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 this morning, including

market reaction to results from johnson & johnson. let's begin with this market rotation after yesterday's 3.5% gain for the russell, 12% in five days, the best run in about four years. >> it's a little unnerving because the stocks that are leading it tend to be stocks that have no earnings, they're small. they're all up 50% or more. look at the top ten. we have such -- we've got david, we can go right to him. prelude therapeutics, aurora innovation, caribou, cipher mining, method electronics, solaris oil field, igm. that's the leaders of this. should we just go all in on this index that everyone says is the place to be? >> that is the question right now. everybody wondering whether this can continue past, what, an 11.5% move in the russell 2000 over the last five days. we are talking about a standard deviation in the move versus the s&p of some six which is not

typical as, of course, you would expect, given that's the standard deviation move but it's causing a lot of pain out there. there are those who were short the -- if you're running a hedge fund, you may be short the russell in ways you're not completely aware of. parts of your portfolio, to your point, there are any number of smaller health care companies and the like that are certainly benefitting at this point. not a lot of liquidity in the actual names in that. the index is one thing to buy, but the names themselves -- >> thank you for saying that. >> it's very difficult to get in and get out. >> these things are up. if you look at the parabolic moves. obviously, if you buy 25,000 shares of some of these, the size of these, the largest is 341 million, the largest gain, and then you've got companies that are, like, cariboo, up 59%. lost $1.38 last 12 months. we're supposed to say, this is it? this is the move of a lifetime and you better get in? i think people have to be a little under the hood and when they look at these, they say to

themselves, listen, aloe gene therapeutics has lost $1.72. it's up 45%. no. i'm not going to play this game >> but they're just -- are they just buying the index? >> yes, and there's no liquidity. thank you for mentioning that. >> this is what elaine was saying at the beginning of the year. in '94, when hadthe fed suggest their tightening might be ending, russell went up. >> there are some very good companies in the russell that are up 30%. but a lot of them are kind of like hertz global, which is up 30%. or riot platforms. that's a riot in itself. generation bio, peakstone, but then again, you do have companies that are -- you do have a lot of companies that are at the bottom of the -- of 2025, and they are real. like beazer home is a real home builder, and the home builders were very strong yesterday, but for the most part, these

companies are -- they don't really resonated with the american people, so she may be right. but if these go up that much, you want to short this market with everything you have. this is the big -- this is a list of froth. >> so, the rotation ends? >> this is a froth list. >> what ends -- rates are now, what, 4.1% on the ten-year, or in that range. >> i like small and medium-size business. i don't like micro microcap. it's too early to buy jovy aviation. >> why? it's going to be a $70 trillion -- >> $9 trillion. it struck you at the time. >> it did. i can't remember the number anymore. i'm glad you did. $9 trillion. this is a morgan stanley report just to refresh, i believe, that made -- just stopped me in my tracks when they said, yes, the aviation market for these kinds of -- for the flying cars, we call them. $9 trillion. >> you said we'd be safe in fog

horn therapeutics, david. >> foghorn leghorn. >> i don't want to make too much fun, but i do. elaine, i like elaine, remember the great '87 call, but my problem is that we can discuss this list all we want. this just is a list of froth. you got to starbucks, which no one does anymore, and you say, triple venti cappuccino with froth, this is what they produce, which is why the quarter was so horrible. >> it brings us to slightly larger names that are issuing a lot of downside preannouncements. we looked at spirit. we mentioned jb hunt's guidance. five below, of course, is a story today. >> let's hit some of these. spirit, let's talk about a prepackaged bankruptcy. they were going to merge with jetblue and it was going to save them. that was broken up by antitrust. i think the trump administration might have let that one go through. i don't know. they take that palm beach trip and was going to raise the rate.

that's a palm beach trip -- that's mar-a-lago. >> what's the market cap on this poor thing at this point? >> five below -- >> one of the names you were talking about. >> five below is one of those companies -- >> $346 million. >> it's not the fulcrum of this movement. five below, joel anderson, who's been on "mad money" a number of times, this is one where they don't even say, he left to spend more time with his family. they simply say, he left. now, five below, every time he's been on, i say, you can't keep adding stores with bad same-store. that's the classic what happened with wt grant if you want to date yourself. their total sales looked great but the same store is terrible and they guided down, but this is a company that's been hurt by china, hurt by the consumer, and hurt by shrinkage like almost -- i mean, costanza-like shrinkage. >> when you say, hurt by china, we obviously, over the last couple days, saw weakness in

high-end luxury names such as burberry. >> this is not that. >> so, what was the -- hurt by china what? >> they couldn't stay five below. that's the problem. they were starting to kind of, like, five below. >> hurt by competition from china. >> no, it's just too expensive. they have -- >> you didn't answer the question. >> what do you think, it's a sporting goods store? like vf corp.? they sold -- >> i just want an answer, when you say they were hurt by china. >> you can't -- there's a problem. the stuff costs too much to make. so, they can't stay below five below. plus they also had the self-checkouts in the front like cvs where i still, carl, i'm hide bound. i pay. >> in-person. >> yeah, well, i use those machines. most people just, like -- >> you actually give them your money. >> yeah, there's a -- david, there's a cvs in west hampton. i have paid. and i feel like such a sucker. >> do you? same way getting on the subway every morning, i feel like, hey,

i'm paying. >> you don't hop? >> no, i don't hop. i would be so -- at this point -- >> that's an olympic sport. >> i can't hop. of squeeze even. i'm happy to pay. i wish everybody else felt similarly, but they don't >> it's good to have you back. >> it's good to be back. >> i'm sure it is. >> it's good to be together. >> what is this, the california room of the shining? >> it's a rough morning for the chips today, including nvidia with the u.s. now reportedly mulling a ramp-up of its chips crackdown on china. according to bloomberg, the white house has told allies it's considering using the most severe trade restrictions available if companies like asml continue giving china access to advanced chip technology. meantime, you've got this interview with former president trump claiming taiwan took about 100%, he says, of america's chip business and should pay the u.s. for defense, in his words, jim, "how stupid are we?" >> i don't want to say that's

kind of -- it's an ill advised position because what happened is that taiwan semi, the man who runs, morris chang, he was here, he recognized that they have many more engineers in taiwan per capita. it's much cheaper to make things there. the real intellectual property is kla and it's applied materials, asml, and of course, lam. so those are the ones that have been at the forefront, but the president has said over and over again, you can't keep sending this stuff, asml. we have the ability to stop you. and, like, asml was saying, i don't really care about what you have to say, president biden. >> i know. they have. although, i mean, the company was based and created as a result of u.s. technology. certainly, its history in terms of everything else. it's certainly important in chip making. tsmc is a huge customer. that's not what we're talking about here. but a number of chip makers are facing -- are finding themselves out of a market where other competitors are able to benefit

from it. >> correct. >> although, at the end of the bloomberg story that basically is the key here, i did laugh when they said the american export controls are costing americans $135 billion in market cap. i kept thinking, that's -- 1/30 of nvidia or one day, a move either way, in nvidia. >> let's understand that applied materials already took the hit, about $2 billion. lam research took the hit. because the president said, listen, you can't give them the latest and greatest. asml didn't. level the playing field. now, of course, because the market's so stupid, asml goes down and lam goes down. lam already had the hit. asm has it. >> they did issue this q3 orders forecast that was light. >> well, they did say it was going to be the same as '23. that was surprising to me. but look, what matters is that asml has not played ball. and the -- the administration's

