it is 5:00 a.m. here at cnbc global headquarters. i'm frank holland and here is your "five@5." record watch. futures with a bit of a muted start with the dow pushing deeper into record territory. we're also seeing moves in another part of the market and tom plealee says there a potent for a 40% rally. and fresh help for those looking for a rate cut in the future. and new developments in the presidential campaign for investors. donors are lining up to support former president trump as he makes his first public appearance since the

assassination attempt. retail spending numbers are out today and the latest read on what many believe is an overstretched consumer. we get you ready for the big bank reports as the sector reaches an all-time high. it's tuesday, july 16th, 2024. you're watching "worldwide exchange" right here on cnbc. ♪ good morning and welcome to "worldwide exchange." thank you so much for being here with us. let's get you ready for the trading day ahead. we kickoff the hour with the look at the stock futures and the dow sitting at an all-time high. the s&p is close to its high. the futures are muted. we see a rise to the upside. the s&p is fractionally higher. the dow opens up 35 points higher. a strong upside move with the nasdaq. this morning, we are looking at the bond market with the two-year yield at the lowest since march.

4.41%. the benchmark at 4.18% on the yield right there. you have to remember we were worried at the beginning of july. big decline with the benchmark. voinvestors are getting rea for bank of america and morgan stanley ranand united health. more on that in judgst a moment turning attention back to the markets. fed chair jay powell signalled the fed would not wait until they hit 2% before cutting interest rates. that is enough for investors to shift expectations. the cme fed tool is lockioking a cut in september. you can see here since the 10th of this month, a big rally here

up over 7.5%. the russell 2000 rising 8% over that period. fund stat's tom lee says this is part of a bigger rally. >> i think the rally will be larger than the october or december rally last year. this time, we have of a larger short position by institutions. we have short caps more oversold and valuations, whether you look at median pe at 10 times 25 earnings lower. we believe this could be in teten weeks, 40%. >> joining me is jeremy from wisdomtree. >> great to talk to you, frank. >> you heard tom lee there calling for a big rally in small caps. he has been saying that since

the beginning of the year to be fair. do you believe there is a 40% upside from the increasingly dovish jay powell? >> you look at what has happened in the s&p 500. there are only two sectors which have beaten the market this year. it is all tech. tech and com services. it is a narrow leadership. large caps are up 20%. i agree with him fully on the valuation case. they are much cheaper than 22 times. the small caps are the only ones paying the higher rate from the fed. what caused the turn is the dovish spcpi. >> arejeremy, you are highlight the valuation. is valuation a big issue in the market? we continue to see the market hit fresh highs whether it is the dow or s&p in recent weeks.

at the same time, the highest valuation names are hitting the market. is that something we should be concerned about with the optimistic estimates with earnings season coming up? >> i do see the broad s&p as a whole has been driven in large part by earnings. half of the gains is not just multiples, but driven by real earnings growth. the premium pe for the tech stocks are 30 times plus earnings, but the growth estimates are twice as high as the non-tech. you would not call them a bubble. earnings are expected to be that much stronger. you know, the key issue is if the earnings do not deliver, this is more risk of the multiple. you know, we will be watching that earnings season closely and farther out outlook to see if earnings can maintain. you are actually right. they are being warranted. >> i have to give you credit.

jeremy, from the beginning, you have been bullish on global markets and bullish on india. you talk in your book that the etf is up 20% year to date. with so much upside momentum in the u.s., why go outside the u.s. for opportunity? >> we talked about the pivot away from china. the other story is china's third plenum this week. people are talking about the big stimulus out of china. they have been one of the other leaders of the global growth for the last decade. we see that as a story that is shifting and we see people rotating from china toward india and japan. we believe china is the best growth story over the coming decade. this is a long-term story. they already went through their election season. modi has stayed in power and a lot of the reforms he's done the last few years are still in

place. he will take further efforts. it is reasonable with a strong earnings growth. everything is lining up for a long-term story from india and japan and the pivot away from china is well on its way. >> jeremy schwartz, thank you very much. for more on the trading day ahead, go to cnbc pro for insights and analysis. turning attention now to the 2024 presidential race and former president trump making a surprise appearance at the republican national convention in milwaukee last night. it is his first public appearance since the assassination attempt in butler, pennsylvania. he appeared alongside senator j.d. vance on the same evening that president biden spoke with lester holt. the president tapping his mental acuity as well as the tech support continuing to build

