spacex to texas. we'll tell you why. "squawk box" begins right now. ♪ good morning, everybody, and, to "squawk box" right here on cbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. here we go. tight e been a while since we saw red arrows in the morning. the dow is off by 60 points, the s&p by 50. the become loser, nasdaq off by 250 points. a little more than that. the chip stocks are dragging after the biden administration floated using stronger trade restrictions to crack down on the chip sector in china. separately former president

trump said taiwan should pay the united states for defense, and we're going to have more of that interview in just a moment. today let's move comes after the dow soared by 743 points in yesterday's session. that was a gain of over 1. the s&p was up by 0.f% and the nasdaq was up by 0.2%. the biggest driver for the dow is a gain of more than 6% for unitedhealth after upbeat earnings and guidance. you can check it out. a big part of that jump coming yesterday. this has been a really interesting move too. the russell 2000 small caps index was up 3.5 yesterday. it's been trading as its highest level since january of 2022. it's still 8% from its all-time high. it started last week when you got inflation numbers, bigger

than anticipated. they've seriously outperformed. >> serious goldilocks, and everybody says it's going to be september. no one is taking the cut-off. it's a rotation. tom lease said 40% yesterday. we've got 3 1/2 months to go. >> we'll see. the treasury market at this point looks like the 10-year yield is back. the two-year is sitting at 4.25. the housing data is due out at 8:30 eastern time. investors expect a 1.8% increase by november after a pullback. we're going to get numbers from johnson and johnson as

we're on the air on squawk. then later this afternoon after the close, united airlines will be reporting, and j&j joseph wolk will be joining us. spacex and x owner elon musk says he let's moving the headquarters from california to texas. he vowed to make the moves in response to a new law in california signed by governor newsom this week that bars school districts from requiring parents to be notified after a child's identify indication clc identification. musk posted, this is the final straw. he'll move the headquarters from california to star-based texas. he plans to contribute $45 million to a pro-trump super

pac. and two plan to make donations to political action committees to support donald trump's running for president. they responded in a podcast episode yesterday that runs for 90 minutes. here's one of the highlights. >> the first topic is the blockchain in crypto, which is probably the area where we've had the most interaction with the government. >> it's something i've never experienced before. i'm in total shock it's happened. it's been impossible about to make progress with the white house. it's a tot aally impossible. >> he wrote, businesspeople should endorse biden because, you know, the most important thing to business is rule of law, and i thought, that's so ironic because they basically subverted the rule of law to attack the crypto industry.

we're dealing with this right now. this is probably the most emotional topic. >> this comes as some of the big names in tech have thrown their names behind former president trump including elon muffing. >> a big part of that interview, by the way, i think, wasn't just the regulation or lack of regulation for crypto but was also around the idea of realized or unreal lietzed gains the way the white house has pitched effectively tacking what wouldfounders and private equity firms or venture capital firms, and they went on a long -- i don't know if you guys watched it. that was a major component of the pea supe. crypto was part of it. but their own taxing and how it would be taxed was part of it. >> pick your poison. do you want a list of what

normal business -- i'm not going to go into it. my horoscope today, you need to accept some battles in life are never to be one. one of the battles is in front of you. it's not worth fighting over a lost cause. yeah, i think there's plenty of reasons. is jamie dimon going to be treasury secretary? so many disappointments. >> he's not going to be. >> that's good, thank god. meantime, former president trump speaking to bloomberg floating the idea he liked jamie dimon the treasury secretary. it's unclear if jamie dimon likes him enough to become treasury secretary. he said he would allow fed chair jay powell to serve out his term which runs through may of 2026, but he says the feds should not cut the rates before the economy. he wants to bring the corporate

tax rate to as low as 15% and he no longer plans to ban tiktok. he wants to bring down inflation with more gas drilling. he would look at jamie dimon serving as secretary irtear. in the meantime i think the most interesting component of the conversation that he had around jay powell was the idea that he thought that he could fire jay powell. it's unclear. it was, i 50e78 going to let him stay in this role as if he had a choice about letting him stay in this role. that role, at least as far as, you know, a whole bunch of scholars and lawyers and constitutionalists around the federal reserve and federal reserve independents --

>> that's more interesting to you than his saying cutting corporate rates to 15% when we had the individual yesterday who says he's basically putting together the trump plan for new ne ne-yoism or whatever the heck that is. >> ne-yo apocalypse. >> he said there's no way, shape, or form you're ever going to have donald trump recommending an increase in corporate tax. the most interesting thing to me isn't that trump is clueless about what to do with powell. but he's saying 15. not 20. in the "journal," an interesting lead piece, describing the goodnd a bad things about the trump economy. what the terrorists took away from the american consumers but what the corporate tax rate cut, what that did do for business

investment which started going down in the final two years of the biden administration, about real wages going up. a lot of positive things. why would you raise corporate rates? >> to deal with the deficit. >> that's piddly. the corporate rates are 7% total. >> no. it's the implication of fair ngs and the pushback you get. >> why is it fair to the tax corporations -- >> don't yell at me. you're asking -- >> i'm not yelling. >> did you see the project 2025 bracket 2 tax system? >> that's not going to happen, project 2025. >> if you believe -- >> trump said that's not going to happen. >> certain parts are not going to happen, but when it comes to the tax peegs, what's so

interesting is they were going to go to a two-bracket system, a 15% and 30% system on individuals, and i thought what was so fascinating about that was if you made $100,000, your taxes went up remarkably but if you were making a lot more than that, your taxes went down remarkably. and so i don't know how you feel about folks who are paying -- who are making 100% to $200,000 and their taxes go up significantly, but those making, 3, 4, $5 million, their taxes are going down significantly. >> we have comments about trump putting himself on the federal reserve. he already said i'm not doing the project 2025. >> do you believe he's not going to do -- >> i don't know which ones -- i have no idea, especially with jd vance as vice president. i have no idea. he said he's not, but maybe he's

lying so he doesn't worry people at this point. >> i don't know. coming up, a live report from the republican national convention. former challenger nikki haley. i'm sort of getting with you again. i don't think joe biden's going to be the nominee. i just -- there's still time, isn't there? they're going to try to make him the -- >> you never thought he should be the knowledge knee. >> well, i didn't think they should pull the rug out from under him after he got the delegates. it's not fair. he doesn't impress me. nikki haley spoke in support of trump last night. as we head to break, here's a look at the price of gold. i love gold. $2,500 almost. >> you're t nothe only one. >> look at that. all-time high. "squawk box" will be right back. that's right james, it isn't. car, where are we going?

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we should knowledge there are some americans who don't agree with donald trump 100% of the time. i happen to know some of them, and i want to speak to them tonight. my message to them is simple. you don't have to agree with

trump 100% of the time to vote for hem. talk it from me, i haven't always agreed with president trump. but we agree more often than we disagree. that was donald trump's former primary challenger, of course, nikki haley speak at the republican convention last night. joining us now, axios co-founder mike allen. i said earlier, mike, i don't know, we can talk about the rnc. there's a lot of unity, everybody is sort of saying the same stuff. and there are some interesting things you can say with jd vance that you can weigh in on because he's got some economic ideas. lina khan and all of these cross-currents. we'll see what kind of vice president he can become. now i'm more interested in the move to renominate president

biden early, and i think they really want to do that, but there are still a lot of people that are like, no, we cannot do that, that seem to be holding out the possibility of something happening at the convention to change candidates. >> 100%. a real surprise in the hall behind me as i was talking with axios reporters and as i was talking with news makers. they were talking about biden and chicago a month from now. you almost never get that these conventions are such bubbles. there's so much going on, fascination here, you rarely even talk about the other side. but there is yet again action against president biden. so the read of axios today, a very interesting story, president biden leaping left in an effort to cement his hold.

three things. we have president biden talking about caps on rents across the country, we have him talking about moving on medical debt, and, third, we have him talking about changes to the supreme court, opponents would call it court packing, tighter ethics rules. what do those things have in common? they're part of the progressive wing of the party he's trying to lock down. the early voting, same thing. he wants to get this set in stone, way ahead of chicago weeks ahead. >> you could run out the clock. the clock is ticking, and i think we'll be over at the olympics. he's only got two weeks to hang on, double he, if they did the early nomination? isn't it locked in stone? nothing can happen at the convention at that point? >> the timelines are fluid. everybody is trying to figure out what are the real deadlines.

but zoom out, joe. the big picture is a real contrast between the two parties, what you have here and you saw it in is that clip that you just slowed of ambassador haley. you saw it earlier in that remarkable graphic you had of the tech donations to trump. the people here feel like winners, and lots and lots of people in business think that they're going to once again be running the country and, therefore, the world. that's why you saw former president trump on the cover of "business week" as andrew was talking about before being reassuring, being transactional, trying to reach out to business elites who might have been concerned about the jd vance pick and the more populist ideas you were just alluding to. >> we had a full on discussion yesterday. do you know, does conference

america have trump's ear? he doesn't have like kevin hassett or if kudlow is going to be involved again. to me, it's almost like a n neo-social lichl that claims to have some conservative roots. is there any idea that jd vance is a big believer and would he try to convert trump on those ideas or would trump say, get in line, jd, you're my veep. >> definitely two of those would be one. one of the reasons for the jd vance pick, it went right down to the wire. for a few weeks we've been told every sing nall, every sign we were told jd vance would be a couple of days. he was telling his friends it was jd vance. but even on monday morning, elon

musk, tucker carlson, david sax, calling on the formerpresident to lock it in because he loved the drama of the veep stakes and the attention it brought to him. one of the reasons jd vance was picked -- it will be 42 weeks from now -- he can extend trumpism for another generation if he were to win twice on his own. trumpisms would be in the whois until '37. that's something that really appealed to trump as they had these debates. including florida governor doug burgum. one of the wraps internally on jd vance, he's too much like you, especially after saturday, trump said, too much like me, that sounds good to me, he's my guy. >> we just had a full screen of those individuals.

