a "squawk box" /* begins right now. ♪ good morning, everybody. wng 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. andrew is off today. let's take a look at what's been happening with u.s. equity futures. you see there are some big declines. why are you looking at me? >> it looks like i enlisted yesterday with the stripes. >> nice cut, nice cut. i'm getting one today. >> are you? >> yeah. >> different for you. >> longer. it takes a heck of a lot longer. >> it's a styling thing. this was necessary to cut the gray off. >> trust me, this is necessary too. let's take a look at the markets too. quite a bit of weakness. the nasdaq is off by more than

200 points and the dow is down by close to 200 points. the s&p off by 202. all of this happening. yesterday's key carolinas were not severe by any stretch, but you are looking at some extended weakness here. let's also take alook at what's been happening with the treasury market. right now it looks like 424 is where the 10-year stands, the 2 yee's at 243. and we've got crypto prices. if you take a look at this, a day after the spot etfs made their debut on the exchanges, they did pretty well. bitcoin is up by 1%. above $66. the ethereum down ever so slyly, by 50.4%. more than a billion shares traded between ethereum. that's lower than the 4.6 billion that traded in january. but it's still enough to lift several of the ether funds.

50 of the top ittest debuts of all time. >> shares of google parent alphabet are lower. revenue is roughly in line with expectations, but if you look at the numbers, youtube ad revenue was at $8.6 billion a quarter, but that was short of the $8.9 billion. cloud revenue was a bright spot. it surpassed $10 billion in the quarter for the first time. i bet you can see the stock down significantly. the nasdaq is weaker as far as what the indicated open is. we're talking they would be worth watching to sort of dictate where the nasdaq is headed today. >> it's because of where a lot of the growth is coming. if you take a look at shares of visa, they're lower as well.

quarterly revenue growth fell short of what the street was expecting as well. this is a rare miss. higher interest rates appear to have taken a toll on consumer spending. the company's cfo said the high spend consumers remain stable, but they did see a slight moderation in the lower spend consumer sentiment. it also cooled down in the asia-pacific market. that was driven primarily by mainland china. they said the recovery in travel deplanned is progressing slower than it had expected. you can see the stock off by almost 3%. we did get american express earlier this week. they did a little better, but they have a higher end consumer, and those are the ones visa said are still spending. >> relating to lvmh. i'm going to use the "p" word again, pandemic. it's still having an effect.

the luxury group reported second quarter sales of $22.7 billion, another huge number. but the estimates are $23.4 billion. chinese shoppers reigning in spending on high end fashion and that offset a rise in demand. sales in that region tumbled in china -- includes china. tumbled 14% year over year and the company notes its tough comps when consumers were coming out of the pandemic and they splurged on luxury groups. now it's a comparison thing. >> you used the "p" word and "c" word, pandemic and china. >> so what's your point? i'm not sure what you're saying.

i'm just -- it made me think. if i did go to boot camp, do they send you home if you start crying? >> i don't think they send you home. they make you run laps. no crying in boot camp. >> what happens if you beg and say, i want my mommy. >> soldier, on your knees. >> i wish -- i was in between things, vietnam and other things. i sometimes -- to become a real man, i almost wish i would have served. >> i don't think i would have ever wished for war. >> no, not war, but to have served and to beable to say that. it's nice. when people say that, i respect and admire them. >> as you should. >> especially marines and stuff. >> any of them. any of them. we're watching shares of mattel this morning too. the toy maker reported a drop in sales of about 1% to just over a

billion dollars. that was a smaller drop than analysts had expected. earnings came in at 19 increments a share. that beat the street's expectations of 17%. it was partially because of a slide in barbie sales. they expected that drop-off after the release of the movie. they expect sales to increase over the long term based in large part what that i saw with the movie too. a private equity firm approached them about an offer. they later retreated. you can see for one year the stock is down by about 19% for the week. it's still up by 4%. president biden returned to the white house after recovering from covid. he now faces the final six months of his presidency. he's a lame duck, but he looks good there. he has scheduled a prime time address from the oval office. you can watch full coverage on

nbc. i don't know how sick he actually got from covid. there's so many weird thecs that were swirling around, but it looks like a full recovery at this point. >> yeah, it does that 78 r 81 with covid, the first wave would have been scary. >> think back to the days. >> this is the third time he's had it. it's around. >> i heard too. it's a much less serious outcome than we've seen in the past unless you are older, unless you have an immune system that's challenged. >> i had it in december. it was nothing. two days. >> last time i got it, i was still sick. >> yeah, like the flu. >> yeah. >> on the president's agenda tomorrow, high-stakes meeting with israel's prime minister, benjamin netanyahu. he's going to address a joint

session of congress this afternoon. it's very weird who's not attending including vice president harris and others as well. they were -- watching the news yesterday, they're almost like pointing to people who are and aren't as to whether you're truly supportive of israel or not. >> support ivg of israel. >> some have things to do. >> he's such a polarizing figure. you can agree with supporting israel but not agree with netanyahu and how he's dealing with the war, particularly in israel too. >> it's a very important and good ally, not just in the middle east, but worldwide. in other political news, donald trump's camp has filed a complaint. it accused president trump bind and vice president kamala harris of accuse /* /* of rolling over

the transfer of funds. campaign finance legal experts are split on whether the transfer is permissible, and it's unclear where the fec will decide. speaking of campaign finance, elon musk is denying a report that he plans to donate $45 million a month through a new to help president trump get back to the white house. in an interview he said it was not true and he was not donating that amount. he later said on his x platform, he'll make some sew e dough nationings to it but not more. donald trump saud he would debate kamala harris if nominated as president at candidate. before biden dropped out of the raus, he had been scheduled to debate trump for a second time

on september 8th and it would be hosted by abc. trump announced any coverage would not be by abc. coming up, tesla shares dropping after earnings missed estimates. we're going to show you what else elon musk said on that call next. plus at&t is set to report. any minute we'll bring you the reactions. "squawk box" coming right back. while i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. upwork is half the cost of our old recruiter and they have top-tier talent and everything from pr to project management because this is how we work now.

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tesla reported weaker than expected profit as auto sales fell for your the second quarter in a row on. on a company conference call elon musk unveiled the plan of the robotaxi. >> we postponed the robotaxi or the product unveil by a couple of months where it's shifted to 10/10, the 10th of october, and i wanted to make some important changes that i think would improve the sort of robotaxi, the main thing we're going to show,ed a we're also going to show off a couple of things. >> joining us now is dan flax, research analyst.

there's some interesting things in here, dan, and there is competition. on the same day that gm is delaying a new buick, ev, tesla did say competition is one of the reasons that buyers were paying less. who is the competitor to tesla, and if tesla is having problems, what ev maker can you count on that's not going to have problems on this environment? >> good morning, joe. there are clearly headwinds, pockets in the consumer. western manufacturers have struggled to really scale some of their ev problems. that puts overall pressure on the market. what's important for tesla is their ability to innovate, to continue to bring down costs, and that enables them to bring out lower priced models as we think about the next 12 to 24

months, which can help drive improved demand. you take that and you couple it with being able to deliver driving. i think the name is attractive at current levels. >> the -- i didn't even realize this, dan. this is just staggering to me. so a bright spot for tesla was that they actually sell regulatory credits to other carmakers that aren't meeting emission requirements. tt profit was 8$890 million in the second quarter. that's more than half of the operating income. selling emission credits to other automakers that are failing to meet emission standards. >> can i ask what that means? if the trump administration comes in and lowers those

emission standards durks that hurt tesla's profitability then? >> i think the focus -- i think the focus is going to be making cars that consumers will love and want to buy more of in the next few years. the political backdrop, the emissions credit, that could change. they have a very strong balance sheet. they generate cash flow. in some of the markets globally they're different. drivers for demand. clearly china's a different market even with fierce competition. so even with the benefit from credits, i still think the focus is on the car sales themselves, the units, which should improve next year in my view. >> then we must be in the waning stages of whatever you want to call this. right now they're making innovative cars. they ask elon musk would you

make less expensive vehicles, cut down on some of the -- i don't know. extras on some of the versions, and he didn't wasn't to do that. they got into electric vehicles. you saw profit tumble 45%. so it's all fine and good to say they're going to keep doing it, dan, but you say we're at the end of this, i don't know, bump in the road for tesla or near the end in the beginning? >> sure. we're in between two product cycles. you have the model 3, which was very successful. i think what you'll see over the next 12 to 24 months is a lower cost car and also a new platform. and so we're in between product cycles. the key is their ability to bring down costs. have a $20,000 plus vehicle. we're now in the 30s and above. so if you're able to bring down costs, that can appeal to more buyers. and clearly the range, the technology, the features and

functionality should continue to improve. even in a 20-plus-000-dollar car, it should be a pleasurable experience. we'll see what we get, but i think customers could like that, which could help drive better growth. >> becky makes a good point about a change in administration. even with a pro ev administration, what happens with the build-out and the charging stations? what's going on there? you need that, in the infrastructure you need that. >> they're continuing build the infrastructure. the network is incredibly powerfulle. that's why you see others work with tesla and they're trying to ramp their own businesses. the network is important. i do expect them to build that out. the key is they do have the financial flexibility to do that. so if you have the network, you have the cars, and you have incremental features that can get delivered over the coming

years, you have what i think will be a very durable business, which can help drive the stock over the next 1 to 2 years. >> the reason i think it's so interesting is elon musk is definitely throwing his support behind trump. the biden administration has not been very nice to elon musk. they didn't invite him to the ev meetings and that really struck a chord with him very early on. i think the question is would the biden administration policies be better for tesla and his net worth and is he going that against his support. it's totally possible? >> becky as i think about the decade and next decade, we're likely to have different gorging policies here in the united states and globally, and tesla is going to have to navigate the dynamics. elon musk will support whoever he prefers. but for his business and the stock price, i think what will matter most is innovate ing and

lowering costs and tesla can thrive here and abroad. >> would that be enough to compete against chinese evs, or will there be a need for, i don't know -- again, we're saying if it's a trump administration -- big tariffs on chinese vehicles or is it going to be a bloodbath, i think he said, in the auto market. >> i think you could certainly see tariffs both here and in europe. even were there to be tariffs, i expect them to be competitive. of course, in china there will be competition. i think they need to bring their costs down. that will enable them to compete with the chinese oems, an even if there are tariffs in the

united states and elsewhere, the company still needs to innovate. the market, i think, will still need to be competitive that okay. thanks, dan. do you do price targets? what's your price target? >> i can't give you a price target. >> okay. no one really cares. >> i think they're on the significant upside. >> i'll give you mine. 246 mg i'm thinking 275. >> 225 this morning. >> hold on. 265. >> joe, i think the stock could be significantly higher over the next couple of years. >> my work, which you just saw how i ariefr. dan flax, see you later. i could change that at any time. it just depends. see you. when we come back,

perimutter dumps his disney stake. we've got the details next. later we eek tall to greg ip e esenhais rr's campaign. "squawk box" will be right back. energy fuels, a leading american uranium producer, is ramping up production to supply expanding nuclear markets and diversifying into rare earth elements, key ingredients in many clean energy and defense technologies. energy fuels.