absolutely right to go after them, given the fact that they haven't played ball, but let's understand that secretary raimondo has done everything she can to make it so that key semiconductor plants are here, which is why intel's up, because it is really embraced that. but i think that the president saying that taiwan stole it, so therefore taiwan has to pay protection -- >> that's a different president you're talking about. you get people confused here. >> candidate trump is saying that you need protection. i think that one of the -- if they want to pay, they have -- they have to pay protection. >> protection money. >> that's the same as with nato. and it's -- there's no give without a get is trump's thing. >> all these things are resonating in the market today, both the story being reported by bloomberg about potential cr crackdowns on those that are supplying -- >> that's president biden, not trump. >> the chinese are effectively sp increasing their output and

sophistication of chips. huawei has been able to operate with a new phone pretty well. they're going to create their own ecosystem that's going to have no part of u.s. supply in it and be probably just fine. separately, then, you've got this taiwan cheomments from tru. >> you could sell nvidia because it's up a lot and you're nervous and scared, and president biden's after them, and trump -- >> isn't your club meeting at noon today about whether or not you buy tech at a discount? >> exactly. and i think you have to be a member of the club, but the one thing i would tell you is that kneejerk moves have historically given you a chance. that's how we built our nvidia position. buy, but not -- you have to do it slowly. we'll get some more on what the former president said about tiktok and jay powell and corporate taxes. we are on track for a sharply lower open. interesting diet of downgrades today of names like chevron, qualcomm, american, morgan stanley, when we return.

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♪ welcome back to "squawk on the street." rick santelli here live at cme hq with the last breaking news of the morning. industrial production for june up double expectations, up 0.6%. in the rear view mirror, the up 0.9% became up 0.7% so we see positive numbers on industrial production, especially considering we started the year down 0.9%. now, if we look at utilization rates, a nice little pop there as well. 78.4 expected. it moves up and confirms now at 78.8. that is the best level of utilization since september of last year, although in the rear view mirror, we did downgrade last month from 78.7 to 78.3. right now, we have a 4 4.46 two-year.

longer duration treasurys are up in yield but not as much. dollar index taking a big hit today, and the yen has had a couple of good rally days since the beginning of the wk.ee "squawk on the street" will return after a short break.

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republican national convention heads into day three today, an important one today. eamon javers is in milwaukee with the latest. good morning, eamon. >> it was unity night last night at the rnc as a parade of former trump opponents took to the convention floor to praise him and offer their endorsement for him, including ron desantis and the candidate who stayed in the race longest against donald trump, presented the biggest threat to him, argued that he was not a great candidate for the presidency, that is nikki haley. last night, she said this. >> i'll start by making one thing perfectly clear. donald trump has my strong endorsement, period. >> now, that came on the heels of a bloomberg business week report yesterday. they sat down and interviewed donald trump, among the things that he said was that in his second term, he's considering jamie dimon of jpmorgan for

treasury secretary. jpmorgan had no comment on that when i asked them about it yesterday. so, no indication whether that is a real thing or sort of an idea that's just being floated out there. also, the former president saying he would keep jay powell as fed chair, which goes against some of the reporting that i have heard from people close to trump who suggested he would fire jay powell as fed chair in a second term. be that as it may, there's a lot of speculation here about who the candidates could be for a second trump cabinet given just how good people here feel about their chances in november. a whole long list of names out there. i won't go through all the different names here, but you can see a lot of candidates for a lot of jobs. that is the background chatter at this convention, guys, because as i say, people feel very, very good about their chances in november. >> yeah, eamon, on jamie dimon, i can add a little bit of reporting. obviously, last time -- back in 2016, there had been at least some asks of mr. dimon. he had no, i think, a number of

times then. i think the expectation is if there were an ask this time, the answer would be the same. anybody who knows, at least, his wife or his three daughters could imagine what would happen in that family were he to say yes. that said, i'm curious on jd adv vance, because you have been following this. i was out a couple days, doing reading like a lot of people may have been about now the vice presidential nominee. aligned with elizabeth warren on some stuff on the banks, aligned with lina khan on some things with antitrust. what is going on here? >> there's a huge sea change, generationally, in the republican party and their approach to the economy, david. this is an era of economic populism and there's a group of economic intellectuals on the conservative side who have spent the past five years coming up with a set of conservative populist policies that deviate dramatically from sort of the chamber of commerce republicanism that you and i grew up with over the past 20, 30 years in the republican party. this is a very different

approach. it's a worker-centric approach. it's about increasing wages, helping communities, helping families, not necessarily as concerned about prices and certainly not concerned about the opinions of corporate elites who a lot of these conservatives on the populist side view as on the other side of a cultural war war. they view ceos, people in c-suites, as suspect and potentially shoving sort of woke values down the throats of their voters. they don't like that, and they don't see themselves as aligned with those ceos and corporate elites. that's a very different approach than what we've seen from republican candidates in the past, david, who have aligned themselves with the job creators and the big corporate executives. this is a different republican party and you're going to see different policies coming out of it as a result. >> eamon, you're really at the -- you're the only guy really saying this, and it's really important people understand. we're talking about a sea change that would say that big cap companies sold out the workers in order to be able to make the most money in the stock market. and it's time to help the

workers, and also, i've got to ask you, then, in 2026, we could renegotiate nafta. isn't nafta the bane of the existence of these anti-globalists? >> yeah. i mean, you look at trade across the board. donald trump's proposal for across the board, 10% tariffs. that's not welcomed by some of the members of congress you privately talk to here who are sort of the traditional chamber of commerce-type republicans but you would imagine they will go along with that and if it comes to the floor of the house of representatives next year. trade across the board is the fundamental issue for these economic pop lists, and jd vance is a person who's at the vanguard of this new thinking. i talked to marco rubio, and he said, republicans who have grown up in the party thinking a certain way about the economy need to be aware that that hasn't worked for a lot of people and need to be prepared to change and acknowledge they've changed their views, given the disastrous results

that we have seen for communities, for the heartland, for industrial communities across the country, the rust belt. they argue that those policies largely failed base republican voters. they've led to things like the opioid surge and a lot of pain and disaffection among rank and file republican voters and they want to reorient the republican party to be the party of down scale america across all races and demographic groups but this is now a working class party that views corporate elites as somebody who are on the other side of their values. so, google, facebook, but also disney, anheuser-busch, all of those companies have experienced that in one way or another. expect that to continue now. the pick of jd vance really signals a resurgence and a tilt towards -- strongly toward economic populism in the republican party. chamber of commerce politics, not totally dead in the republican party, of course, but this tells you where things are going in the future. all the young republicans are on the populist side. >> we're also keeping note of the support coming out of the vc