i'm pretty sure we had tyler winkle voss. i'm pretty sure -- we only needed one, right? >> it's such a smart graphic. >> we ontario needed winklevi and saved space. >> smart brevity. >> exactly. elements of style. how long has it been? saturday, sunday, monday, tuesday. if it had been an inch different, i still think the entire couldtry would be -- i don't think it would be where we are right now, but i don't think it's front and center the way it should be. and the rhetoric i see on both sides, we're back to fascist, hitler, dictator, end of democracy, january 6th, i'm

seeing it again. everywhere. >> i did a 50 minute live, on stage interview. one thing i really pressed him on is how long does this new trump last, the push for unity, the rewriting of the speech. tucker carlson told axios it puts a frame around the mood of this convention. i asked him, mike, how real is the trump conversion on the road to damascus that suddenly he's going to be a uniter, not divider, and tucker carlson made a very memorable quote. he said being shot in the face changes a man. i said to don junior, is your man a changed man, and how long does the new trump last? and we found out the exact parameters because what he said was, well, when he's attacked, we'll fight.

we're trumps, and we'll fight. that's what we do. we'll see that on the other side. the president in nevada also taking on the other side. so here at the convention, a real change for people who watched republican politics over the years, over the presidents, over the decades. one message we saw with nikki haley, not the usual fights, the competing breakfasts, press conferences. none of that. like these, the trump party, there's no going back and jd advance could be on the party ticket for a good long time. i said, let's say your father becomes president 47, what's the chance that jd vance could be

president 48. he said very good. i can tell you business is following along. trump resip row crating with a transactional outreach. he said, oh, i coall not appoint him. i could fire him. talking about trumpnomices. >> we've learned enough about conventions. you get inundated with one or the other side and, you know, the democrats have their say and that's the last word that they're going to get, so that's always an advantage. how long does a convention balance last? anyway, mike, they say we have to go. j&j is out. thank you. >> thanks for the conversation. let's talk about the earnings from johnson & johnson, coming out with earns of $2.82 a

share. that's a beat. revenue came in at billion versus 22 anticipated. they're talking about stronger than expected performance for the first half of the year. they're raising their own guidance, expectations by 5 cents a chair. if you look at what they have to do from an accounts perspective towave, they're going to be lowering the numbers that the street's expecting. they say this is just an accounting change and something that will not impact the companies, much will so in -- about 18 months ago how you have to account for these things.

they're now looking for guidance of 10 cents a share. it's going to look below what the street was anticipating, but, again, they're saying because of accounting changes. when they first released this, you saw stock down by more than 1%. i think probably as people are reading through this, stocks are down 1.3%. if you look at the performance again. it has 125 digit platforms that are a billion dollars in revenue. they say two-thirds of those billion dollars or more beat the cons consensus. they have 13 platforms at $1 billion or more. some at the med tech level as well. we'll be looking at the performance numbers. there are some issues hang ore the stocks, primarily lawsuits

associated with asbestos and what you've seen with tall cob power. if you're looking at the one-year, it's off by 3.8%. we will be speaking with the ceo or joseph wolk coming up a little later in this hour. joe whol joe wolk will be coming to us at 8:15 eastern time. right now as we head to break, let's check out the price of bit down. looks like about 65,000. "squawk box" will be right back. ♪ ♪ ♪ ♪ ♪

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time this morning. take a look. off by 6%. the company warning it would post a bigger loss than it expected in the prior quarter. that's because revenue fell short. non-ticket revenue which accounts for the fees it tacks on for low-priced fairs, they came in lower than anticipated. that's per passenger. the airline recently repackaged the way it sells its fairs. over time it would be able to use this new strategy. everybody always felt like they were being nickel and dimed for the extras. now they feel like they're being nickel and dimed for the entire fee. >> i wish they would charge everybody to bring a bag if you're going to check it or if you're going to -- if you're going to charge us for checking bags, charge people for bringing bags on the plane too. it slows down the loading process.

>> people are fanatic. >> that's what spirit does. >> united -- >> oh, i see what you're saying. >> if you've been to newark, there's a reason that under no circumstances would you ever want to check anything because sometimes it's as long as the flight, waiting for the bag. but i always -- i'm just resigned to it. i have to -- i've got to check it. i watch these people. i have zippers in my suitcase, like my tar ga -- the things i need i have in my tar gas. i don't have a single bag. i don't carry anything. >> i would never check a bag. >> that's what i mean. >> you check them all. >> golf clubs. >> i never check a bag. >> i never have to. that frees me up. what if you have some type of liquid? i have hair products and those are liquids. >> get those little bottles. >> you get the little bottles. i use a lot -- this is a lot --

>> that's my issue too. it's the makeup stuff and hair. just so you know. >> we don't have these problems in teterboro, folks. >> right. but the people that are just obsessed with the carry-on stuff they drive you nuts. they hit you as they're going by, they jam it up in the thing. they drive me nuts. they wouldn't check a bag if they had to. >> takes longer time to board. ship tixs is a way. coming up, a first on cnbc, an interview with joe wolk with the earnings out. more on today's decline in chip stocks ahead of headlines about a crackdown in china. if trump became president, he made comments about china. ahead, a look at s&p 500 winners

and losers.

overnight after an 11% jump of revenue in the second quarter. it expects to read a billion euros from the previous year at 700 million euros. that stock's up by about 3.5%. let's talk about what this report says because it's got lot of people in hollywood both nervous and anxious and talking about the future of this company, "variety" reporting warner brothers cutting more than 1,000 jobs. the cost-cutting move will affect several divisions including finance, business shares production and streaming, that streaming source being max. a source saying the majority of the it cans were in the finance division, but then an analyst said these guys have to start selling assets, whether you want to sell cnn or other assets. >> i forget what channel that

was. >> that's sort of the larger question, i think, now. >> i think it's still -- you know, it's been 30, 40 years, but i still think once you get to a certain point, i think there's another side to this. >> i hope there is, i hope there is, for david's sake and everybody who works there. >> the things he's doing are almost things you had to do. it takes a certain amount of time. >> given the amount of debt they have, they have to do these things that and nobody's better at figuring out how to do that. >> when we come back, we'll talk to the ceo of a startup that's building data centers for ai. that's next. as we head to break, check out the squawk stack. meantime take a look at gold and bitcoin. they're rising bigly as they like to say. league.

>> big league. >> you're going to get sick of this. tamra, i >> announcer: squawk stack is sponsored by principal. let our expertise round out yours. and they don't "circle back" they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety- clacking... clickety-clackier. you need tamra, izzy and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours. [inner monologue] i needed some help. and benefits plan good thing i knew someone... ♪♪ or... some-thing. [a.i. copilot] glad you called, j. [a.i. copilot] it's time for an upgrade. awesome. ♪♪ [inner monologue] i knew what i had to do. because they never stop. no time to waste. this isn't sci-fi.

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welcome back to "squawk box." as demand to power artificial intelligence applications is soaring, a new jersey startup is rapidly building data centers across the united states and europe. joining us in this interview to talk about it is the co-founder and ceo of the company. good morning to you. we're all trying to just understand, i think -- i mean, by the way, we just had this news from trump, which i want to get your thoughts on given the chip piece of this. >> yep. >> how quickly this market really is growing, what it really, really looks like, and i would actually throw into this the energy it takes to power

these things. >> first of all, thank you for having me. i appreciate the opportunity to speak to you and the audience. in no particular order, you know, the market that we're seeing and we are very close to the true demand for this infrastructure is relentless. it's been in a state of severe disequilibrium for the past 2 1/2 years, and in our planning and the planning that we've been driven to do by our clients, there is still quite a bit of runway still in terms of what the build is going to look like and the capacity. >> what does the runway look like to you. >> it looks like based on time, not volume. i always think of that from a perspective of a market who can't tell us how much they want but i want everything through this date is wildly out of balance. >> when people say i want

everything through this date, what is the date they give you? >> their planning cycles occur -- some companies in nine months, some companies a year, some companies looking out further than that. they're basically pinned do we don't have enough capacity to be able to train our models. we don't have enough capacity to serve our models through inference, and so we are a company that is one of the few companies in the world that's able to be able to bring on this kind of infrastructure at the scale that's required to actually make a difference. >> do you have any concern or worry at all that one day not that it's all going to shift but the science is going to shift? that somehow you're going to need to be able to train on more and more and more data? that's the idea. do you think it will take less power to do this or less processing -- the idea to be

less processing power and there's going to be some moment where we go, oh, my, there's a lot of overcapacity here? >> it's a good question, one we think about, right? we're a small company and a company that's competing against giants, and so the consequences for getting out too far over your skis for a company like coreweave is catastrophic. and so the way that we try to do it is we try to focus on the long poles, right? >> right. >> so building the physical infrastructure at the data centers, securing the power, securing the mid-voltage transformers, the things that take a long time to deliver are the things that we are willing to take on more risk with. and then the way that we handle our clients is that they come in and they request capacity from us. and so our exposure is limited to the long poles. >> how hard is it for you to get access to chips, and do you think the comments that former

president trump made even this morning or in "business week" last night can shift the balance if, in fact, he becomes president? >> so the -- the -- the timelines for access to the chips are being gofb verned by things, right? the first thing is new generations of chips that are coming out, and the second piece is the capacity to be able to have enough physical infrastructure to bring that compute online. >> okay. >> those are the drivers of when you're able to deliver. >> nvidia only, or what's your story? >> we allow our clients to lead us, and so we are one of the true resources for delivery of nvidia's straur. >> what else are you buying? who else is getting your money? >> so we buy from -- we buy from

all of the different types of silicon and look at them from a performance perspective, but at the end of the day, we are delivering what our clients want and they want nvidia technology. >> they don't want the other stuff. >> they don't want the other stuff. they may be self-selecting. they know we're good with the nvidia stuff and they're bringing it to us for the type of build, but overwhelmingly it's i can't deliver the nvidia-based solutions because i don't have the stinfrastructure. it's hard for me to tell because i can't get through my own demand. >> thank you for coming in. mike, come on back. it really gets in the weeds. >> myself, i wouldn't think about buying anything nvidia when i buy -- >> when you're buying chips? >> don't even show it to me if i'm googling it. i don't want to see anything. >> that's why we don't have