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perlmutter has sold his disney stake. perlmutter had been one of disney's largest independent shareholders for more than a decade. he threw his performance behind the activist in that campaign against disney management last

year, which was rejected by shareholders. perlmutter became a major shareholder when he sold marvel entertainment to disney for more than $4 billion and he has now sold his entire position of 25.6 million shares of disney at an average price of just under $115. so about $3 billion. it would have been worth -- he's lucky he sold it. it's 90 now. at one point it would have been worth 5 or $6 billion when disney was at $200. >> yeah. hard to call tops and not call the bottom in selling. >> you don't want to try to pick bottoms. we'll talk about that another time. it's gross. when we come back this morning, shares of google parent alphabet are lower. we're going to dig into the ad revenue and ai earnings

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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. checking the futures, you can see we're -- we're going to talk about it now. tech stocks like alphabet under pressure this morning after reporting quarterly results. steve kovach joins us now with the highlights. are they highlights or lowlights? >> a little of both. look, the big headlines coming out of q2 earnings last night was slowing ad growth and more spending to build out alphabet's cloud infrastructure the meet ai's demand services. on the ad side it was up 12%, which is up from the previous quarter and a lot of the conference call last night centered around artificial i intelligence and whether or not it's benefiting google search,

plus how much they plan to spend in the future. ruth pore rah, the cfo says to expect google to spend $12 billion more, but that raises the obvious question. how do you know you're not missing and overspending? sundar pichai said he'd rather overspend than underspend. take a listen. >> one way i think about it is when you go through a kiev like this, row know, the risk of underinvesting is dramatically greater than the risk of o overinvesting. these infrastructure are widely useful for u. we can work through that. >> $5 billion. google is going to be making an investment in the self-driving

firm waymo. pichai didn't give any concrete detail about how that's doing, just vague examplesing like they're seeing good engagement with those older and judger, 17 to 24. but how much money it's contributing to ad growth, now idea. it seems like all the money is happening in the cloud. there are themes to watch next week when we get crowd leaders microsoft and amazon reporting their earnings, guys. >> you think that we can glean anything from this about the magnificent seven, all of them together? >> i think the big question is investors are just so uncertain how much they're going to altimaet will i have to spend. not just google. microsoft is seeing this, amazon is seeing this. all the demand. there's a gazillion startups that want to run the ai applications on the cloud. microsoft said last quarter, we literally don't have the capacity to meet with all the

demand. they partners with oracle. it's going to be interesting to see how that's evolved over the last three months. >> you're like a teenager. >> i'm 39 years old, joe. >> he's talking relative. >> you remind me of a teenager and the way you dress. do you watch youtube tv? >> actually, that's what i have, yeah. >> you watch youtube tv. >> i watch cnbc. >> that's all you have? >> linear. unfortunately comcast doesn't exist in new york city. i can't get that sweet corporate deal. why is it? >> i do not. >> i think it's great. it's really great. even my parents. >> like youtube videos? >> you can watch cnbc, espn. it's cable, just streaming. and the dvr is great. unlimited cloud dvr.

it's awesome. you can build your own netflix library of shows. >> do you have any cable provider? >> no. >> no cable. >> no. i just have internet and youtube tv. >> you're one of these people. >> we benefit from youtube. >> you're a cord cutter. >> sort of. i have linear. >> and broadband. >> yeah. that's where all the money is. >> i was right. that's all i'm going to say. >> when aren't you right. >> steve, stay here because we're looking at at&t numbers and i know you were looking at verizon earlier. at&t is just out with its reported earnings, adjusted earnings, 57 krejtss a share. that came in line with expectations. revenu revenue, $29.8 billion. if you look through some of these numbers, mobility service revenue, 16 pjt $3 billion, up 3.4%.

239,000 at&t fiber net ads. your point on that, this is th$18 billion ads. if you're looking at the first half of the year, they're up about $2.5 billion year over year in precash flow. some of the interesting numbers, i spoke with the cfo and talked to him a little bit about the revenue being a little lighter. he said that's again because consumers are reluctant to upgrade their phones. that comes on the top end. >> you hear that from all the carriers. >> he says it doesn't matter all that much. they don't make the money on the phones. that's why the profitability -- >> the upgrades help a lot, especially stealing customers from the other, and it helps because they charge you a cut of an upgrade fee, which is nothing. but that's millions of people

upgrading every year when a new phone comes out. >> i asked him if he thought the new apple ai phone was going to help because you gave me that question, which i appreciate. >> i did, yeah. >> he said they don't know if the ai phones will get people to trade up. he pointed out samsung has an app i phone and say that does no happen because we had this huge outage last week, i talked to him a little bit about outages. they came down hard on at&t about the february outage they suffered for about 12 hours that knocked people out. the fcc came down hard and said they did not do things properly. they failed to test the disastrous update that kicked all the devices off the network. they've come down pretty hard on verizon who had another outage

earlier. they were asked. he said we own it. we're not proud of i. but he pointed out he gave out credits. eh said i. also app update that came through on this, not at a siper attack. but he pointed out that everybody is looking at the cyber attack. he said, you take all the care you can. it's important to understand. the hackers are getting more sophisticated. frankly, i wouldn't be surprised if we don't see more cyber attacks, and i count myself in that same camp. >> companies are going to be required to disclose them sooner thats. we wake up and hear about another hack and that's partly because of those roles. >> i go back and forth on this.

you want the companies to take all the care they possibly can. but if you don't prepare for any outage, you have to have empathy for them. >> there's got to be infrastructure there. i've been a t-mobile customer. they had sthar own hack several. that doesn't solve anything. >> even crowdstrike, most of the airlines got back up and running. delta, not the case. it relies much more heavily on microsoft. i domgts know what the problems are along the way. but i've been hearing for the transfer of minors. kids got stuck all over the place. some kids are still there, days and days later. it's a whole different story when you can't get your kid back. that's a whole different problem. >> and you have to ask, was that a delta problem or --

>> i'm worried this is a dress reese hersal for a real hack. >> we both thought this was the big one. >> i got the call friday night. i thought, oh, my god, it's the cyber 911 and i happened, but thank god it didn't. >> 4:00 in the morning. before you arrived. back in the office. blue screens of death. >> same here. >> yeah. >> we made youoved you to a -- wolf." >> i was a toddler. i was born in '58. >> she's never heard of "the singing none." and you haven't either. >> i have no idea.

>> it was a nun who sang. >> i knew requestet the flying nun." >> that's good. she had the -- >> wings on her hat. most nuns don't have the flyable habits. >> i notice. coming up, european -- i was raised by nuns, you know that, in the orphanage. soccer teams are pushing to gain more exposure. the owner of ac milan will join us next. still deathly afraid of penguins because of that sfloo did you call them penguins? >> i was 12 weeks old. a reminder, get the best of "squawk box." listen any time. we'll be right back.

european football clubs are doubling down on the u.s. market. soccer team ac milan is

partnering with craft analytics group to capitalize on its american skboes ur. joining us now is the founder and chief investment officer at redbird capital partners which owned ac milan and has stakes in two groups and jessica dwellman, ceo of craft analytics group. it's ready. would you say that? it's finally red for an appetite for soccer. >> the realization of sports is here, and the ability to watch as you were just talking about on tv or youtube tv games at any point in time of the day has really made sports accessible especially premier league sports and soccer to fans in the united

states, and i think what ac milan and jerry are doing with the u.s. tour is really phenomenal. we're so proud to partner with them. so much is focused moneyball on the team side, but to have this broader view on the business side, that's really where we specialize and have pioneered this use of analytics, big ckuds to recognize that here and in italy. >> for some reason, jerry, there's a notion -- do we seaworld klass soccer? i feel a little bit of envy.

i don't see the same thing happening with the u.s. league and the u.s. teams. >> look, i think the guys of major league soccer have done a phenomenal job but they've been held back that the players are not part of the ecosystem. until you have that system and being part of that system, it's going to be very difficult. have you kids growing up seeing that quality of play. part of the reason for doing the friendly tours in the u.s. is there's tremendous demand out of the u.s. and america for european football. this is an opportunity for us to bring it back to the world stage. we have 550 million fans worldwide, 50 million fans in america, and we want to lean into that. >> 550 versus 50. i want to say it nicely.

you were really blunt. these are a bunch of guys past their prime? >> no. >> you don't think that the level -- i know jessica's laughing. the level up to this point is not the quality you've seen? >> it's hard to do that. most of the players go to the european system and there's no set price on it. it's been an arms race in europe particularly for talent, for the players. and that's why you see sovereigns and corporations and, you know, institutions, frankly, investing in european football. it will come in the u.s., but there's a lot more that needs to be done. we benefitted ac milan.

