maybe? we're going to run out of time if we don't flip it around. there it is. wti crude, $80.45. there's the currency check. flip it again one more time. show folks where bitcoin is sitting right now. >> weave got time. >> it's taking its time. is this a computer thing? >> it was 63,000 last time we saw it. >> there you go. >> you can put a man ton moon, supposedly. >> "squawk on the street" begins right now. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. stocks look to continue their climb with the russell aiming for five straight 1 mrs gains. retail sales better-than-expected. yields bounce a bit at the short end after the ten-year briefly hit a four-month low. roadmap begins with quarterly beats for both morgan stanley

and bank of america. brian moynihan with join us in the next hour. elon musk reportedly committing $45 million a month to a new pro-trump super pack. let's begin to market reaction to those quarterly results from bofa and morgan stanley. not all of these are working premarket. >> i like net interest income. how much you're making off your deposits, which they're making a lot off the deposits. they did it without having a lot of investment banking. they had good numbers. morgan stanley, the second best performer after goldman so far after last earnings season. what bothered me here they're just not getting the accounts i thought, not making enough money. i will say this. the one thing you have to recognize is that wells fargo got hit on friday, and then it's

been up since as people realize, wait a second. if the fed is going to cut rates, here we have the beneficiaries. it's morgan stanley and it's wells fargo. before you jump them, recognize these stocks overnight have become plays on what powell does. and the plays on regulation. you want to be levered if you think trump win, holy cow. >> those are the two big narrative engines at work right now. the prospect of easier regulation and lower rates. >> it will be interesting to see, one of the things that happened with bank of america, people were worried post republic and silicon valley bank that their bond portfolio was the issue. it just wasn't. i think it was spread by short sellers. i know that's a tough thing to say. hon echtly, it meant nothing. things are rolling off and it's very good for them.

bank of america is just really good. >> net charge-offs, flat quarter on quarter. jim's point about rolling off about 10 billion a month. we'll talk to brian moynihan the next hour. >> he's the man. he terms you loan growth has come down. we need a rate cut. >> meantime, net charge-offs, i think i just saw on the tape probably lower in the second half than in the first half. >> it's incredible. that plus the retail sales tells you that the american consumer is good. the small to medium-sized business is okay. plenty of ammo for a rate cut but not nor a july rate cut. >> despite what dpoeld man said yesterday. >> i thought goldman was off the reservation on that. it's like talking about amazon prime. i have been psych for amazon prime. it's anecdotal. i waited -- how else do you make money in this country? i waited until this morning

early on. i had to keep pressing that button to get out of the checkout cart. >> some pointed out the race among all kinds of corporates to get in front of the news feed to attach yourself to anything related to prime day. >> amazon is on fire. -- mobile is low. it is a great company. i know that i talked about the nfl and maybe amazon gets involved in that and maybe reopen the deal. i'm not sure the nfl is too crazy about that idea. amazon is the hyper staler that has everything going right now. >> some of the numbers on morgan stanley sounded nam. ib up 51, equities up 18. it was the wealth management up two. >> yeah, same thing with schwab. i hoped when these companies buy these retail brokers, when they buy the e brokers, so to speak, they would start getting more

business. they have a system where silicon valley company comes public. great feeder to morgan stanley's network. so far we haven't had a lot of ipos from silicon valley. >> that is apparently looking brighter. some of the reports out of s andp regarding the pipeline. >> if you think we're going to have an m&a -- anything like what we have now, i think the ftc is the most anti-deal that i've ever seen, and the justice department isn't so hot either. i don't know who -- president trump, if he becomes president, he could appoint plywood to those jobs. listen, guys, knock yourself out, except for media because i don't like zaslav. i don't like cnn. i think the m&a atmosphere is going to beic. >> >> really quick on schwab, nii down six, trading down

three. they do talk about sustained equity performance helping assets under management. >> schwab has had a big run in 53, 54 when people were worried about their balance sheet. that turned out to not be a problem. what's interesting is i keep thinking about robinhood. robinhood is going to be gaining clients. these companies are not. you buy ameritrade, e-trade, shouldn't there be more followthrough? yesterday larry fink sat right here and talked about how the customers are actually going a little more aggressive. not getting that either. these companies really need deregulation and they need a better ipo market. in morgan stanley's case -- >> we're kind of done with the financial chapter of earnings season. can you put a cap on it? what do you see? >> the two best for jpmorgan and

bank of america. bank of america, slow and steady is winning this race of the commercial race. goldman sachs had an extraordinary quarter. i actually joked to the people there when i worked at goldman there was this fellow, gus leavy who understood trading, understood banking. people talked about it being pretty darn good. i mentioned to them, is there gus levy talk. they said no, don't get too excited. i am. i think solomon is the hero of the hour. >> everyone remembers. >> people were dumping on him, just trashing the guy. i'll take 492 any day of the week. but, look, brian moynihan is slow and steady, perfect, just done. it's funny because that is the warren buffett bank. remember when wells was -- >> i do remember that. those warrants back in the day. >> obviously charlie sharp is

not going to say regulation is just going to go, but it has to do with federal reserve scrutiny. i don't think the federal reserve scrutiny is going to be as critical as it is right now where they kept reacting to what happened with the mini banking crisis and really i think, as what larry fink talked about. there is a great feddering, so to speak. not a great verb. i think the federal reserve being less restrictive is going to cause a lot more loan growth. by the way, the loan growth at bank of america is telling. it's slowing too quickly. pou powell has to be worried, but not panicked like goldman. >> -- >> i remember when barry stern came on our network talking about a bank famg every week. well, how about a bank succeeding every week? that number for commercial real

estate made me feel very good. made me want to go buy some commercial real estate, maybe buildings in downtown l.a. >> or in san francisco. >> anything is possible. >> i do think by the way, overall banks have been pretty good. morgan stanley running at 105, some moron took it at 107. i want to short everything he's ever done including his house, or her, their spouse, i'll short. anything connected with the people that paid 107. >> jim mentions retail sales. we get a pulse of the consumer, better t-than-expected better-than-expected. we were looking for somewhere in the neighborhood of .10. nice revisions. i'm sure you saw building materials up one-four. >> how about clothing? >> my favorite is electronics and appliance stores, a very good number. my travel trust owns best buy.

but i still believe that things are better in the pc world, that the idea that you can buy a pc that has ai is very good. by the way, we can ask brian an about ai. they are saving a lot of money with ai. >> we didn't mention yesterday hp's new omni book rollout which we'll start to see in august. >> better battery life and you need ai. the change, this is the first real change since we had the 286 going to 386. people are acting as if it's not a refresh cycle. it's been three years from when there's been the last wave of buying. i think it's very telling that people are so bearish they don't even get there's a refresh cycle. they're so bullish on the russell. that's because that's who really ben 23i9s from dereg. >> and lower rates. >> yes, lower rates. a lot of the bigger companies like big regulation.