behind the former president. elon musk plans to donunate $45 million a month to a super pac to back trump. nbc's brie jackson joins me from milwaukee and gives us a look at day two of the rnc. brie, good to see you. >> reporter: good morning, frank. day one came with several surprises here at the republican national convention in milwaukee. we heard about the announcement of j.d. vance being the vice presidential pick for former president trump. vance is a senator from ohio who is probably best known for the memoir "hillbilly elegy." ohio senator j.d. vance receiving a warm welcome at the republican national convention

after being named former president trump's 2024 running mate. the 39-year-old says he brings loyalty to the ticket. >> the president can't be everywhere. even donald trump can't be everywhere. you have to be a person he can trust and rely on to actually advance the agenda. >> reporter: the first term senator was a critic of trump in 2016. since then, he changed his position and been by his side for court cases and campaign events. this comes two days after the gunman fired at trump injuring his ear. >> my first reaction was to pray for him. i was terrified. >> reporter: former president trump surprising the crowd and making his first public appearance since the assassination attempt. on the day that he secured the gop nomination, president biden

sat down with lester holt and calling it a mistake using the term "bull's-eye." >> focus on his policies. >> reporter: president biden focusing on his vp pick. >> i don't see a difference. >> reporter: protesters outside the republican national convention are speaking out. americans are divided over issues like abortion and the country's future. with vance's name added to the gop ticket, voters have a clearlier pyiyier clearer choics november. if elected, j.d. vance would be the third youngest vice president in history. frank. we have more to come here on "worldwide exchange," including the one word that investors have to know today, but first, amazon

launching the tenth annual prime day to what many believe is an overstretched consumer. we speak with the ceo of service first bank coming up. later, more on big tech's big backing of former president trump and his pick for running mate and what it means for investors. he a very busy hour when "worldwide exchange" returns. s

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welcome back to "worldwide exchange." take a look at futures in the green across the board. the dow would open up 50 points higher. the nasdaq is higher as well. let's turn our attention to europe with a lot of red on the board, arabile. >> a lot has happened over the last few days. i'm fixing the color because it is all about the luxury space which has taken a hit today. that space we will focus a lot on. we head off to the ecb meeting. european central bank with the meeting on thursday and the markets will focus on that with the political uncertainty playing into the market as we get into the earnings season as well. the banks in europe having reported. on the sectors we are talking about, particularly luxury and household goods. the german fashion house joining

be burberry and swatch taking a hit on the sector. swatch and burberry pointing out to negativity to that. household goods going down .50%. that is where you find hugo boss. the resources going down 1.6%. on the upside, real estate with the interest rate cut anticipated to flow on, not necessarily this meeting, but next, will be in focus. frank. >> arabile, thank you very much. arabile gumede live in the london newsroom. we will continue to talk about the consumer and what is a very big day for the retail sector. first up is the sales data out before the opening bell. a report that many believe is a market mover showing .50% slowdown from a month ago or flat if you exclude auto sales. today is day one of amazon's prime day which adobe predicts

$14 billion in sales. that is up 10% from a year ago. this comes with new warnings around the kconsumer that includes commentary from bellwethers like pepsico noting subdued demand in north america. conagra missing the sales for the fourth time in five quarters. the company lowering fiscal year earnings guidance as consumer adjust to higher prices. joining me is scott muskin. good morning to both of you. great to have you here. >> good morning. >> we are getting the data out about retail sales the same time we have the prime day sale. it is a record year. that's very interesting. at the same time, you say the discounts are deeper than last year, especially for consumers. last year, discounts were about

12%. this year, they are 20%. what does that tell you about sales being up and discounts deeper? >> the numbers we saw from adobe is what i have seen across promotions are tame in what is essentials. essentials is having more of a discount from last year. target and walmart are bringing that in. where hei see the deeper discous are home goods and garden. that needs to have the promotions. >> you say people aren't buying that. scott, i want to come over to you. pepsi. we're talking about potato chips and soda. i'm not saying they're essentials, but they are coming to conagra. something we all have in our refrigerator. what does it tell you about the consumer that people are cutting back on those things? >> frank, such a good question.