one of our most popular players is referred to as captain america. he's done a phenomenal job over there. it cuts both ways. first he came out of the u.s. system and is able to perform the way he performs in europe. it's a testament to what u.s. is doing. >> joe -- >> go ahead, jessica. >> i think the main thing is that in europe, the way that the players learn is through these club systems, so they're kind of embedded early on. sometimes between 5 and 6 where they're having exposure to the teams. that's only started in the united states oven the last decade or so, but it's very prominent now. you have these homegrown players in the united states where historically most in the united states have gone through like the collegiate system, so that is a net new element in the united states, so it is a

generational effort. i do think with mls past its 25th year and with the global exposure that i have now with their apple tv deal, there should be increasing awareness. you have to remember now only are we seeing in the united states the european teams but also seeing in the united states the european teams, but also there is the opportunity for the fans in europe to see the u.s. teams. but that said, jerry's point on the 50 million u.s. fans for ac milan, i mean, realistically, especially with pulisic over there now, that's almost their second largest fan base. and that's pretty remarkable. >> joe, i want to lean into something jessica said, which is, you know, data analytics, which is the heart of our partnership with the group and jessica typically has been around the players on the field and money ball. there is a data and data analytics that is applied to off the field. and, you know, i've been watching this for the last 15

years and when jessica and the craft family started craft analytics group 15 years ago, they were -- they were on to something in terms of the value proposition to the fan. i mean, you know, sports is a multibillion dollar industry now and that's driven by the value proposition of the fan. most people think that the values that are being driven in sports is only around the media revenues. well, the new frontier is going to be the monetization of a live event and when 15 years ago when jessica started craft analytics group, we created a group called legends hospitality with the yankees and cowboys to monetize that fan experience in those two stadiums and six years after that, we created a company with the nfl called on location, doing the same thing. this has been a 15-year journey. >> i could talk longer about it, i'll tell you about my betting experience. betting has a lot to do with just expansion of all sports. and i bet on a final of soccer

and i bet on one team to win, they won. but it was in regular time, it was a tie. so they won in overtime and i'm, like, i already spent my -- no, i don't get paid, right? because the outcome was a tie. stupid soccer. the outcome was a tie. so even though my team won, how do you explain that, gerry. >> that's not stupid soccer. that's stupid gambling. >> get your analytics to work on that, jessica. i would like to talk more. come back. i want to talk more about this. i didn't talk about ted lasso or any of that stuff. thank you, both, very much. say hi to the crafts. they're all -- okay. see you later. thanks. >> thank you. >> ted lasso, he's here, he's there, he's every freaking where. >> can you believe i didn't get paid? >> that's gambling. soccer came to a resolution. >> should have explained that a tt bit better. >> no, it's a betting --

>> nowhere else you go to overtime and your team wins. nfl, goes to overtime, you get paid. extra innings --

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germany's deutsche bank reporting its first quarterly loss in four years, although the loss was smaller than the street had been expecting. the company confirmed it is not planning a second share buyback this year. investment bank revenue was up by 10%, but fixed income and currencies revenue was down by 3%. and you can see that stock is off by 4.6% this morning. still, for the year, up by about 45%. when we come back, stock futures are pointing to a lower opening on wall street. you've got the dow futures now down by close to 190 points.

nasdaq futures down by close to 220. and the s&p off by 40. we're going to talk strategy with barry knapp, that's next. like wearable tech. trends? all that research. sounds exhausting! nope. schwab's technology does the work. so if i spot an opportunity, in robotics or pets, i can buy those stocks ina few clicks. can't be that easy. it is with schwab! schwaaab! schwab investing themes. 40 customizable themes. up to 25 stocks in just a few clicks. hello. i'm ethereum. and i'm big finance. you look really tired. just calling it a day. but it's 4 p.m. yeah, and i've been working nonstop since 9:30 this morning, so. 9:30. you don't say? yep. you'd want a little shut-eye too if you'd been moving billions around the world. well, actually, i do. you know, stablecoins, nfts, loans. people can access me 24/7. what? but look, everyone's different. you should get your rest. you'll get after it tomorrow. tomorrow's saturday. [ethereum] monday. you'll get after it again on monday.

it is exactly 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc. i'm joe kernen with becky quick. among today's top stories, president biden returned to the white house yesterday. looked pretty good, i thought, after recovering from covid. nice suit, nice tie. has a scheduled primetime address from the oval office tonight at 8:00 p.m. eastern and you can watch full coverage on nbc. elon musk denying a recent report in "the wall street journal" that he plans to donate $45 million a month for three

months to a new super pac to help former president trump get back to the white house. in a new interview, musk saying that the report was in his words simply not true. musk later taking to his x platform to clarify that he will make some donations to the pac, but at a much lower level. and the faa launching a broad review of southwest airlines. the move stems from a series of recent safety incidents involving the airline, including a flight that descended to low altitudes too early and another that took off from a closed runway. i was going to say, i kid you not, all i was going to say, going to say it another way, but -- >> look, this is when i actually would sit up and pay attention. the knock on southwest is they didn't vinvest in their compute updates and systems and making sure they were hitting profitability at the expense of

actually putting money into things for the long haul. that's one thing when it is computer systems. it is another thing when it is potential for training and other issues that go through this. what is going on that the government now says they have to look into them. >> 50,000 takeoffs and landings or something every day. >> very safe. >> you're talking about you want six sigma, an old ge thing, you could make one mistake in 8 million tries. only allowed one. that's what we expect from the airline industry. >> yeah. >> taking off from a closed runway sounds, like, absurd, but -- >> i've been trying to figure out -- >> you can have zero failures. >> a lot more reports of near misses not just at southwest but other places too. it is something that is happening as we're getting more and more flights back up in the air, things are more crowded, and i guess maybe we hear about them more than we used to too. yeah.

>> boeing, oh, my god. boeing -- someone has a weird expression on their face at boeing it gets reported. >> tesla shares down this morning after the ev maker's profit margin slips. phil lebeau has more on that story. hey, phil. >> this was a rough second quarter. you can call it low quality earnings. you can call it a miss, whatever you want to call it, it is clear this is going to put pressure on shares of tesla, the company falling tencent cents short of expectations. the earnings year over year down 43%. this was the fourth straight quarterly miss relative to expectations that tesla has reported. auto growth margins, the big weight on the stock this morning, 14.6%, the street was at 16.5, 16.9%. they were not expecting it to be this low. and as you look at annual deliveries, the company, once again, said, look, they're going to be notably lower or could be notably lower compared to the

growth rate in 2023. they did not give guidance here, but the street has been expecting 1.8 million in line with last year. let's see if the estimates come down over the next couple of weeks. with regard to robo taxi, unsupervised drives, elon musk did say that he believes, before you get to robo taxi, you need unsupervised full self-driving rides, autonomous rides. he believes that is likely to happen in 2025. as for the robo taxi and when we'll learn more, here is what elon musk said on the call. >> robo taxi, the product unveil by a couple of months. we're shifted to 10/10, the 10th of october, and this is -- i wanted to make some important changes that i think would improve the sort of robo taxi,

the main thing we're going to show, and we're also going to show up with a couple of other things. >> take a look at shares of tesla over the last three months. it had a really nice move here. largely because of the optimism regarding robotaxi and the lower priced model that is expected to come out in 2025. there is a lot of questions there in terms of what we might actually see. one bright spot, tesla earned energy storage in the second quarter up 158% compared to q2 of last year. bottom line is this, guys, you had margins that came in well below expectations, you have pricing pressure. you have higher costs. you put that all together, along with the questions about when we might see autonomous driving, true autonomous driving, not you and i being in the car and taking our hands off the wheel, those are all the question marks that are out there and i think we're into a period here where there is not going to be many new pieces of news expected

until we get the rorobot taxi unveiled in october. you'll see that over the next several weeks. >> yesterday, gm's cfo talking about how, look, they're not going to be going ahead with their plans for that cruise with no steering wheel. >> right, the origin, correct. look, this is really, really tough. fully autonomous drive vehicles with no driver, unsupervised is very tough. and i know there will be people who say, look, you can see waymo doing it out in scottsdale. you can see it in other places as well. yes. in geofenced areas and waymo has had success, and by the way, alphabet said they're going to be spending more money on the development of waymo, there has been success. so there is a pathway that tesla can go through in order to ultimately offer this. but, what elon musk has been

promising, becky, is we're going to have robo taxis, they're going to be everywhere. most people will tell you we're not close to that right now. could we some day be there? possibly. but the days of you and i walking outside of your house in new york area and saying, i want to be picked up and i want to go here and i want to be dropped off, we're just not there. and these questions will be dogging this stock and dogging the development of the robo taxi as he outlines his vision. >> we got to go. i'm still trying to get my head around that these emission requirement credits that revenue of 890 million from other automakers? so -- >> right, remember, you have to have -- >> this is coming out of the operations of other automakers, but is it actually -- >> and they buy those credits, they buy those credits from tesla. >> to comply with the government, that the government is not -- taxpayers aren't

paying any of the -- >> correct. correct. >> consumers are. >> consumers are. >> more expensive than -- >> joe, they don't -- >> go on. >> just so you know, joe, they don't outline which automakers are buying credit for them. let's do a hypothetical and say stellantis realizes they don't have enough of the credits or enough of their -- to meet the government standards for emissions and fuel economy, therefore they go to a company like tesla and say, we will buy some of your credits. tesla has those credits because it has all electric vehicles. it more than meets the government's standards there. that's what they do. they then turn around and sell it to a company like that. we're not saying that stellantis bought these, we're saying that's a hypothetical. >> you could see why it would happen at companies like a gm where they're selling lots and lots of very profitable trucks and suvs and the customers don't want the other ones that kind of would offset the fleet's

