all right, nick, he doesn't -- he's not very frivolous most of the time. very serious. have you seen that? >> look at what he covers. >> exactly. exactly. nick timiraos, thank you. we like having you on and getting -- i think the nick whisperer. >> yes. >> all right. still to come, reaction to the president's press conference and the state of the democratic party. jay clayton, former s.e.c.

chair, will be our guest. and later the latest cpi data showing overall inflation is cooling for things like auto insurance and certain food items, still running hot. national retail federation president ceo matt shay will join us to talk about the state of the consumer. we'll be right back. >> announcer: time now for today's laafc trivia question. what year did the new york stock exchange officially begin trading? the answer when "squawk box" returns. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. it really helped close that gap. (whisper) go, go, go! (group) yay! go aflac! go duck! get help with expenses health insurance doesn't cover. find an agent. get a quote at aflac.com. wish we had aflac on our team. you can! while i am a paid actor,

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>> announcer: now the answer to today's aflac trivia question. what year did the new york stock exchange officially begin trading? the answer, 1792. >> stocks moving on earnings released a short time ago. wells fargo down by 5.7%, beating expectations. eps at 133 a share. the street was looking for 129. revenue better than expected at 26.69. rising interest expenses showed little signs of letting up. it was below $12 billion for first time since 2022. jpmorgan reporting an adjusted 440 a share. both better than expected. that stock is down by 1.2%. the next big bank to report will

be citi around 8:00 a.m. eastern time. the company expected to earn 139 a share on revenues of just over $20 billion. coming up, the president facing the press for the first time since that debate with former president trump, and pushing back on calls to drop out of the race. former s.e.c. chair jay clayton will join us with his thoughts. "squawk box" will be right back.

the president facing the press for the first time since his debate with former president trump. biden pushing back on calls to drop out of the race. >> i think i'm the most qualified person to run for president. i beat him once. and i will beat him again. >> joining us now for his reaction is former s.e.c. chair jay clayton. he's a cnbc contributor. so, since the debate, we saw a lot of teleprompter events. we know that he considered that. we did see with stephanopoulos, that was all off the cuff, theoretically. and you may or may not think about his performance there. but last night was ex-

extemporaneous. it was a far cry from the debate. you can snicker about vice president trump and putin and zelenskyy actually looked like he thought that was kind of funny, but in general, if you think that he's not there mentally at all, that's not what you saw last night. >> no, but, joe, we looked at this, and i think it is a -- in the context of how would a corporation handle this. it is a communications issue. and the issue is still on the table. is he capable of being president of the united states? last -- what -- people who are reacting very positively last night, i believe they're doing something that happens way too often, which is recency bias, confirmation bias. >> you think he can get through the board of directors of a corporation? >> do i think donald trump -- i think donald trump can respond

to -- >> i'm asking you whether a corporate board woo uld keep hi as a ceo based on -- false equivalency? >> the context is the same. the context is the tame. are are you able to go out and communicate and respond and je express the issues that you instill confidence in your constituency? are you able to do that? that's a big job of the president of the united states. he did fine last night. but if you look at the data points over the last two weeks, it is not fine. >> when democrats, in all the different states were voting during the primaries, do you think joe biden that we saw last night was different than the joe biden from six months ago or eight months ago or nine months? the democrats fully knew this was the guy. he looked the same to me. to me they make my -- i get furious listening to the stuff he said. but it was the same guy,

corporations are causing inflation, you know, guns, it was all the same stuff. >> i think you're making my point. >> what is -- >> my point -- >> they should have thought about this before. nothing has change d. nothing has changed except now you're under the spotlight of scrutiny. every time he appears, the test is much more rigorous than it was six months ago. these are real tests. did he pass last night? yeah. did he fail in the debate? did he fail -- i thought he failed with george stephanopoulos. he didn't come away -- >> didn't democrats fail by rubber stamping him as the nominee? is it his fault or their fault? >> i think the real question is -- >> media's fault. >> were they rigorous enough, did they think about this? clearly they did not. who was the winner last night? i think the republican party was the winner last night. because this issue is still front and center. and like in any crisis, it is

going to be front and center as we go go forward. >> you're fully aware of his ability to stay if he wants. but you, i think at the same time, would give it 90% he's not the nominee? is that where you are? >> i'm at a very high percentage. >> that he's not. how does that happen? god is not coming down, unless you go tell him. >> i would say we're on a trend reality and reality is going to catch up. >> i just don't know what that looks like, considering his inner circle supposedly has no -- they're just as strident as he is about his plans to stay. >> well, look at how many members of congress. >> 17 out of -- how many are there? they're not even doctor jerry nadler? >> some of them, some of them i know well. >> you do? >> and are people of substance and rigor. >> are they in districts where they might lose? >> i don't think so. >> that's not why they're doing it. >> i don't think jim himes is

worried about losing. jim himes is a -- jim himes is a deeply experienced guy, ranking member on the intelligence committee, he -- he has -- there is no one i know who is more committed to the democratic party and to the betterment of the middle class. >> the debate hadn't happened, do you think he would have a problem with four more years -- he was fully on board with biden. why is he not now? the poll numbers went down. >> let me give -- let me give some of the folks in the democratic party who we're painting with a broad brush, don't know how many of them had direct access on a substantive basis to the president in a time of what i would say is deep engagement. >>le well, i had no access to and we knew what was happening. >> but they're relying on their surrogates. right? >> we knew. all you got to do is watch -- >> at this point, though, does this change the outcome of the ultimate race? the longer that biden stays in,

the more sort of wounded his campaign becomes, whether it be because of just the image problems or the fund-raising issues that are happening as we speak with donors just not -- boycotting, et cetera. at a certain point, it wounds them, if he stays in for longer and lets this go on. so what do they -- what will be gained? >> what to watch for, okay? how much is the brand, the democratic brand, not the biden brand, but how much is the democratic brand continuing to be damaged by this kind of scrutiny on the day to day basis? and if he has future gaps or future problems, and people are going out and defending him when it is clear that that's not really where he is, that will greatly damage the brand. >> you think the average american is going to say, i don't want to vote democrat anymore because they hid him? >> i think people -- the worse thing you can do to people is to

lie to them. people do not like that. they're okay with having differences on policies, they're okay, but when you stand up and say, you know what, again, in a corporation, everything is fine, when you know it is not fine, that corporation loses its brand identity, loses its quality very quickly. >> and you think they can move kamala harris out and put whomever they want in? you think that's a -- what month is it right now? is it july? >> if you wanted to do that, the best argument for doing it is we can't just anoint the next person. we have to have a democratic process. >> like the democratic process that they're totally ignoring by ousting biden. >> i don't know that you're ignore, a democratic process by ousting somebody who the public is telling you -- >> almost every vote from the people that are in a position to give him the nomination. what do you mean it is not democratic? >> i think you want him to stay in the race, joe.