community and the billionaire community, eamon, which is another thread running through all this. interesting balance taking place. that's eamon javers in milwaukee. we'll come back to you later today. take another look at the emkease t futures under pressure. more "squawk on the street" is back in a moment. doors lead us to new opportunities. your dedicated fidelity advisor... -surprise! -for you, mama. ...can help you open those doors. by proactively reviewing your entire portfolio. with an eye on taxes and risk. doors were meant to be opened.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. welcome back. we're going to squeeze in a "mad dash" and an opening bell. >> desperate times require desperate measures. vf corp. has been -- >> balance sheet has been stressed. >> yes. so, the manager, who came from logitech, sells supreme, which is a skating rink. they sold it for $1.5 billion but if you need money, you have to sell what you can sell. kind of like a stock portfolio. >> i've been to the -- that supreme, there were lines around the corner downtown. >> what were you doing? >> i walked by. i walked by. >> okay. >> i'm like, what are they all lined up for? >> i know that we have breaking coming up in the olympics,

breaking. as a competition. i didn't know whether you would try to get in that and spin around on your head. >> no, no. >> we have the mayor of paris diving into the seine to prove that it's clean. that's progress. >> did he make it out? >> it's part of the competition. let's get the opening bell at the cnbcrealtime exchange. at the big board, celebrating its new name and ticker symbol. at the nasdaq, shoulder check, encouraging mental health awareness for young people. we will look to hold 5,600 at the open, jim. >> well, look, i think, again, this is that exchange. you've got share donors. this time it's semiconductors and you have companies, small and medium-size businesses that are going well. i was chatting with david during the week, what you're basically saying is, look, these towns that are decimated, and this is ""hillbilly elegy."

this is a celebration of small and medium-size, but trump is not yet president. so, i mean, i think people are really enthusiastic, should understand that you're buying things that almost require that to happen, and you're selling things that could be very good six months from now. >> do you think yesterday's move was, as some say, sort of based on expectations of the trump victory? >> yes, i do. i do. i think that, look, there are people who are making their bets right now, and they seem -- carl, i'm using that word bets in the pejorative way. they're not realizing, for instance, that applied materials took the hit on china. asml hasn't. i'm not recommending applied materials. these stocks are up huge. but i do say there's -- it's not distinguishing what should be sold and what's not. but i do say, and i'm going to talk about this in my club meeting, let's understand the market is up 18%. people are looking for a reason to sell. suddenly, we get a guy -- i don't know if you saw the diet

coke-coca-cola exchange in the bloomberg article. they're saying, listens this is a good opportunity. it's too crazy. i'm going to take profits. that's not wrong. what's really crazy -- >> with that money, you go into? >> cash, please. i'm not going to -- if i go into the nasdaq 2000 i'm coming on top of one of the most amazing moves already. i'm not going to get in front of a parabolic move just because it's happened before. these things can go down. you get one poll that says that a new guy could beat trump or biden is catching up in wisconsin, even though it's -- >> it's a hundred days to go, jim. >> thank you. >> there's a lot that can potentially change. that said, the current president is named biden, and in fact, he has -- he is having an impact on the stock market this morning. we talked about it at the top of the show. you saw the biggest losers in the s&p are chip-related names. these are foreign-based companies that use u.s. technology where the u.s. may crack down on them because they

are transferring advanced chips in some way through their own equipment to the chinese. and so there it is. altho although -- asml, everybody's getting hit here. >> lam came out and said they lost 2 to $2.5 billion in sales because they stopped selling to china, which asml has not. then again, these stocks are up so much. again, people are looking for reasons to sell land, which has been one of the greatest performers of our era. >> as you see, one year, up 52%. the big trade, though, that -- the big rotation that we have been talking about, at least continues on one side, which is mega cap tech in the early going here. the earliest of going. meta is down at 3%. apple, down 1.7%. amazon, microsoft, all -- nvidia, down 4%. now it's also getting lumped in as a result of the chips. >> nvidia was down 2% and then 3%. now it's down 5%. >> keeping an eye on the iwm

open here, still looks like it may be down. it was ever so slightly. >> there is a sense of both panic and give me some money, i got to invest in other things. we did hear, not that long ago, from larry fink, ceo of blackrock, that there are people who are taking on more risk. they're going into these etfs that david just mentioned, and look, when they sell, they -- the etfs just bang everything down and when they buy, they take everything up and that's just typical behavior. i'm not advising panic. i'm against panic here. i'm coming out here -- >> you're anti-panic. i've never heard you endorse panic. >> it's not really a strategy, panic. i don't know how you feel. >> i try not to. i try not to panic. i do try to feel. >> is steve cohen panicking? >> no. >> no? just checking. >> what do you mean? >> i think he's referring to sports. >> we went into the all-star break in third wild card position. 25-11 of our last 36.

come on, man. >> what's the best team in baseball? >> the new york mets. they're always the best team in baseball. sometimes they just don't show it on the field. >> jalen brunson got a good deal. >> meta might be getting bu buffeted more than the others because of comments from donald trump about tiktok. >> that's reels and mark zuckerberg has done a fantastic job with reels. i don't think anyone felt that -- that tiktok would be shut down. by the way, this -- >> buying supreme? $1.5 billion to your point. it was bought for, what, $2.1 billion by vf corp. how many years ago? i don't remember when the deal was. >> did you know that luxatica has these a.i. glasses that are meta's. you can't get them. i asked mark zuckerberg to come on the show because they're impossible to find. i have the first iteration where you can -- i gave them to my

daughter. she loves them. this iteration of a.i. sunglasses sold out. nothing can move the needle, meta, i know, but they are doing something with this -- remember how he said, listen, we're going to throw money down the rabbit hole with this platform? there are things that are wor working, and i think it's worth it to point out, those glasses, you can't get your hands on them. >> what explains chips taking it on the chip so hard and intel being the number one s&p'er? >> intel's embraced gina raimondo, the commerce sec secretary's, plan. if you look at jon fortt, he's done great reporting on what intel is doing. they're putting up factories here, and that's not what nvidia's doing. but what is nvidia going to do? you can't make the stuff here right now. now, nvidia -- intel being up 3%, there's typical overreaction. you're going to get the quarter intel and say, why did i buy it up three? it was some foundry. that's what people are doing. that's a panic short, and i just

say, look, go ahead and do it, but understand it's a trade. intel will not make the quarter. >> right. you see some headlines out of waller here, getting closer to the time when a rate cut is appropriate. more evidence that first half data was an aberration. cutting too soon would be a grave mistake. you did have williams this morning as well in the "journal" basically closing the door on july, it sounds like. >> i think july was just a goldman canard, and i enjoy goldman's research, but that was just something that i think that was ill advised, that piece. i think everyone expects if you read, bank after bank -- brian moynihan yesterday. they've got a schedule for what they think, and i think that everyone's being september, 100%, and then we'll see what happens. that's not wrong. >> jim, i want to get your take on j&j, which we haven't hit at all this morning. the stock is up about 1.8%. still down for the year. obviously, no longer even close to the level it once had of being the largest market cap

pharma, slash, whatever you want -- devices company now. eli lilly's double its size. that said, 2024 second quarter sales growth, 4.3%. growth of 6.6% adjusted operational growth of 6.5% as well. thoughts? >> there was a lot of misinterpretation because there's some different accounting issues when it comes to what they bought. joe explained it to me really classically, which is that if people understood the accounting, you'd realize it's not a miss at all. that is driving the stock. plus they are -- july 26th, you're going to see the closing of the vote on talc, and they may have enough votes to stop talc litigation. remember, no plaintiff has won since 2018. >> the vote is being -- is of the -- >> it's a cloture. >> accepting the -- >> the prepackaged -- >> right. for the litigation that, right, around the talc that says it's a

carcinogen, essentially. >> that makes you feel like maybe the stock is too undervalued. they have a loss of sexclusivit on an important inflammation drug but they have at least a dozen drugs that could be $5 billion. plus the shock wave. those are good deals. people are excited about j&j, and the thinking is it's been derisked because perhaps they should win, get the prepackaged -- >> that's soon. that vote. >> we're not going to know. joe's explained. we're not going to get the results in '26 but it is near term. so, suddenly, people are saying, wait a second, if they get the prepackage, this stock is way undervalued. i agree with that. >> yep. >> good company. >> meantime, david, we haven't really gotten your take on some of the banks. lot of discussion today about equity trading, up three times the estimate across the major banks so far. >> yeah, well, goldman obviously responded well this week to the earnings that you guys covered on monday morning.