we put out our third quarter economic outlook. one of the things we noticed is there are two worlds right now. one world that you are describing with the low-end consumer and inflation is taking its toll. if you look at earnings, they are flat over the last four years. they don't necessariily par participate in the market. we see the consumer and we do a lot of consulting into consumer particularly those common goods you are talking about. people that sell them or manufacture them. there is a lot of pressure right now in the consumer cutting back. it's pretty unbelievable. take a pet category or something like that. the number of pets being put up for adoption. there is a lot of pressure on the consumer and that is hurting

the companies. i do agree with some of the electronics and other discounting going on in some of the hard goods. that's definitely happening, too. it's coming from the same consumer. that consumer is just under a lot of pressure. >> scott, we know how important the consumer is to the economy. 70% of spending is consumer spending. retail sales are coming up today. i expect to see a decline month over month. do you believe that might be a market mover? is that something investors should be very concerned about? >> i mean, i think there's concern. i think the concern is we're all expecting a fed rate cut and the question is, we think the current equity market is a little hot. definitely if you look at the m2, it has been rising the last six months at a 6% clip. the equity market is up 18%. housing is still up 6% year over

year with kay shiller. there is a lot of hot money. the question is if the fed cuts rates, does it rekindle inflation? t that consumer pressure is interesting to see at the end of the year. we are going into a election cycle, of course. there satis an lot of concern g forward and where inflation goes in the next 6 to 12 months. >> by the way, we are showing a chart with the rise of household debt and consumers with credit card debt and rates hitting all-time reports. jess, you gave us stock picks. people are cutting back on potato chips and soda and ketchup, but you have discretionary spending. dick's sporting goods.

workout clothes and ulta. why are people spending here, but cutting back on others? >> there are lifestyle shifts. consumer who would rather do this today and not necessarily spend on chips because that is an extra $5. where can i put that $5 elsewhere? on lipstick, sure. it is a help me feel better with purchasing. with dick's sporting goods, you have back to school coming up and into wellness. that would be a reason why we see potato chips and soda come down as well. >> your other picks are tjx and ross. these are discount retailers. you mentioned the consumer wants to feel good. you want the brands, but you don't want to pay as much. >> correct. off price. when it comes to tj for the

umbrella and ross, they have amazing buys. the brands are there. the consumer will go at a cheaper price. off price is still a contender. >> scott, i'll give you the last word. if we have an overstretched consumer, what does it mean for the equity bhmarket? >> if we get rate cuts, we could see the economy going. if we see dick's and walmart and amazon, there are companies that are winners and taking share. if you look at dick's versus academy and walmart versus target, you are definitely seeing certain companies thrive even if the environment isn't doing as well. these companies are thriving with massive cap ex budget.

walmart and amazon are aut auto automating. that gives them leeway to lower prices or become more price competitive given their comp competitors. we see a big sucking sound from walmart and amazon taking enormous amount of share. that is another thing the retailers have to do is compete against the slower consumer and two large companies taking a lot of share. i do think it always is company specific. broader equity market, it feels pretty hot. money's flowing in. we get fed rate cuts. >> a lot of optimism about the fed rate cuts. i want to thank both of you. scott and jessica, thank you very much. coming up on "worldwide exchange," the activist investor swiping right on match group. that is coming up in youbir g money movers right after this. s ai-native network. now everyone's so productive,

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welcome back to "worldwide exchange." time for the big money movers. three stock stories of the morning. match group is surging on the wall street journal report that starboard has a stake of 6% of the date be app company. match should improve conttinder. it sees a possible sale if a turn around is not successful.

and gm ceo mary barra says they will not have the platform in place to meet the goal of evs by 2025. shares of trump media down today after closing up 30% yesterday. the parent company of truth social have retail traders betting the former president will win in november. and looking at the shares of bitcoin. it is still up more than 9% in the last week. the number of crypto tracking stocks riding the bitcoin rally. coinbase and micro strategy and riot ptflaormsup up in last week alone. more "worldwide exchange" coming up after this.