okay? >> news flash. but also in a sense of fairness, i don't like watching people that knew all along and now they're, you know -- >> to melissa's point, let me tell you something people in america know, we're living longer. i've lived through it, i've lived through it in the work environment, i've lived through it -- people who are fading, and no -- >> he's got to go and nancy pelosi decides -- three, four years older than him. >> what i'm telling you is that the american people, they recognize what's going on here. the american people are smart. they know exactly what's going on here. >> okay. easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley

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cnbc and the national retail federation putting out the latest retail monitor showing some moderation of consumer spending in june. real credit card spending shows that spending was up half a percent last month, down from over 1% to uptick in may. joining with us more, matt shay, president and ceo of the national retail federation. great to have you with us. what is the headline out of this report? >> well, i think the headline is we're seeing more of the same.

we see a resilient consumer. we see continued spending by consumers, but we see moderation. and that's what we have seen for the last several quarters, last several reports. on a year over year basis, the numbers are still very good. averaging more than 3%, which is real growth, particularly when you think about the fact that in retail general merchandise is mostly down more than flat, it is down maybe several percentage points. so, really the inflation in the economy is persistent and lingering on the services side. on got side, even on food, it has mostly come down and flattened. there is real growth in there. it is moderated. i think consumers are being much more deliberate, they're being more thoughtful, they're rotating out of various services categories and discretionary categories and moving increasingly into those essentials they need for the households. >> that's what we heard from pepsi yesterday and conagra.

pepsi was talking about, for instance, across incomes, consumers are just, you know, becoming more thoughtful, getting more thoughtful about how they spend and that sounds like what you're talking about here. as we, though, see the unemployment rate start to tick higher, how do you think about this moderation and how quickly this moderation could accelerate? >> there is no question, melissa, that the growth we have seen for the past 40 consecutive months, 48 consecutive months now, since we came out of the pandemic induced recession has been driven by healthy employment and healthy wage gains. and we're seeing both of those moderate, though i think on the employment side the moderation and the slight uptick in the unemployment rate has more to do with entrance into the workforce than because of layoffs, and it is taking a bit longer for people to become attached to the workforce. the jolts numbers are still pretty good. so, i don't think there is a lot

of concern there. wages are slowing, but they're still running in excess of inflation, more than 3%. so, i think that's all pretty good news. i think the real question is the one that the chairman of the federal reserve and colleagues get asked about when they're going to provide some relief on interest rates because i think now what you're seeing consumers really express is the pain point of those long and variable lags on mondaytday monetary policy and it is starting to hit. >> i wonder if they're talking about the possibility of tariffs increasing under a trump administration. is that coming to the forefront? the 10% across the board tariff on imports up to maybe 60 or more percent on imports from china, that's hard to work around. >> yes, i think it is impossible to work around, melissa. it is a tax, a tax on the american people, a tax on consumers, and so, you know, we

said before, we're going to say again, i think the studies all support this, it sounds good, it is popular, populist politics, but it is terrible economics. it is horrible for households. it is highly regressive. and there is no way to, as some political candidates have suggested, there is no way to increase terroristariffs to so unworkable, but that doesn't mean we shouldn't be on guard for it and we will be. there was a proposed border adjustment tax, which was a tariff by another name. and this would be terrible for consumers. it already is. the biden administration kept billions of dollars in tariffs in place on consumer goods that serve no real strategic purpose whatsoever. don't do anything in terms of advancing bilateral relations and trade with china or other trading partners.

simply lead to escalations and increased costs. we'll be watching for that, and it would absolutely be devastating to the economy and for consumers and for voters and american families. >> matt shay, thanks. >> thanks, melissa. coming up, a breakdown of bank results from this morning. and the paris olympics will be the first games to take place since legal gambling became widespread in the u.s. how sports books are preparing and what the gaming industry is expecting. we'll be right back. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas. morgan stanley. (♪♪) (♪♪)

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the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

major banks kicking off earnings today. we're waiting for citigroup, top of the hour. jpmorgan and wells fargo reported earlier. joining us now, mccray sykes. great to have you with us. wells fargo down almost 6%. why? >> so, couple of things there. i think the top line, the nii came in lower than expectations,

11.9 versus 12.3. that was a zboimt. nu disappointment. number two, i think they were looking for the guidance at the low end, down 8% to 9%, i think that was a disappointment. there is some conservatives in that which we have seen. and a little higher expenses and that was due to higher revenue from markets, not unexpected. you put it all together, and some expectations and the stock being up 20% year to date, it is not surprising. good value there. >> that is the problem, if it is a problem, the run-up of the banks into this earnings season. there are so many expectations revolving around a potential troth in net interest income, there is expectations, like capital requirements will be alleviated for a lot of the banks and so there is a lot built in here. why is that -- the headline numbers looked fine. why is it down this morning, do you think?