listen, capital markets activity has been up. we saw it at jpmorgan, even though the stock did not respond positively on that earnings day of friday when we saw all the big banks, actually, down. wells fargo, the biggest of them. you know, we'll see what we get from here to sort of election day. when it comes to m&a and that side of things, i continue to hear that there's sort of a wait-and-see mode for the bigger deals, and back to the conversation that we were having with eamon, i don't know if jd vance's perspective is shared by trump, if trump were to be victorious. we talked about this many times. there's a general belief that there would be less regulation in terms of overall but even on antitrust, it would simply be a softer, gentler approach that we would allow for more deals, but if jd vance is getting in his ear and is aligned with lina

khan when it comes to big tech, you may not see that level of activity that people are expecting. >> morgan stanley has said they already have three times the bakeoffs that they had last year at this time. of course, someone downgraded morgan stanley. >> yes. >> get the bakeoffs, but what i hear consistently from those who are the practitioners, the bankers and lawyers, i've got something, i've got something, it died. it died for any number of reasons. it can be antitrust, but oftentimes, it's price. there's just so many different things figure into it, but certainly the larger deals that, at least, people have said, i've got a pretty big one, they won't tell me what it is or even industry, and then they never make it to the finish line. >> what is bar shea saying? we joke because he's everything in the industry. >> he's certainly got a very good position. >> he's got a big position. >> there are a lot of other lawyers out there, jim. i know you don't know any of them. >> that was a -- that was comic relief from an otherwise very

serious discussion that you were bringing. >> one that the "journal" op-ed board writes about today, to david's point. his white house would be an almost daily jump ball between free market advisors and the new gop statists and protectionists. how's the market supposed to know what to trade? >> by the top of my club call, wi wrote it up, and i said, you know what? the market may actually like a consistent but negative policy from biden versus an inconsistent but positive policy from trump, because how much the market hates uncertainty, david. >> well, we're -- i mean, let's not forget the days we were attuned to what was then called twitter and the president's, you know, tweets about things that were right in our wheelhouse, and it was your -- if you're running and allocating capital, it can be a difficult environment sometimes, because you're hearing things every day. i'm looking at -- by the way, taking a look. truth social is doing pretty well. trump media, djt, hanging in there nicely. bit under 40 bucks a share, i

assume he'll be using that platform again. still a hundred days to go, but to communicate and we'll be sitting here talking about things, to carl's point, or the editorial page of "the wall street journal," that could be one day one thing and the next day another. >> don't you think it's quizzical that you have united health reporting an inline number and the drug companies are being really -- both presidents. trump would be against the drug companies and so is biden. >> it was biden that brought in the i.r.a. in terms of price controls, insulin prices. >> why does the middle man get away with it? >> the pbms? very opaque business. >> i know that if you're a populist, you're not in favor of those companies. jd vance being populist. >> he wants to raise less corn and more hell. >> he wants to -- is there also a possibility of devaluing the dollar?

>> he's not going to let the worker be sacrificed upon a cross of gold, if that's what you're asking. >> it's unclear what, if any, real influence he would have. vice presidents? >> well, yeah, but he's great copy, that guy. now, anybody who read "hillbilly elegy" knows what it's about is steel company consolidation that sold out the workers, and that brings in opioid addiction as there's no jobs, and i think that a prominent leftist gave me that book, saying, here is the manifesto for the left and it turns out to be the manifesto for the right? strange bedfellows, politics. >> it is truly an historic circular discussion about what we gave up for low prices in the '90s. >> this is the walmart discussion. we take 900,000 jobs for t textiles, which is what we had in 1980, sacrifice those, send them to honduras, all over

central america, and in return, we get cheaper clothes, so we sell out the worker, the textile worker, and we all benefit. >> just on the backs of a certain part of the country. >> exactly. it's been a tradeoff. i know that as someone, i fought against jp stevens because they felt they were -- that was a great textile company and the strikers put them out of business, basically. but you had this debate in the '70s and '80s, do we sacrifice the workers in -- to give 300 million people cheaper clothes? and the left endorsed the cheaper clothes. >> guys, before we wrap up, just to come back to my wheelhouse, did notice shares of warner bros. discovery are up. there's a report in "variety" about layoffs in the company. the nba contract out there still, and we'll see what finally happens in terms of, they have the right to match, of course, does warner brothers. my expectation is they will match, but the question is whether the nba will truly see

it as a match of what is amazon's current bid on the table, or will it be deemed not a match because even though it's the same on exhibconomics, it's a true streaming platform given they would air it on max and tnt. and then what do you get? we're going to follow that, but that's coming to fruition quite soon. and like a number of other companies with highly leveraged balance sheets, it's just been a beneficiary a bit lately of lower rates. >> what is -- what do you think in terms of the prospects that if you're at home and you see this and you say, you know what, i really like this stock, it's $8, i should go buy it. isn't this one of those where you should wait and see, rather than just go buy? >> i leave those kinds of decisions to you. that's not my place here. >> would you agree this is an in flux situation? >> always, always. >> i rest my case. >> continues to be. >> i was doing william jennings bryant and you didn't seem to realize that.

the cross of gold speech. would you sacrifice the farmers? >> i got to start reading him. >> comcast flirting with $40 for the first time since april. i don't know if you saw this. new york fed survey looking at the percentage of people who are planning to move in 12 months. in january, it was 13. it's 18 now. you got mortgage rates back to 6.8%. household creation could do wonders for streamers. >> and for cable companies that conceivably hook people up. that said, jim, you know, the proliferation of other opportunities to get broadband, whether it's fixed wireless, which is -- t-mobile's aggressively advertising it. and as i pointed out, what starlink may be in a number of years once they get star ship launching, hundreds of satellites each time for its new constellation, you just have to wonder how much competition will continue to be out there, even if people start to move again. >> i know my trainer was chiding me for buying the package.

informing me that, what am i doing, paying the full boat? and i said, look, i work for comcast. he said, what does that have to do with it? interesting analysis. >> as we go to break, dow is up 40 here. s&p, 5,616. watch bonds today. it will be interesting with the 20-year note auction on deck. dow, all-time high. nasdaq, two-week low. stay with us. tony, its gone. no. how am i going to do this? welcome to the mdy mid-cap cup, presented by state street global advisors. today's challenge is to play 9 holes without the middle of your bag. how does that sound? that sounds terrible.