they know it smothers the small and meade yuchl size. the trump/vance ticket are for small and medium sized. >> the russell has been an important story. we mentioned at the top of the show going for five 1% gains. >> there is a feeling that this ticket is going to make it so that there is real growth in an area that's been hurt by regulation the most. when we look at regulation, who gets hurt? it's small and medium sized business because they can't figure out regulations. you think mcdonald's doesn't know how to open a restaurant? if you're opening up your restaurant and the regulators say i'm giving you a city -- wow. >> that's a big conversation today. we mentioned vance because he has praised the ftc, and he has called for higher minimum wage and he has in the past called for higher corporate tax rates. this idea of neo populism versus

unfettered growth. >> i think you have to toe the line in the same way that, if you call someone the idiot, some of the more incendiary things he said about trump have obviously been forgiven. i don't think anyone knows where he comes down the spectrum. i do know where trump comes down. regulation bad. i think you have to toe the line of your president, period. >> we're going to see how all of that plays into pennsylvania and michigan and wisconsin which is becoming the locus of this race. >> how about the teamsters. >> teamsters. >> the teamsters, i cannot believe that they're at the republican convention. that's extraordinary. >> and reportedly considering no endorsement of either candidate. >> if you're the union president, shoulthd on the you have the teamsters -- they are the union. >> when we come back, speaking of the election, elon musk reportedly putting his money where his mouth is when it comes to supporting the trump presidential campaign,

responding on x a few moments ago. take a look at the premarket. green arrows again. we'll see where we get today after some fierce action in the small caps the last few days. stay with us. [city noise] investment opportunities are everywhere you turn. do you charge forward? freeze in your tracks? (♪♪) or, let curiosity light the way. at t. rowe price, we're asking smart questions about opportunities like clean water. and how clean water advances can help transform our tomorrows. better questions. better outcomes. t. rowe price ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term

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with speeds up to a gig in millions of locations. and right now, get up to $800 off the new galaxy z flip6 and z fold6 when you trade in your current phone. get the fastest connection to paris with xfinity. elon musk reportedly backing his endorsement of former president trump with a major campaign contribution. sources tell the journal that musk says he plans to commit around $45 million a month to a new super pac backing trump's campaign. in response musked poepd a meme saying "fake news." >> with need to know how much can be used for both markets in baftal ground states and where it can be used at all. that's what i know from people i talk to. that's where the money is being

spent. it's interesting that linear still works when it comes to advertising for politics. it is just the money flowing into these companies is extraordinary, the companies that do that -- >> you think that's a stock moving kind of cycle? >> i think unfortunately it's one off. but it's just a one off thing. i do think that's -- if that money can go into -- if it can go into tv, that's one of the greatest things ever. think about that, that still works to get voters out, especially because negative advertising is going to be extraordinary i think this year. you already see what trump is capable of. it's not like biden is going to sit there and say, listen, i'm going to just take it. the negative advertising it's going to be a couple hundred million on both parties. >> right, at a time when a lot of americans are just starting to pay attention to the race. >> exactly. >> of course, that's part of the reason we're paying so much

attention to the convention this week. the former president naming senator j.d. vance has his running mate. let's go more from eamon javers at the rnc in milwaukee. >> reporter: you guys have been having the right conversation about this ticket this morning. trump's selection of j.d. vance is really a giant green light for economic populism in the republican party, signals where trump wants to go, where the party is going in the future. i've seen, frankly, very lazy analysis on wall street over the past 24 hours looking like this is a second coming of the george h.w. bush administration. this is not that at all. this on economics is not your father's republican party. so take a look at what j.d. vance means, what donald trump means when it comes to big corporations. for example, big finance and wall street capital. j.d. vance is a skeptic of a lot of institutions. here is j.d. vance talking to big bank ceos in deese.

he's discussing the idea that big corporations are injecting sort of woke values into their workforces and into their customer bases that conservatives don't like. this is not a conservative movement that sees itself as i'm patco with big ceos. it sy sees itself culturally in many ways with big ceos. here sr. j.d. vance last year. >> if you guys are going to use the financial power that you've accumulated to go to war against the values of our voters, impoverish our stints who rely on cheap energy and destroy the jobs of people who work in the energy sector, why should we listen to you when you come and ask us for a tax break or for regulations? i'm one republican who wants to have a good relationship with you, but the more you guys insult yourself into these fights, the less good that relationship will be. >> reporter: i think that captures the tenor of the

remarks from j.d. vance there. this is a republican party now that views sort of the coastal elites who run large corporations, particularly on wall street, as potentially on the opposite side of a giant cultural war that's happening in this country. that leads you to a whole bunch of different conclusions. one conclusion the economic populists have is policy has been focused too much on consumers over the years. that is, making prices cheaper for consumers when, in fact, it should have been focused on making wagers better for workers. that leads to a whole different set of policy choices on a host of issues. take, for example, the issue of defense stocks. i saw analysis that this was bullish for defense. i think you have to look at cutting back on ukraine spending as bearish. a lot of that spending is going to american defense companies. you have to look at the approach to the dollar. here is j.d. vance's comment about the potential of devaluing the u.s. dollar. he said earlier this year

devaluing is a scary word. what it really means is american exports become cheaper. again, the idea here is devaluing the dollar is potentially a good idea because it makes wages better. it increases exports, increases opportunities for american workers. i think that's the way you need to understand the shift in the approach to the economy from this trump/vance ticket. >> brilliant analysis that i'm not hearing anywhere else. pro worker is exactly the biggest fear democrats have because this country has gone -- i agree with eamon. i think techs have gone too far for the big. if you talk to paychecks, it's the small and medium covered by the regulation. that's the largest payroll company. they would tell you this is exactly true. >> we'll talk about how it applies to a bunch of the sectors eamon mentioned. got some news on unh today,

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we'll get jim's take on the s&p 500 gainers in. news out of star bird joining elliott over there. of course, unh and some of the guidance they're giving regard the stn atatt ckco oth lesha.

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let's get cramer's "mad dash." >> large cap stocks, the dow down and that's silly. numbers basically in line, the medical loss ratio was fine. what i think matters, now it's done. when you finish that quarter, now we realize if we get president trump in, then what happens is there will be no crunching of their margins. i think any president wants to attack, if you're trying to get the populous thing going, you want to attack these guys because they're viewed as the

villains. that's not the way the republican party will view it. i think it's live and let live. therefore, you're over the worse which is the hack. the hack is now quantity need. now you go ahead and buy the stock. if the republicans win, they're not going to kill united health. they're fine. they're not going to say, listen -- remember, you're dealing with obama care and they want to wipe out obama care if they get a chance. if they sweep congress, they will. >> they've tried many times. hasn't quite gotten there. >> if they sweep, i think they'll get it. i think united health is cleared to be one of the stocks you buy if you want health care. i still think -- remember, president trump was really negative on the drug stocks last time. and the democrats and republicans, i thought the republicans were more negative on the drug stocks. i don't think he's going to repeal the tough stuff. a lot of people feel they can repeal individual element of ira which is medicare negotiating,

and i don't know how they think you can do that unless they think he's gone rogue. i don't see he has the power. >> unh does affirm and put numbers on the cyber costs, some 92 cents for the quarter. [ bell ringing ]. >> at the thbs real time exchange. at the big board anheuser-busch and team usa getting ready for the olympic games in paris just a couple weeks away. alit at the nasdaq, good foods celebrating. the picture looks pretty good. >> yes, it does. the kinds of things going down, downgrades of general mills. speaking of nasdaq. why? they're not cutting pet prices and pet is down 8%. the companies that can't adjust to inflation are still going down. boy, the small and medium-sized business on fire and deservedly so.