>> well, we'll have to see the guidance there too and the commentary. we already have seen worries about interest rates and inflation, et cetera, global macro. they're conservatives. great execution, great capital management, loans doing a little bit better as well. so, investment banking up 46%, markets, all these things we're doing better than expected, so the execution is there. but at 2.3 times tangible, it is quite a premium valuation and even jamie dimon said we're going to be reluctant to buy back shares here. i think a lot of that good news is baked in. as you say, the run-up kind of anticipated these results. >> in terms of rate cuts and the expectations, you know, 90 plus percent chances of a rate cut in september. and the path afterwards is a littlebit uncertain and some are saying maybe we're not pricing enough in later on. what is your sort of expectation for that and do we need that backdrop in order for you to be

as constructive as you are on some of these names? >> right, well, the predictions that rate cuts can be very vol volatile. it does seem like given the cpi print and all the economic news that we're pretty baked in for september and then have to see. there are some political dynamics related to fed policy toward the end of the year, as you can imagine. but what we saw at the beginning of the year, we saw a rotation of smaller regional banks that lifted off and then it retrenched and we saw the better performance by the big banks going forward. and yesterday we saw kind of the seismic shift there, so, perhaps just given the relative performance with the big banks up 20%, little banks, smaller banks underperforming, but more dependent on the rate in normalized yield curve that you could see some of that inflection point and change going forward. so i think that's something to watch. but, again, i don't know how to predict interest rates and never have. we look at a bottoms up fundamental research component,

but certainly lower interest rates going forward would be a benefit to the banks. >> so, basically, if i were to tell you today that there are more rate cuts to come, and that the market is underpricing the number of rate cuts, yo wow say, go to the -- the regionals would benefit as you point out. should there be a with decline in rates? >> a number of factors. take pressure off the economy. help friction there. outlook for reinvestment, cre, et cetera, opening up capital markets and deposit costs screened up the last couple years, taking pressure off that. normalized yield curve eventually is very good for banks as opposed to inverted one. then the last component being what do we do with individual credits? a great revaluation in refinancing going on given the decade we have of rates. to the extent you have to still go house-to-house, check out concentration, multifamily, et cetera. ultimately should be good for banks but still do your work

individualtry. >> check on ati. huge run-up. aerospace leasing company. in your fund, you don't think? it does lease. it's a transaction. >> right. we have 80% of our concentration of financial services 20shgs% allowed to use in other things to put in there. this was a closing run by fortress. infrastructure investments. narrowed that focus to aviation. traditional leasing, really an alternative investment firm, but they've had an impressive operating segment on this business that's taken off. $25 billion ebitda and hoping to dobb $500 million-plus going forward. the catalyst behind the run-up in the shares. a bigger concentration just given out performance. huge taxable gains given what's happened and managing that as we grow the fund. >> all right. great to see you. >> thank you. coming up, let the gambling -- hold on there --

hold on. take it easy! you can, leave it in a second. cameras rolling, all kinds of stuff. let the games begin. olympics weeks away, a look how sports gambling sites are preparing for what's usually a slow season. plus, citigroup rertpos. market reaction straight ahead. we'll be right back. more p

expected to bet on the summer olympics in paris fueled by the recent boom in u.s. legal gambling. sportsbooks gearing up for a surge in wagers as the games approach. joining us, director of the sports business program in washington university, and maybe you can just help me with normal odds-making. i'm always in awe of how right in exactly where he's in odds, how they're set and it's amazing. how are they going to do that with every athlete competing at the olympics? is it a.i.? is it just the way the bets line up? you know? do you understand what i'm saying?

how can we possibly pick a favorite when we have no idea? >> oh, i absolutely understand what you're saying. analytics people in vegas, probably in demand for any analytics team in tv sports. tricky and opportunities for the wise guys. people that really know the markets of these different sports. whether it be gymnastics or swimming, whatever the case may be. there may be a unique opportunity where some of the bettors know the market better than the oddsmakers. that's where real profitability occurs. joe, look. the super bowl betting this year was north of $25 billion. the march madness betting close to $3 billion. i'm going to be fascinating with legalization of state-wide gambling. where will that be for totality of the olympics when it's said

and done? impressed 23 a third of march madness. bigger than in the past. i don't know whether it will get there. >> what will be the most popular events, do you think? what's most suitable? you know, i guess soccer, things like that? we do that already. >> i think men's basketball you're going to see the most action, just because there's greater familiarity with basketball. it's not just betting on who's going to win, because many believe the u.s. men will run away with it, as will the u.s. women, but you can see a lot of prop bets. these exotic bets. for example, when anthony edwards, "mant man" of the timberwolves, score points? over/under. you'll see it in basketball and see it in jim masks and sw

gymnastics? on the floor exercise on gymnastics. a lot of opportunities because of betting volume because of these exotic bets. >> shifting gears. you saw the judges' decision, back to figuring out exactly what a college athlete is. is there such a thing anymore? i mean, on one hand, schools would make no money without the people that are actually generating the fan interest, but what's the line we need to walk now, patrick? what did this judge, how does it change things? >> well, again, i mean, we all know which direction this is going, and i think, joe, you and i are in the same boat that we believe that these student athletes, all along, should have been compensated for their performance, and where is that line? because once they become employees and forget the fact -- forget the cat scrambling in the

background, once they do this what are the expectations in terms of number of hours they could potentially be expected to work? what implicationing are there? i think a lot of things need vetted and we'll see how it plays out going forward. >> one of the provisions was, paid minimum wage. that would be good, for -- not for the athletes. good -- i mean, i'm sure everyone would certainly agree that, to pay -- i mean, what? they make 100 times minimum wage, what they're worth. how does that even apply? some of the things seems odd to even talkabout it. >> you know, joe, i think the craziest thing with what's happening and i've talked to a lot of college athletic administrators is that, clearly schools like ohio state, michigans, alabamas, georgias, they're the biggest beneficiaries because they have the greatest revenues. take the middle tier schools, like st. louis, st. louis university. i went to college.