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the obesity drug wars continue. roche with positive data on an early stage trial for its latest obesity drug candidate something bought via acquisition last year. putting pressure on lilly and

novo today. >> i have to tell you this is early, continues to happen. if you want to buy roche, they announced this on my show in january so you're getting old news. good for you. >> we'll get some trading with jim in a minute. dow is up 80. ne platform with w. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

let's get to jim and stop trading. >> the second day that swab has taken it on the chin. people feel they're not taking in the money, it's not great but it's hurting, down more than 10% now. it's a good company i think people decided you know what, throw that maiden in the volcano and buy the others. >> we talked about the cuts to hold -- >> it was brutal. there will be a level you want to be in it but they made the number by expense control not growth. >> do you want to tout the club meeting. >> at 12:00 we'll say what is a trump stock and isn't. i think there's a lot of managers information and i'm going to try to go over the portfolio to explain it to people and a lot of it is contrary to what's going on right now and therefore there's

opportunity. >> and tonight. >> we have first re-vverizon. david, memphis real estate bryan told me, out of nashville, into memphis. he's a person who gives you the best look about what small/medium size biusinesses ae doing. >> we did nashville city of success last year now we have to consider memphis. >> i missed gnash. have you been to memphis? i haven't. you should check out memphis. jim we'll see you tonight. important day, "mad money", of course, 6:00 p.m. when we come back, the take on the market rotation with the dow up 100. to ensure fresh investment ideas keep flowing,

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(reporters) over here. kev! kev! (reporter 1) any response to the trade rumors, we keep hearing about? (kev) we talkin' about moving? not the trade, not the trade, we talking about movin'. no thank you. (reporter 2) you could use opendoor. sell your house directly to them, it's easy. (kev) ... i guess we're movin'.

good wednesday morning welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber live at post nine as always from the new york stock exchange. stocks are giving some back today. s&p down almost a full percent but not all sectors. energy and real estate and staples, utilities all green today. even banks continue the rally. but information technology down almost 3%. the semiconductors that have been the leaders are getting hit today on the concerns about new biden administration restrictions on overseas semiconductors. consumer discretionary sector also lower. looks like we're wiping out the gains for the week as well. the nasdaq no surprise under pressure to the tune of 2%. that's what happens when you have declines in this some of thing? semiconductors like nvidia.

treasuries, a light day, industrial numbers firming up, but the 10 year below 4.2%, the two year below 4.5%. here are three big movers we're watching. look at j&j. the company beating earnings estimates but lowering the earnings per share guidance, stock still up 2 1/2%. shares of five below is sinking as the company replaces the long-time ceo after issuing a profit warning. shares down 16. and the chip stocks are tumbling this morning amid concerns fueled by comments from former president trump. and export restrictions from the biden administration on china. more on what it looks like later this hour. but overall it's been a rally moment hard not to pay attention to the small caps and the rally they staged, ever since that

good cpi number we got i don't know a week or so ago. look at the outperformance of the small caps, the russell 2000 against the nasdaq 100. >> it's like standard deviation is what i'm hearing from some of my headphone guys. which doesn't happen often. >> the question is why. >> lower rates obviously seen as the key here in terms of beneficial. and then this trade has picked up steam as it's gone along. this is a historic rotation. >> violent rotation some would say. >> p given how quickly it occurred. lower rates, people are getting excited and confident about that and also the trump trade, a note this morning the trump trade 2.0 is long industrial, small caps and mid caps. and then there was a chart from coldman sacks this morning, simple, s&p 500 versus the predicted odds that trump will

win the election and they show that's given an extra boost or at least it's correlated with this extra boost, it's happening at the same time where inflation numbers are more benign, looking forward to fed cuts. but also this idea that the trump economy in a republican sweep, it would be pro business lower corporate tax rates, for instance. >> lower corporate tax rates, the pro business part is more interesting. >> with tariffs. >> no. jd vance, whether he has any influence of course in the actual administration will be interesting to see you. >> on anti-trust you mean. >> anti-trust, devaluing the dollar. >> minimum wage. >> any number of things that i think would be viewed, more as not necessarily as pro business, at least the way we think of the republican party in the past not to mention the 10% tariff that former president trump has discussed as something he would implement which i'll let you

tell me what the impact of that would be. >> tariffs are not growth friendly, bottom line but they have a worse impact on europe, on china, on our trading partners and that's why there's a little bit of a weakness trade in the dollar going on right now. just because there's a view that president trump favors a weaker dollar, will put pressure on the federal reserve to lower interest rates. we talked to ray dalio about this yesterday, obviously he's been writing a lot and thinking a lot in his historical framework about the internal conflict going on with politics. here's what he said he expects from another trump administration. >> you're going to have a more isol isolationist, nationalist policies that are going to be more -- less regulatory. more capitalist. those things by and large are

better for the capital markets. you're probably going to have pressure for an easier monetary policy. and so we're also going to have greater amounts of deficits and so on. >> that's something that he's very worried about in the long run. biggest investor takeaway from him, i thought. this has been a common refrain from him, which is gold has an important role to play in the portfolio given the policy uncertainty. he prefers gold to bitcoin although he owns some bitcoin, a lot of love for bitcoin lately. and the fact he's not a fan of bonds here, even though there's been appetite for u.s. treasuries on the idea the deficits will rise in this kind of political environment. so those were the takeaways. >> if you cut the corporate tax rate to 15%, former president trump indicated something he favors in this interview he did with bloomberg business week

unclear if that pays for itself. >> that's some of the deficit concerns but also the growth excitement around things like small caps. >> right. >> without a doubt. >> because those companies could benefit from the boost. >> you also have an economy that's slowing down but not too much. it's soft landing and increasing calls to reduce rates. we had brian moynihan on yesterday, he's been more optimistic but even he is saying now may the time for the fed to cut retto preserve it. >> we believe the borrowing demand by businesses, okay, nothing wrong. consumer defaults are well within our expectations normalized to where they were. commercial defaults are still low but the activity says it's okay and now it's time to get the balance back.

the restrictive rate structure is higher than they need to keep the economy going -- the inflation towards 2% and chair powell saw that the other day we see the same statistics to report that. >> he revealed to us they factored in three cuts this year, september, november, and december, to keep what has been an okay economy. just on that front, jb hunt was one of the earnings reporters this is the transportation logistics trucking company, good handle on the economy. it's been tough in that sector of the economy you can hear it in the ceo's voice. they are talking about a positive inflection, listen. >> we both hear in the second quarter and moving to the third quarter. one thing we do know is we're at least closer to some kind of inflection. not that we're calling it today. but i will say there are signs that tell us that things are moderating or getting better.

we are skittish. i've been conditioned now over the last two years to be very cautious on the things that we say. >> getting near the inflection. she wouldn't quite call it yet but stable demand for appliances and exercise equipment. softness in furniture demand modestly encouraged. kind of a read on the okay economy. >> let's get back to this big rotation, really becoming historic at least in terms of as say ra said the violence over a short period of time. the russelle is up again this morning. the iwn up another 7.7%. you can see what the move has been like versus the s&p over a short amount of time here. let's go to dom chu tracking -- i'm using the word historic dom, i don't know if you are. it feels that way. >> it does. in the broader con teltext of things, a week and a half or so, the move has been violent. you hit some of the economic

fundamental reasons why the small cap trade outperforms because of that optimism, the low every interest rates ahead, which benefit small cap companies but there are those out there looking at the mass i have spike you've seen over the course of the last week and a half or so compared to the s&p 500 and the nasdaq 100, what is causing it, the signs all of that. one of the reasons we're seeing it is the outperformance in two key parts of the market. health care and bio bio technol specifically. i'm going to show you the xbi, the spider biotech equal weighted index, tracking the smaller name and the kre, the spider regional bank etf. both have seen mass i have spikes in the last week and a half or so. so bio technology and regional banks and health care make up roughly 35% of the iwf etf.

and three more stocks that may be indicative of the violence of the move. ev go, up start holdings and plug power. names that have generally under performed but you can see here, the big outperformance in the last maybe month or so for some of these names. t ev go, up start and plug power are among the most highly shorted name in the russell 2000 index etf. so the violence in the short amount of time could be by some traders' minds short happenings. >> let's talk about the rotation and where stocks go from here. joining us this morning is ed yardeni. great to have you back. >> thanks, carl. >> took note of your note last week where you went to 5800. used the word melt up. has any of that changed?