emissions on the whole picture of this. you get why it happens. >> it is a messy transition the industry is going through and it will last for several years here. >> phil, thank you. our next guest says that the squeeze in small caps is over. we want to bring in barry knapp, managing partner and director of research at ironside's macro economics. and, baurrry, a lot of things t talk about. we'll start with small caps. small caps have been up pretty significantly, 12, 15% in just a very short period of time. so, yeah, does look like the squeeze is over. i guess the question is how much more room to run do you think the small caps have? >> so, typically when we come out of a recession, or what i call fed policy normalization-related corrections, a mouthful, but the idea is once we come out of a recession and the fed starts to tighten or normalize policy because they think we have reached escape velocity, you get a six-month persistent rally in

small caps. but generally before you get those small caps will go down quite a bit. they go down a lot in recessions, they go down more than 30% more than the s&p does. the same thing happens in these 10% fed policy-related corrections. they haven't gone down this cycle. they have been massively underperforming, but they haven't gone down, so, for me, sure that the trigger for this rally was the last cpi number and the idea that the fed is going to start cutting, should be cutting next week, but they'll start in september, so that's what triggered the short covering. there is -- there wasn't really an opportunity created by them actually declining to justify a six-month type persistent rally in the group. and the real reason that they have been struggling so much is still on offer with earnings season thus far, where earnings are still falling for the sector

because of the deeply inverted yield curve, they finance at floating rates and they're getting squeezed on the cost side. i don't see that problem alleviating itself for roughly a year or so. stocks will generally start to rally six months before earnings bottomed. i think this is just too early for a sustainable rally in small caps and small banks for that matter. for me, it was a squeeze when it was clear the fed was going to start cutting. but it is just that, you know, passing trend and for most investors, not really worth getting involved in. >> what do you like, barry? >> well, we have been market weight tech through this whole cycle, being much more than market weight tech and con services to me borders on recklessness since tech is 30% of index and com services is another 10. our biggest overweights have been energy industrials and materials because of the manufacturing renaissance in the

u.s. which is a more secular trend than a cyclical one. at this spot, right here, the immediate economy is definitely weakening and there is going to be increasing evidence of that. so, i'm in a tricky spot where the stock i like from a secular perspective, i still think you should be overweight, but it is likely to struggle and earnings season so far for industrials is not -- it is pretty mixed. but on balance it is negative and we're in a tricky spot, buying intermediate maturity treasuries as a hedge for that. overall, i think this is a spot where, you know, adding new money to the market is probably unwise for the next month and a half, two months or so. >> prices will drop and that will present an opportunity? >> that's exactly right. and so, as we transition to the fed starting to ease, the justification for that is a weakening labor market, which is going to be increasingly evident, i would expect a fairly

weak report a week from friday. the initial estimate and the benchmark revision for total payrolls is likely to show we created a million less jobs in the year ended march, as we go through that whole process, i would expect the market to get really concerned about earnings, and that the economic outlook and that to be associated with a bit of a pullback here. so, if we get that pullback, it is probably a fat pitch and you can add money, but right now, you know, we know valuations are rich on tech, it doesn't take much for disappointment, google last night, for example, and so, you know this is not -- this is nothing like a fat pitch where you say, you know, pound the table and you got to put some money to work. >> okay. barry, i appreciate your thoughtfulness and it is great to see you. we'll talk to you later. >> all right, thanks. >> coming up, what a kamala harris economy could look like if she were to win the white house. senior economics reporter steve liesman has been looking at her

track record. that's next.

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but it's only for a limited time. five years? -five years? introducing the comcast business 5-year price lock guarantee. powering 5 years of savings. powering possibilities. investors and average americans, average americans, are wondering what economic policies kamala harris would champion as president. and senior economics reporter steve liesman has been looking at that. and what we can learn, nobody knows for sure, for her tenure as vice president, senator and prosecutor, in the biden administration, that doesn't mean everything would be identical, i guess. >> i'm hearing a lot of that, though. i'll get to that in a second, joe. the front-runner kamala harris, democratic front-runner, launching her campaign yesterday in milwaukee, offering maybe a

glimpse of what some of her economic policies might look like. she said she supported -- >> a future where no child has to grow in poverty. where every worker has the freedom to join a union. where every person has affordable healthcare, affordable child care, and paid family leave. >> those words echoed some key themes of the biden administration. also, issues that harris has championed behind the scenes on her own as the senator, including that child tax credit continuation and other government aid programs that address inequality with only a modest economic record, one that the democratic policy adviser told me has, quote, left few

footprints in the sand. supporters and critics are now forced to use what little evidence they have to try to paint an economic picture. here's what supporters say, they say there is not much space between harris and biden on the economy. she backs an economy that looks for labor, small business, entrepreneurs, and big business as well. she opposes trump's broader tariffs and has worked with big business including public private partnerships in central america and southeast asia and also worked against them. over the past few years, harris has said to have met privately in her residence every two to three months with business leaders of companies both large and small. and when the administration took office, she pressured executives at big banks to increase their ppp loans to small businesses. critics, of course, they point out she has been one of most liberal senators when she sat in the senate. she supported a return to the 35% corporate tax rate, and a full repeal of the trump tax cuts. advocated for low and middle income tax credits on medicare for all, all of which kind of resembled a universal base of income type of proposal.

whether she holds on to that still is unclear. democratic megadonor marcus pincus tweeted yesterday he'll be all in for harris if she supports a centrist platform and will sit it out if she veers to the left. unclear how she'll react, guys, if what she ends up doing is -- which i keep hearing, more modeling the biden economic agenda. >> novogratz said the same thing yesterday. i was shocked. i thought he would be all in. he said she's too far left. >> you talked to a lot of the folks, like i have. i think a lot of them advocated for biden to withdraw and may not have thought through the second step of the harris inevitability and now there may be, like, maybe we should have had that as a package. >> i think -- >> you mean her going too? >> her being the replacement for biden. >> when you're in the senate, you can say whatever you want. nothing ever happens. >> right, right. >> so she bowed in, to end the filibuster, to pay the new green deal, banned fracking, ban

offshore drilling, mandatory gun buyback, civil penalties instead of criminal for crossing the border, start over with i.c.e., maybe have no i.c.e., healthcare for all illegals, and eliminate private insurance and start from scratch. >> you're right, though, she was a medicare for all, eliminate private -- there was a big debate, she never got to the gate. >> in the senate -- >> so, you're raising -- you're raising the question that colored my report, joe, she's been vice president for three and a half years, do you go back and say, the stuff she did in the senate is the stuff she's going to do now. we don't know. >> right. >> plus, i'm told she really does have an eye on the fiscal realities that are out there that might be different. >> didn't sound like it yesterday, though. >> pretty long laundry list. >> expensive. >> she is aware of these things. i'm also told she is on board with the return to the corporate

tax to 28, not the 35, which is what biden had proposed. people do change. and whether or not she has changed, we need to know more. >> she's 59 instead of 81, she's an appealing candidate, she's smart. >> she talks in full sentences. >> sometimes, yeah. and laughs in full sentences sometimes. >> what about the fed? >> it is interesting. she abstained, it looks to me, on waller and bowman, which were the two trump -- but she voted against powell and joe was kind of on to the thread there, we don't know exactly why she voted against powell, those democrats who voted against powell at the time wanted the fed to do more on climate change. my guess is that's what she had wanted. but the -- >> too centrist. >> too centrist and there was a whole contingent that wants to say the fed should be, like, penalizing companies. >> elizabeth warren has a different problem with powell. that's just capital

requirements, and regulation and not the -- >> you were on to something earlier, i do think she might be more strident when it comes to climate change than maybe biden has been. whether or not the realities of whatever the senate looks like -- >> the big tech companies in california. >> one of her big wall street backers the other day, he said she's been meeting in the residence with companies every two to three months and she does have a concern about the economy, she does support capitalism and market economics and is a real supporter of small business and entrepreneurs, so, that's -- and she's worked with big business, and against them. they like to tout her big -- as prosecutor when she had a housing foreclosure suit, she went to them and undid a $4 billion deal and made it into an 8 billion -- $18 billion settlement. that was a big deal. she went against the banks and other points where they point out she worked with them. so, they do try to tell, joe, at

least a more centrist story. i'm guessing you are not a buyer of it, but, hey, that's what the marketplace of ideas is about. >> for me, the biden record is nowhere close to centrist. >> 100%, yes. >> she's anywhere near there, yeah, she's got a long way -- >> don't forget about what pincus was saying. s he also said in his tweet he thinks biden veered left, which i think is also true. whether or not she -- i don't think in this environment, joe, she needs to do that. always been interesting to me why some of these democratic leaders veer to the left, don't govern with them in their surplus, and go to the center. same thing with the other side as well. the republican side. >> why you don't go to the center is beyond me. where are you going to go? where is either party going to go? >> harris has the luxury of not doing the primary, where you do veer to left, to get your base, she doesn't have to do that. so we'll see if maybe she

strikes a more centrist tone here. >> people will say that trump didn't need to go right with his vp pick and he did. but that was before -- >> and what is the point right now of the election denial stuff still? what does that get him? is anybody going to vote for him because -- >> i think he really believes that -- >> that's fine, but, a lot of people think that's -- >> there are a lot of people that think that -- 81, joe? steve, thanks, i think. >> was that a biased report? come on, apologize. >> i like biased reports to the other way. it was not as biased. >> announcer: time now for today's aflac trivia question. on this day in 1982, what rocky 3 theme song topped the charts for the first time? the answer when "squawk box" returns. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. it really helped close that gap.