exactly what eamon was saying. it's who the republicans favor. they want those companies to grow. look, i worked with larry kudlow for a long time on our network. larry i think is going to have a high-level position i believe if trump wins. if he wants him. obviously he's at fox right now. he's always said small and medium-sized business, that's who we're for. that's trump's sweet spot. he loves those companies. >> as for the iwm, small cap etf up 8% in the last four sessions, best rally since 2020, june of 2020, jim. as for the russell, one out of five members now at a six-month high. >> isn't that something? we had larry fink in yesterday from blackrock saying customers want a little more risk. we're talking about etvs, that's 10 trillion. my bad i didn't say larry fink. $10 trillion. you've got to be kidding me that one company -- >> what's interesting is morgan

stanley said they're also on track. >> morgan stanley is the poster boy of a stock that ran up in anticipation of fantastic numbers. you're not going to get fantastic numbers from investment banking and m &am&a. the stocks ran, that's the culprit. it's that people got too excited. no one gets that excited about bank of america because it's not that exciting. that's okay. i don't want excitement. wow, an exciting bank. no. if i want excitement, i'll go to nvidia, not bank of america. >> speaking of exciting, this is an interesting day in which consumer discretionary will lead, better than a 1% gain. >> retail sales number. >> we've got this weird situation, carl, where things are happening the way they're supposed to. oh, strong retail sales, let's go buy retail. the market is very 1995. we had people talking about how after you get the rate increases are coming down, the market does

well. we have a market that's making common sense. oh, this looks good. then you saw a downgrade of dollar tree today. that's because tariffs. there's no doubt, i mean j.d. vance is mr. tariff. he's incredible with tariffs. >> yes. now we have to start dissecting cost of goods baskets from china at every retail. >> we do. when you read hillbilliology, it talks about companies abandoning these towns. they would do better with tariffs. he's all over the map. you can read it as a left ring manifesto or right wingman fest toe. he's now saying it's a right wing manifesto. a lot of it is self-reliance. the old time republican, we have to have more self-reliaself-rel.

there's such a thing called bad luck. a lot of people in the book i thought had bad luck. big steel mills closed. that's not the fault of the people who work in those towns. >> while we were on the subject of unh, jim, just the idea of hacks, this disney news regarding some of their slack information in which conversations about ad campaigns and hr personnel were reportedly leaked -- >> this stuff is so bad. i thought more should have been made of the at&t -- whthat was frightening leak, the att with snowflake being part of the problem. >> that's right. friday. >> that was not good. >> disney has been a horrible stock since peltz left. that's why i said it. i've invited hugh johnston on the show many a times. when the quarter comes, i hope he sits there and explains it.

>> it would be interesting to hear where they see the cruise business, more in the theme parks. the box office narrative has taken a turn since the last quarter. >> maybe not as woke. your royal caribbean interview tells me, listen, people want a real bargain. the disney cruises are bargains, but they've got to get control of the narrative, control of the ceo. boeing and disney. do people just not want the ceo job. you make 35 million minimum. you make lebron money. the only way to beat lebron is to take a ceo job. >> we talked a lot about starbucks yesterday. evercore, yum goes to 145 there. >> starbucks, i thought it would be down more because they're saying both the u.s. and china are bad. yum, it's not just pizza hut. people are saying taco bell is

weak. i don't know about that because the stocks have been down and down and down. i guess it's never too late to downgrade or say something negative about starbucks. we had a critical conversation with a ceo about starbucks. i continue to believe part of the problem with starbucks was the alleged connection to israel which is nil. so there's a possibility the u.s. could surprise. china is a disaster area. hugo boss -- >> it was burberry yesterday, boss today. >> holy cow. anything that's even remotely flashy is just not doing well. >> there's a look at rich month. shares down 9% in europe. cuts their earnings and sales forecast. >> china is a disaster area. i'm waiting for one ceo to come on and say china is a disaster, we've got to get out of china.

i remember when procter & gamble said it and the stock got clobbered. somebody in this business has to come out and say china is a disaster and we're done with it. >> where you're exiting production or just exposure? >> exposexposure. unless you make it there -- look, apple is probably the most cherished employee other than costco. costco and apple are the best employers in china. i think the government needs employers. i think we're going to find companies saying, listen, we're moving away from china if you think trump becomes president. wow, vance hates china even more than trump. can you imagine? >> meantime, jim, brings us to cars. i want to play a bit of sound from mary barra yesterday at one of our ceo events talking about production targets, sales targets in teshgsv business. take a listen. >> general motors moving to an all-electric future, and almost what's more important is the fact that the vehicle really is

a software platform. we're seeing a bit of a slowdown right now. we won't get to a million because the market is not developing. we'll get there. so we're going to be guided by the customer. what i'd like to tell people is getting an electric vehicle and drive it. it's a lot of fun. >> you've got to buy gm off this. they're losing money on these cars. ford is losing a huge amount of money on ev. we don't want them to sell stuff they lose on. that's how they blow the quarter. ford has been a mall any sent gm. ford's run is about jim farley saying, if we're not making money on something, we're not making it. that's what we wanted from ford, not sales, but margins, earnings. i think ford is going to give you great numbers. >> i think we're going for five straight on ford at least. >> jim farley, this is his quarter. i think they ought to do two things.

i think they should sell even fewer evs and buy a lot of stock back. look at gm, mary barra, when she announced that buyback -- barra is great. all we ever do is talk about musk. >> as we should. enormous market share of the business. >> true. barra is not a ratings magnet, nor is barra. musk has a very funny -- he has good memes. he's good at the meme business. >> very talented in social media. he literally owns social media. >> literally and figuratively. >> morgan stanley, adam jonas has a note about climate. we're going to hit near 100 degrees in new york city. he thinks episodes like that will draw more attention to renewables and evs. >> i appreciate the fact that jonas, not unlike charles dickens, feels the need to right every day. >> match.

>> that was one of the notes which basically challenges the competence of management. there's one very funny line in there which says the ceo is in the gaming business. he should be able to do better. i'm thinking, tinder, hinge, draftkings. maybe jason robins should move into the dating game. that was a stretch, but the stock's performance is pathetic. i think justin is doing a grade job at starboard. he's right. go get 'em. >> the bernstein desk, they say they just want this thing to be sold to private equity. >> well, it's certainly cheap and hasn't kept pace. they own the segment. how do you own the segment and not make more money? this is how people meet. the amount of people who meet like this -- i didn't meet like this. i had a couple shots at it and didn't meet like this. that sounded bad. >> where are we, jim, on mega

cap tech? he saw insiders selling out of mark stephens at nvidia. >> all right. which is funnier, how much he made on the sale or how many shares he's still got to go? holy cow. by the way, there's going to be legendary sit-down between zuckerberg and jensen on the 29th. this is just a meeting of the minds. remember when these people -- it was worlds collided between those two. now they're going to sit down and talk to each other. amazon is the leader. these guys, it's one day. tomorrow it will be google. there's like a queue. >> earnings expectations for ai in general is moderating. >> it is moderating, absolutely. i'm not backing away from

nvidia. i still think when you listen to super micro, we had them on last night. oh, man. they're talking about just gigantic numbers. they're the partner of nvidia and they certainly -- made it very clear last night. that is the best performing stock in the s&p. >> interesting data out of the bofa's fund manager's survey, geopolitical risk has outpaced inflation as the tail risk. >> how are you going to get the f-35 into the straits of fur mows is a? i think how you defend taiwan is going to become a major issue in this election. i'm calling him president trump because he was president. he has strong views on how the chinese should handle the issue. it's not a discussion. it's more like a one-way tale. he's not trying to get more business out of china.