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it is 5:30 a.m. in the new york city area. here's what's coming up on "worldwide exchange." jay powell's comments help push the rate cut talk and the rally may just be getting started. and former president trump picks j.d. vance as his running mate. we are going from wall street to main street and

talking to the ceo of one bank and what he sees for his business in the economy. it is tuesday, july 16th, 2024. you are watching "worldwide exchange" here on cnbc. welcome back to "worldwide exchange." i'm frank holland. thank you for being here. we pick up the check of the stock futures with the dow sitting at the all-time high. the dow would open up 50 points higher. we see a move in the nasdaq right here. you see it right here shifting between fractionally lower and fractionally higher. it was solidly in the green earlier today. the s&p is higher right now. we are looking at a number of blue chips in the dow. apple here is up fractionally right now. hitting all-time highs. goldman sachs and jpmorgan chase reporting earnings in recent days. we are looking at small caps.

take a look right here. the russell 2000 climbing nearly 2% yesterday adding to its week-to-date gain of almost 7%. tom lee from fundstrat still banging the drum saying this may be the long cap rotation. we are starting to see upside moves. this morning, we are looking at the bond market with the two-year yield with the lowest level at 4.42. the benchmark 4.181. you have to remember at the beginning of the month, the benchmark was 30 basis points higher when it comes to the yield. we see a big move to the down side when it comes to the yield on the benchmark. that is the money set up. we turn attention back to stocks with another batch of banks set to report this morning. bank of america and morgan stanley capping off a relatively strong earnings season for the big banks, including positive results for goldman sachs.

ahead of the results, bank of america shares are up 16% since reporting three months ago and also trading at an all-time high. that is helping to lift the kpe 52-week and all-time highs. turning to the regional banks, investors seem to take the risks in stride. the kre etf coming off the sixth positive day in a row. one name contributing to that rally is servisfirst. ear important to note, three analysts cover this stock. two drivers of the quarter were double digit loan growth and quarterly deposdeposits. executives say market conditions are turning more favorable in that region. joining me now in the first on

cnbc interview is chairman and president of servisfirst bank. tom, good morning. thank you for being with us on "worldwide exchange." >> good morning, frank. >> the bank in the birmingham, alabama area with loan growth of 95%. you have a diversified business with construction and residential. what is the driver? >> the driver is the southeast united states. our footprint is the southeast united states. we have the integration and the market is seeing positive results from that and that's a big driver for us. >> is there one particular area? you mentioned mortgage loan portfolio is diversified. we know rates are pretty elevated. we have seen that impacted with the sales in the residential market. are you seeing residential sales jump there or is it more commercial or multifamily? what area? >> we have a relatively small

residential mortgage portfolio. what we're seeing is the businesses are doing well. we're a business bank primarily. the businesses are growing and doing quite well. we primarily serve owner manager companies. our developers are doing quite well. we're seeing positive results. our loan officers are moderate on the year-to-date basis. our margins are getting better quarter over quarter and we expect them to drive higher for the next six quarters. >> you mentioned margins. i was looking at your net interest margin. what do you attribute that move to? we heard from other analysts and other banking ceos that customers are moving to higher interest products. is that something you are seeing? >> we were. our margins were squeezed over the last year. this is the first quarter where y we see margin exexpansion. our margins are getting better

almost on a monthly basis. we're seeing a much more positive result this year than last year. >> we talk a little bit about the stretched consumer on cnbc. consumers having to trade down and do things likes t that. what do you hear about their finances and economic conditions in your region which is the southeast? >> we primarily serve business customers as well as some developers. primarily multifamily developers. what we have seen is, yes, our customers that serve the lower-income consumers saying they are trading down. for example, furniture sales. people who specialize in manufacturing consumer furnish af furniture at the lower end are seeing sales. the consumer seems very

resilient. it seems very positive. >> another thing i noticed in the report is you lowered your provision for credit losses. is that a sign you are seeing people borrowing from you are having better economic businesses and businesses are doing better and you are less concerned about default than just a year ago? >> our losses are down from last year. our losses were very moderate last year. below average. you know, if i had to tell you, our loan officers over the last 19 years or 18 or 19 basis points. you know, last year, they were 12 basis points and this year, they're about eight basis points. they are very moderate. banks are in the business of taking risks. the trick is to have a diversified loan portfolio. that's what we have. that protects us from any extreme losses. >> understood. shares moving higher. tom, thank you for joining us. >> thank you, frank.