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all right, welcome back, everybody. group 1 automotive, which owns and operates 206 automotive dealerships, they got 270 franchisees and 42 collision sites in the united states and the uk reported its results earlier today. they came in with earnings of $9.80 a share. that was quite a bit better than the street was expecting. $9.36 was the expectations. revenue at $4.7 billion. joining us right now is the president and ceo of the company, daryl cunningham. let's talk through what was a pretty difficult quarter. i hadn't really thought about it until you laid it all out. this was very difficult in the united states. you had, first of all, some pretty extreme weather that came through, especially in texas and oklahoma. and then you got hit with the cdk outage. with all of that, you still managed to come out with better than expected earnings. how did that happen? >> well, good morning, becky. thank you. we were really pleased with the

quarter. you're right, there were some definite distractions that we worked through, our team did a fabulous job working through those. when you lose your computer systems and every one of your dealerships in the united states, that can be an impact to our teams and to our customers. but, our team was able to work around those issues and we have some technology in our back office which allowed us to close our quarter in normal timing, which we were very proud of. so, really exceptional performance by the team are here to look at our performance through the end of may, without the effect of the cdk outage. our parts and service growth was very good. our gross profits on our vehicles were held up well, as well as our growth in used cars held up well and our average was really good. we were really pleased with the execution of the team. we closed some acquisitions

earlier this year that we were very pleased with, may have been contributing very nicely since we bought those. >> what would you say just in terms of the extreme weather that was taking place in texas and oklahoma, the second quarter is usually the toughest time if there is not a big hurricane that occurs in the third quarter. how much did that impact things? what was the cost? >> we had some hail issues in oklahoma and kansas and texas. and we had some flooding in texas, which, you know, the teams dealt with fairly well in the second quarter. and so we were able to contain that, those impacts and the hurricane hit us in the third quarter in houston, which is our largest market, we're coming out of that nicely. the power is finally back on in houston these days. so, one of the things i think that our company does really well is we recover from events. and i think we proved that, we're the first public viewer group to announce our earnings this quarter and one of the reasons we were able to do that

is because we were able to get back in business very quickly. i think we have proven to be very nimble as a result. >> let's talk about how the consumer is feeling. we heard from some of the big auto companies that they are offering some more incentives than you had seen post covid. trying to get people back in and buying. it looks like there is a real appetite for some of the big vehicles like trucks and suvs. what do you see overall from the consumer, how much they're willing to pay and how much of an impact do rates have on that, if you see a rate cut, what would you anticipate? >> well, you know, to us it looks like it is the consumer is pretty healthy and i think our oem partners are responding well with interest rates on their incentives and we saw our gross margins on the new car side were almost flat sequentially where they had been declining quarter over quarter. and so, it held up well. and then on the used car side, we're seeing our gross margins were steady sequentially as well

and year over year basis. so i think generally we're seeing, you know, the consumer is pretty good. we still have some backlog in our order bank in the uk of around 10,000 units which we see as a good thing. and we're still preselling some units in the united states, like in the toyota brand, almost 4,000 units are advanced orders. so right now looks pretty good. if there is -- if there is an interest rate cut, i'm not one to predict what it would look like, but obviously vehicles being the second biggest purchase that customers have, that would -- should have a positive impact on our unit buyers. >> let me ask at the opposite way, is it a problem if they don't cut rates? would you anticipate your customers would drop off in demand? >> i don't -- we don't see that, we have been living in a higher rate environment for quite a while and adjusted and i think our oem partners ajusted to that and our finance partners adjusted to that and our teams have. i don't think it would impact us

negatively. >> all right. daryl, thank you. always interesting insights. again, pretty difficult conditions to be managing through the quarter. we appreciate you joining us. >> thank you very much, becky, appreciate it. >> thank you. coming up, stocks on the move in the premarket including a check on tesla, under pressure this morning. and then former president trump's tax plan and the idea of replacing taxes with tariffs. why the idea is gaining popularity. "squawk box" coming right back. 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.

welcome back to "squawk box." i'm dominic chu with a look at some of your premarket movers this morning. we'll start with shares of at&t, which are just up around 3%. the telecom giant is hiring after reporting profits in line with estimates. slower iphone upgrades were a headwind, but at&t did beat on a few key metrics including mobile phone subscriber growth. it cited higher demand for unlimited plans and fewer cancellation rates, that churn as well. another earnings mover, g ge vernova. the energy company reporting a profit beat but a revenue miss

citing weakness in the wind business but did grow in power generation and electrification. those shares higher by about a percent. and we'll end with a check on tesla, shares now sliding by just about 8.5% premarket as the electric vehicle giant reported its biggest earnings since 2021. automotive revenues hit particularly hard in the current quarter, down 7% year over year as they were hammered on a number of sides from higher artificial ielgentlince spending to ev discounts and rising competition in china. keep an eye on tesla, driving that tech narrative this morning. keep it right here. "squawk box" returns after this commercial break. from nike, hoka, on, and jordan. plus, the hottest styles from adidas and new balance. don't have time to get to the store? visit dicks.com for fast shipping, one-hour pickup, or same-day delivery. plus, with our best price guarantee, if you find a lower price, we'll match it. with looks this good, it's never been easier to win your year.

the whole notion of using tariffs to pay for tax cuts is getting more traction among republicans, while democrats say tariffs will be a regressive tax on the american people. robert frank joins us now with the numbers and potential winners and losers. why don't we know? what year is it, 2024? do we know or not? >> well, we know some things. >> doing a jon fortt, on the other hand. >> support among republicans

growing for former president trump's tariffs for taxes plan. the idea is to pay for part of the 2017 tax cut extensions and corporate tax cut with added tariffs. trump advisers saying that tariffs would boost u.s. manufacturing, would create jobs and they would generate revenue. democrats say all of that would be a regressive tax hike on the average american to pay for tax cuts for the wealthy and companies. here are the numbers. according to the tax foundation, trump's additional tariffs would effectively raise taxes and revenue by about $2.6 trillion over ten years. that would mark, by itself, the second highest tax hike in nonwar time history. it is offset by extending the 2017 tax cuts. that amounts to a tax cut and loss revenue of about $4 trillion. you add it all together, with the corporate tax cut, and you get a total tax cut of about $1.7 trillion over ten years. so it would also, of course, add

$1.7 trillion to the deficit, excluding the added interest payments. now, all income groups would benefit from the tax cut extension, higher earners benefit the most. the top 1% get a 3% tax cut, middle earners get a 1% tax. when you look at the tariff impact, there have been some studies that show that the average middle american would effectively get an increase in taxes of about $1700. the extension of the tax cuts would be a tax cut of a thousand dollars, so you add that together, the tax increase of $1700 for the tariffs, the tax cut of 1 -- about a $700 increase for the middle earner american. but the top would benefit a bit more. especially because tariffs are regressive. >> first time around, was it the same way -- i know that corporate taxes, they say that's the wealthy, i don't know -- i think that's kind of conflating. >> it is conflating. because -- >> did it help --didn't the middle class end up with more of

those tax cuts than the -- just the w2 high earners or not? >> did the 2027 t17 tax cuts, w they more regressive? for whatever reason the tax code become more regressive after the tax cuts, that could be -- >> you're talking about corporations. >> but the one thing i would say that is misunderstood is that everyone got a tax cut and extending those would benefit everybody. benefits those at the top more now if you're in a high tax state, it didn't benefit you more, but broadly speaking, everyone's taxes went down and everyone would benefit from -- >> ours in new jersey, mine -- >> if you're a very high earner like you are in noew jersey. >> okay, thank you. still, with no reductions for my

agent, parasite. kidding. kidding. love you. love you. robert, stay with us. let's bring in our guest, richard stern, director for the center of the federal budget at the heritage foundation and mary lovely of the peterson institute for international economics. i would start with you, mary, but i kind of -- i think i already think you're probably -- richard has got to convince me this is a good idea. have i been brainwashed that tariffs are always bad? why do i think that pure conservatives do not like tariffs? >> yeah, absolutely. well, i appreciate the chance to talk about it. so, you know, i think the important thing about this is you were just talking about the business tax cuts, business taxes are exceptionally regressive. beyond that, it is the part of business taxes that massively penalize the construction of new factories and office buildings and factory equipment. so what are we talking about putting tariffs in or frankly as

bob talked about a border adjustment tax, a tariff like mechanism. it is a way of closing a loophole where right now we actually tax domestic production of goods vastly more than imported goods. that's exactly what the problem is. if you produce something here, you face higher tax rates than if something gets imported. that's been a taxpayer subsidy against domestic manufacturing. that's part of the story of the last generation or so. so, what we're talking about here is closing that loophole and using that not just to pay for the broad suite of all the tax cuts but to go further to make good on the down payment of trump's tax bill and go into them and make full expensing provisions for construction of factories and office buildings, for putting new factory equipment into the ground so to speak. so, you know, that's an ability to be a force multiplier for workers wagers to make sure you build on the legacy of trump's tax bill. the economy is actually larger

right now than even the best predictions before trump's tax bill went into effect. and that's even without obviously predicting covid. it shows you the power of this kind of tax cut. >> i think now -- i think you're wrong. he just totally turned me around. can you -- are you goin ining t bring me all the way back, mary? >> i think he's inventing his own economics. yes, businesses are taxed. there are a lot of tax preferences for construction, r&d and other things. companies operating in other countries are also taxed. so the question is, will these tariffs raise jobs and wages, which people really want in this country and many people need. the answer is simply no. it is a job buster, not a job creator. why? because many of our companies use imported intermediates and they will be less competitive because they'll have to pay more. this is an important factor and

one reason why estimates of the trade war that we had under former president trump show a job loss, not a job gain. by some estimates, the u.s. economy tshrank one percentage points. there is lots of reasons why the competent grew. it grew under president biden. but basically looking at the tariffs, they're a factor to shrink the economy, not grow the economy. so i think it is one of these cases where, you know, lower cuts, lower -- sorry, lower taxes, and we get more jobs, it is, like, wow, that sounds too good to be true and the answer is because it is too good to be true. >> when the peterson institute scored the tariffs, i guess they're looking at the 10% across the board and the 60% for china. basically you said it would amount to a $1700 tax increase for middle earners. but don't you -- shouldn't you account for some wage benefits and some job gains in certain