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more than 12% the past week but after a couple of tough weeks. the crypto industry getting a boost from former president picks. j.d. joins us with more. he's in tight with a lot of bitcoiners and a lot of those silicon valley types. we know that, emily. >> absolutely, joe. that is, in turn, helping trump's campaign, you know? vance's selection for vice

president is welcome news to those in the krcrypto. he has been workshoping a potential bill to provide the rules of the road for the kipto industry. the potential legislation would clarify when crypto need to be as a security. the measure would also give crypto companies a path to actually raise capital off of digit assets. vance's proposed legislation to give banks protection to work with crypto companies and trump has received support from a number of crypto players, including the wingle voss twins as well as vc investors. others plan to donate to trump and voice frustration with the biden administration's posture toward crypto in a podcast yesterday saying trump's policy platform better aligns with their views. >> it's just like a flat-out like -- in the entire space.

good complete across the board embrace of the entire thing and absolutely 180 from what we have been experiencing. >> we are expecting to hear even more from trump on crypto as soon as next week when he speaks at the bitcoin 2024 conference. guys? >> all right. thanks, emily. that was some interesting sound there. we appreciate it. see you later. when we come back, johnson & johnson shares are down after beating expectations but the company lowered company's earning guidance based on what they will see with accounting changes and not what the treat was expecting this week. and we will talk more about this joe wolk who wl ilbe joining us after the break, first on cnbc. we will be right back.

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welcome back. johnson & johnson earnings and revenue beating the street's x expectations but the company lowered costs related to acquisitions and changing with s.e.c. accounting for that. joining us is now is joe wolk, johnson & johnson's chief financial president and financial officer. for the quarter 282 versus 271 that the street had been expecting, revenue came in above expectations as well. what happened with the guidance? $10 to $10.10 a d with the perf

overall. you noted the top line and bottom line beat and free cash flow generation. with respect to the guidance we threw a lot to analysts the last few days with the costs and the s.e.c. has changed their guidance probably about 18 months ago with respect to what you can classify as special items in the past, many companies would have taken those acquisition charges and classified them as a special item and get to adjust their earnings. you can no longer do that. that is really the adjustment. to your point, though, the analyst, the five or six analysts that have captured everything related to these acquisitions of shock wave and nm 26 antibody for atopic dermatitis at 10.01 and the midpoint would be above what analysts are expecting. >> in terms of performance, you did mention that all of these

big billion dollar plus platforms that you have, two-thirds of them outperformed. what was happening? pharmaceuticals, i think, was the more important of the two? >> yeah. we were very pleased with the pharmaceutical unit. they had their first 14 billion ever. leaders on the market, for treatment of resistant depression so we were very pleased with the almost 9% growth they were able to post. a number of those brands did beat consensus and a number of them are growing at better than 10%. we would have liked a little bit better performance out of our mid tech unit. maybe one or two identifiable issues in the process of being addressed but that the power of j&j and can have volatility in one part of our business and better offset for the performance of the entire company to outperform. >> that is something you've seen over the first half of this year, but there have been pretty big clouds hanging over the.

can. front and center with the situation with talcum powder and the lawsuit surrounding that. can you give us an update where things stand right now? >> certainly. the may 1st, we announced a solicitation or proposed offer tlmt se settlement with the ovarian claimants and it will close on july 26th. i would want as to caution you u viewers not to expect an announcing on july 26th. it will take weeks, maybe up to a month, for the administrator to tally the votes and vet the votes and make sure they are legitimate and we will go from there. with respect to the number of other claimants in the suits, we have already settled with more than 95% of the cases. we are encouraged by the support that we have from plaintiffs' attorneys who represent claimants who help us draft the

proposed settlement as well as recently announced support from newer firms that weren't part of the development of that. there is a small dwindling minority that is vocal at this point but i think we are in good position to resolve this one way or another. i would want to remind investor with our cash flow 7.56 billion year-to-date and what johnson & johnson has done the last decade we have done the things to make us successful almost 140 years now and invest in r&d at this level' we had the closing of shock wave and a couple of you mentioned earlier and increased our dividends and we will continue to do that. this is not something that the company can't handle. we would like to have it resolved because of the overhang you mentioned but we will continue to do things that have made us successful for many, many decades. >> just last week, on friday, you and bristol meyers squib filed an especially for the u.s. court of appeals for the u.s.

third circuit regarding what is happening with the constitutionality of the inflation reduction act and the idea that the government can negotiate drug prices with you. how important is that? where does that stand? what happens if you lose? >> yeah. well, listen. i think price erosion has been part of the industry for a number of years. if i look at our -- our stellar performance in pharmaceuticals has year-to-date 3.5% year to erosion and we are premised on the standards of care. we think there is constitutionality issues with the proposed reforms in the i.r.a. and we are going to fight those, but we will have to see how that plays out. we do think it's harmful for innovation long-term and would really lining to have a transparent discussion about where the pricing is. you know, if we have great scientific innovation and nobody can access it or afford, it does our business no good. when we think about this, go back six years ago the average discount in rebate that was provided was about 26% of list

price. today, it's getting close to 60% and that is not just j&j but the industry at large. we have to have a conversation where the discounts and rebates going because they are not getting to the patients. we impasse thighs and want to correct the situation folks on a month basis for chronic meds would pay $5 to $5 for a copay and now paying $75 to $100 have insurance premiums that are going higher. we need to address that and have a transparent conversation. >> are you saying it's the health insurance companies fault or the idea that medications are more expensive as you get drugs that can do more than they are used to? >> i don't want to assign fault. we hope for a transparent discussion the way the industry has stepped up. our industry has price erosion at j&j the last five to 60s years and i do think, though,

that you got to remember that over 90% of the prescriptions today are generic and penalizing the manufacturers to come up with therapies to treat but not only cure cancer and ibd and obesity and disease of the brain and important medically breaks that allow the cost for health care for society and i think we need to have a better discussion where the discounts and rebates are going and why aren't they getting into the hands of the patient? >> do you think it matters who wins this next election? would you expect to have a different outcome with a trump administration? >> you know, i guess i would approach that -- johnson & johnson has been around a long time and dealt with all types of administrations. as i think about it from a business perspective, you certainly want to have an administration that is at least neutral and not hostile to business if it's friendly, that is even better. i think in terms of tax policy, that is critically important. i can point to an investment we

are about to announce shortly over $1 billion with the latest self-therapy manufacturing. it's going to be likely placed in the united states. in 2016, that was not the case. that would have been a manufacturing facility probably built overseas. so we want to make sure that that is front and center. i think having business friendly mindsets we have the atmosphere like i talked on pricing is more advantageous to get to a fair and questionable solution. lastly, i probably would look to someone willing to entertain tort reform. last week we saw some good pieces on third-party lichtigatn funding and some of the tactics plaintiffs are using. senators cornyn and tillis and others are looking into this and think by that is good not just for johnson & johnson but for business and that draws up costs across the board. >> joe, i might ask them to, you

know, preserve that sound bite because specific instances of companies doing specific things based on tax policy is always hard to find and we had a discussion yesterday basically blaming the decline in the middle class and the end of the american dream on globalization. as capitalism caused all of these jobs because of cheaper labor to go abroad and eroded the middle class. and as you just said, if you bring the rate down, corporate rate down to 21, that takes away the incentive to move the manufacturing abroad. so raise backs to 28% and calling yourself pro-growth and pro-business is just -- it's diametrically opposed. you just said it. the billion dollars is going to be invested here instead of abroad because of corporate tax rates now are low enough to be competitor hicere. >> since 2017, we invested more

than $30 billion in the subsequent four years after the passage of the tax act than the prior four years. it led to about 6,000 more jobs here in the u.s. for johnson & johnson so there is a direct correlation and it makes it very easy as the cfo to look at an analysis and not knock outline the u.s. because the rate is what it used to be at 35%. >> i can't believe you're a greedy self-serving corporate executive that is worried about your stock plan going up a little bit because you have a lower corporate rate. you do have a horse in the game, but i respect you and think you're a good enough guy but that is not why you want lower corporate rates, right? >> listen. this is good for the american economy. we have the best talent. we have the best innovation here. we would like to place really what is sophisticated manufacturing nowadays with gene and self-therapies coming down the pike. if you can place it in the united states at a neutral

rate -- you know the 21%, somehow people have misperceived that as a wind/fall. it puts us until the middle of the pack when you look at all of the developed nations. >> joseph wolk, thank you for your time. >> thank you. >> it is just after 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc. a couple of big stories that we are following this morning. a big interview with bloomberg business week and former president donald trump saying he would allow fed chair jay powell to serve out his term but the fed should not cut rates before the november election and give the economy and president biden a boost. he wants to bring the corporate tax rate to as low as 15% and he no longer plans to ban tiktok. variety reporting that warner brothers discovery cutting 1,000 more jobs, smaller than the sweeping cuts made by the company last year and that move

will affect several divisions including finance, business affairs, production, and it is str streaming service max. elon musk is moving the headquarters for spacex from texas to california. musk citing a new law that was just signed by california governor newsome as the last straw. all of my ex's live in texas! all of my ex's live in texas. that is a real -- well, you don't -- you know -- you don't know country music that well. ♪ all my ex's live in texas ♪ >> i've said that before. spacex and x moving to -- you get it? >> i do. >> you didn't laugh. you didn't smile. you didn't say good one. >> good one. good one. >> you have to have a little symbol here. >> don't do that. >> a gong. >> gong. take me off and get the hook.