unc charlotte. so much poaching. i can only imagine how difficult at schools like this. a kid comes in, outperforms. a place like st. louis university, unc charlotte, outperformed. good luck keeping that kid beyond freshman year. larger schools poaching with collectives and everything else. that's the greatest challenge for these middle tier. and i wouldn't be surprised at some point you see the separation between the very top 60 or 70 schools versus all the other schools in division i. >> and left the barn, though. i don't know. too much -- >> i don't expect it to change. even more change, again, could see the -- >> ahead of that. yeah. not going back. i guess citigroup is out. everything stops, patrick. everything stops as citigroup is out. thank you. this better be good. >> it's pretty good.

slight toppling for citi of 20.7 billion dollars in revenue. net income, $3.2 billion up about 10% from last year and the firm reported eps of $1.52 per share. shares currently down about 1.42% on this release. expenses down 2%. then that's despite the $136 million fines, if you recall, announced earlier this week by the fed and occ over internal controls. the savings, though, came from the org simplification and stranded costs related to recent divestiture. it's within citi's five businesses, i want to highlight markets here. the firm's investors day last month, cfo mark mason said revenue would be down in that division, but business has clearly been strong over the last few weeks of 9 quarter, because markets revenue was up 6% thanks to equities. the firm also clocked a $400 million gain to that visa stake restructuring we saw with

jpmorgan earlier this morning. banking jumped 38% to 1.6 billion dollars. thanks largely to debt capital markets, as the ipo market remains muted, and wealth up 2%. closely watched division that's undergone a shake-up under the new-ish, about ten months or so, head, andy zeke. and ceo jane fraser saying in a release the firm made a "incredible amount of progress in simplification both strategically and organizationally." saying citi will continue to execute our transformation and strategies to meet medium-term targets and continue to further improve returns over time. citi saying in 2022 they would achieve return equity 11 to 12% if the following three years. we'll hear more from citi when i sit down with cfo mark mason live from citi's headquarters. catch that interview this

afternoon on "the exchange," guys. >> and in the middle of one of the biggest restructurings and t turnarounds that anyone's ever tried to do. >> yeah. >> so take her word for it? that it's progressing as planned? and people have, you know -- skeptical it can be done. >> a lot of skepticism and bullishness, too. the stock performed really well over the last year, and the fact that you do see some significant cost savings already due to that it simplification and this morning's earnings release says something. and in the statement she reiterates there are medium-term targets set out in 2022. >> and long-term targets that -- it's going to take a long time to get to -- >> we'll see. a very, very difficult tank. something that -- task. something people have burned by citi in the past. >> ten things try to do. >> the macro banks overall,

positive. positive about the year's gone on. pair that with booster of restructuring story, you know, that's the case. a bull case for citi. >> let's book right now. does it say? >> pull book for you. >> 99. >> below. >> versus two times book. right? >> i see 85, 34? realtime? >> a reflection how far it, they still want -- >> value per share. 99.70. >> at 66. should be a buy. >> sorry. tangible book 85.34. book value, 97.87 to clarify. >> okay. definitely as much as i need to know about citigroup. what you just did, though. >> perfect. >> the perfect amount. not too much not like a goldilocks. >> a goldilocks. >> a goldilocks amount you gave us. a look at futures. up 49 points. nasdaq actually now positive after yesterday down almost 3%.

was it? 2%. >> 2%. >> 300 points. 2%. treasurys 4.21%. ppi coming in about 25 minutes. >> yep. for more on the broader markets get to mike santoli at the nyse. mike? >> yes. melissa, talking about the plodder markets you have to be specific what we're discussing when it comes to yesterday's action. the s&p 500 looks like no big deal. a good cpi number. a little sell in the news of mega cap growths supporting the market. market craving permission to assume inflation is in the sort of mission accomplished column. maybe not quite there, but you see here. 0 0.9% of 1% all-time high. angle of this resumed from where we were in the low. so that sort of still remains a pretty solid trend. what happened internally is massive underperformance of the

winners versus the recent laggards. plook at the russell 2000 versus the nasdaq 100. a 5.5 or 6 percentage point spread. russell 2000 outperforming the nasdaq yesterday. the trend, falling off a cliff for a while. about 40 percentage points of underperformance from about a year and a half ago and here you got that 4%, you know, out performance, 5.5% out performance yesterday. this is the kind of thing you've only ever seen in magnitude around major market lows when the overall market was super oversold and volatile. hard to know werther you can project ahead. positions was such it was way against small caps and you had a big reversal. volatility index doesn't look like much. definitely seens a floor building around the 12 level but up even yesterday, or day before yesterday, on an up day. shows when mag seven's not leading, market is less of a secure place and maybe

volatility could go up one way or the other, guys. >> mike, thanks. mike santoli. coming up, thl partner joining us live on set to talk equity, inflation and the economy. "squawk box" will be right back. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

won'ting long now. standing by for the consumer price index comes out 8:30 eastern time. yesterday cpi printed negative. joining us on the economy, private equity, scott sperling, co-ceo of thl partners. last time you were here you -- i didn't know whether you were buying or selling. doing a little of both? >> doing a lot of selling over the course of the last few years. we have been trying to buy, but frustrated at valuations.

and i think that's not an atypical story for folks in our industry, when i talk to my friends who run other private equity firms i think we're all a little frustrated by the disconnect still between valuation and what you think the long-term value of an asset would be. >> and that is a reflection of cheap money, formerly? >> yeah. a reflection of people -- there's a lot of money out there, and almost every aspect of the financial market as we know. and there are people making decisions about either long-term exit multiples that may be somewhat different than where some of us are. i think there are many of us who are in the rates aren't ridiculously high at all, but, and there will be cuts but still higher longer for lots of very fundamental reasons that we've talked about, and happy to go into, and, therefore, multiples should reflect that.