>> no. looks like we had a melt up but also a broadening melt up. in the late 1990s we had a melt up that stayed focused on the technology, this time around the melt up in technology and communication services at least in the past week as you folks have noted seems to be broadening out to the mid caps, small and mid cap companies, and i think that was very accurate in pointing out it has been some short covering and a concentration in biotech and regional banks. i think the widening out is going to increasingly focus on the s&p 400 and 73. in other words money may come out of the magnificent seven or money won't go into the magnificent seven and it'll get redistributed to the rest of the

s&p 500. earnings have been flat for the past two years. >> you did say last week that you were wary of fed rate cuts because of the side lin cash it would draw into equities. >> right. >> explain that. i >> i'm not in charge of the fed and rarely go out of my way to tell the fed what to do. but as a rstrategist, if the fe is looking to lower interest rates, looks like they're locked in in the pattern, committed to lowering rates in september. the market would be blown away if they don't because there's accut in december. that explains the melt up and the broadening we're seeing in the market. i don't want to see a melt one because as an investment strategist i have to be smart enough to tell everyone when to

get out with the meltdown. look, it's not what's good for me, it's what the market intends to do and it feels as though the market is pricing in five fed fund rate cuts over the next 12 months that's what it's doing. >> there's a difference between broadening and rotating. >> correct. >> today it feels like one of those sort of uncomfortable days at least if you're in the nasdaq or tech stocks. the nasdaq is down 2.4%. the dow is higher. how do we know which one it is and what's healthier? >> i think it's broadening. i think it's healthy to see the nasdaq have some sort of selloff. it's been going straight up, so seeing some profit taking in that index makes sense, especially since there is actually some mildly bearish news such as you folks mentioned

that the biden administration may try to make it harder for asml and other semiconductor equipment, the manufacturers, to sell to china. in addition, former president trump is talking about asking the taiwanese to foot the bill for defending them vis-a-vis mainland china. there's bad news out there, the markets taking some profits on it and those profits aren't totally leaving the market. they're quite the opposite, they're going right back in. >> ed, on housing we got the 30 year fixed down to below 6.9 seeing one out of five sellers cut price. we have cleveland fed rent index down for the quarter. most since 2010 and now do you think there's optimism you can move if you want? >> i've been arguing for the past couple of years that we're in a recession. i've been talking about a

rolling recession that's hitting key sectors at different times and housing has been in a recession. i think we're now getting things into place with lower mortgage rates some discounts on home prices. plenty of inventory sitting in the market for more months than in the past. i think it calls for a rolling recovery in the housing market. i would say the same thing for retailing and goods producing generally. that area also has been in a growth recession. there's been no growth in goods producing for the past couple of years as we saw in today's industrial production it looks as though things are starting to improve as is retail sales. >> right. you got atlanta fed back to two and a half, goldman two, three. can't wait to see you ho you update your models in the coming day. >> thank you. here's our road map for the rest of the hour. looking at the chip wreck

driving the market lower this morning. and roche has data on a new obesity drug sending shares higher and pressuring rivals. and shares of citizens financial rallying on the back of its earnings. the ceo joins us with his outlook as "squawk on the street" continues after this.

welcome back to "squawk on the street." the chip stocks are sinking in today's trade leading the nasdaq

lower. seema mody looking at the sector a number of factors driving the action here. >> that's right. chip stocks under fire from both republicans and democrats. former president trump shared his frustration with taiwan dominating america's semiconductor industry which he said never should have happened, referring to taiwan semiconductor, customers like apple, nvidia, qualcomm and others relying on the company. all those stocks are down 5 to 6% on the prospect of potential restrictions. president biden is reportedly looking at implementing new controls on companies like asml, the sole provider of equipment used by semiconductor, overshadowing the strong earnings report, down 10%. tokyo electron are down as well. the industry is grappling with export controls already that

affect sales to china. while billions have been doe v devoted to building chip factors in the u.s., they're behind schedule. there's no country in the world that can make taiwan semis chip. >> thank you. let's stick with the semiconductor stock. cameron fitzgerald joins us now, he has a buy rating on asml price target of $1,320 saying despite geopolitical risks focus on growth. but let's start with the geopolitical risks. what do you make of the former president's comments about taiwan and what may be coming moves from the biden administration to try to tighten up restrictions on china getting ahold of high end chips. >> good morning. i think the potential for more

restrictions is real, but i would highlight that we've already limited unavailable to china and asml currently cannot service five different factors in china. so the intent is to limit the ability to build leading semiconductors. and i think the efforts that the department of commerce has put through have done that. clearly when you saw that chip come out of huawei in china, that led to the red flag. and so, you know, i think there are considerations. it is bipartisan in d.c. but i would, you know, suggest that we've already done enough on that front. so i think, you know, the pullback in stocks, particularly sml is overdone. >> there it is. down 10%. again, in terms of the actual numbers reported by the company, generally positive, correct?

>> yeah. you know, i think that there was wide debate whether the bookings would come in at the 4 billion level or upwards of 6 billion as we forecasted. and they came in right around 5 1/2. so that was definitely good enough. i would highlight when tmc reports this evening it's going to be a strong report. today it's led by a.i. and we are starting to see a return to seasonal trends in some of the other markets like smart phones, pcs, enterprise servers. so the growth next year, again they reiterated on their call this morning. >> i'm curious, though, in the difference in your perspective in terms of the effectiveness on the bands s that have been in pe versus the frustration on the

part of the administration. where does that play in? why are you seeing it as successful and perhaps other not so successful? >> it's a great question. i would say the fact that huawei was able to build a 7 animator chip is alarming, disturbing relative to the aims and goals of the administration. and that i think has led to potentially a vision of putting more restrictions on asml and their competitor nikon and not allow emerging shipments to china. but if you recall -- if you were to put a full embargo on select tools from asml that would prohibit china from building even 28 nano meter chips. i don't think that's their goal. i think not allowing servicing tools at specific factories in china will serve its purpose. i think not allowing euv tools

into china will serve its purpose. in my view that's enough but to your point this is one of the one areas in d.c. where both parties agree. and so, you know, could we go overboard for sure. i think that's what the market is reacting to today. >> also they've got to be getting pressure from american semiconductor companies saying we have the export restrictions, our competitors abroad do not. that's probably part of it. i wanted to get your take on these comments from president trump that he made to bloomberg business week in this interview claiming taiwan took 100% of american semiconductor business and taiwan should pay for u.s. defense. do you have a view on the election and the american posture towards taiwan if potentially china makes a move to have a view on semiconductor stocks right now? >> yeah. answering that is probably above my pay grade. but i would say that, you know,