secretary raimundo is the person running the china thing for biden. no love there. she was hacked while she was coming back from china. >> what do you make of eamon's comments about the impact of a vancian point of view on ukraine. would that put raytheon or anybody else at risk? >> i think that's a really great point. i think these companies are entrenched with the pentagon. they're not going to see less business. the pentagon loves rtx, just loves them. they love lockheed martin. they love companies that make big hardware. does that mean they're not going to be able to make the $500 drone from iran? no. i bet you vance says, listen, we've got to make more cheap military. i wouldn't be surprised if he didn't say we have to have fewer men and women exposed. wouldn't every plane be shot

down perhaps if it can't reach? how do you put a carrier so close to taiwan to defend it in china? i haven't seen how they can do that. >> we had comments the other day from general milly looking at long term the percentage of military personnel that would not be human essentially. >> it has to go that way. that's not the way the pentagon wants it. they just don't want it. they want men and women making the decisions. i think that when you sit down with jensen huang who is not talking about the military, boy, everything that's made -- there's so much of the military hardware made with gaming chips. >> really? >> yes, yes. it's nvidia, the fastest chips in the world. i think we ought to be more sensitive to what silicon valley says. pal t pal palantir. >> they gave me the consumer package good guy which imention on air because i thought, did you hear me what i had to say on

air? no. by the way, we have a new bank winner, pnc, like they ever do anything wrong. it doesn't even matter. i don't care what they do. bye, bye, bye. >> loans down one and deposit down two. >> doesn't matter. pnc is sainted. they represent the great middle class. that's the rap. >> the one call we didn't goat that is notable is shopify. bofa goes to buy, up a few bucks to 82. that's almost up -- >> the president of shopify said what turned out to be very true. they're the small and medium sized business. that's the rap of the republican party. it used to be the rap i felt of the democratic party, but they're in favor of union. president biden has laid on the tracks for the unions. he ought to get them out of the

republican convention, the teamsters. i haven't seen the teamsters hate democrats and democrats had teamsters since bobby kenny. >> not like we haven't had a wave of startups, an historic period for business creation. >> if we're going to deal with reality, that's like a reality tv show. when i worked as a judge -- i was working with a judge named prentiss. how was it? never has a non-disclosure agreement been more helpful for me in my life. >> thank you. >> extended that to lisa detwiler, my wife. can't talk about it. >> jim, oil near a one-month low. a big reason why retail sales headline was different. >> true. people have to understand, there's a lot of buying of the oil stocks. if you go back to when trump came in last time, it was a

disaster for the oil stocks. all they did was drill and they lowered the price f. you believe in this, buy halliburton. it was self-fulfilling. all the companies decided to drill like crazy because trump said you could drill like crazy. they weren't worried about methane, about flaring. that lowered the price of oil and made the stocks horrible. they've got a lot of natural gas in ohio. >> yes, they do. >> i went to ohio to see chesapeake. they said, listen, the oil is going to come up. natural gas came up. let down. >> the big story in pennsylvania as well. >> yes. you're going to export all this natural gas, it's terrific for vance. sherrod brown never favors the oil companies. >> no, he does not. dow up to 300. up to 40k, seems like just yesterday we reclaimed 40k. >> the most incredible bull market in history.

>> watch bonds today as well as we got the powell comments yesterday and the fed speak continues pretty much all week long. we did get the two-year at the lowest since february 7th. got to 4.42. and retail sales came along and got us back to 4.46. stay with us. do you have a life insurance policy you no longer need? now you can sell your policy - even

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keep an eye on a name that jim has liked until now i think. reddit gets downgraded, jim, over at loop to neutral. >> shortsighted. pinterest and eddette are the winners. too much advertising. that's a high-quality problem. >> you see the performance of the ipo doubled since it came to market. dow up 330. stop trading with jim is coming up next. ♪ i am, i cried ♪ [ laughing ]

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it's time for jim and stop trading. >> big run in the hrs because rates are down. the local media is going to be the big winner because it works when you're running for

president and have the battleground states and that's nextstar media. it's a well run company. yields almost 4%. fubl like i do the pac money can end up in tv, nextstar is your play. >> that's isolated. you're not making a broad call on media names? >> no. you're making a one and done. there will not be a lot of post-election money spent, but nextstar is a great company and that's where the money goes. there's empirical evidence linear tv still works reaching voters. >> the redbird and skydance comments coming into the paramount world if you manage it right, jeff shell, would argue, there is a future. >> that's right. jeff worked at nbc. i have to tell you that this could be linear's time. it works. i mean having done local news, it works. that's how you reach people. >> it would confound a lot of

expectations. jim, we're going to talk to bristo brian moynahan in a moment. what's important. >> brian moynahan has been able to make money where others haven't. interest income, kinard about his bond portfolio was something i think the federal reserve propagated, which was wrong, and the tenor of the company's business. if you look at the stock this is the big winner for a long time. brian moynahan is not a promoter, he's an operator. he's a darn good operator. >> expenses up only 2 as well, the inverse of the conversation we were having on friday with other names. >> and digital, they got the best digital and people don't realize they've spent a lot of time on technology and they have the best ai. they use ai in a very progressive, productive way. they do a lot of things great, and it all came together this quarter. >> jim is going to stick around for that conversation. broin mine moynihan joining us

from bank of america. 40k, 606 and the s&p trying to get back to the highs. don't go away. .

good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla. live as always at post nine of the new york stock exchange. david faber has the morning off. stocks are rallying again, although we lost a lot of that early rally yesterday afternoon but we're starting strong again up 0.3% on the s&p 500. nasdaq comp is lagging because there are only two sectors lower, one is information technology for a change, because that's certainly been be a leader in the market lately. energy is also down today. microsoft is lower by about 0.5%. qualcomm, nvidia also lower. that's going to do it and why

the nasdaq is almost unchanged right now. dow is at a record high up 1% and united health is one of the reasons why off earnings today. it's very strong adding 133 points to the dow. goldman sachs adding another 62 points. home depot is rallying, caterpillar, amgen, and that's all part of the story. 30 minutes into the trading session. here are movers we're watching. shares of tinder parent match group in the green after activist investor starboard value built a stake of more than 6.5% in the name. got some reporting on what they're after there and i'll bring it to you in just a moment. more volatility hitting shares of trump media ticker djt, still up tunnel digits despite a fall this morning. watch the financials, bank of america, morgan stanley, charles schwab on the move after results. bank of america up 4% and brian moynihan will be with us later on this show to break down the numbers and what it says about the environment. >> busy morning with retail sales and business investors. let's get to rick santelli.

hey, rick. >> good morning, carl. business investors for the month of may, expected to be up 0.5% delivered. up 0.5%. what's unique here is that's the biggest build in business inventories going back to august of '22 nearly two years. yields have moved up since the stronger than expected retail sales and revises. we have another number out july read on national association of home builders market. for that we will head east to diana olick. >> rick, home builder sentiment dropped one point to 42 in july. that's a miss. the street was looking for a one-point gain. anything below 50 is considered negative sentiment. this is the lowest reading since december of last year. of the indexes three components, current sales conditions fell 1 point from june to 47, buyer traffic also fell 1 point to 27 and sales expectations over the next six months rose 1 point to

48. and that last one and the current overall number, is all about mortgage interest rates. the 30-year fixed was in the low 7% range for all of june, but then began dropping in july from 7.14% to now 6.81%. according to mortgage news daily. the expectation is that rates will drop further and that's where you get the gain in the last metric. rates had been over 7% for such a long time, that builders may not be feeling that today's slightly lower rate environment is in the numbers yet. 31% of builders said they cut home prices in july. that is higher than the 29% that did in june. sara, they're still trying to everything to get buyers in the door. >> yep. the high rate environment. thank you. diana olick. let's chew on the retail sales numbers for a moment. they were stronger than expected. never count out the u.s. consumer and the strength there. the headline number on retail sales comes in at about 0, but the expectation was that it would fall 0.3% and may, the

month before, actually got revised higher, revised 0.1% to 0. 3%. the control group that feeds into gdp, 0.9%. another surprise in a positive way and matching the highest in about a year, if you go beneath the surface as to where americans were spending it was broad basted in terms of where the strength was. we knew gas stations were weak and motor vehicles, too, because there was a cyberattack in one of the software platforms across m mvs and sporting goods and hobby stores. there were positive numbers everywhere else. i mean we saw that in furniture which had been a weaker category. building materials had a rebound off the may numbers up 1.4%. online spending very strong on the month. 2% on the month. and then restaurants which is