>> the money is, has been generated organically from productivity and corporate earnings and a good economy? or is it still -- >> well, so -- private equity. you know, the out performance over almost every period generally for the private equity industry that been quite strong. a rational amount of money being put into private equity and i think returns will continue to be better than in other asset classes. i think right now there is a movement to try to buy the very best business models and the so-called great companies, and the premium put on that may or may not be appropriate. i think for some of us we think it may be inappropriate, but, you know, we'll see in a few years. >> do you think your business could be better if there was less regulation, less antitrust issues, more energy development? you see where i'm going?

see where i'm going with this? do you care about the election? could it be better for you? >> certainly could be better. it could be better if we had a regulatory environment that was less cumbersome and where the ability of the regulators was within the bounds of what we have historically thought they should be. so particularly antitrust is an area that i think is important to people in our industry, but more broadly as well. i think the entire regulatory burden on the economy seems quite high when you look at it. certainly being able to reduce the cost of energy is a big positive for all consumers. and that's something that -- >> more tariffs? that would be bad from the orange guy? when you hear -- >> we have to see what actually happens. >> okay. last night --

>> the tariffs -- >> the head of the country said corporations doubled profits. they're the ones that caused inflation. when you hear that, does it bother you? does it matter? >> we know that's not true. >> it's not true, but does it matter? you hear the guy -- >> i think it's somewhat problematic but not unexpected in a very heated election. particularly one where there's an even bigger difference between where one party has centered and where the other party has centered, and those centerings are not necessarily in the center. so you're hearing more extreme commentary from, you know, each side. and the, i think the answer hopefully will tend to be more in the middle, and particularly as one thinks about the set of policies, i think the observation that trump will -- will talk to a set of policies that directionally will go in, but not to the magnitude that he may state. >> are you planning on a trump

presidency? >> well, the odds, the betting odds are clearly that. i think it's a lifetime, as they say, between now and the election. lots of things can happen, including uncertainty about who his opponent might be. i would have to believe at this point biden still the favorite to be the democratic nominee, but obviously there is growing concern in the party. concern being a nice word. that he may not be capable of doing the job. >> but he won't do unrealized gains, but he talks about it, but probably won't do it. he won't dot 50% capital gains that that won't happen. >> over time we'll see where that goes. obviously we are running huge deficits, which long term will have a big impact on our ability to manage interest rates down, because that takes on a life of its own away from the fed, when

you have to finance tens of trillions of dollars of government debt, you tend to have to pay a lot more for that. that can have a big impact there. i think when you look at overall the reason we're running this huge deficit is obviously government spending has been a bigger and bigger part of the economy. when you look on the revenue side even with the so-called tax cuts that occurred, revenue is not diminished significantly from where it normally is. it's the nature of the spending. compare 2019 to where we are for the next fiscal year, you have to ask yourselves, yeah. i understand why we spent a lot of money, trillions of dollars. >> right. >> during that pandemic. that was probably a good thing to do. maybe some things did things shouldn't have, but probably a pretty good thing. why is the level of government spending now still growing from that level as opposed to return to where it was with capital being more efficiently deployed in the private sector?

>> giving the nature of why the amount of spend. never stop. once you get it going, you did it. let's keep doing it. >> in the baseline. look, a major energy transition that's going to cost in the trillions of dollars when you run through that. we have defense spending by almost every commentary coming out of the nato summit is inadequate. for the u.s. as well as in other parts of the world. there's already other pressures and the amount of money we're spending for interest rate payments as a government are also built enormously. so now, flip side. lots of it, great technology is being developed both on the i.t. side and the health care side. there you go. >> thanks. >> you're welcome. >> and we'll continue this conversation again hopefully. hopefully soon.

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full swing in idaho. julia boorstin joins us with a special guest. julia? >> thanks, melissa. joined by bobby kotick former ceo of activision blizzard focused now on a number of philanthropic ventures. bobby, a.i. is a huge topic here in sun valley. and all of your not-for-profit work comes back to a.i. and how it can be used as a tool to drive change in this economy. what are you working on right now? >> so it's really exciting if you see the amount of progress that's taking place from a lot of the new tools in a.i.

large language models are uniquely suited for certain kinds of work. so if you think about education. especially k-12 education, right now we have two generations of failed public school education. for a variety of reasons. but if you can actually give kids the opportunity to learn in a way that is appropriate for the way though learn. so if you're a visual learner, and we can assess that, test it and then provide you with a visual learning experience on a core curriculum you really need to know, a.i. tool is uniquely suited for doing that. if you're an auditory learner, change it. look apartment the con academy, the most forward-thinking person figuring out how to use a.i.'sone of the things i like about that model it's not limited to a school. he goes direct to the kid or direct to the family and so i think you can see lots of opportunities to have direct-to-kid opportunities for

the way we change how you learn. >> and also very focused on veterans employment. when it comes to employment and concerns about employment in this country, there's a lot of concern that a.i. is going to be taking jobs away, and sort of replacing a whole swath of workers. are you concerned about a.i. having a negative impact in the workforce? >> no. a.i. will be the exact opposite, in fact. i think what you'll be able to do and it goes back to what i just said in k-12. assessment and the training will change dramatically. my employment focus is for veterans. think about the population of veterans today that able, capable and unemployed, something like 300,000 to 400,000 able and capable unemployed veterans, all of whom have skill training opportunities for new categories of employment. so a.i. i think will be a really important way for us to train, educate and develop new skills

that are going to be necessary for the economy that aren't necessarily taught in the military. >> well, a nice optimistic note about a.i. providing jobs instead of taking them away. you have a new venture, philanthropic venture you're working on. center for government accountability. haven't announced this yet. what is it? tell us what this new initiative is? >> look over the last, let's say, 15 to 20 years, one of the things that's happened is you've had an increase in corruption in government municipal governments, state government, federal government. but the tools to be able to actually identify things that then give you, in law enforcement, the ability to prosecute those corrupt public officials, have actually weakened. and one of the benefits of a.i. is that you'll be able to do things -- a great example. freedom of information requests that are important for your work

or public records requests. the automation of that process, the ability to actually synthesize all of what you gain in a freedom of information act request or a public records act request can be automated through a.i., and you can then provide district attorneys, attorneys general, even the doj with access to tools and technology that they won't be able to easily get on their own. >> so you're going to be working to provide those tools, and how quickly will that launch? >> well, we want the tools to be robust. it's going to take time, but i think when you look at law enforcement, you look at district attorneys, attorney generals, they don't have the money to be able to get access to the very best a.i. talent or the very best custom a.i. tools but they need it. >> when it comes to the government and accountability, sort of more broadly, you've been pushing for reciprocal trade with china saying if they limit the way video games or social media is distributed in

china you want resciprocal trad what's happening here in the u.s. the president spoke about this last night. what's your perspective on reciprocal trade now and what should happen with china especially given a big panel here on china when the secretary spoke on yesterday? >> i think the secretary's actually been leading the charge on this within the government, but if you think about singling out a single company, like bytedance, that's not the most effective way for us to think about trade in china. you know, we have an enormous amount of trade with china, and right now the rules and regulations don't allow u.s. companies to operate without being in a joint venture that's usually owned and controlled by a chinese company. the government in china will have the choice. for example, tesla can operate in china on its own.