taiwan tsmc specifically makes roughly 100% of the world's semiconductors. if you want an a.i. industry with nvidia if you want to have smart phones from apple, we're relying solely on tsmc. is that something where taiwan stole the business. no, i would say that tsmc, strong subsidies in taiwan over the last 20 years is what led them moving to the pole position. so this has been a long-time coming and i think to take a different view is wrong. so, you know, i would say that, you know, the department is doing its best to try to build domestically but that's going to take many years. and so, i would say, though, that the selloff in the group is more aligned with president trump's comment on taiwan as opposed to to the potential for

more restrictions on asml. i think the short and simple answer is without clarity on kind of u.s.'s role in protecting taiwan, you know, it might be a struggle for some stocks to work at least near term. >> i'm glad you pointed that out, cj because we note nvidia shares are down over 6%, amd over some 7 1/2% right now. keeping an eye on all those names. appreciate you taking the time. thank you. >> thank you. bitcoin trades at the highest level of the month on pace for the best week since about march as investors are cheering the former president's run running mate jd vance and his stance on crypto. we'll talk more about it when squawk comes back.

welcome back to "squawk on the street" crypto investors getting excited about the idea of a potential bitcoin bull in

the white house. bitcoin hitting the highest level since mid june, topping 66,000 earlier. emily wilkins is in washington with the latest. first trump became the bitcoin candidate and jd vance owns bitcoin. >> he does. jd vance's selection was welcome news for the entire crypto industry because he's seen by many as someone who really understands crypto. he doesn't just like it, he gets it and gets what's needed in terms of regulation. he's been workshoping a bill around, trying to provide rules of the road for the crypto industry. the draft of his legislation would clarify when crypto needs to be regulated as a security versus a commodity. it would also give companies a path to raise capital off of digital assets. now vance has also proposed legislation last year that would give banks protection to work

with crypto companies. trump himself as received support from a number of crypto players including the win key largo -- winklevoss twins. they voiced frustration with the biden administration's posture towards crypto in a podcast saying trump's platform is going to do more to help their industry. >> startups and technology we are certainly among the best experts in the world. we think donald trump is a better choice than joe biden on these issues. >> we expect to hear more from trump on crypto and what his plans are as soon as next week when he speaks at the bitcoin 2024 conference. we'll be paying attention to that and what he says. guys? >> emily, appreciate that as we work our way through the convention speeches tonight and tomorrow. still to come, new data from roche about this weight loss pill sending shares of lilly and

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welcome back i'm contessa brewer with your chris nbc news update. the department of homeland security is investigating security issues at the saturday rally where a gunman tried to assassinate former president trump. this probe will look into the secret service's handling of security that day. ukrainian officials say moscow and kyiv each exchanged 95 prisoners of war this morning, the third swap in the last seven weeks. according to ukraine's headquarters, some of the released ukrainians were captured during the earliest invasion and have spent more than two years in captivity. the mayor of paris took a dip in the river to show the river is safe ahead of the

events of the olympic games. organizers poured $1.5 billion into the river to clean it up where swimming has been banned for decades. >> she put her head in. i was waiting to see whether -- i'm not crazy about her stroke there. although it's not terrible. it's not terrible. >> not everybody practices every day like you. >> no, they don't. >> thank you. let's get now to shares of roche. they're getting a boost following positive data for a new obesity drug trial, pressuring competitors, eli lilly and novo, saw it with pfizer last week. let's get to angelica for details on this. >> great to be back talking about obesity pills again. and roche saying people who took its experimental obesity pill lost an average of 6% of their

body weight in 4 weeks. side effects are similar to other glp-1s. the results are a phase one study so this is early stuff but another signal that roche could break into possibly this $100 billion obesity market. remember, roche spent almost $3 billion last year on a company called carmott the thera therapeutics. they made this pill. roche shared promising results from a shot earlier this year so if that pans out, roche could have two obesity drugs it could be years before either drug reaches the market, david. smaller companies structure and viking down today on this news also. >> as kramer points out it's not just about the pipeline but the production. that's angelica peoples.

>> down has a gain of 1.10. bob pisani is here looking at the rotation of the past five days. >> look at what's going on today. this is fascinating. we are seeing selling in big caps due to the selloff in semiconductors in tech on the taiwan story we've been talking about all day. but take a look, put the chart up that carl put up, seven to five advancing to declining. the dow is up, small caps are basically flat. they were up earlier in the day and the semiconductors, the big down move here. so this big rotation out of tech into small caps value is more than a one day wonder we made jokes about it last week, it's not, it happens happening. it has legs and is beginning to track momentum investors buying former forgotten parts of the market. since liquidity is often an issue buying small and micro cap

stocks it's a choice for investors. the idea is let the market maker gs worried about buying and selling the underlying stocks. we buy the etfs and there's been spikes in the last seven trading days. but many investors are looking for more exotic ways to play this. the vanguard extended market etf, this holds the entire stock market minus the s&p 500. this takes the total market index, talking about the entire equity universe in the united states, and takes out the s&p 500. sounds crazy but the resulting portfolio has mid caps to the tiniest micro caps out there. sort of the perfect one etf for this environment. other noticed corners of the market that makes similar but not identical calls include the ishares russell 2500 etf, it tracks the russelle 20 -- the

russell 2000. it's also up about 8% this week. there's two things that concern me about the rally. rallies of small cap stocks that have legs come off of market bottoms and economic low points. that's the traditional rally. we have the opposite here, all we have is a rally based on interest rate cuts. that makes me very suspicious about the legs for this. the second thing we're entering a seasonably weak part of the year from the middle of july through october this is when the volatility traditionally goes up, when the market has the worst period of the year. so i'm happy. i love rotation, i think it's great for the market, cheering this move in the value and small caps but there's reasons to be concerned about the legs associated with it. >> what about earnings? are those going to help confirm it or hurt? because these companies are

still dealing with higher interest costs. >> forget the taiwan stuff today. the biggest problem is earnings growth in the tech sector is -- well, earnings are growing, it's showing decelerating earnings growth. so it's not just whether are earnings growing it's the biggest thing, what's the delta, the biggest cap tech stocks have been showing decelerating earnings growth and people are fundamentalists out there have been pointing this out for a couple of months now, this is a classic warning sign for people piling money into stocks when you have the decelerating earnings growth. that's the biggest concern. >> what about the mechanical side, people by the iwm side of this, the russell itf, the stocks are not particularly liquid. i'm curious how this all plays out. >> this is why etfs work. you're right. traditionally you try picking stocks in the micro cap space you're going to have a liquidity

problem. but there are designated market makers out there, they're in charge of actually buying the underlying stocks, buying and selling it according to the demand there is for that etf. and basically they're the people out there, this whole sub culture and universe out there including people over there, citadel, they have a business around this, buy and sell the stocks and maintain the etfs underneath it. so far i have not heard of liquidity concerns amongst the authorized with the etfs. i'll let you know if i do. >> it could lead to outsized moves? >> yes. >> what we've seen before, i know we have to go. the etf tail wags the dog we saw it with issues with bond etfs for example. it moves under the bond even when the bonds are liquid. >> thank you. still to come, a stunning number of foreign buyers are

fleeing the u.s. housing market. hitting the lowest level in more than a decade. we'll tell you why after the break the ceo of citizens financial breaking down the con consumer as he sees it. retirement. but we quickly realized we needed a way to supplement our income. our friend sold their policy to help pay their medical bills, and that got me thinking. maybe selling our policy could help with our retirement. i'm skeptical, so i did some research and called coventry direct. they explained life insurance is a valuable asset that can be sold. we learned we could sell all of our policy, or keep part of it with no future payments. who knew? we sold our policy. now we can relax and enjoy our retirement as we had planned. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find out if your policy qualifies. or call the number on your screen.