really the only services part of the retail sales number also coming in at 0.3% higher. electronics were stronger as well. so what do we make much that number? because it's weird, it doesn't necessar necessarily jive with some of the commentary we've heard from the retailers this earnings season and the companies that are about the value seeking stretched consumer, dealing with high rates, dealing with sticky inflation levels. so consumer is not out even if the consumer is cooling, which there's plenty of evidence to show this. they're still spending. that's still good. but the upshot for the market and perhaps why the 10-year yield is not moving significantly higher today and turned lower again and bmo put it this way, carl, there isn't anything in the release that would shift expectations for september fed cut. that's the prevailing view in the market right now and the market has felt increasingly confident, despite these retail sales numbers. >> yeah. and then you got on top of that,

upgrades of names like shopify and you have the home construction etf up 2%, that's the fourth positive day in five. you're starting to see things clicking as people's expectations of a cut and get closer perhaps to the actual thing, the actual cut. >> right. the actual cut and now the market thinks september and december for the cut. and another read of how confident investors are in this is the bank of america fund manager survey came out where they speak to all of their fund managers and they get a pretty good read on sentiment and they asked rate managers biggest tail risk and it's now geopolitical conflicts. the two lines represent july as yellow, blue june. now it's geopolitical conflict over inflation. higher inflation. which had been the prevailing highest tail risk for several quarters in a row. it just shows you the risks have changed in the minds of investors and that's as we have seen continued disinflation and

potential move for the fed. the imf out with the world economic outlook projecting global growth will be in line, 3.2% in 2024 and 3.3% next year warning upside risk to inflation has raised the prospects for higher for longer rates. imf chief economist joins us now. so are you not convinced, pierre, that inflation or disinflation coming down to target levels at this point? >> well, sara, we had a very good cpi report for the month of june, of course, and everyone has acknowledged that. it was very good news on overall inflation, but also on core inflation. but having said that, we've seen a few bumps in the road already in the first part of the year, and some of the underlying concerns are still there, in particular, i think when we're looking at services inflation, there is still a sense that

services inflation could be pushing higher than really where it was prepandemic and that could, in turn, push up the raw inflation numbers. when we're looking at wage inflation, it's also been quite robust. a lot of that is still catching up to lost income during the inflation surge, if you want, so it's not necessarily a source of worry. there's no wage spiral or anything like that. still a point of concern going forward. i think we want to be prudent and we want to highlight we got a good month, but we got a few months that were not as good earlier in the year and could take a little bit longer than maybe the markets are expecting at this point. >> you're not in the camp of september rate cut? you think that's too soon to expect it? >> we're more in the camp we could be on course for having some cut in the latter part of the year, maybe just one cut for 2024, and maybe the rest in 2025 sgroo do you not think rates roo

restrictive and hurting the economy the longer they stay at the elevated levels and that's a bigger risk than inflation remaining sticky. >> this is the balance the federal reserve has to assess. there are signs the labor market are cooling and they are welcome signs because for a long time labor markets were tight. we had vacancy unemployment ratios that were high and coming down, but unemployment rates remain quite low. it's a fairly solid labor market at this point. the fed wants to be careful it doesn't want to precipitate a downturn in the labor market that is not necessary, but it has to keep its eyeson inflation path and right now, good news for june. we'll have to see what happens for july and august before i think they will be in a position to make a call for september. >> in this outlook you also -- and you've done this before, but it sounds like a ramping up criticism or at least alarm bells around the u.s. debt, and

the deficit picture in a healthy economy. and the kind of path that we're on. what is the risk here? and how close do you think we are to realizing that risk? >> well, i mean to be clear, the fiscal situation in the u.s. is clearly sustainable. i mean there are a lot of things that the u.s. can do to make sure that there isn't really something that gets out of control. so we're not concerned from that perspective. where we are concerned is we're seeing in an economy that is near full employment, that is going quite well, we're seeing a fiscal stance that is quite strong, that is leading to increase in debt to gdp levels. we're seeing that while, you know, in the context in which medium term growth may not be as strong, in which interest rates are higher. doing more on the fiscal side would seem prudent to us,

especially in a sense when you have nervousness in the market around u.s. debt this has strong pillovers to the rest of the world as well. this is a risk factor we highlight and we wish to see a little bit more prudence on the fiscal side. >> we're in an election. i don't have to tell you. i mean not much in terms of prudence. in fact, there's more talk of tax cuts on one side and spending on another. >> yes. we're seeing that in a number of countries. 2024, of course, is a heavily packed year in terms of elections. that is one of the concerns we have looking at not just the u.s. but broadly. s a number of countries need to do more to increase the buffers that resulted from russia's invasion of ukraine and maybe not enough efforts are being done in that space. another area where the economic policy is elevated is on the

trade side, those measures are increasing at a very fast clip. this is something that is potentially, you know, is going to start hurting the global economy and we're concerned about that. >> but tariffs on the other side will bring in revenue which is needed. >> a lot of the studies that we see on the impact of tariffs and previous tariff rounds imposed by countries is a lot of the incidents of the tariffs is borne by the companies that impose them. costs on the countries that put a tariff in place and on the rest of the world. it's really something that should be used very, very carefully. it doesn't mean that tariffs should never be used. there are some legitimate reasons for using them. thinking about them in the multilateral setting would be a preferred approach. >> you have been warning about that, the imf, on tariffs and trillion policy. before we let you go i want to ask you about china because we had another batch of weaker growth. gdp and retail sales this week. the commentary from the luxury

players, today we've got hugo boss, hasn't been all that great, what's happening with the chinese economy? how much is it slowing? >> well, we had -- in fact revised upwards our growth projections for china in our data we published today for 5% for 2024 and 4.5% for 2025. some of that revision was on the basis of robust consumption growth and exports in the first quarter of the year. there is still underlying weakness in terms of consumer confidence, the proper sector is still a lingering problem, the crisis has not been fully addressed and this wocould weig down on domestic activity going forward. that's what we're seeing. our projections were close before the release of the second quarter numbers for china at 3.7%. they are coming in below what was expected. they seem to indicate that there is some materialization of the risks we flagged and that could lead to a downward risk going

forward. >> why don't they stimulate domestic demand? >> well, they've been doing a few things. they've been doing a few things on investment. they've been doing a few things for the property sector. they've been doing a few fiscal measures that auto would help households replace maybe some of their durable goods. clearly not enough and there's a sense in which the uncertainty is high, perceived uncertainty by chinese households is fairly high. some of that will probably require deeper measures, deeper reforms, that would help sustain the domestic consumption in the country. >> you've been urging, treasury has been urging, business leaders have been urging. thank you very much for the update. appreciate you coming on with us first. pierre owe live. >> morgan stanley shares close to the highs of the session. to leslie picker with a conference call under way. >> carl, yeah, morgan stanley rebounding as the conference call is underway. it's amid some positive comments

from ceo ted pick about the investment banking environment. the institutional security side revenue gained 23% year over year supported by a 51% jump in investment banking. the cfo told me by phone earlier their pipeline is building from here and then pick fielded a question about when we'll see a real rebound in investment banking which is still below historical levels. >> a number of folks have been calling for this, and it has been sort of a delayed chutes, if you will. but i think now we're seeing some tempering of the inflation prints and some normalization rates. we're also beginning along with that to see the market broaden out. you, of course, have seen that over the last number of weeks. >> pick said he thinks we're in the, quote, early stages of a multiyear investment banking led cycle saying his case is bolstered by the belief that the economy is going to hold up, plus some regulatory

normalization. numbers from the other side of the business, that's kind of what initially spurred the stock to decline earlier this morning, wealth management revenue coming in a hair below street expectations with net new assets of $36 billion slowing from this time last year. investment management saw slight outflows while last year it had inflows. the cfo saying net flows will be lumpy and impacted by the macro economic environment and business specific factors and noted that tax related outflows and increased spending, particularly among high net worth clients, impacted flows, carl. i see just on this live transcript that's what they're talking about right now, drilling down into kind of that high net spending that they've seen and how that affected flows in the quarter. >> leslie, appreciate it. busy day for financials as we wrap up that part of earnings season. more from leslie this morning. as we go to break a road map for

the rest of the hour. looking to buy a kashgs now might be the time, at least by one metric. we'll talk about why later this hour. amazon's prime day kicking off. what does it mean for the stock. more with one analyst who issued a warning on the name. a huge interview, bofa's chairman and ceo brian moynihan with us as shares gain on these fresh numbers and the dow zeros in on a 500 point gain this morning. stay with us. the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away. the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai. while i am a paid actor, and this is not a real company,