i think if we add a resciprocal framework employed in china that industry, the chinese companies are participating in an industry with joint ventures in the u.s., many of those technology-related industries could have information security requirements. security clearances. but it would give you the opportunity to create hundreds of thousands of jobs, billions of dollars of value and allow the chinese company to know they are operating with a partner providing security that they're required to provide for companies in china. >> do you feel the government is moving in that direction or what's the chance of that happening? >> think about it. the president last night largely focused on nato, but he actually specifically brought up reciprocal trade and the need for this reciprocal trade framework. leader schumer has been focused on it. in a bipartisan committee led by

mike gallagher focused only reciprocal trade. probably the most bipartisan piece of legislation discussed right now in the government. >> speaking of the president, a huge focus here on this coming presidential election opinion looking big picture at the administration and you're talking about the different pieces of this. what kind of administration do you think would be best suited for economic growth and for business? businesses like the one you recently sold to microsoft? >> well, you know, think about the federal government. it's the largest most complex organization in the world, and you know, the people who are running it should be the most sophisticated capable people who run large complex organizations. >> a very brief answer. i'm guessing you don't want to be nanie names any names here? >> that's not something i spend a lot of time on. >> a quick question. it's reported you're interesting in buying tiktok.

speaking of bytedance. >> i read that, too. i'm more interested in china. >> yes or no or tiktok? future ceo of tiktok down the line, bobby kotick? >> right now reciprocal trade with china and i don't xi singling out a single company is a good idea. >> leave it there. bobby kotick, activision blizzard working on all of these a.i.-driven philanthropic divisions. back to you. >> appreciate it. julia boorstin with bobby kotick. 40 minutes away from inflation data. awaiting the numbers look at futures and how we're setting up after yesterday's redistribution in the markets from big cap technology to other players and sectors in the market. which had not participated in the year's run. s&p 500 up by two points. nasdaq down by 13 right now. treasury yields, ten year note at 4.2%.

we went down seven basis points yesterday after yesterday's cpi report in the two year at 4.49. rick santelli is standing by at the cme in chicago. rick? >> yes. we're waiting the ppi. wholesale side of the inflation equation. of course, june numbers that will be coming out in a few seconds. do want to point out to your note yesterday, lowest yield since march 8th. ten year lowest since march 28. headline ppi for june up 0.2. up 0 bo.2% unrevised down 0.2. up 0.2? highest since april when it was up half a 1%. strip out food and energy, it's hot. up 0.4. double expectations. last month was unchanged. up 0.4. also just highest since april when it was up half of 1%. look at ex-food energy and

trade. under. unchanged. unchanged expecting a number up 0.2. rearview mirror unchanged up 0.2. revisions coming back in. back over those. year over year final demand, coming in at 2.6. definitely hotter than a 2.3 expected. rearview mirror at least up to now 2.2. 2.6 is the warmest since march of '23. over a year. if we look at ex food and energy, 3%. half a percent hotter than expectations, following 2.3 and 3% warmest. back to april of last year when it was 3.1. finally year over year ex food energy and trade, 3.1 following 3.2. 3.1 warmest since april at 3.2.

revisions. over those. headline last month's minus 0 bo0.2 up, unchanged. moved up to 0.3. stripped out food energy and trade unchanged now becomes up 0.2. year's over year headline, 2.2 becomes 2.4. food and energy from 2.3 to 2.6. ex food energy and trade moves from 3.2 to 3.3. universally every category, all six, last month getting revised higher, and everything but one is higher than expected for this month. yields haven't moved up as much as i would have gleaned, because ppi never has the impact when it comes in second on the calendar of events post-cpi. we're seeing a 422, 423-ish in 10s, at 420 before the number and 453, 452.5 now and before

the number that was 449. several basis points higher once again you want to keep in mind 460 for two year and 425 for ten year on important pivots for closing the week. joe? it's a long, big, long line of numbers and big revisions. sorry it took so long. back to you. >> yeah. we'll see, rick. dig into, after a break, dig deeper into this any inflation data and whether it, in anyway, undermines the narrative that we have from yesterday and the kcp from the fed and jeremy siegel from the wharton school joins us. stay tuned. you're watching "squawk box" on cnbc.

june producer prices coming in hotter than expected. talking more about this week's new inflation data, from the huist foundation as well as a former national economic council senior official and economist at the heritage foundation. not only was a plan for june hotter than expected but revisions for prior month also hotter. jennifer, how do you think this impacts at all the fed's

thinking about a cut in september? >> i think it's worth putting today's numbers next to yesterday's cpi numbers, which came in cooler than expected. and i think probably we'll see core pce shake out somewhere in the neighborhood where it has been year over year which is about 2.5%. which is still looking at somewhere in the neighborhood of 250 to 300 basis points of restricted territory for the fed. i'm less fussed about whether today's numbers come in slightly higher than expected. especially given yesterday's numbers, and more focused on the bigger picture, which is the fed has a whole lot of cutting to do and quickly. especially given the recent unemployment uptick to now 4.1% or so. we're not near the technical alarm bells but close. i think close enough that the fed needs to switch quickly into