manufacturing areas that right now are so dominated by imports? >> yes, i'm very glad that you asked that question. first of all, yes, we look at the $1700 tax on middle income families. and there will be some offsetting sort of macro economic effects that we could not consider in our analysis. those are being considered in other types of analysis that are being done at universities and think tanks as we speak. the so-called effects amount to very small changes, most estimates are now coming pretty close to ours. when we talk about tariffs creating jobs, there is -- we have to look at the details. first of all, tariffs might create jobs on -- for some manufacturers who will see some relief from foreign competition. but let's look at what we buy. most -- many of the things, particularly on the things we buy from asia, we do not make in the u.s. and if we put a tariff on those

goods, u.s. is not going to be where those jobs are created. we have seen particularly during the trade war that the tariffs of former president trump put on china was the job act for vietnam and thailand and mexico. it was not a job act for the u.s. and lastly, as i low-value items we don't produce in the u.s. taxing them raises their costs, makes it harder to sell domestically against foreign competitors, most importantly, they're overseas. a recipe for, really, whamming exporters. why? one factory i talked about, massive retaliation by other countries against our manufactures. >> richard, final word. we know that much, not much time. a lot to cover, but what do you think? >> definitely appreciate. the deal. bob light hhizer a terrifying

mechanism. imports, that's half the story. trading exports. u.s. is a neek counique country terms of wealthy countries, having taxes on exports. what this does a proper tax treatment on find end-use consumption goods in the u.s. imported. the proper tax treatments, zero taxes on domestic exported. do it that way it actually means you're not putting in new tax on industrial inputs on capital goods. factory equipment, things like that. you miss a lot of heavy economic effects talking about here that are negative. you get the positive effects and doing so giving you a pay for for allowing proper expense so u.s. has one of the best tax plan on the planet. a consortium trying to push for a minimum business tax globally

by 15 frs %. we're at 21%. question don't have proper tax provisions. look down the line, u.s. has an uncompetitive tax system giving us a chance to get back to that and frankly it's workers, lower-income american whose benefit the most from that and seeing lower prices, higher wages, faster economic growth. one nor thing on that. part of that growth isn't the dollars and cents. it's new technology, new devices that save time, improve quality of life for every american. >> richard, and mary, thank you. robert frank, thank you. why milton friedman and paul krugman is go with a nobel prize in science. if it is, it's a science, it's dismal. how can those -- stiglitz -- makes no sense. is it true or not? do you know now? who's right? mary? do you know now?

looking for jon fortt. jon fortt. >> thank you, one and all were when we come back, "lltrt wa see journal," inflation and the elections. greg ip. "squawk box" back after a quick break.

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therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title. welcome back to "squawk box." i'm diana olick. mortgage interest rates eased slightly last week. not enough to get potential home buyers off the fence. average rate on the 30-year fix for conforming loans dropped to 6.82% from 6.87%, from 20% down according to the mortgage bankers association. the lowest level since february of this year. rates have dropped over 20 basis points in the last few weeks, but applications for a mortgage to purchase a home still dropped another 4% last we're compared with the previous week on the seasonally adjusted index. purchase d.c. emand is 15% lowe

than a year. applications to get a loan, up 0.3%. demand 38% higher than the same week one year ago but coming auflg an extremely low level. rates today are very slightly lower than they were last year at this time. later this morning we'll get the read on sales of newly built homes in june. builders are doing better than existing home sellers, because, of course, they're able to buy down mortgage interest rates, but even they are seeing demand slow. joe, back to you. >> very good, diana. thank you. coming up, reaction to google's earnings, internet analyst joining us next. we'll be right back.

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welcome back, everybody. it is 8:00 on the east coast and you are watching "squawk box" right here on cnbc. i'm becky quick along with joe kernen. andrew is off today. among our top stories this morning, earnings continuing to roll in. at&t meeting expectations for the second quarter in terms of the earnings per share. revenue was just barely light. the company, though, reiterating its outlook for the full yooek y y year and what they've seen in

wireless growth and cyber subs. gain 232,000. company says 18th consecutive quarter added more than 200,000 for those fiber subs. and going to speak more about this later this hour with former tesla president john mcneil. stock now down by 8 and 1/3%. lvmh dropping. down 14%. stock now down by almost 10%. 10% year to date. the chart. all right. results dragging down other luxury stocks. lvmh down 10% for the year. many of the other stocks down as well. hugo boss down by 4.4%.

futures, which are impacted by some of those tech earnings from last night. we get to, you can see, nasdaq down 232. get to mike santoli at the nyse, and kind of smart. the nasdaq, was it picking up some -- i mean, in recent weeks? maybe some actual fundamentals in that magnificent seven that didn't work that great j.t. did it know somehow? >> the rotation talking about the last couple of weeks seemed to have something to do with maybe the magnificent seven-type stocks. losing relative earnings growth advantage just on the margins here. see if that plays through in the next while. s&p 500, joe, you know, going to be down by the futures indication, about another 40 points from here. last week's low. just under 5,500. see if it comes into play. even a modest pullback like in

spring, sometime as false recovery. the transition seeing in markets, very smooth initially. really no net pain on the headline index level, but that's been changing in the last several days, at least. you have a little more friction. look at the group that have been net beneficiaries of the move away from mega cap growth and more cyclical financial small caps. small cap russell 2000, regional banks, home builders. a vertical same angle. kind of a forced rush into these rate-sensitive areas. everyone deciding that the small caps are the ticker you want to play, what hasn't moved higher much this year? what seems well positioned for fed rate cuts, soft landing, whatever policy rates you pencil in. a jarring repositioning, seems, as opposed to think earningless come in. why you have a little more bumpiness in this, i think. on a macro basis, look at the commodity indention relative to

long-term treasury bonds. you this tone. economic data slowed, deceleration in the economy. this is the overall commodity index ex-training chtraded fund. long-term treasury etf. commodities go up, bond prices going down. yields going up. right? you see a nice inverse relationship, but both kind of rolling in that way. then you have this bottom in treasuries which suggests the kind of soft part of the soft landing might be getting priced in to the macro. >> very good. all right. thanks for that, mike. see ya. shares of of a i alphabet t lower. co coming up short of expectations. down 3.8%. head of internet research is with us. putting out a new note this morning where you're reiterating your outperform. what did you see that's maybe a

little different than what the street is seeing this morning? stock again, off by about 3.7%. >> becky, you're right to call out the youtube softness as a weakness. two going from last week in the aftermarket last night. specifically the commentary about expenses in the september quarter. and march pressures, that quarter. largely due to timing and a hardware launch. the pixels, forwarder into the september quarter. that's more of a timing issue. we still think we have a pathway here to march and expansion for the full year and think we'll see that going forward. a couple of bright spots. search revenue came in better than expected. google accelerated and margins better than expected. you got three of the things you wanted to see. a question about youtube. i think the weakness was -- i

don't think anything else is going on. and underappreciated product cycle at google with the application of genai and the search, seeing results there. we think that happened in youtube, other parts of the business as well. top picks. >> the genai. everybody is still talking about artificial intelligence. is it getting tougher to impress with a.i. at this point j? have we gone through it a mania and now time to catch up? >> google, people believe the search product is better than before. and they search more because of it and are advertising seeing better return because of genai influenced results on the advertising side. the tentative answers so far are positive. ran our other survey on the consumer side. google brought it up against last night. higher satisfaction rates for

searchers that use what they call a.i. unfused. genai search responses and seeing people who use their a.i. search more. if that broadens you're going to see a search revenue growth maintain at levels higher than what the market fears and the market has search going back to single-digit percent growth next year. that's the upside in terms of estimates aks and the stock. that's our call. >> thank you. having a little trouble hearing you. an audio issue is taking place. we appreciate your time this morning, and i think we got the gist of it. thank you. >> thank you. delta air lines ceo ed bastian out with an update on recovery from the crowdstrike global i.t. outage saying delays and cancellations down 50% on tuesday compared to monday. cancellations today will be minimum and expects operations to fully return to normal by

tomorrow. better. better for you and for me. >> flying delta. >> delta air france, like, both. you fly saturday, i think. bastian, again, apologized to customers for the disruption saying the airline would take care of those impacted with meals, hotel rooms and ground transportation. he also said that those customers would be awarded sky miles and travel vouchers as a further gesture of an apology. >> i still don't understand why was it so much worse at delta other than they rely on microsoft more? most able to get things back under control that day. talking about days and days of these delays that then sort of -- i know what you said yesterday with the "wall street journal report"ed not able to find crew. and not figuring out scheduling

on this. >> bastian did no offer initiative of a new spiffy lounge, which is what -- if you let everyone in, then it's no longer special. >> no longer special. coming up, israeli prime minister benjamin netanyahu getting ready for a speech to congress today. a pivotal moment for american politics and we're going to talk about what's at stake with former white house foreign policy advisor dan senor. some people are going, maybe more noteworthy, people that aren't going. you're watching "squawk box" on cnbc. ♪ (alarm sound) ♪ amelia, turn off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. ♪ (suspenseful music) ♪ why not? did you forget something?