there are the futures. big gain yesterday. biggest since march of '23, i think in the dow but the nasdaq barely yesterday and dom is here with more. the rotation is happening, at least it's your only stages but we are actually seeing evidence that it might be more long-lasting? >> it could be. maybe if more people hung their hat in tennessee, it would be as well. listen. i think that there is a lot of movement here with regards to what is happening and the story is whether it has legs and get to that coming up. a check on global stick shops. asml is town at this point. taiwan semi, shedding 2% and nvidia almost 4% pre-market.

the moves follow a bloomberg report that biden administration is looking ago a crack down on their shipments to gchina. trump said in an interview on tuesday that taiwan should pay for the u.s. defense of its country so we are watching chip stock broadly lower. spiller airlines is down this morning and shares falling about 6.5%. the carrier said it will post a wider than expected loss the last quarter due to revenue that came in lower than expectations. they shared nonticket revenues were several dollars lower per passenger than expected and reason we are seeing them down 6.5%. cap it off with gamestop. all down about -- up maybe 1.5% and on track for eight consecutive winning day and notoriously volatile stock is up

65% so far this year and gains fueled by kitty returning to social media after a three-year hiatus. for the month of july you're seeing right here, those moves in the stock have added roughly $3 billion to its market cap in just july alone so we will keep an eye on gamestop. >> don't you think tiger could still win the british open? do you believe that colin montgomerie -- >> he hasn't won any major. >> i did win a major. >> he is exempt to play. >> right because he didn't and i did. so good. so good. >> i think no matter what there is a reason why there's woods kind of contemplated exemptions for his presence on certain parts of the pga in the future and because he draws fans, to

this stay, still. >> in colin montgomerie's defense, no better ryder cup winner than ever. he doesn't win for himself but for his country. >> it begs the question what do you. a hall of fame xcareer? is it only based on championships? >> or if this business? is there a broadcasting hall of fame? >> you guys might be in it. i have aspirations maybe some day. >> or cable. we don't really broadcast. that could be an issuing, techn technically. when we come back, bob diamond of atlas merchant will join us. and we will talk about silicon valley's growing support for the former president. "squawk box" will be right back.

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the big being bank earnings so far have beast estimates on the top and bottom of the season. we will hear from the regional banks today for more on the health of the financial sector, markets' more. let's bring in bob diamond, ceo of atlas merchant capital. i'm proud of you. former -- i've always been proud of you you. former ceo of barclays. you're in the business. you probably knew what happened over the last three months. or had a pretty good idea. after having seen some of the major banks, anything surprise you and anything you thought or

worse than you thought? >> it's kind fof a normalized environment. i think the earnings were quite strong. i think the underlying fundamentals for the larger banks in the u.s. >> i like that. underlying fundamental should be a word. that is really good, bob. i'm going to start using that. it was mostly in line with your expectation. then highlight what is going? did you see jpmorgan is worth more than $600 billion and it's never been there before. >> listen. the larger big four u.s. banks continue to get larger and more concentrated and i think the real issue, you know, is interesting to see the discussion around goldman's earnings which, to me, looked fantastic. the concern was 11% roe and looking back to '99 and the public issue and kind of 25 to 30% returns. the truth is they are much larger and they are more

concentrated, they are more likely utilities, the big four banks. they carry much, much higher capital levels and we are not going to see returns like we saw in the '90s and the 2000s. i think 10% to 15% and more utility-like returns. the banks are safe. they are really, you know, it's a bit of a -- from an earnings point of view. earnings are strong but they are 10 to 15%. not 20%. >> do we need stricter capital requirements, whatever it's called? do we need that? will it ever become required? >> i think we really do. >> you do? >> given that the larger banks are becoming larger and more concentrated and everyone says they are safe and nothing bad can happen but look what happened to credit suisse and in switzerland where one megabank and not that they are performing well. they are performing really well

but what if something went wrong? i think the larger capitals are here to stay. you know i'll say this. we are very focused on the regional and community banks. he we think there is a huge opportunity there and we think it's really good for the u.s. economy and the u.s. financial services industry, and we think there is going to be consolidation and i think that is where an investor can see good returns over the next couple of years. even better returns than the large banks. >> when we had some issues in is that group and we thought duration race was everywhere it never was. we are waiting it out and rates are coming down so we will be okay? >> no. i still think the treasury portfolio and both of the big banks and regionals are a bit upside down. you now they don't get mark to market but you can see through. they will correct themselves over time. i think if you can imagine an environment where a really strong regional bank has strong capital. so an investor has come in and

you shore up any loan professions and you shored up any treasury portfolio and you focus on what does the environment look going forward? you have 5 to 5.25% rates. we know they are going down over time. you have loan demand in the economy as we have never seen really for the last decade, so the go forward environment for strong bank, particularly a regional bank is outing. >> outstanding. >> is it, appetite for them to be bought up? >> i think the regulators are encouraging us to put more capital in. do the regulators want to see more failures, of course, not. never ideal for them. becky, i think the 4.5,000 regional and community banks is probably you know it was 7,

7.5,000 and it consolidated. we expect the next 2 to 3, to 4 years it would go to 2,000 plus or minus 500. >> wow. >> there would be a period of healthy consolidation where we can identify and people can identify the strongest and the strongest will be able to acquire, you know, some of the too small to succeed. >> basically, you think half of the community banks that exist today or regional banks that exist today will be gone the next three or four users? >> over the next two or three years we will see healthy consolidation. >> what about trump's comments on jay powell? he would like to keep them but the implication he wouldn't have to keep him. that would be a new -- >> come on! he's got two more years, right? >> no but that this the questio

>> he fire him? >> that was the implication that he could. >> i think he is doing a good job. i think -- >> trump? >> powell. i think for a comment that, you know, as far as i can see, he has two more years for his term. >> most people don't believe he could be fired or you do? >> i don't know. i'm not an expert in that space. andrew, i think this very strongly. i think the independence of the fed is really, really important and i think it's important for the markets and it's important for the credibility and brand of the u.s., of our economy of, of our financial services industry, so i don't think it's a question you asked but i believe we need to preserve the independence of the fed. >> are those light houses? >> nantucket. >> i couldn't see the letters.

shgc. >> i can get one of these, joe. you got to play the -- >> we will see. i don't know. i'm in demand for all of those. thank you, bob. >> thank you. silicon's valley most prominent investors are returning to trump. ar small cap rally gaining steam. we will speak to a portfolio mg what is driving that return. see that? that's like the gap in my health insurance. gap in your health insurance? yeah, it didn't cover everything when i got hurt. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses,

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time for housing data. they expect 1% increase in the june number. 5.5% pullback took place in may. shares of j.b. hunt are falling after the company's second quarter profit. it was dragged down by declining freight revenue and volumes as well as higher insurance and equipment costs. the company has been wrestling with a downturn in the freight demand since late 2022 when retailers started paring back inventories that had grown bloated during the the pandemic. united airline flight attendance to vote next month on whether to strike. the vote will open on august 1st and close on august 28th. the flight attendants are demanding a double-digit base pay increase, higher pay for time at work, including on the ground, retroactive pay, schedule flexibility, and work world improvements.

united reports quarterly reports today and that is coming after the bell. when we come back, the global chip stocks are under pressure this morning over reports that the administration is considering new rules to clamp down on companies that are exporting chip making equipment to china. also, some comments from former president donald trump saying taiwan should pay the united states for its defense. let's take a look at the futures ahead of housing data that is going to be released at 8:30 a.m. eastern time. right now, it looks like the dow futures are off by 120 points. s&p future are weakened and down close to 60 points. the nasdaq is the big loser. you saw what the chip stocks were doing and that is really putting some pressure on the overall index which is indicated off about 320 points below fair value. we will be right back. help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley

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cofounders of the venture capital film are planning significant donations to committees supporting the trump campaign and adding to the silicone valley leaders who are promising to pledge money to the trump campaign. we have been talking all morning

about the video that those two gentlemen put out on youtube but, of course, also david sachs saying calls by trump that led to jd vance's selection as v.p. speaks to what seems to be a major shift in the krael valley. >> there has been a sea change, absolutely. we have gone from loud voices in the community and speaking out on behalf of biden to now those voices being quiet and we are seeing all of the people you na named. the information broke yesterday about ben and mark who very critical of trump and then openly endorsing him. i think these tech leaders say they are being moved by policy. they are being moved by trump's support for crypto, for a.i. but, you know, there really is not perfect alignment between

trump and the tech community. the community at odds on immigration, even evs, which i think is a big question for elon musk who has come out in front of trump so we have seen a sea change but there are many, many open questions right now. >> the question is how much of this is a sea change and how many of these people do you think either were republicans, closet republicans, or other things before? you talked about folks who are not speaking out now. is that because they are still planning to back biden? are they shifting to trump? when you think about some of the big companies and i'm talking about google's and apple's and the microsoft's, has the management of those firms shifted? are we talking about individual pockets? >> i don't think there are signs the management of the big firms have shifted. but i think a lot of people like people across the country are maybe hoping that president biden does step aside and so they are not out there openly endorsing him.