a risk mitigation posture and certainly needs to start no later than a september cut. >> do you agree with jennifer? >> not at all. the last thing we need to do now is cut rates. we still don't have inflation under control. a key reason why we had a soft cpi print was the fact that we have had money moving out of bank reserves and moving into reverse repurchase agreements, and what that has done is essentially helped slam the brakes on consumer credit for a couple of months, and that's decreased demand. we saw that in the latest cpi print, but that whole process has been reversing now. the money was never actually extinguished. essentially kept sterilized. as that money moves out of reverse repos and back into bank reserves it's going to multiply, going to continue to build. inflationary pressure. there is still much too much money in this economy. the fed has done nowhere near enough to get this under control. >> you don't think we're in

restrictive taert, and not worried about uptick in unemployment. fed chair powell clearly stated last week two risks. inflation as well as the jobs picture they're worried about. >> of course. lots of risks within this economy. much comes from the fact the government continues to crowd out the private sector. as long as that happens, you're going to have fiscal and monetary policy at lagerheads and just making it that much more difficult for the fed to make progress on inflation, and to get us back towards price stability. >> jennifer, i guess the fiscal monetary going head-to-head is sort of a difficult dynamic. the fed can't do anything about that. right now. they can do what they can do, but whatever happens in the halls of congress happens in the halls of congress and there's not much they can do to fight the inflationary effects of say, the inflation reduction act. >> i'll take the other side of this one. for most of probably both of our

professional lifetimes we've had the fed asking fiscal policy to move. you don't get to choose your political windows in washington. guess what? this administration has seen the largest set of public investments into our backbone infrastructure, energy, physical infrastructure, building roads, transport routes and our technology backbone. so fiscal policy is mute. i would argue it's the job of the fed to lean into that. especially thinking of housing and of oil and gas, are contemplated in these public investments. at least energy is in a sense of moving to a set of cleaner energy sources for the grid that not for nothing don't have kind of inflation channels that oil and gas do. we have a moment in the i.r.a. and other public investments

we've had to sever traditional channels fs for inflation. it's the job of the fed to have a medial view and see those through. not asking them to get woke on climate but inhabit mandate for price stability and make of set of investments or not harm them thanks to fiscal policy that will lend towards price stabilization over time. what's really unhelpful for more housing? 5.5% interest rates putting mortgages where they are. if anything, the fed's current posture is that actively worsening a lot of the existing drivers of inflation. giving rise to larger questions about whether for these more supply-side drivers of inflation, interest rates are the right tool. >> jen, do you think renewables eventually become helpful towards inflation with what they cost now and the amount of money spent subsidizing the transition with getting very little in return? because we still, i think it's

1% less fossil fuels that the world uses now after 20 years and trillions of dollars. is that really going to stabilize inflation? the transition? >> not at all. solar and wind may one day be our main source of energy but can't today. they're net losers. look at things like the i.r.a. by the way, not only are they helping to strangle reliable sources of cheap energy like coal, oil and natural gas, but on top of that, funneling more scarce resources in the solar and wind, which, again, are net losers. i just don't understand why we're talking about the i.r.a. and building infrastructure. the i.r.a. literally has more money going towards ripping up existing roads and bridges than building new ones. it's not helping build new infrastructure but destroy infrastructure we already have. spending becomes of dollars to build literally a handful, not an exaggeration, a handful of ev charging stations. look, end of the day i frankly

don't know what inhabiting a mandate for the fed even means. i do know the fed's hands are tied here, because the government is spending trillions of dollars it doesn't have. goodness, look at the data we got yesterday for the monthly state month of june we spent $140 billion just in interest on the debt. that's not paying it down. that's just the interest. >> we got to leave it there. thank you jennifer and e.j. coming up, wharton school of defense jeremy siegel. signs of a new market rotation predicted and we did see yesterday. don't go anywhere. "squawk box" will be right back.

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how am i going to do this? welcome to the mdy mid-cap cup, presented by state street global advisors. today's challenge is to play 9 holes without the middle of your bag. how does that sound? that sounds terrible. ♪♪ ♪♪ ♪♪ ♪♪ this is our future, ma. godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo hello. i'm ethereum. and i'm big finance. you look really tired. just calling it a day. but it's 4 p.m. yeah, and i've been working nonstop since 9:30 this morning, so. 9:30. you don't say? yep. you'd want a little shut-eye too if you'd been moving billions around the world. well, actually, i do. you know, stablecoins, nfts, loans.

people can access me 24/7. what? but look, everyone's different. you should get your rest. you'll get after it tomorrow. tomorrow's saturday. [ethereum] monday. you'll get after it again on monday. at&t this morning revealing a big data breach. data from 109 million accounts illegally downloaded in april

including calls and texts from all all of at&t customers during a period in 2022. the company says the context of the calls wasn't disclosed or social security numbers, at&t says the fbi is investigating the breach and at least one person arrested after call logs were copied from a third-party platform hosted by smoke nowfla. shares of snowflake lower on this news. and yesterday's negative cpi print joining us on the markets is jeremy siegel. professor emeritus of finance at university of pennsylvania wharton school of business. wheep economist and wisdom tree. professor, good to see you. you said that we won't see a rotation into small stocks and value stocks until it becomes clear the fed's going to cut, and that the cpi, said this before, came out, could be a game changer. exactly what happened. you saw what happened with the russell yesterday.