have a good day. >> catch another first on cnbc interview with bank of america ceo brian moynihan at 10:00. and hugo boss is the latest to join the luxury stock slide. shares are down 8% right now. we'll have full details when we return. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

welcome back to "worldwide

exchange." it's time for the morning call she'd. reddit moving from a hold to a buy. the stock is trading twice over the march ipo price. we have another downgrade from piper sandler on dollar tree. piper saying the notable earnings risk for this year and next year citing the president election no matter who wins as a factor. and morgan stanley moving sweet greens from equal to buy. and coming up on "worldwide exchange," the one word every investor needs to know and trump taps j.d. vance as the vice president pick. what this means for the markets and your money. we'll be right back after this break.

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(grandpa) i'm the richest guy in the world. (man 1) i have time to give. (man 2) i have people i can count on. (grandma) and a million stories to share. (vo) the key to being rich is knowing what counts. welcome back to "worldwide exchange." turning to the 2024 race and former president donald trump making it official tapping j.d. vance as his running mate. he is known for his america first policies and strong ties to silicon valley. he has called for breaking up google and proposed raising taxes on corporate mergers. this pick coming as a number of

tech leaders throwing support and money behind trump with a pac. some of the pacs most profile donors. let's bring in the managing director at beta partners. good morning. great to have you here. >> thanks for having me. >> j.d. vance. interesting. he is a venture capitalist and invested in tech companies. his backing comes from a tech billionaire. he has been critical of big tech and talking about breaking up google. in your mind, his vice president a pick, what does it mean? >> the trade leadership and exclusions and licenses through the trade war is something we saw in the 2017 tax bill. i think for the tech space, that is undergoing a lot of scrutiny

and regulation and social media and crypto and a host of different issues with anti-trust as well. getting access to the potential second trump administration now, particularly through j.d. vance, makes sense as they are looking at regulation to come. just as some businesses would prefer to have the opportunity to get licenses the way they did in trump's first term, they hope to do that with the second term as well. >> you are looking at possible regulation to come. the one concerning thing for companies is j.d. vance is very much il, i think this isead the had years of debates and hearings. it is still what we can safely

call a formative stage. there is a lot of room to run. the lobbyists that work for the institutions, this is the area you want to go particularly with the polling data, in the swing states, trump is ahead. it is likely that trump wins those states and in particular with pennsylvania, what is notable to me, j.d. vance is from ohio. given that general media landscape and proximity, geographically, to pennsylvania, is a big deal. it makes sense for these industries if they are concerned about the regulation to move to the trump-vance ticket. >> j.d. vance is from ohio. part of the reason he was picked is he will bring in the rustbelt voters. he is tougher on trade policy and president trump talking tough about tariffs. does he being named as the vice

presidential candidate bring on a higher tariff on china? >> j.d. vance is the new realm of the republican party. i'm old enough to remember the republican party being the party of free trade and now it is fair trade which is still a thing. i think 10% tariffs on chinese imports, tparticularly lists 1 through 4 today, should rise up to 17.5% and 35% depending on where they are now. a host of items have been tariffed at 50% rates. semiconductors and the like under the ambassador to thai. those could raise other points. you could see a 60% pick a number of tariffs on certain imparts. i expect former ambassador lightheiser to be part of the next administration. those can start off at 25 or 50%

if they so see fit. the steel industry has 100% now tariff on steel coming in from china. president biden increased that th threefold and that goes into effect august 1st. the trade war will be a prominent feature in the second trump administration. >> we're almost out of time. taxes. j.d. vance has been very focal about possibly hiking taxes on high earner. what does this mean if former president trump is reelected? how do those two things work together with j.d. vance wanting to see taxes move higher and former president trump, if elected, will want more tax cuts? >> more tax cuts is one thing. keeping the tax cuts in tact is what we're after. to keep the status quo will cost $4.6 trillion. if j.d. vance is proposing

raising taxes on corporate mermerng mergers and wealthy, that is a cost into 2026. you need to pay for it. they will go after the industries to pay for it. >> great to have you here. thank you very much for your time and insight. coming up on "worldwide exchange," the seeignals the ne guest sees with the market's next run. we'll be right back after this. morikawa on 18. he is really boxed in here.