i think the big companies are really quite conflicted. you know, they are befacing regulatory pressures from both sides and have concerns about both sides and we are not seeing those ceos speak out except for elon musk who controls the platform of x. we surveyed subscribers yesterday to get a slice of the tech community and 59% said they planned to support biden, 27% trump. we will keep doing those numbers to compare. that strikes me as some movement towards trump for sure, but, still, the majority for biden. >> jessica, can you explain sort of the disparity between silicon valley executives and maybe more mainstream chamber of commerce executives just in general with democrats versus republicans? and, you know, i understand donald trump got some policies that don't fit into the normal

business regimen you would think of but silicon valley, doesn't matter who the democrat is. they didn't back romney all along they are on the side of a party that some would view as less business friendly than republicans. why is it like that? and that is why this is a sea change. not only is it a republican but it's trump. >> you know, i think the politics, joe, are complicated in the valley if you go back. way back, very republican support in the origin of silicon valley but no now in what i think as the google, obama, eric schmitt, colon era and sheryl sandberg you had a lot of dem leaders along the valley. i think what is happening now you see these -- the folks like teal and musk are sort of libertarian in many ways but

their ignoring social issues where they may not agree with president trump but they are deciding to really vote based on a targeted set of issues that they care a lot about. a.i. and crypto if you're talking about horowitz is how they will make or lose their money. i think it's hard on as to say if you're swinging red or blue. the valley leaders are somewhere in the middle on many different issues. i also think perhaps what we are seeing is the sense that trump is going to be in the white house again and if that is the case, i suppose it would make sense for some of these leaders to try to get behind him. >> i was going to point out, it was right after the shooting that you saw some business leaders come out immediately and throw their support behind him. maybe they were counting on the idea that, yeah, that would give him an even bigger bump and thinking it's inevitable now and i want to make sure i goat my

chips on the -- get my chips on the table and get credit for supporting him now? >> absolutely. musk's endorsements was minutes or right in the thick of the assassination attempt. >> he's still mad about the ev meeting. mary barr sold about three cars and elon wasn't there. >> that is a huge -- it's fascinating to me. i mean, elon's business, his fortunes rise and fall on the future of tesla. you know, trump and vance have been very clear that they, you know, think that ev subsidies shouldn't be in the cards. so we will see how this plays out. >> i mean, do you think his thought about needing or wanting subsidies at this point, given the success of that company, relatively to the others, it basically makes it almost impossible for everybody else if they don't have the subsidies? is that how you see this? or do you think it's a broader

philosophical view? >> i think he's being -- musk is being practical in some ways, but the ev question is not resolved. i mean, competition. many people think it's a race to the bottom with commoditization for that business so i don't think he can be feeling confident in that regard but perhaps he is thinking he can change his mind and, you know, that might be why he put his cards on the table. >> the other big one this morning, elon musk saying he is leaving california. i think we might have known that sort of a little bit in the back of our heads. but officially. and officially over this new law around gender identity in the state. do you think this is going to lead to other companies moving officially to places like texas? >> we have seen a trickle and i think that will continue. i've got to say elon has a knack for timing these moves that probably took five years to the five minutes when there is a headline in the news. you don't move a rocket

factory's headquarters overnight. it's hard to say. i think we are seeing some of that. there is movement outside of california for sure, but these days, there is actually a lot of activity, especially start-up activity back in the city and i know many of venture capitalists who have wents to austin and cae b back. elon made it clear he is not coming back to california. >> you guys might have to move to austin. >> we are everywhere. you know? >> thank you. appreciate it. small cap sizzle is still to come. russell 2000 on a five day winning streak and that is interesting. just getting back to where it was. one of the few that aren't -- we will talk about the move and find out if the rotation out of big tech into the small caps.

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♪ welcome back. reuters reporting that the biden campaign will resume political advertising this week. they suspended those ads after the attempted assassination of donald trump. several aides said a further pause could damage president biden's re-election and others democrats seeking office in november. president biden told some democratic lawmakers he plans to endorse significant changes to supreme court. the planned under consideration include term limits for justices and establishing a binding code of ethics. changing the structure of the supreme court would require congress to make a new law and that is very unlikely, while the republicans control the house.

not to mention that at this stage, they basically have said they are not taking up any new big new legislation until they get past the end of the year and in to next year. >> ethics code, super sensible. the fact there isn't one? shocking. term limits? we have all been wanting term limits forever for congress and for senate. i think you'd want it for this. i think you'd want your respective of who is on it. >> this is term limits i think based on age. just a little rich. >> i know it's rich but i would love to see, i'm asking joe, given -- >> no. >> you don't want term limits? >> nine guys and gals and lifetime appointments. no, i like it the way it is. >> did you like that five years ago? i think you would have said -- >> five years ago is fine. maybe going back to -- but you weren't born there.

>> do you think it's reasonable for us to have term limits for everything? it seems like a sensible thing for everything. >> i like chuck grassley. he runs five miles a day. >> you always say, joe, read the news. andrew, read the news. >> i'll will give you a tease what we are coming back and we will talk about the news in a moment and talk small caps as we take a break, before we do, look at oil prices this morning. right now, you're looking at wti crude up a bit, 81.21. a lot more on the energy sector is coming up in the 8:00 a.m. hour so you don't want to miss that. we return after this.

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they do best for the next five years. that's a lot of bread. you got this. the comcast business 5-year price lock guarantee. switch today for a limited tim. 0. get you caught up on the market this morning. just waking up, markets under pressure especially the nasdaq this north pup see now the nasdaq indicated off more than 320 points. big part of that, chip stocks,

we'll look at in a moment. dow off by 85. s&p futures down by 55. of course, after big gains across the board yesterday. especially for the dow. if you're watching what's happening with small cap stocks, talk more about this in a moment, but the russell 2000 futures are off just slightly. this comes after the russell 2000 has continued to outperform over the last week. ever since we got this look on inflation that looked like things were tamping down a little bit. this is a bet that small companies will do much better as interest rates come down. this is a bet on interest rates coming down as well. mentioned chip stocks before. you see now the chip stocks are under pressure with exception of intel. nvidia off by about 4%. qualcomm down by 4.5%. amd also down 4.5%. comments out of the biden administration looking to tighten up chip kwequipmentmake

and comments from president trump saying maybe taiwan should pay for its security. putting big pressure on nasdaq futch u future. apple shares off by 2.25%. tesla shares this morning down by 2% as well. when we come back, new hampshires governor joining us to talk about the election and much more. plus eric rosengren, our guest. "squawk box" is coming right back.

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welcome back, everybody. just talking about it. small cap stocks. one of the hottest trades in the market now. the russell 2000 index jumped 3.5% yesterday hitting highest levels since january 2022. up more than 10% in the last week. that is the biggest rally we've seen over a five-day period going back for about four years now. joining us now to talk more about it is chris retsler. a small growth cap portfolio manager. what's the genesis? kind of a shift we've been waiting for, for quite some

time? >> small cap manager, certainly waiting a few years here. you know, getting to lower inflation, really positive for the expectation of lower interest rates. when that happens, you know, i don't know. but i think what powell's comments were a couple months ago was his next move was down, not up. i think that really was a signal that small caps should begin to work and we've been able to see that since then. you know, the move the last couple weeks has been very nice. obviously, small caps are volatile. they don't go up forever, but longer term we're in a stage of cycle that's pretty good for a lot of those companies that have suffered, underperformed versus a lot of the large cap companies. we're seeing a broadening of the market. that's good for the economy. that's good for the country, that the small caps are beginning to see some attention. >> so the small caps are up 12.8% over the last month. funds manager tom lee thinks

it's just the beginning and can be up 40% over the next couple months. do you awe gagree? >> it's possible. small caps are liquid. as money comes out doesn't take a lot of money to push those stock prices higher, get multiple expansion, and in an expectation of lower interest rates say the next 12 months, i think that's very good for the companies. lower cost to capital that has weighed on companies. able to fix a lot of inventory issues post-covid. took time because the economy is slowing. the economy will continue to slow but getting to a horizon where it should be a better environment for small caps and obviously the market prices six, nine months out and i think we're beginning to see thanks w. >> within this sector, s semiconductors and semiequipment. seeing serious things, the biden

administration attempting to clamp down what can be sent to china for some of these things. in the case of the trump potential administration, the former president saying he thinks potentially that taiwan should have to pay for some of the security that they receive from the united states. does that change your perspective on any of those stocks? >> certainly in a political environment. those types of headlines i think we'll hear a lot of over the next few months, but longer term, semiconductors are just a bigger part of our life in every way.aut automotive, industrial, pcs, data centers, right? they're mega trends here for a while. what he's focused on more is the semicap equipment and software that goes into manufacturing it, and pulling back a bit to say, look. we're not going to put our best technology out there to potentially support our enemies out there. >> does that make it a less investable environment for you, or you think it's just talk at this point? >> probably provides an opportunity, you know, maybe not

today you're out buying semicap equipment, but if it pulled back enough. trends in place, in san francisco last week. numbers people talk about on a global basis are quite significant. europe is building, japan. chip act money is beginning to flow. there are other opportunities outside the asia area where these tools can go. >> what else do you like? >> also we like military modernization. i think the amount of money spent on the night over israel is just unsustainable. what's spent in the red sea is unsustainable. so how do we modernize our military that really begins to move forward, that we can take care of these threats? there's a large modernization program there. i think you also are looking at, you know, a potential resurgence of industrial companies here, domestically, as we continue to re-on shore. power efficiency. continue to work on. then another major program

that's coming is the world broadband buildout, which has money in place and bipartisan support. hopefully that program can continue to push out that development, because it just brings america closer together. >> chris, thanks for coming in today. >> thank you. it is 8:00 on the east coast. you are watching "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. among today's top stories, global semiconductor stocks hit hard after a bloomberg report that the biden administration is looking at cracking down on companies that are exporting chipmaking equipment to china. also, potentially adding pressure. comments from former president trump to bloomberg that taiwan should pay the united states for defending the island. in that same interview, trump also made news on the fed. he said that if elected, he would allow chairman jay powell to finish out his term, which ends in 2026. trump appointed powell about six years ago, but later criticized him heavily over fed rate

policy. and, the nba's bort of governors approving new rights deals with amazon, prime video and nbc. owned by parent company of cnbc, which is comcast. the league is now a step closer to new 11-year agreements worth more than $75 billion. potentially the final step in that process giving warner brothers discovery a five-day window to match one of those deals. unclear when that window would begin. new contracts begin in the 2025-26 season. this morning's big earnings report, johnson & johnson. beating profit and revenue expectations and raising its operational performance guidance for 2024 by 5 cents a share. thanks to government-driven accounting changes, johnson & johnson is lowering what it wants to expect. joe wolk joins us earlier to