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shares of tinder parent match group sharply higher at the top of the s&p after news activist investor starboard value has built a stake of 6.6% in the name. in a letter to match's ceo and cfo jeff smith, the head of starboard, writing that match is, quote, deeply under valued and may be well suited to operate as a private company. we helicopter on adding that the board must "must fully understand the potential value creation opportunity through the sale of the company and compare alternatives on a risk adjusted basis." on their constructive engagement with match which starboard apparently does have, a few of starboard's recommendations for turning around the operation or growing it further and turning around the share price include tinder needing innovation, they say that match can boost margins and profitability, they have to fix the operating leverage and

that company should look at buying back shares. carl, the bottom line is that adjustment in starboard see this as a great opportunity in what they see as a secular growing business, online dating, not going away, and that's not being disruptive with two headline brands hinge and tinder just needing to grow more. i mean they're still growing. it's still growing about 6%. that's a step down in where they had been. with the right mix of innovation and the focus on profitability and this is something starboard has done and come in to places like salesforce and done, they feel like it's a big opportunity and a big under valued opportunity for the shares. if they can't turn it around it's potentially an opportunity to take it private and the board should consider that and potentially selling the business as well, and i am told there are meetings and it is constructive and we'll see where this goes. investors are excited about this one. it had lagged, they had a huge

run up during covid, match did, and the past five years or so it's significantly under performed its pearce despite the fact that it had been growing. >> the bernstein desk today, what i think was missing from the letter was a tangible plan to reinvague rate paid user growth and why the real plan is to sell. >> that could be, but i think when it comes to user growth innovation, i mean, innovation at tinder and they have a ceo who i'm told starboard likes and likes the background of the gaming background and he's been on the job 18 months and they would like to see more in terms of cranking up the growth story. >> meantime, amazon is kicking off its two-day prime day. adobe analytics predicting it will set a record for online spending in the united states expecting $14 billion in sales across both days, that would be a 10.5% bump. joining us evercourse mark mahaney, has a 225 target and

you're removing it as a top large cap long. >> well we've had a pretty big aamongst the mega caps, about six of these the super six, i couldn't help himself, but if i look at amazon, meta, google, netflix, spotify and trade desk, these stocks are up 30 to 60% year to date. you know, i think you want to, when it comes to looking for out performance from here, i think you want to kind of look out a little bit. we kind of bumped up names like shopify and uber. i continue to like amazon. i think there's a great long-term thesis here. margins are rising. aws growth accelerating. free cash flow inflecting up. a lot of goodness to the story, you know, just it's nowhere near as dislocated as it was last year when i think it really merited being a top pick. >> right. can you put into context for viewers how important prime day is for the at least the quarter? >> sure. it's probably mid single digit

it percent contributor to the quarter. this is almost as big for amazon as, you know, selling days around thanksgiving, black friday. this is the tenth year i think that they started in 2015, so that would make this the tenth year of prime day and every year it's become a bigger contributor. of course, it's a record number of sales that contribute to the business. we think it's roughly $15 billion, but somewhere in that range. the company won't disclose the actual impact unfortunately, but it's a big marketing event for the company, too, and also allows them to kind of maybe move into different areas, to kind of introduce some of their users and customers, about 90 million amazon prime customers in the u.s., allows them to introduce them to new products. one of the more interesting ones amazon is leaning into is amazon pharma. i wouldn't be surprised to see that cross promoted during the next two days. >> yeah. great chart yesterday out of blackrock. rick reader looking at what's happened to average delivery times in this country, a lot of

the amazon, the tip of the spear, of course, incredible efficiency in deliveries over the last decade or so. appreciate the help on this important day for retail. mark mahaney. >> thank you, carl. >> still to come what the morning retail sales numbers mean for the federal reserve and your portfolio. goldman sachs chief u.s. equity strategist joins us next. later bank of america's brian moynihan with his read on the economy and what he saw in earnings. back in a moment. it faster and sell more. much more. take your business to the next stage when you switch to shopify. ♪exciting music.♪ [mud splat.] [bird squawk.] and that's why i never drive those guys. the party's over big guy! we're tired of hearing “i don't wanna get my truck dirty.” with weathertech laser-measured floorliners front and rear... a seat protector ...and full bed protection...

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welcome back to "squawk on the street." the ai boom has certainly been fueling this market to record highs. our next guest says the ai trade is under increasing scrutiny. investors are concerned about the potential returns to the hyper scalar's ai investment spending. joining us at post nine is goldman sachs chief u.s. strategist david kostin, s&p target of 5600. welcome back. >> nice to see you, sara. >> nice to see you, too. we've seen small caps kind of reassert themselves and an alternative up two days in a row at a 52-week high. is this the unwind of the heavily concentrated ai trade? >> the way to think about it is

the market itself index is up 20% year to date. typical stock in the s&p 500 is up 7. that gap has largely been driven by the major five companies which are up dramatically and helped lift the index. our forecast there will be broadening of the market over the next six months. the assumptions we make in our model is that 5,600 will be the level of the market at the end of this year. baseline forecast. economy slows, fed cuts interest rates two times from now to the end of the year, ooerpg rise 8% and the multiple down slightly. that is the baseline forecast. there's scenarios where you could have a higher level of the market on different assumptions. broadly speaking you get expectations of broadening the market. >> what is your confidence level in the broadening of the market and what has to happen to see that. >> when i think about it in this way, since the start of the year, the big four hyper scalar stocks have increased their

capex and r&d spending expectations this year and next year by $65 billion. analyst estimates for 2024 and 2025 have increased capex spending by $65 billion. your sales forecast for those companies in calendar '25 and '26 have increased by $35 billion. so that is prima facie evidence right there that the spending is not expected in the analyst community to kind of follow through generating additional sales. now that may happen in 27, 28, 29, further down the line, but from the near term perspective that's where portfolio managers are asking the questions. we had the goldman sachs financial services m&a conference with about 250 financial services executives, private, fin technology, public companies meeting in new york and asked the question to those in the audience, where are they spending ai? what are the use cases they are finding? i was surprised how few companies are thus far embracing the ai opportunity set.

now that may -- they're testing certain things, and that's where the questions come. we're getting more and more questions from portfolio managers which is where's the beef and where's that going to take place. that's where the debate is right now. the market has been led by those companies year to date. >> so, david, of the small caps and of the broadening is there a part that you see as particularly under valued. >> one of the things i think about is the fed ant the expectations that the fed will be cutting interest rates starting in september and probably december as well. that has historically been a benefit for small cap companies where basically 30% of their borrowings are in the rate form and therefore lower interests, lower interest expenses and higher earnings a consequence of that. that's one area you want to think about from the russell 2000 or a broadening of the market generally. the premium growth that's expected in some of the largest tech companies is likely to

narrow going forward, meaning the expectations of revenue growth, of margins, that's likely to be less dramatically above the forecast for the typical stock and as that narrows, we likely will see maybe more of a compression in valuations. some of the biggest stocks trade high growth rate expectations, eight times enterprise to sales overall market maybe three times. that gap as well depending on the big premium, big growth to the extent that's delivered upon, that's great, to the extent it's not that would be a risk. broadening of the market would be a general thought process now. the market has moved 20% this year. >> a lot riding on those upcoming rate cuts. thank you, david, from goldman sachs. >> when we come back, bofa's chairman and ceo brian moynihan talking about the quarter with the russell with the near 2% ayitusrng. this moin st wh . lling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr