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israeli president putin benjamin netanyahu scheduled to address a joint session of congress this afternoon looking to shore up support amid the continuing war in gaza, taking tens of thousands of lives. netanyahu facing more than safxz with leadership at home in israel. under pressure to get a cease-fire deal done. also to try to bring back

israeli hostages and bring them home. almost ten months now after they were abducted by hamas on october 7th. joining you sdan senor, from th former george w. bush administration and host of the "call me back" podcast are and co-author of the genius of israel and the haven't seen you in a while. good to have you on. >> good morning. >> there are some people going today and some people that aren't going, and i mean obviously talking about vice president harris not going to be in attendance. she's been outspoken and even diverged from the biden administration on this issue to some extent. but dick durbin. what is he doing today? second ranked member in the senate? are people not going because netanyahu is polarizing? >> a few things i would say. first, vice president harris has known for months this date was scheduled.

leadership of congress, both sides worked with the israeli government. she chose, said she has a scheduling conflict. she chose to have a scheduling conflict and given now the presumed nominee for party for president you would think she would reschedule. regardless what one thinks of prime minister netanyahu and i understand he's a polarizing figure, in israel as well in the united states, but he represents a country, as i said. one of our most important allies in the world. certainly most important in the middle east that is shattered. has been under siege since october 7th. worst day for the jewish people, october 7th, of any day since the holocaust are and when presideprime minister netanyahu comes, almost every jew or american agrees

with. it's not about israel but a civilization struggle we share a common threat, origin, catalyst of this kwar on israel, the ira, u.s. allies and those in the gulf need to do something about. his country is not. the idea people are making a statement not showing up is much bigger for netanyahu. making a statement about israel and a statement about their attitude towards jews. >> you don't need to be jewish to be a zionist either. definitely do not. i'm not jewish, but i would call myself a zionist. i don't -- >> and -- and as an american, who's focused on american interests in the world. right? look at this on one hand the most important ally to america in the world and israel's on it. >> what's your grade for the biden administration? some people say they've been great. i think you start telling people

whether they can or can't use weapons or holding back on weapons or saying, well, you know, if you do this you're fonot going to get them. do this, you will get them. that's b.s. would you give them a b? >> early days of the war i think the biden administration was extraordinary. deployed military assets to the region, president biden made a strong statement standing shoulder-to-shoulder with israel. traveled to israel. >> seemed like a no-brainer. traveling was -- >> i will tell you somewhere between late december and kind of march, april, something happened in the administration where they started to turn. around march, april, the administration did not veto that u.n. security council resolution. >> who is that? who decided that? >> ultimately biden. under enormous pressure from p progressives within his own

party. senator schumer delivered a terrible speech on the senate floor. what it matters. widely reported heard this from officials within the intelligence community in israel arnold the united states. one of the two architects of october 7th follows events in the united states closely. he follows politics here closely. when he sees a breach between the u.s. government and the israeli government, his incentive to negotiate a deal goes down, because he says, wait a minute. pressure's mounting on israel. not mounting on hamas. so to your point, joe when the u.s. does things like hold back munitions, starts to put on conditions for the distribution of munitions to israel, and when they see these crazy protests on student encampments on college campuses, leaders say the u.s. is beating up on israel, mounting up on israel. stand back. why come to the negotiating table? >> not just a split between the united states and israel.

it's a split within israel itself. a lot can be placed back on netanyahu's head. >> netanyahu very unpopular now. not going to dispute that. think about the big, strategic goals the israeli government has had, eliminating hamas and their capacity to the do another october 7th, not allowing hamas to be in the capacity to have a base of operations and getting the hostages back, those goals is where most of israeli public is. >> and hostage families are mad for what netanyahu has done. >> absolutely. i speak to hostage families on almost a weekly basis. really. sometimes more -- i'm in touch with a lot of hostage families. what they're going through is excruciating. every one that is extremely frustrated with their prime minister, with their government, with the whole security ab apparatus. i do not like for a second, second guess their -- their, i just can't imagine what they're

going through. when you look at public polling and public sentiment in israel you see two thing. it's frustration with netanyahu. then drill down on what should the goals be of the israeli government right now in this wore, it's consistent with what netanyahu's trying to pursue. i do think it's a little paradoxical and understandable to be frustrated. at the same time israel cannot allow hamas to have a base of operations to wage war against israel. >> a minute left. trump shared a letter he got from mahmud abbas. and according to some does that -- also meeting with netanyahu. so how do you see -- would israel be mad that he's corresponding with hamas or is it -- >> i mean, first of all, the letters, basically hamas says glad the assassin wasn't successful, which is -- >> i don't think you'd hear that from iran. iran, damn, they missed, they'd say, and some people in this country.

>> it's innocuous. president trump, talk about a polarizing figure. many can debate and disagree about his legacy. on israel and the middle east, recently spoke with those leaders in the gulf states, they agree. the trump administration's record in the middle east is extraordinary. moving the embassy to jerusalem. recognizing sovereignty over the golan heights. again, these leaders don't get involved in american -- >> best thing everyone's ever said from that administration. >> these leaders aren't inserts themselves in american politics. a sense the legacy on trump administration they care about is pretty extraordinary and they're frustrated with smthing out of the biden administration especially with kamala harris. she has time in the next months to signal a different course, but not showing up today is a mistake. >> and ready to endorse president trump right now? >> i am not making endorsements

on u.s. policy. >> you're a wuss! >> no, i'm not. what are you doing? >> i'm not allowed to say. yeah. people have no idea where i stand. yeah. i heard you the other day very critical of -- >> i try. i try. try, but -- >> i mean, i'm a capitalist. know what i mean? it's not that hard to figure things out. why i get so confused when i see -- >> i know. >> what goes on. dan, thank you. >> thanks. >> thank you. when we come back, greg ip from the "wall street journal" is asking whether the democratic nominee for president will be able to escape the shadow of inflation that took hold under president biden. we will speak with greg right after this. also a programming note for you. president biden will be addressing the nation tonight from the oval office on his decision not to seek re-election. you can watch the nbc news special report right here on cnbc. "squawk box" will be right back.

welcome back to "squawk box." futures right now continue to show significant amount of red ink this morning with the nasdaq down almost 275 points. s&p down 50. which is pretty big pullback for the s&p and the dow almost down 200. a tentative win for the biden administration, in its efforts to ban non-compete agreements. a federal judge rejecting an attempt to stop the ftc anti-non-compete rule from taking effect in september. the challenge to the ftc brought by a tree trimming company in pennsylvania. that company, the lawsuit will be allowed to play out now that its bid for a preliminary injunction has been d.enied. earlier this month a different federal judge in texas blocked the ftc from enforcing the rule against a coalition of business

groups, and, you know, you get a good tree trimmer, think about that. he can basically write his own paycheck, but why tree trimming? >> i don't agree with the -- no. bigger issue, a situation, hairdresser d.c. er deal with . if you leave the salon you can't go work within a 30-mile radius. >> tree trimming -- >> one thing i think the ftc is on the right course. shouldn't be able to tie people down you can't go anywhere and never compete against us. we'll see. >> impacts us theoretically. >> impacts people trying to get out on their own and do something. make then sign the noncompetes. can't work here unless you sign away your right to never ever compete against us. >> tree trimmers. >> again, i go back to the hair

salons. >> and what about -- pay a lot for making bunnies and stuff -- >> in a new "wall street journal" column our next guest asks whether the next democratic nominee for president, whether it's kamala harris or someone else, will be able to reset the debate over the economy to focus on the future railroad than the inflation of the last few years. joining us now is greg ip. chief economics commentator at the "wall street journal." an interesting question. look around the globe, we have seen incumbents toss ed out by voters and a big part of that, inflation. prices haven't come down. a big thing you have to live with. would kamala harris do you think be able to distinguish herself from the incumbent whose vice president she is. >> i don't think how she did get away from biden's record since

she was part and parcel of that record. the other thing, as you pointed out, everywhere in the world people are upset whoever's at power of inflation whether it was their fault or not. and incumbent governments pay the price. for that reason you, it's a real tough situation for kamala harris that economic malaise doesn't have a single cause, pinned on this policy and changed and so on and i i think rather than dwelling on the past it's probably more productive for her to talk about the future. ask the question, under which president will be have more progress on it? there she can point in the last year relatively strained inflation. wages better. pivot and say look it's a the stuff donald trump plans to do, like headingive import way 10% tariff. i'm not a political expert. strikes me as more of a winning

argument than trying to defend the past. >> wages and pay. went through a lot of her potential programs on these things. again, it's based on someone who's been the vice president for three and a half years but a senator before that. looking through wages and pay, where do you think she lands on that? >> well, when she ran for the presidential primary in 2020 she had a pretty liberal position. trying to stake out a sort of left of center presence on issues like medicare for all on the green new deal and so forth. no way she'll be ale to put that forward as a platform now. she's part of the biden administration. i think also those policies did not test well in the public. now, interestingly enough, biden did sign into law certain policies that were extremely popular. like the infrastructure law and chips and science act bringing back infrastructure and promoting electric vehicles.

the problem, people aren't aware they made a difference to them or not even aware biden is responsible for them. it wouldn't be bad if harris could remind people that this is all the stuff that biden/harris have done for them and there's more of the same waiting for them. then again, turn the argument back to trump. what a trade war with our closest allies, would that promote industries that you care about? what about tax cuts? trump wants to, like, go further in terms of not just extending all tax cuts, going further cutting a corporate tax cut. a winning argument for people worried about the cost of living? >> do you think she's going to run from ending the filibuster to pass a much larger green new deal than the inflation reduction act? which i argue, it's not that people don't realize how good with the inflation reduction act. it's a boon dog on a nightmare for a lot of reasons and no one should say, great job. and filibuster, ban fracking,

ban offshore drilling, mandatory gun buyback. civil penaltieses for crossing the border. and getting rid of private insurance, that's just left of center, greg, could get rid of private insurance? a little -- maybe to some people it's a little left of center. health care for all illegals. how many that going to be for inflation? how's raising the corporate tax rate to 28% going to be and raising capital gains to over 45%? i can't -- the stuff you're cherry picking that looks pro-business, it's like a ludicrous point of view, to me. >> well, a lot of positions you named, joe, she obviously, like, you know -- moved aqway from thm once part of the biden administration. >> she hasn't said i don't think that anymore. you mean because -- >> the biden administration --

>> go ahead. >> medicare for all is not part of the biden/harris push. >> she's not president. >> joe, you have an saabsolutel good point. a lot of positions in her past that are awkward. how she deals with that one of her biggest burdens overt next four years. not uncan common to take pack positions. j.d. vance had negative opinions an trump and evolved. an opening in her choice. seen seen more left wing and liberal than biden she needs to choose a vice president sort of offsetting that image. somebody more moderate. on the inflation question, a real point that republicans have counted away -- pounded away at biden repeatedly, relatively negative attitude towards fossil fuels notwithstanding we have domestic oil production.