explain. >> left to its own devices, thrown a lot at analysts with some acquisition costs, taken guidance up by about a nickel overall. the s.e.c. changed guidance probably about 18 months ago with respect to what you can classify as special items. in the past many companies would have taken those acquisition charges and classified them as a special item, get to adjusted earnings. you can no longer do that. that's really the adjustment. to your point, though, the five, six, analysts that captured everything related to the acquisitions of shock wave and the antibody 2026 for atopic dermatitis are at 1001. new guidance, $10.10. mid-point above what analysts expect. >> shares of johnson & johnson down 0.4 of 1% after the earnings. day three of the republican

national convention. eamon javers joins us with the latest edition of this. jibber-jabbers. >> there you go, joe. last night was unity night here. the republican national convention all the former president's rivals in republican primaries, came together, one after the other on the stage here to endorse him full-throatedly in many cases. vivek ramaswamy, desantis endorsing him culminating from this moment from nikki haley, chief rival perhaps on the primary stage. >> i'll start by making one thing perfectly clear. donald trump has my strong endorsement, period. [ cheers ] >> all that came on the heels of bloomberg releasing an interview with the former president saying he would consider for treasury secretary jamie dimon of

jpmorgan. not clear how clear that is or a thought double from the former president. talked to jpmorgan yesterday. they gave me a no comment on the idea of jamie dimon as treasury secretary for former president donald trump if re-elected. also this idea in the bloomberg reporting of jay powell potentially staying on as fed chair. that is something figures close to the trump campaign told me they expect jay powell to be fired by donald trump, but trump suggesting here in the bloomberg interview he would keep jay powell on as chairman of the federal reserve. then, look, a whole host of people here who are all gossiping and talking and trying to catch the scuttlebutt what's going to happen in a second trump cabinet, because there is real, i think, glee, probably the right word here, about the prospects for a second trump term, and if you look at the list of people for all the top economic jobs in the second trump administration, it is very long. a lot of names being discussed out there. marco rubio as potential

secretary of state, doug burgum, you talked to ned yesterday potential secretary of energy. larry kudlow. could he go back and be a treasury secretary candidate? you see all the names there. a lot of people in the conversation for top jobs in a second trump administration. all that jockeying is going on behind the scenes here, too, because the folks here in milwaukee feel very, very good about their prospects going into november, guys. back over to you. >> pretty good names on that list for, you know -- the narrative was that no one would -- wouldn't be able to get any good people to work for him this time. i guess. we'll see. you know what? it's a long way off, my friend. a long way off. you know how we get -- >> that's what everyone tells you when you ask them here. >> no. i know, but -- >> you ask here, everybody says got to win in november first before we can talk about that and then, you know, quietly off the record, they're all talking

about it. >> exactly. getting into transit in a month, whenever it is, you know, the democrats have their, have their chance. so -- i mean, all of a sudden you're in that echo chamber. you will -- we all are for four days when that happens. right? chicago could be interesting, though. >> unclear what's going to happen there, joe. you still see bubbling of discontent from democrats saying they don't think biden is their guy and have a limited amount of time and an effort to prevent early roll call on the democratic side. democrats saying wait. we don't want biden locked in before the convention. opening up space for some change there. not clear at this point if any prominent democrat wooluld say, yeah. this is my year. could they get anyone other than kamala harris to consider that run this late in the year given how strong donald trump looks? might be a fool's errant at this point and saying i have a good

chance in the democratic party and wait until '28. >> both parties some the ability to snatch the feet from the jaws of victory in the past, as we know, eamon. it's always a -- you know? that's why -- >> why we're here. see what happens. >> betting sets, not 100. they're like 60. 60-40. maybe a little better. thanks, eamon. >> you bet. back to the markets. a quick take on futures. dow now 101 points higher. i should say lower this morning after what has been a couple days now of just green arrows almost every morning. nasdaq off 320 points. s&p off by 55 points. mike santoli down at the new york stock exchange this morning. explain what is happening here? >> well, andrew, the word "rotation" talking about in terms of everybody rushes in to the smaller cap, financials, neglected parts of the market, may be lightening up on winners is probably too mild a term.

the market goes to extremes. a chart of the s&p 500 against everything not in the s&p 500. small caps, also bigger stocks not in the index. what this etf tracks. a vertical move in everything in the s&p. it's concentrated, top seven stocks a third of the market cap. interesting to date, talking about a few days, the unusual smoothness of this rotation so far. what you see today is evidence that sometimes when things move fast, you have small caps up 12% in a few days you're getting more volatile parts of the market to come to the fore and overall market becomes less stable. of course, huge winnings on the table. taking some off now. russell 2,000 the past three years. all-time high there is late 2021. definitely broken out of this two-plus year range at this point. look at that vertical needle on the chart. got to calm down. very overbought at this point. usually when you get these huge

kind of blastoffs in the index after a long period of not much happening, it does have positive implications going out a few months for a broadening of the market in general. look here. just at one of the mega cap recent victims of this rotation, you might say. which is meta. about 10% oftef its high. no big deal. interesting. meta platform in the stock price there. that would kind of represent whether it's just a mild pullback or something more. the case in a lot of the bigger names here. you have to see what that actually means for the index ultimately as we work through this period. seasonal effects. obviously haven't been driving everything here, but this is the day they start to turn age litt more negative in july. >> before we let you go, how do you think about earnings season playing into this market rotation? that we've seen the past week. >> interesting. this is about when earnings growth is supposed to become a little bit more broad and

inclusive and more companies besides the big tech companies delivering earnings growth. that probably should substantiate the move over time. i think interesting, though, so many stocks with a massive run. this rebound. probably creates a pretty tough setup in terms of the actual report and how stocks react to them. i think you're seeing that, for example, even in j.b. hunt today. good numbers but a weak stock all of a sudden rebounded sharply. it might be noisy as we get through the reactions to earnings, but the overall earnings picture, substantiates probably what's going on in this market. >> mike, bitcoin's only back to where it was. >> yeah. >> not saying it's a big deal, but do you, can you point your finger to any definitive trump trades that are working since the developments on saturday? i would never tie any move, you know, like yesterday. that was a big move, in the dow.

i mean, if what sonnenfeld and others say, the end of the u.s. economy now with j.d. vance. at least we weren't down 800 points yesterday. it was up. not saying it has to do with trump, but it doesn't look like the world's ending anytime soon for the stock market, if he does become president again? >> for sure not that. i do think that what you have had is an increase in the conviction level, perhaps. of a trump victory in november. also essentially pushed in the same direction at this rotation you're getting from inflation coming down, rate cut coming, economy in a soft landing, and all of those other things, but i think look how bank stocks traded. saying that sort of fits into the trump trade playbook. strong for the last week or so. just in general, this kind of smaller cap and cyclical over global secular growth stocks, that fits into that narrative. hard to tease it out.

i find it interesting. happened last time, too. every celebratelow taxes, light regulations, oh, but the tariffs. you go back and forth and back and forth on that. >> deregulating oil. more oil so that's going down. why buy energy stocks? yeah. it's always -- and you know, the market moving up for months and months and months and has more to do with a rate cut and inflation moderating, just like you said, i think, mike. goldilocks. coming up, the latest, we have from the republican national convention in milwaukee. get an on-the-ground report ahead of more big speeches. i guess all in the eye of the beholder whether it's a big speech. then speaking with new hampshire republican governor chris sununu. stay tuned. you're watching "squawk box" on cnbc.

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welcome back to "squawk box." j.d. vance expected to address the national convention happening tonight.

joining us on his take on the race for the wouhite house, new hampshire governor chris sununu. straight up ask. what was your reaction to j.d. vance at vp? >> a good pick. you want at clear contrast with the surnt vice president in kamala harris and you have that. he's a marine, incredibly brilliant. this guy, a book and movie written about him and done about him even before in the u.s. senate. most important, a u.s. senator, there a year and a half. an outsider. seen as somebody who can come in, do things differently, have the voice of the american people, disrupt the establishment everybody wants to move out of in washington, d.c. and a friend and partner to donald trump. they'll have a great partnership. i don't any driving a lot of policy for the administration. trump will do that. bring in his team, but end of the day, there's a good partnership there. >> i wanted to ask you about.

at least within the business community to the extent there's any questions about j.d. vance, the question is, you know, how populist will he be? are his policies either around taxes, around labor. you can go down the list. regulation, given his affinity or apparent affinity for people like lina khan? what does that do? >> i don't think you'll see a lot of -- it's where the see the vice president's policies overtake the policies of the president. right? trump as the next president is going to really dictate that. i'm sure j.d. will have input, of course, but what he has, an ability to bring and work with the senate. which trump can't get a little with congress walas well as he should have first term. a better connection with someone like j.d. a vice president rarely drives the policy. it comes out of president trump himself. >> governor, a group, i think

calmed american compass or something that really portend they have oversized influence on the current republican party. i think maybe legends in their own mind at this point, but they claim, they claim that j.d. vance is a huge acolyte and totally onboard with raising corporate taxes, reappointing lina khan. no more antitrust. no deregulation. almost sounds like an oxymoron. like mostly progressive policies and j.d. vance adheres to these it completely and in trump's ear the entire talking about this new populist movement. everybody i talk to says, no way, but not stopping them from saying they're going to have -- >> no. that group has virtually no influence.

nonsense. really is. again, look at donald trump himself. this is a guy who steers his own course, you know exactly where he stands, brings in economic advisers, you're friends with them. those are the folks he leans on. you saw the trump economy first term and you'll see similar type reaction in the second term. the big question, the right one talked about, tariffs. right? how are those levers going to be used specifically with china? a much bigger conversation has to happen with what happens in europe, what happens with india. tariffs there. obviously made statements on taiwan in terms of what they would have to pay for defense and all that. but the tariff issue i think is the big economic issue. i'll also tell you there's a recession coming, guys. probably not until '26-27. federal, arca money still out there, released through '25-26. when that dries up you neat expertise to manage a soft

landing. >> ask you a different question. which is -- republicans have been talking about debt and deficits in this country for a very, very long time, and they've oftentimes put that front and center in terms of the rhetoric and the conversation. yet part of the conversation appear based on pra president trump to "businessweek" lower corporate taxes to 15%. i don't know where you think the original tax rate goes. doing those things and not going to really deal with the other side of the balance sheet, which he doesn't seem to want to do, where now will you see it? >> yeah. i couldn't agree more. that's a problem. but it's a problem for democrats. been a problem for republicans. no one wants to talk about debt and deficit but it's extremely real. the answer, cut spending, get rid of discretionary spending, bring in certain aspects of the budget under control. very doable. the big thing i also push when i talk about the political implications. medicare and social security. these things are going bankrupt.