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welcome back to "squawk on the street."

bank of america shares getting a boost after second quarter results beat estimates on rising investment banking and terrific asset management fees and so many other terrific lines. i want to thank the gang here for letting me play a little. joining me now is bank of america ceo brian moynihan. i'm going to start with something atraditional from our point of view, congratulations on a great quarter. >> thank you, jim. good to see you again. >> one of the things that's happened is their net interest income, i know is one of these lines that maybe the investor, the home pay not know, but it's important forn banking earnings, you actually called the bottom. can you explain how important and the forecast has got to be good with what you talked about within ai. >> if you think about our 25 be there in revenues, nearly $14 billion is nii, net interest income, the difference between the depositors entrust to us and

the loans we make. that number we feel bottomed this quarter. a massive change in interest rates that have settled in and with we can talk about the economy later. that massive increase has settled in, the positive pricing stabilized, positive balance has been growing and gives us confidence when you do simple azumtss from now the second quarter to the fourth quarter. we told our investors today and put in our documentation the estimate for the fourth quarter is 14.5 be there, an increase of $600 billion per quarter over a couple quarters which shows the balance sheet starting to generate earnings again and that has been a period of where we've been coming down and now starting to go up slope and that provides great earnings momentum for the company. >> at the same time one of the things that should have happened to this point with the vicious rate hike cycle is i would have expected a lot of defaults. it's kind of the opposite. in particular, your commercial real estate makes me feel much more confident about our country because you are the biggest in

our country. >> yeah. in a commercial office space, our commercial real estate exposure is 60 to $70 billion. our office space is down a couple billion over the last four or five quarters. chargeoffs, nonperformers, all fell during the quarter. we aggressively worked on it and aggressively pushed as they usually say the pit through the snake, getting to appraisals and seeing it come down and expect second half to be lower chargeoffs in commercial real estate office than the first half. it was always well secured. ltds were strong. there's a lot of work to do in the commercial real estate sectors around the country but we're seeing the activity in our portfolio because of the high quality nature of it basically work itself through. >> now i think people should recognize that you are out front in terms of digital and digital platform. what i think a lot of banks do is they say that they're using artificial intelligence to make it so they're more productive,

but a lot of them are big hat and no cattle. you're putting your money where your mouth is and your ai business the way you're using ai is right now already additive. if you can tell us what you're doing with digital and ai i think it will explain to people why you have such good expense control. >> year. expenses of which $300 million was compensation driven by the out performance on the fee base side of the company. going to your broader context, you know, this is not something you can do overnight. you know, 25 years ago we started deploying, you know, online banking and then mobile banking and then the advent of the iphone and took off with that and up to 40 odd million checking customers. we have 47 million digital enabled customers. wealth management business, 75, 80% of the business is digital. half sales are digital each quarter now.

the interactions 3.5 billion times people interacted with us digitally. you're driving that business which allows you to maintain that expense base. we have operating expenses on a quarterly basis about where we did in 2015 or 2016. if you think ability that that's almost eight or nine years of inflation and higher costs and more people and growth and a bigger company through the implementation of digital capabilities. what artificial intelligence does is takes that to another level and we see the capability we've. up to 19 million odd users, doing 150, 160 million interactions a quarter. each would have been a text or phone call and e-mail and direct response and now it can answer the straightforward questions. it is a straightforward, processing engine which we developed ten years ago and put it into service five or six years ago and it's been growing and we've taken that technology and applied it tother places. we think there's great hope for ai on taking models that are

built for specific purposes, applying them to our data, and then make sure they're fed right, applying them on our premises so we make sure they're security with our customers and help them do tasks and take away work that teammates would rather not do and replace it with work they would rather do. >> i.e., better margins. what's happening with the consumer? it's been confusing to read different earnings reports from consumer and retail companies. a solid retail sales report. jobs, jobs picture still okay, rainy though it's cooling a bit. what's your sense of things? >>. >> if you go back a couple years ago people thought when you looked at consumers, they were going to take their stimulus rate of funds from the pandemic, spend them all down, accounts were going to go down, delinquencies start to rise, et cetera. none of that has happened. about six or nine months ago you see the consumer slow down, the higher interest rate impact, job

turnover slowed down our attrition rate dropped. getting paid more money, inflation eating up, getting more careful. think about the last two or three quarters from a 6% year over year growth rate to about 3.5% year over year growth rate in consumer spending. that means all the money goes into the economy over our consumer accounts added together, debit, credit card, zele zelle payments, that 3.5% level running even in the first part of july is consistent with the low inflation 2% type growth economy we saw in the 17, 18, 19 arena. so what i've said is, in my mind, the way to simplify this is to say the fed has gotten the consumer in the right place. now they have to be careful they don't go too far and dispirts the consumer where she slow down the spending, and it goes negative. that's the customer money moving into the economy. that is $4 trillion plus at bank

of america. it's a big sample. you've seen it slow down and now we have to be careful we keep the balance right. >> sounds like you want to see a cut? >> i was going to say --. >> that's not what i want to see. >> we need cut. i listen to your quarter and look at the loan, the rate of decline of growth of loans, and if i'm listening right now, and i'm jay powell, i would say you know what, we don't have to do july but we have to do september. >> the market is now at 100% in september. the nii statistics we gave you early jim, assumes september, november, december. our research team, that's what the market has, our research team has one cut but my guess is they're going to move that around. they have four cuts for next year. the real question people have to straighten out is, there could be interest rate cuts but our expectation as a company and the research team which does a great job for us, 3.5% end point on the fed funds rate.

it comes out and sits there. higher growth, higher inflation economy the front end will be higher. whether 3 or 3.5, different than the last 15 or so years where it's been next to nothing except for a short window where it was raised and cut before the pandemic. if you remember. so getting to more normalized where the 3, 3.5% fed funds rate which is more consistent, 4, 4.5% 10-year or something like that would be much more healthy overall, evidence good growth, controlled inflation, and a flexibility to move the rate structure up and down in response. and that's what our team thinks happens between now and 26. we'll see. but i think all of us believe the consumer slowed down enough, borrowing demand by businesses, okay, as sara said, it's okay. there's nothing wrong. consumer defaults are still well within our expectation to normalize where they were in '19. commerc commercial defaults low. now it's time for the ted to get

the balance back. the retricktive rate is higher than they need to have for the economy to go towards 2%. and chair powell said that. we see the statistics to support that. >> when you think about things that might impact the consumer mindset negatively is it about employment growth or the availability of jobs and how does the wave of home run equity in place right now, i think the other day he put it at 17 trillion, help support the consumer mindset? . what's good for the consumer, they're they're employed and earning more money. the amount of inheritance is very high. the money transfer starting to take place. those are good benefits. against that, housing prices are high, rate structure is high and getting into homes is high, inflation slows them down. we have to be careful pause because the whole consumer is a bunch of different people, a wonderful group of people, wonderful group of customers for

us and they're affected differently by the market out there. by and large the savings have gone up, the wealth gone up with the stock market and housing appreciation. getting into a house is more expensive and that equilibrium, all you guys are free market economists, that equilibrium will come in sync but it takes time to adjust. you've had this massive stimulus we have to be careful. the federal government deficits, there's work to do on the economy with 4% on the economy, than 6% unemployment. turnover rates in companies are fine. everybody is okay, but we have to make sure we manage it well. now it is the hard part now again. it was hard earlier on. it's now hard again because there's really judgments have to be made to fine-tune and that's what we see. >> brian, i wanted to ask about back to your bank, the return on tangible common equity, we've talked about this before, but at 13.6%, so far below jpmorgan's