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welcome back to "worldwide exchange." time for the "wex wrap-up." we begin with starboard taking a 6% stake in match group aimed at improving growth and profitability and spending. s starboard should improve tinder. and mary barra tempering the ev ambitions. barra said gm does not have the capacity to reach the previous target of 1 million evs by the end of next year. and trump media closing 30% higher after the surge yesterday. the trading volume was ten times

volume. and hugo boss is cutting the full-year sales forecast after the decline in the second quarter. the company says the macro and political challenges are weighing on spending for luxury goods. lineage is raising $4 billion in the ipo which would be the largest in the u.s. since arm's debut in the fall. they are looking at $70 to $82 a piece for market shares. and the s.e.c. an approves three spot ether etfs. blackrock and vanek and templeton are among those. here is what to watch on the economic front. retail sales out this morning and several key earnings reports from bank of america and morgan stanley and united health and fed governor akugler will speak

later this morning. we did see moves in the market this morning. right now, the dow would open up 50 points higher. the s&p is fractionally higher as well. the small caps are looking to keep the rally going with the futures up 1%. joining me now is gunjan banerji. >> good morning, frank. >> i think i know your wex ward of word of the day. >> my word of day is momentum. this is a stock market rally that has a ton of momentum behind it. investors i have been chatting with say it is tough to call when that ends. we see the s&p hit dozens of new highs. people are growing more bullish and they are betting this can continue.

>> they are growing more bullish. are they growing bullish about the market or fomo? >> a mix of both. i think some of this is people who haven't been positioned for the rally and people who have missed out and trying to pile on now and chase higher through leveraged bets. in other instances, people are growing more optimistic. think about the inflation data. >> jay powell comments. >> exactly. the jay powell comments. the rate cuts are coming into view and the goldiloocks is rea. people are buying equityetfs. people are taking a sunnier outlook on this market. >> we are seeing a broadening of the rally. small caps and transports with positive days. what does that say about the future of the rally? a lot of people wanted the

market to broaden out. do you believe it can happen? >> this is too concentrated and we see the big rotation and everyone is caught off guard all of a sudden because there is a huge divergence with the nasdaq and the russell. it is wild. up 7% in the last week alone. i do think it sis a positive sin with the economic sectors. think the banks and small caps. if rates do go down, those could get another boost. investors i have been talking to say this could be painful in the short-term, but it is a positive sign. it reminds me what happened after trump was elected in 2016. you and i -- >> you were the first person after the trump trade. you came on talking about the

trump trade. the broadening of the rally, is that the trump trade or possible parts of it being a trump trade? >> i think people are trying to figure out what is the trump trade. the ten-year yield did not rise much yesterday. what investors have been telling me it is too soon to get a sense of how those policies shake out. what does a potential republican administration do on taxes, tariffs, debt? right now, the trump trade is in part msmall caps and the steepening of the curve and the social media company going bonkers. >> and how does j.d. vance being picked change the trump trade that investors should be mindful of? >> i think investors thought it did. we saw the market come off its highs yesterday after the news was released because he does have a very populous stance and it made some people question where will they stand on

regulation. that's what makes this so tough to call. >> gunjan, thank you very much. >> thank you. >> one more look at futures before we let you go. the futures in the green. the nasdaq is moving between lower and higher. the dow off the highs. it looks like it would open 35 points higher. that does it for us. "squawk box" starts right now. good morning. earnings still very important with all of the other things happening in the world. we'll hear from bank of america and morgan stanley before the opening bell. senator j.d. vance from the great state of ohio winning the veepstakes. trump announcing his running mate at the republican convention. it's going on right now in milwaukee. and a report says the s.e.c. is nearing approval of spot ether etfs. they could begin trading next week. the cryptocurrency is up 8%.

it's tuesday, july 16th, 2024. "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. we match. didn't notice that until this second. >> thank you for letting me know. i'm becky quick along with joe kernen and andrew ross sorkin. >> thanks for the text. >> wow. it is really bright, too. it's so bright -- >> is that canary? >> i think it's called -- >> canary yellow. >> what's the word? >> banana. >> a minions banana? >> i