this is a reality. it is happening and every day we get closer and closer to that eight and ten-year threshold when these things go bankrupt. the fear, congress will do what they always do. kick the can down the road. not be pro active, only react in eight years and bring a bad solution. as good as donald trump is on a lot of issues i hope he brings in an economic team that says got to deal with it today to get the best possible answer for the future. >> thoughts on maybe ironic to some degree, president biden's plan to bring forth some new rules around the supreme court, both in terms of an ethics policy. surprised they didn't have one prior to this and potentially term limits? talked whether there should be term limits for senators, for congresspeople, for presidents. have them for supreme court justices. whether this should be a test to, you know, drivers' test, frankly, after a certain age to

get on the road. what do you think about all of this? >> no. look, soon as -- you can agree or disagree with the decisions of the court. soon as one branch of government starts telling the independent, totally separate and independent branch we're going to change your institutional controls, that gets a lot of people scared. the beauty of our system is that each of the three branches is truly distinct. the president has to nominate congress and the senate confirms those judges. then have to manage themselves. you have to have that independence. really do. otherwise they really become a political machine. >> do you think, what about term limits broadly speaking or that group having an ethics policy? seem sensible to you? >> well, like an age limit for the court? something like that. no problem with age limits. >> making it up. >> that's fine. not a joe biden decision. that's a congressional and probably a constitutional decision. >> 100%. >> the more joe biden tries to -- he's got a lot of other

problems right now than worrying about the institutional rules in the justice department. how about head of secret service clearly has to be fired and lied about certain things publicly? how about the disaster on the border? how about the inflation bidenomics nonsense. a lot of things he should be worrying about in the next four months. his own political future. >> if you were to step down, who do you think would be the strongest democrat to go up against -- >> kamala. kamala. the only one that can do it. the only one that could have the money and name i.d. in the last three months. won't matter. both going to lose. >> governor, i want to thank you for joining us this morning, and -- >> anytime, guys. >> jumping in, talking candidly about a bunch of different topics. thanks. when we come back news we're just getting on a.i. powerhouse anthropic. that will be next. later, former boston fed president eric rosengren will share his views how quickly the

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we have some news from the west coast on a.i. start-up anthropic teaming up with one of its biggest investors. joining us to tell us more is kate rooney. >> anthropic and menlo ventures partnering on a new $100 million business to back other early-stage start-ups and get them using the a.i. companies. menlo early partner along with alphabet and amazon. $1.3 billion fund for a.i. anthropic, the actual a.i. company here, won't be investing. giving founders $25,000 in credits to use on their large language model.

daniella one of the founders of anthropic want the next flock of a.i. builders, building on their technology benefiting from feedback getting from other founder. in turn helps them improve their product in a competitive environment. anthropic competes pi openai chatgpt and i sat down with a partner at menlo told me they modeled this after something that apple did. called the anthologj,y. a bu funding developers. >> a whole set of early developers and things they were struggling with and things they needed to be more attentive to and direct lens into things apple was thinking about. a lot of par heshehes -- parall

>> more than doubled first to second quarter topping $25 million according to crunch base. back to you. >> how does this compare to what openai is doing, pursuing? >> interesting. yeah. so they have their own venture fund. they're actually putting up cash getting equity and start-ups. about $175 million in a fund. anthropic taking a passive role, not getting equities. not getting the financial side. working with and coaching ends up taking off becomes the next $100 billion company. not that upside. openai a different tact. nuance at a difference. >> kate, thank you. >> thanks, joe. all right. we are just about 25 seconds away from the june housing starts data. ahead of that number we want to take a look and see what's been happening with the futures this morning. under pressure all morning long.

dow futures down by about 90 points. s&p futures off by just over 50 points. nasdaq indicated down by close to 300 points. a big part of the waeeakness, semiconductor chips. look at treasury market, ten year below 4.2%. 4.17. two year at 4946. over to rick santelli in chicago. >> yes. june housing starts expected to be in the neighborhood of 1.3 million. seasonally adjusted annualized units in better. 1 million 353,000, following an unrevised as of this point 1 million 277,000. notable here is that last month's number in both starts and permits were the lowest levels, lowest levels in four years going back to june of 2020. 1.353 million does take us up a

bit. now the biggest number just since april when it was literally very close to that number. 1 million 352,000. now, on the permit side, very similar scenario. expecting 1 million 400,000. ended up with 1 million 446,000. so a bit better than expected. in the rearview mirror, starting to get subtle revisions, and the revisions really don't make a huge difference on comps. look at starts, 1 million 314 the new number. that's still lowest level since june of 2020, and last month's 1 million 386 on permits moving to 1 million 399,000. that really doesn't change the metric much either. what we are really looking at here is a bump from a very low level in both starts and permits. when we consider what's going on with interest rates and what's going on with the potential cuts, i can't understand why -- there aren't more talking about what type of difference that's

ultimately going to make if we get one or two hits to the current rate of fed funds, and lowering that a bit. is that going to make a huge difference in housing? i know diana olick and others who weigh in all know where the traction is not coming in. it's not coming in on finance. getting credit. and supply of homes on the marketplace. just to point out, we are seeing two-year note yields continually the last couple sessions running a little hotter. meaning more selling pressure pushing them up. taking some of that invertedness we took out of the curve, putting it in just a bit. that dynamic really was fostered by the better than expected retail sales yesterday, and that dynamic that is still in place to some extent. although we are seeing that this housing number really isn't making a huge difference. the markets seem to be pretty much capped in what the dynamic is, and that is watching the equity markets continue to party about what may be fed rate cuts while we are seeing mixed

evidence on the output of the economy as many try to understand if the fed and chairman powell are actually going to be able to find a green light embedded in all of this data to cut rates. because it certainly seems as though that is what their mission seems to be, if you kind of read between the lines. becky, back to you. >> rick, perfect. thank you. diana olick joins us now with more on these numbers. diana, what do you think? >> well, i want to break these out, becky, between single family and multifamily, because multifamily was the driver in this month, really. up 22% month-to-month and tends to be volatile month-to-month on multifamily side, but a big jump month-to-month. still down 23% year over year. pulling back because record supply came on the market last year and this year. we're seeing a softening in multifamily rents. down year over year and have

been the last several months. why you're seeing a drop in year over year starts. monthly bump up could be one or two developments nationwide. hard to say. single family starts, though, actually down month to month 2.2%. still up 5% year over year. rick talked about mortgage rates. we saw the average on the 30-year fix well over 7% for all of june. so that has builders seeing their buyers come in and pulling back a little about those decisions. we saw builders sentiment actually drop, but the six-month forward-looking indicator on builders sentiment was actually the only part of that index higher and it was at the highest level of any other of the components on the index. builders expect this over the next six months. current traffic very low. seeing month to month starts come down. better than a year ago. if we continue to see rates come down. they are now in the high 6% range. if they come down with potential cut from the fed in september,

then we could see more buyers coming in. builders will have to step up, and meet that demand, because they're still very little existing supply on the market. back to you guys. >> diana, traditionally i assume builders sentiment is closely tied to mortgage rates, closely followed by the economy, maybe? >> yeah. builders sentiment actually is in the month. we got the july number on builders sentiment yesterday. they actually did that survey just last week. so it's the most current indicator. we have, again, seen mortgage rates come down a little bit, but back and forth. i don't know if the builders think they'll still come down this month. being very careful. a lot of supply. a nine-month supply of builder product right now. that's very high. six months a considered balanced between buyer and seller. you have a three-month supply on the existing side. put them together, the market only has about a four-month supply of homes for sale. >> okay. diana, thanks a lot. great to see you. coming up, former boston fed

president eric rosengren will join us talking about his reaction to former president trump's new comments on fed chair rojeme powell. don't go anywhere. "squawk box" coming right back, after this. with social sentimenttomizs help you find and unlock opportunities in the market. e*trade from morgan stanley with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley

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rosengren. former boston fed president, visiting scholar with m.i.t.'s center. more numbers. everything headed, looks like, for at least a september cut. you say the fed should not cut. why? >> no. iactually think that the fed probably should and probably will cut this september. so i think things are well aligned. inflation has come down. >> so you didn't say that, he also said the fed should not cut interest rates before the election? you didn't say that? >> sorry --? >> i actually took out something else and didn't -- i left that in and did read it. so -- anyway, never mind. yeah. but, okay. let me get to the next question. so rick santelli was just talking about a quarter point. does anything improve? does that really do anything, i mean, it's a sign of a trend,

obviously, and it's a sea change, but does it help people who want to buy a house? does it help people getting a loan? does it really do that much? >> so as you know, 25 basis points isn't much of a change by itself. normally the fed doesn't move in 25 basis-point increments and do nothing after that. so i think the market is telegraphing that they expect a series of cuts over the next year and a half. so the first cut is indicative of conditions that now more easing is likely. i would say the market is applying a steeper rate path cut over the next, you know -- through april, than i personally would expect. the fed's been pretty conservative in terms of wanting to be sure they're well on their way to get to a 2% inflation target, and inflation still a bit higher than their target.