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shares of citizens financial moving higher after beating profit estimates, strong capital markets such as bond under writing offsetting a hit from weaker lending, that demand fuelling an 11% drop in income. the ceo joins us now to discuss the quarter. bruce it feels like it was mixed because credit cost was higher and credit income you forecasted the trough later than the market expected but still a nice move in the shares. what are you seeing broadly? >> well, i'd say we kind of headline for the quarter was a strong performance so capital markets revenues were really strong, led by bond underwriting

of syndicated loans. and also continued strength in middle market m&a so we were up 13% versus a strong first quarter, so that looks good. hit records in cart fees and wealth fees. so a broad market in fees. we're managing our deposit costs well, down three basis points versus the first quarter. not seeing a lot of loan demand yet. hopeful that picks up a bit in the second half of the year. we're doing a good job on expenses. our credit metrics are about where we expected them to be. so anyway, i think we're feeling optimistic about second half and then clearly, as we go into 25 and 26 we have a lot of tailwinds. >> pointing to the lower net interest income in the -- in the quarters, i think you pushed it back a quarter when you expect that to bottom.

what is driving that and how do you expect the rate picture to evolve to influence that key metric? >> yeah. so it's obviously two elements to it. one is the net interest margin and the second is volume. and i guess what we had anticipated was a little more of an uptick in volume in the second quarter. that didn't happen, which kind of means that the bottoming will happen in the third quarter. we're not doing too badly, though, only down 1 or 2% but then i think we also have the swaps that we had forward starting some in q2, some in q3. no more after the third quarter. so we have to fight through that a little bit in the third quarter. that was meant to hedge falling rates. and, you know, we're locked into that. but when we look out to q4 the normal dynamics of front book, back book repricing, noncore

rundown, some things that should start to lift and then that should rise into 2025. >> bruce, is that what you're talking about when you say tailwinds for 25 and 26? can you give more specificity in terms of what's behind that forecast? >> net interest income is going to be a big driver again as the legacy swaps burn off. then we should see our nim go from high 280s today approaching 330, 335, straight to the bottom line so that lifts our eps. you combine it with our really strong strategic initiatives, the launch of the private bank which is doing really, really well, hit 4 billion in deposits with and 3.6 billion of aum in the second quarter. that will continue to mature and drive performance. our new york metro play, 6% household growth year over year,

9% growth in deposits going really well and our capital markets business, the way we positioned our commercial bank to serve private capital, equity. private equity is going to get active again, all that, putting that together, the initiatives plus the tailwind on nii we see an ability to move our where arn the credit cycle? how do you describe what you're seeing right now? >> yeah, i would say the cycle has been relatively benign outside of commercial real estate. so we're still seeing solid performance in consumer, solid performance in commercial. the one hot spot has been commercial real estate, in particular, the general office space, given the dynamics around return to office, combined with high inflation, impacting clothes for borrowers and just high cap rates. so, you know, i would say that is going to be with us,

certainly, through the rest of this year, well into next year, it's a multi-year workout. the good news is, most banks have put up satisfactory reserves around that. we're working through the process, trying to come up with good outcomes for borrowers and the bank. so i don't really expect any surprises. so you can say in effect, that's been quarterized. and when you look more prodly to credit, the rest of credit is hanging in pretty well. >> your stock has surpassed the march lows after we had that crisis with svb and worries about the regional bank. still not quite at the highs yet. i wonder how the investor conversations are going, and where you think investor sentiment is right now on banks like yours, given that regionals have lagged the bigger money market centers. >> yeah, so i think bank stocks generally are catching a bit of a bounce in terms of the rotation into cyclicals. so if you think the economy is

going to hold in and pick up and you avoided the worst of a recession, banks were oversold and they're kind of coming back to something that's more normal historically, although they're still cheap historically. what has to happen now is earnings have to really pick up, and i think one of the reasons our stock is kind of got some momentum right now is the story, the strategic positioning we have. so, i like to say, we have the transformed consumer bank, which is doing a great job on deposit and wealth. our commercial bank is best-positioned to serve private capital and some key industries, like tech. and then, we're building -- we have the aspiration to build the premiere private bank, which typically was historically the space first republic operated and owned, and so we have the key people there now on our platform, and that's going very, very well. so, you know, that strength in those businesses, combined with

some of the economic tailwinds and the balance sheet tailwinds i just mentioned, i think, has people kind of coming back in to look at the story and find it appealing. >> yeah, i mean, stock's up more than 25% on the year, bruce. thank you very much for joining us. and with that color on the quarter. >> sure, my pleasure. >> good to see you. still to come on money movers today, kantor fitzgerald ceo howard lutnick will join us on post nine. we'll talk about this market rotation that begins in a few minutes at 11:00 a.m. eastern. stay with us. (runner) stay with me now! (teens) oooo! (woman 1) mírame ahora! (woman 2) get em now! (roger goodell) we're ready now! (woman 3) have fun! (fan) ooo, pinch me now!

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high interest rates, high home prices, and low supply all taking a toll on foreign investment and u.s. real estate. diana olick has those numbers. >> international buyers purchased 54,300 existing homes. it's a 36% drop from the year before, according to the national association of rea realtors. this is the lowest level of international investment since in nra began tracking it in 2009. the dollar of volume, $42 billion, was also down 21% from the year before. this as both the average and median purchase prices were the highest that the nra ever recorded for foreign buyers. the top buyers by volume were from canada, china, mexico, and

india. they bought the most, though, in florida, texas, california, and arizona. chinese buyers spent the most money, that is, higher-priced homes. this report is only sales of existing homes and foreign buyers are big in the new development space. that's not reflected here. realtors cite a strong u.s. dollar as well as tight supply of homes for sale and high prices as major hurdles to foreign buyers. that in addition to the usual currency, banking, and title hurdles that foreigners face. back to you guys. >> diana, thank you. dinah olick. that does it for "squawk on the stre." lomo mkecoeta t reart verage coming your way, including coverage on the fall of chip company stocks. that's next. [busy hospital background sounds] this healthcare network uses crowdstrike to defend against cyber attacks and protect patient information. but what if they didn't? [ominous background sounds]

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good wednesday morning. welcome to "money movers." i'm carl quintanilla live with sara eisen live at post nine of the new york stock exchange. howard lutnick with the outlook for the markets and the presidential race. >> and chip stocks tumbling on reports of tighter u.s. export restrictions and comments from former president trump. a breakdown of the sector this hour. plus, this russell rip. will this surge in small caps