around 20%, for a bank that you have such -- so much lower capital levels and we've been talking about it before but worth mentioning because it comes up in conversations with investors and it is a big gap for two businesses that do essentially the same thing. >> yeah. there's a mix of business question and, you know, the market is doing well if you look at those businesses growing and doing well and they produce a lot of incremental profit. we're more of a -- our earnings are half consumer and wealth management and that drives things. the 14% numbers is way above our cost to capital and we expect that to go up. our nii is d as it starts to grow that will start to happen. we're carrying a lot of excess capital because of the rule changes, our capital ratio is 11.9%. the requirement is even under the new clause that came out is only 10.7%. we've had excess capital that's been stored up. we are starting to return that capital more aggressively to the

shareholders prior to the pandemic. the pandemic came and we had to slow down. went a couple years and started returning it again. guess what? the results banged around, the new capital rules, everybody held back. we bought back $3.5 billion shares. we bring down the equity and the nii comes it will keep moving north. our job is to return drive good returns for shareholders and those returns are very strong relative to our costs, our stable earnings stream and the capabilities we have and, you know, our risk premium and all the wonderful stuff the markets talk about. we feel good where it is now and we know it will keep going north in want to talk about regulation for a second. there had been a belief after what we had the mini bank crisis perhaps your bond portfolio could create a problem. this was a complete kinard, us herly wrong and a -- utterly wrong, and a lot was from the federal reserve that likes to fight the last war. do you think under a different regime in the white house maybe you won't have to shadow box the short so to speak, trying to

drive the stock out. that was plain and simple what was going on? >> well, jim, you know, i think what allows us to have a big investment portfolio is the fact that we have a $1.9 trillion in deposits and loans and that amount of money keeps growing, frankly, we have to put it to work. the way to drive the value for the shareholder from those deposits is to invest in short and long-term securities and half of -- 52% of our securities is short. regulation and things like that, our industry is making clear our standpoints of what we would like to see the changes we would like to see, because look, the people that run these companies came out of the financial crisis as leaders that took a lot of us took over the helm after that, have had to fix massive amounts of change, agreed with good regulations that have been passed and saying wait a second let's keep the balance. at the end of the day what to banks do? they help the economy grow and prosper. they help the united states be successful. extra capital, 100 basis points

of extra capital, which doesn't sound a lot to anybody if you're, you know, a regular person out there, 100 basis points, 1%, 100 basis points of more capital, well if you do the simple math for us that's $16 billion, that's $160 billion of loans we could do we can't do t of risks that may or may not come true. we do the c-card tests say they have excess capital yet people say we need more capital. that's where the industry is trying to say, wait, wait, wait, we've gone through all of this, we've adopted a lot of consumer reforms, capital reforms. at the end of the day, the united states capital system is much more strenuous than anywhere else in the world because we have the higher standardized and advanced measures. so let's keep this balance. that's what we're talking about. i've never sort of seen the kind of arguments in the broad pop populous about bank regulation because we're not that

interesting. if somehow the person on the street is worried about what basel iii says is interesting to me. we want balance, predictable regulation because we want to help the economy grow. things that get in our way, we'll raise our hand and say, i'm not sure if that's right. >> like i say to carl, if i want interest, i'll go to nvidia. but i want to talk about zeitgeist, but everything you just said and you mentioned we're capitalists. it just seems like this is a great time for people, for regular people, as you mentioned, and i have rarely seen, other than when we were going around in 2008, 2009, the level of negativity, the level of anger, the level of belief there's no hope. how do you explain the little to no hope, particularly the younger generation, with the numbers you just put on which shows the largest commercial banker in this country is maybe having a golden age, which is really good for america.

>> i think at the end of the day, i look at what is happening as opposed to what people say is happening. if you look at the consumers in our business, they're spending money on foreign travel, they're spending money on experiences. that is inconsistent with a group -- remember, this is 47 million -- you know, 40-odd-million checking accounts. it's not a small sample. if you think about that, and they're taking trips and booking travel, that is a bit inconsistent with them saying, you know, i'm having trouble. now, the reality is they're worried. that's the back to the discussion we had before. inflation is eating up more wages. the wages have grown to meet it. wages went up first, inflation. people remember different prices. three years ago i remember i was with one of your colleagues and we were talking about economists' view of inflation. if goes to 116, economists say it's one-point inflation on 115 less than a percent. the person says, i used to pay

$100 for this and now i'm paying $116. that issue is on people's minds. that's where we have to be careful that if they're not slowing down, they're not dispirited. at the end of the day, if the u.s. consumer stops spending money in the u.s. economy, the u.s. economy will have a problem. i think that's where the challenge over the next 12 months is as hard as the challenge was to figure out when to cut down on the inflation to 2 1/2 years ago. >> well, either way, bank of america remains an inexpensive stock even after a terrific stock. brian moynihan, thank you for coming on "squawk on the street." thank you for coming on our show. >> thanks, jim, and everyone. good to see you again. meantime, bofa, gainer -- >> people should be saying -- people thrown out of work. congratulations to jay powell, congratulations to brian

moynihan. it's really -- it's just not fathomable how things can be so good and yet so many people be so down. let's be a beacon to not be down after listening to him. >> how about today, are you going to tackle some of that? >> oh, definitely. i have to figure out this disparity between how good things are and how bad people think things are. he's right about inflation but it's a moment that i can't believe jay powell pulled this off but we have standards. these stocks are still valued as if they're -- people believe this is the last good quarter no matter what. it could be the beginning of a period bountiful for m&a and bountiful for ipos because maybe there will be a regime change and m&a will certainly not be stopped the way it is with our current ftc and justice. >> is m&a the reason people feel so lousy when the data is so

good, and smart answers, first of all, cumulative impact of inflation. they don't care about interest rates -- increases on food since 2019 is a big deal and also the -- it's -- there are a lot of partisan questions, or responses. you know, when people get asked how they feel, it's how they feel about our government, our president, and that could play into it, too. >> it is incredible that who's in the white house and the election. i mean, i have to go back to the nixon period to see so many people so disappointed in government. jimmy carter. we have the greatest unemployment rate, we're the strongest country on earth yet it doesn't have any impact on people we talk to every day. inflation is bad. >> inflation is bad. >> thank you, guys. thank you for coming on. >> i'm glad we got him at this time. as we speak, dow's up 587 points. united health care is a big part of that story. other winners today, including

the bank. bob pisani has joined us at post 9 to break down some of the action we've been seeing. i know you've been encouraged by the broadening out to the small caps. >> yes. it is great to watch the rotation trade, small caps, value. i have been trying to point out to people, we're not used to looking at company on the value side of things, how strong value's been this month. ford, fastenal, masco. small caps have done well and people aren't even used to understanding what kind of small caps we're talking about. these are a lot of companies well known with small cap names, flor and rambus, semiconductor company, up 10%. flor up 15%. kb home is up 15%. beeser, up 15%.

the problem i have with the story is while small caps and value have been moving, so have many of the growth stocks. it's been broad but it's not like value and small caps are blowing things out. onsemiconductor and apple have been strong on top of american express, ulta. those are growth names. you see the growth stocks growing as the same time as the value. it's a broadening out but it's not like value and small caps are blowing out everything else. we'll talk more about that in the countdown. >> we'll see you in a couple of blocks as well. bridgewater's ray dalio when "money movers" begins after this.

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vanguard personal advisor can help you prepare for every chapter. we got this. that's the value of ownership. good tuesday morning. welcome to "money movers." i'm sara eisen with carl quintanilla from the new york stock exchange. bridgewater's founder, ray dalio, one of the largest hedge funds in the world, how he's looking at the outlook for stocks and the fed and rising political tensions in the u.s. and around the world. goldman's head of fixed income why the heat wave is over for the econ