so using the fed's preferred measure of core pce, 2.6%. there's still a bit of a ways to go before we get to 2%, and there's a lot of uncertainty about what exactly the inflation outlook will be next year. there's a lot of geopolitical uncertainty. there's uncertainty about what fiscal actions will be. so i think the fed's going to move pretty slowly, and i would expect that the press conference, at the press conference, the chair's going to highlight they're still looking at the data at each meeting and not going to provide forward guidance. >> a political backdrop. should the ten year yield be headed higher because of the prospect of tariffs or the prospect of cutting tax rates that might be in a second trump administration? without cutting spending, commensurately? is there a sign that inflation would have a good chance of

coming back, if trump becomes 47, not just 45? >> so fiscal policy matters. so as you think about what the rate cuts may or may not be in 2025, it does depend on what kinds of fiscal actions you expect. so if there's very significant tariffs, particularly if they're matched around the world, that would make it more difficult to achieve a 2% inflation target over the next year. that might cause the fed to be more reluctant to move aggressively until it gets a better sense of what exactly the tariff situation is. if you end up deporting a lot of individuals that are working in construction and service jobs, that could cause wages and salaries to not continue to go down consistent with the 2% inflation target. so the fed's going to want to see, to some extent, what actions -- you know, how much is

rhetoric right now and how much are actions that are actually going to be taken? i think a cautious approach. both because inflation's been coming down relatively gradually, but we've also had some false starts, and fiscal policy will matter, andistic iffal policy causes there to be an inflation shock, then the fed needs to react with monetary policy to offset it. >> eric, curious to get your views about what former president trump said about if he becomes the president as it relates to jay powell. seemed to suggest he would like to keep him in place, until his term ends, but if you really were looking at some of the warning, there was an implication, if he didn't do what the president wanted that maybe he would fire him early. there's obviously a big legal debate about the independence of the fed and whether a president can do that? >> yeah. i have no idea about the legal implications. i think it's unlikely that there would be much benefit to doing

that, and no reason not to have him finish off his term. so my baseline forecast would be that, that action wouldn't be all that supportive of what either president would probably want in order to achieve a soft landing for the economy. >> we've sort of heard anecdotally, we've kidded about who would want that job? and i think we've heard that maybe the chairman's watching and like, exactly. or his wife -- if someone said to me, you know, we don't want you anymore. really? really? if i were to -- i mean, he's doing it for us, when you think about it. nobody needs this. how much -- does it pay $10 million a year? what's it pay, eric, to be fed chair? >> what is it, eric? i don't know the number. at 450, right? maybe less? >> it's less than 450. >> about 450 -- new york.

if you're chair in new york, you get more. right? isn't that right, eric? i think the chair in new york gets more than the actual chair in d.c.? >> that is correct. >> and you're still not going out to dinner every night, in new york. that's not -- >> brookings have a paper what happens if trump tries to fire chair jay powell. there is precedent that -- that the supreme court has taken up a case. only time this happened when fdr fired someone at the federal trade commission is over policy differences back in 1933. humphrey, the guy this happened to, sued for reinstatement and died while the litigation was pending but the supreme court still took up the case and the estate won saying you can't do that. the supreme court would have to decide in the same logic applies to the fed's board of governors. that's the closest legal precedent there is. >> eric, thank you. >> thank you. coming up on the other side

of this, inside small caps recent stellar performance, dominic chu will join us with stats you need to hear. then up next, we're going to speak with goldman sachs head of oil research. stay tuned. you're watching "squawk box" and this is cnbc. really tired. just calling it a day. but it's 4 p.m. yeah, and i've been working nonstop since 9:30 this morning, so. 9:30. you don't say? yep. you'd want a little shut-eye too if you'd been moving billions around the world. well, actually, i do. you know, stablecoins, nfts, loans. people can access me 24/7. what? but look, everyone's different. you should get your rest. you'll get after it tomorrow. tomorrow's saturday. [ethereum] monday. you'll get after it again on monday.

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more weight-loss on the news. shares of drugmaker roche gaining ground saying a second obesity drug candidate for its purchase of a company call ed carmant or karamo therapeutic showed promising progress. the once-daily pill rauesulted a placebo weight-loss 1.6% within four weeks and in oh piece patients without diabetes, the roche pill could appeal to parents who can't tolerate the popular weight-loss injections

from companies like novo nordisk and eli lilly and both of those stocks are now down presumably on a possible once-a-day microdose bill andrew's already ordering for -- >> i think we all should get it. >>it. >> see, with you, i figure you'll get the pills, and then just go wild on the krispy kremes. >> i won't want the krispy kreme. >> this is not -- this is a different mechanism. >> so, i can go wild on the krispy kreme? >> i think you still will -- >> i thought it makes you sick. >> is that what this one does? >> those are the injection ones. this is a once a day pill, people that aren't suitable for the other ones but i don't know if it's -- what are they called? >> glp-1. >> i don't want to lose my appetite. >> it's like losing your will to live. >> or something else. like, gee, i haven't seen my

wife in six months, who gives a -- >> tmi. >> do you want that? >> i don't particularly care what you want. >> oh, what i want or what mac wants, actually. former president trump telling bloomberg in an interview that if elected in november, he will curb inflation by opening the united states to more oil and gas drilling. joining us right now to talk about this and the state of the american and global energy markets right now is the head of oil research at goldman-sachs. let's just talk very quickly, don, about where things stand right now. we've seen very low volatility. it feels like oil is not something we talk about all that much because it's come into a range that's fairly comfortable for both sides of the equation. >> great to be on with you. absolutely. so, brent crude oil prices are bang in the middle, over 75 to $90 per barrel range. we had a modest decline in oil price over the last couple weeks as the risk premium from the middle east and hurricanes retraced as we saw some softer

demand data out of china, but on the bullish side of the spectrum, the expectation that the fed is going to cut soon and evidence of crude drills in the u.s. are very much in decline. implies crude oil price now at a nine-year low. and while we had always predicted that a range-bound framework for prices would imply lower volatility, at this point, we're starting to discuss with investors, is volatility too low, especially ahead of the u.s. elections? >> so, you think there could be more at play. we did have an analyst earlier this week who said that, look, there are a lot of areas of the equities markets that might perform better under a trump administration, but oil is not one of them. his point was that more drilling that might come with a trump administration might be good for consumers, but it's never good for suppliers because more oil means lower prices. >> regulation in oil sector is definitely an area of focus. our d.c. economists would expect

it under a potential second trump administration you would see some regulatory easing. for instance, an expansion of leases on federal lands or off-shore production or a rollback in the methane tax. however, the key point to make is that these regulatory easing measures could provide upside to long-run oil production but have limited effect on the outlook for production in 2025, and oil is very different from equity or bonds, it's a spot asset. you really prize spot fundamentals over the next few quarters as opposed to looking several years ahead. >> what is the volatility concern? what do you think needs to happen here? why do you think it should be more -- treated with a little more caution? >> yeah, so, to be clear, we had anticipated that volatility would come down last year and this year because opec is balancing the markets. oil demand growth and gdp growth are broadly in line with long-run trends but i think there's a lot of questions with

respect to the elections and oil supply and demand balance. on the supply side, are you going to see a potential reduction in supply from iran if secondary sanctions were enforced more strictly, or do you see a boost to u.s. production over the long run if you see regulatory easing? on the demand side, also a lot of open questions. could a trade war weigh on global demand and global gdp? or would tax cuts and business-friendly policies boost gdp and boost demand? quite a lot of uncertainty here that could actually push volatility out from its current nine-year low. >> okay. the risks to that? >> to a range of $75 to $90? modestly to the downside because we're quite confident that $90 is a ceiling in most geopolitical and economic scenarios for two reasons. one, opec has clarified that if the market tightens, they're going to raise production starting in october. there's a strong willingness to do that if the market conditions

allow to do that. second, the high frequency data are a touch softer in the oil markets, especially on the china demand side and in the u.s. on the production side. u.s. production continues to surprise to the upside. >> don, thanks for stopping by. >> thanks a lot. coming up, we're going to dig into small caps outperformance over the past few days. "squawk box" returns with that after this. make your dreams come true. but the choice won't be easy with exceptional offers on the e-class sedan, c-class sedan, cle cabriolet and cle coupe. hurry, these dream offers won't last forever. come in now through september 3rd.

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welcome back to "squawk box." small caps the biggest story in the markets right now. want to get straight over to dom chu. >> andrew, i'm going to show you. it's only been in the last couple weeks that the small cap story has really taken off, but i'm going to show you the year-to-date chart just to give you an idea of how dramatic the move has been. the blue line is the russell 2000 etf and that spiked higher just in the last couple weeks, compared to the s&p 500 and even the qs is what's really been driving, again, underperformance but a big catch-up trade right now. as for whether the sectors and industry groups that are driving some of it, about 35% of this particular russell 2000 etf is made up of just health care and financials, so i'm going to show you the xpi, which is the equal

weight biotech etf and that blue line spike here and the kre, which does some of the small to mid cap regional banks and those in the last couple weeks have spiked higher as well, so watch biotech and specifically regional banks. and then, the three biggest performers, just over the course of this kind of month to date basis, you've got wheels up, huma and aurora. these three stocks extrhave mad the biggest moves and the reason why it's important is biotech and autonomous driving/electric vehicles make up a good amount of the top ten with regard to the best performers on that month to date basis. so, if you keep an eye on biotechnology, on financials overall, and some of these moves in electric vehicle and autonomous driving, that's what's driving some of that big russell 2000 outperformance, joe. back to you guys. >> great, dom. thanks. we get a final check on the markets after that big day in the dow yesterday.

not the same story this morning, especially with the nasdaq, but you could, i guess, say there may be some underlying rotation going on away from, like, the magnificent seven into some of the smaller names. that's why the nasdaq is on a relative basis not doing as well. make sure you join us tomorrow. "squawk on the street" is next. >> bye. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber's back at post nine of the new york stock exchange. futures under some pressure as the street begins to consider just how turbulent this rotation might get. vix above 14. earnings guidance choppy too with jb hunt, spirit, and five below. our road map begins with the rotation in the market. also ahead, a double whammy for the chips sector this morning. we're going to look at where the white house and former president trump fit into that picture. a number of earnings to get to thi