now what is this? three steps forward, two steps back? what did the ppi say to you. >> well, i think it's four steps forward and maybe one step back. ness a few components here that do go into the pce and take a while to suss that out. i think the cpi was a game changer and last friday scott wapner "closing bell" exactly what i said. i think the fed should definitely cut. i mean, not only was it great inflation news on the cpi, which is far more important than the ppi, but let's look at jobless claims. now, jobless claims were good this week but don't forget they reported week of july 4th, which, you know, is always distorted. looking at it really next week, because we've been on an upward trend not only on claims but on the unemployment rate. when we hit 4.1% we hit the

so-called rule that says a three-month moving average goes up half a percent it did on the last labor report, the probability of recession is very high. i'm not calling for a recession, but saying that that is on the fed's radar. i'm looking at that. i think he's teeing up a cut. i'm hoping he cut fast enough that he won't go too slow on the way down the way we know he went far too slow on the way up. so -- my concern is not that he's going to cut too much, but he might cut too slowly, but the data will tell us what the judgment is. >> you don't think before september? >> no. unless we get a big deterioration. trying to think. july 31st is it meeting. we get maybe one, two jobless

claims. no other really important indicator. no. he's far to deliberate. but a tee-up. i think saying we now see the conditions in place for a cut, if the data continue to move in the direction that we are seeing at the current time. >> right. >> of course, the cut is expected to be 25 basis points, but you know, there's six weeks until that next meeting, and we'll see whether he is compelled to do more at that time. but that's my expectation for the july 31st meeting. >> yeah, so, not just inflation but suddenly the -- what we're seeing -- >> slowdown in the economy, because it looks like this half is going at less than 2%. >> yep. >> we were originally excited about last year, way above expectations, the fed expected over 22% for 2024. well, the first half looks like under 2%, and that's below fed

target. so, there's many, many reasons -- he himself said, don't go -- we're not going down to 2%, waiting for the, you know, cpi to go down to 2% before we cut. that's far, far too late. what was really encouraging, finally, that rental component, which you know i've talked about so often, has so lagged in the cpi, finally started coming in lower, and hopefully that will continue to happen in coming months to keep that cpi rate in line. >> so, the other mandate's now just as important. it used to be inflation. now you got to look at both, and the claims number is one way to see it every week. the rotation we saw yesterday, does that continue, do you think? the nasdaq is ready for a breather? do you think you're going to see a move into the breadth will improve? smaller company stocks will go up? value will go up now? that was the beginning of something yesterday? >> you know, and the reason is

that small fronds are so much more sensitive to the short-term interest rates, which the fed sets. they -- nay used to be called libor. now it's sofor. they pay the short rate, and all their inventories, a lot of borrowings are due the that. a lot of big companies either pay through equity or fixed in long rates, long time ago. it's those firms are going to be the most helped by lowering interest rates of the fed, and i think that's what stock pickers saw yesterday, and you know, unless we get some bad news to the contrary on inflation or too fast an economy, it could be that yesterday marks a shift, finally, in the big tech stocks versus the rest of the market. i've never seen anything -- 400

stocks go up in the s&p and the s&p goes down. that's -- that's something that you don't see very often. >> that's true. all right, professor, thanks. and we'll check back in not too far times. good call you made with the judge and thanks for comcoming on today. we'll see you. coming up, a top analyst rejoins us. "squawk box" will be right back.

apple ended yesterday in the red as the nasdaq had its worst day since the end of april, but prior to that, apple shares had been up 11 of the previous 12 sessions. our next guest just raised his price target to $256 a share from $230. let's welcome bank of america securities senior i.t. hardware analyst. great to have you with us. part of this price target raise yesterday was the notion that people have old phones and that they're more likely to upgrade because of a.i., and i'm wondering how much of it is just 35% or so have an apple 11 or older, me included, and how much of it is people wanting to get

the latest to get the a.i. features. >> good morning, melissa. thanks for having me on. i just think that it's really interesting. our survey work shows that after wwdc, the purchase intentions of buying an iphone in 2024 went up meaningfully. people were looking for a real reason to upgrade and you now have generative a.i. coming to the iphone but not just that. you also have the cutoff of, like, upgrades, which is different from what other people have done. samsung hasn't instituted this same kind of cutoff at an iphone 15 pro max or at a pro version, and so it's really giving impetus not just for the typical cadence of upgrades where the install has really paced but also for the newer phone numbers, just before the 15, the 14s and the 13s, to upgrade a little more atypically. there's a cyclical benefit we're picking up in our survey work, which we think is really interesting to drive upside to

both '24 and '25 iphones. >> do you think people will choose -- if i'm at 11 right now, i'm not focused on the latest and greatest technologies because i'm willing to live with the phone that i have, but are you getting the sense that people are willing to trade to the highest level to get that a.i. upgrade? that changes the cadence of how much revenue you actually build in because of this upgrade cycle. >> yeah, absolutely. the mix is going to be super important. the real interesting thing about the mix is that there's this misconception that the pro and the pro max are only, you know, relevant in developed markets and emerging markets. they tend to gravitate to the lower versions of the phones. our survey shows the pro and pro max have been gaining share ever since 2021, so from covid levels when people were guessing, this is all because of stimulus checks, that mix has sustained to be very, very strong now three years post-that, so it

shows that people want the feature functionality, so the more you offer them at the higher end, the more you're going to get that mix shift continue to be a positive driver for apple. we think there's a possibility that apple introduces an ultra model going into next year so they'll have the iphone 17, which would be even higher than the pro max level, and that could be, you know, when generative a.i. comes around, like the d-ram content becomes really relevant, and so you could offer ultra-model with increased d-ram content, which would be the more powerful gen a.i. phone that would be for ultra pro users, so to speak. we see the mix not being an issue at all. we think it's going to be a tailwind for the company. >> wamsi, got to leave it there. thank you so much. check on the markets. the nasdaq is getting back now some of those losses from yesterday. now the dow actually as well. actually, the -- i was looking at the futures themselves. just a little bit for the nasdaq and dow is now turned higher

after all those bank earnings, you know? was that the -- >> wells is still down 5%. >> was that the highlight of your day, would you says? or just being here? >> being here with the banks. what a combination. >> it was a slice. it was a real slice. >> electrifying. >> yeah. when are you back? not for a while. >> not for the foreseeable future. have a great weekend. >> "squawk on the street" is next. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, sara eisen at post nine of the new york stock exchange. cramer has the morning off. futures, pretty solid as we watch for signals as to whether yesterday's rotation was the real deal. bank earnings in focus. ppi does come in a tad warm. yields still lower at the short end. our road map begins with the banks. investors watching for warning signs in the banking system. jpm an