kamala harris a fracking ban. biden not. we don't have a fracking ban. having a guy like say josh shapiro, manifestly not against fracking. very important to his state, on the ticket, might her inoculate her from some of those positions. >> but less production in many ways can cause higher prices which then breeds more, more production, and when you got $3.50 gas instead of $2.30 gas, when he came into it, you know, you can have a boom in the oil industry in spite of someone's rhetoric and in spite of their policies. the biden administration hasn't tried to open up drilling. hasn't done anything with keystone. i mean, you're not giving them credit for the record production levels, are you? >> well, i'm saying that the facts on the ground, joe, aren't consistent with this president having terribly -- >> things can happen in spite of

someone's efforts. you say you're going to end the fossil fuel industry, that probably isn't great for capital formation, shareholders and investing in ten-year projects of fossil fuels, greg. >> yeah. donald trump also said he's going to pay down the debt. clearly he didn't. actually decided over very large deficits. joe, you've been in politics longer than i have. people say a lot of things and change positions. your point is the a very good one. one. reasons kamala harris didn't win the nomination four years ago, voters flocked to the more moderate position of -- >> look at iowa. 1%. i know. it's nice to be able to kind of -- that's like being -- parachuting in here without any of the -- that's weird, greg, in the primaries you need to go left for the base. she doesn't need to do that now. i think you're right. she's going to pick someone who looks like a moderate veep and

we're all going to be sort of lulled into this false sense of security that this is a, a sort of a -- >> joe, j.d. vance once for a national abortion ban. >> oh, i know. >> now not. says thieve to the states. every person moves from somebody as a part of their team to modify positions and part of the art of politics persuading the electorates of your true mission. >> both sides are starting at a point, may be extreme but most voters can choose either one side or the other as a starting point to get more moderate from. i mean -- you know, i'd rather start from -- you know -- not having a mandatory confiscation of all guns with a mandatory -- you know -- not a good starting point for a lot of americans, greg. anyway, thank you. >> good to talk to you. >> see ya. coming up, tesla's former president joins us on the latest aysults from the ev maker. st tuned. you're watching "squawk box" on

cnbc.

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it's piled high with tender beef that's slow cooked and smothered in tangy memphis style barbecue sauce. it's no fuss, no muss. just tons of flavor. the best barbecue beef is only a togo's. try one today. tesla down missing expectations for the second quarter. automotive sales dropped 7% year

over year. gross margins less than half the level from a little more than two years ago. joining us on the quarter and the challenges and opportunities ahead for tesla is jon mcneill. ceo of dvx and tesla's former president and on the board at general motors. jon, talk about this. looks like tesla shares now down by 9%. equivalent of year-to-date loss, too. what do you think are the earnings that you saw? >> i think we're at a compare/contrast between tesla and gm yesterday for sure on earnings. i think the story on tesla what is bad for tesla is good for the sector. good competition, lower prices and continued demand growth. the story is the competition now and dozens of compelling evs giving customers options. tesla margin's look like everybody else's in the car industry. tesla, in increasingly tougher

competitive situation forcing them to discounts squeezing the margins and yesterday saw close to $1 billion of tax credits, energy credits, in both top and bottom line. those will strengthen over time as now the other ev manufacturers increase their output. >> i hear what you're saying about concerns with tesla. look at the business and finance section of the "wall street journal" today, they say tess wla on the left. on the right, gm delays electrical build outweakened demand. not just tesla is dealing with this, jon? >> yeah. i think gm is executing through this consumer demand. the growth is still there. gm's growing faster than the market in evs. gm's ev volumes up 40% year over year second quarter while the industry grew at 11%. almost four times the industry growth rate. you're right. advantage to execute for gm a

gas carport follow yo and ev portfolio and can definitely manage their production to meet the demand where the consumer's at. >> which is not necessarily with evs at this point. jon, talk about what the future holds, because both general motors and tesla yesterday said they're not going to be doing some things quite as quickly as we thought. with elon musk talking to tesla robe bo robotaxis not broadly manufactured and yesterday gm said it wom discontinue -- would discontinue a indefinite period of time the idea of having driverless cars, too. >> that's wrong. we're not postponing driverless. cruise is on the road with 5 million miles autonomous driving. >> not cruise.

the cruise version with no steering wheel was discontinued. >> right. felt pushing a no steering wheel, no brake was further than the public wants to go. driving down costs and the chevy bolt using it as autonomous taxi for cruise. lower costs and i think meets the market where it's at. >> but this idea of completely robot driving. that's going to be a long way down the road? >> yeah. this is -- we've got autonomous driving now with cruise and waymo, and i think you're going to see it expand, but it will go slower. i think that people have forecasted, i think we've been waiting for years to get to full autonomy everywhere. but i think what waymo and cruise are both doing is putting safety first and really putting the communities they're operating in first, too. in making sure that the rollouts

are very thought. but at the same time, really meeting demand. there are a number of people who will benefit from ev, not only in terms of reduction in accidents, but people challenged to drive. i've got a blind friend who can't wait to be able to have a car that drives him where he wants to go when he wants to go. keep calling and asking when can i have my first ride where i drive? and so that's going to do pull that technology forward. but it needs to be done at a really thoughtful way that appreciates safety first. >> that will be something. when it arrives. thank you today. >> thanks, becky. when we come back, should the biggest i.t. players be stress tested just like the big banks? we'll talk about that. heading to at break, reminder. friday marks the opening ceremony of the olympics, and "squawk box" will be there live. we will bring you coverage of those games, interviews with

athletes and major corporate sponsors. andrew's always on his way, and also olympic news for you. we just found out that tennis star coco gauff will be team uss flag bearer for opening ceremony joining lebron james chosen as the male flag bearer. the international olympic committee awarding 2024 winter games to salt lake city. returning to utah, 32 years after the 2002 games. >> mitt romney on that. >> that's right. >> bonjour! >> we'll be right back.

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our next guest warning that the concept of too big to fail isn't unique to finance. he says it also encompasses

technology as evidenced by last week's global tech outage. crowdstrike. joining us to talk about what can be done about this issue, a senior analyst with rand. what needs to be done in your view? to spread the -- spread the work out to some other players? or is it about, i don't know, the right type of cybersecurity? what should we do? >> well, yeah. certainly i always say the right type 6 cybersecurity is always needed. ironically this time, this outage came from the cybersecurity company issuing updates to its software that cause add large outage. the real challenge i'm highlighting here is it's not just about market share. a really large market share. it's the crowdstrike and especially techs have become really large, really

interconnected. os as we crowdstrike, a substitute which they do fail causing widespread damages that can put other things at risk. economic security at risk. national security at risk. it's about identifying these companies that pose this type of risk and coming up with some solutions to manage that risk before we are in a real state of crisis. >> that's what i was thinking, jonathan. that as bad as it was, the silver lining could be it was a wake-up call? that was like a test run. so now we better figure out exactly how to make sure this doesn't happen again? does it mean -- different companies in just crowdstrike? i guess the point of this segment. do we need other people involved? >> yeah. so i think it's a silver lining, as long as we use this opportunity and take that wake-up call and move forward and make progress and actually

managing and pushing policy around the system. it's not just crowdstrike. there's dozens to hundreds of companies who are all very cen central in our highly connected economy and all can pose this type of risk. you're absolutely right, i righ, with crowdstrike, we had this blue screen of death that many people woke up to. that's not the worst that it could be. so, i agree, this is -- this is a potentially nice opportunity to really put some focus on this. >> jonathan, when the cybersecurity companies go to, you know, a fortune 500 company and say, look, we've got this, we've got that, is it an easy sell, or is it part of the, you know, does it hit margins when they do it? everybody's spending all this money on a.i. i guess it's going to pay off eventually, but it seems like i would maybe do this but with my

existing business to get it completely hack-proof or whatever, i would do that, but is there a hesitancy that it costs money and they take shortcuts? >> yeah, i mean, with the caveat that i'm over here in research at rand and not making those decisions at companies. the reality is i hope that it's not just looked at as purely a cost, that it's not purely an operating expense, that this is the necessary -- this is a necessary thing that companies need to be doing, need to be making sure that they're able to protect their systems and defend against cyberattacks, which companies are facing every day. some companies, thousands of cyberattacks, and the fact is that relying on companies like crowdstrike is actually a good thing. now, i think that there should be policies in place to make sure that updates like this one are rolled out -- are actually tested before they're rolled out. i'm not sure exactly what happened in this case. but i think that that's a type

of thing that could make sure that these, you know, we don't get this type of a widespread outage from a single update. >> is there a way to protect against truly, like, horrific -- i mean, there was never going to be -- the financial system was never going to collapse, it almost did. we'll never have a global pandemic again, and we did. you read about a pulse or let's say a nuclear explosion in the atmosphere above the united states that knocks out the grid. is there anything that's totally -- that we can totally protect against? is there a way to do that, or is that always looming in the future, that something like that could still be done? >> i think the biggest problem is when these incidents catch us by surprise. so, i think -- and time and time again, we often wait until these -- the worst happens in order to do something.

what i'm really calling for and was calling for in this piece was to kind of look ahead and think about this. we may not be able to predict that next pulse or that next pandemic. however, i think that we can identify the real choke points, and at this point the systemically important entities that are out there and make plans for how they're able to manage that next shock, that next surprise that happens, whether it be a cyberattack or a pandemic, and make sure that we're able to make our overall system more resilient. one of the problems that you can see with these types of risks is that they're systemic. they aren't risks that any single organization can manage by themselves because they're going to quickly spread across -- from those organizations across their networks, across their company connections, across their products, and so it's not something a single organization can manage. it's not something you can

diversify away from. it really has to be -- this is the role of government to manage these type of risks. >> very good. all right. jonathan, we appreciate it from rand. rand corp., i just like saying that. makes me feel smart. >> rolls off the tongue. >> years and years of high-tech. thank you. >> they had so -- you think about delta. so much of their system -- so many of their systems with microsoft. makes you wonder if it will make companies more reluctant to have one partner, if they want multiple partners to be able to have redundancies across these things too. when we come back, we will talk about what to watch in the markets today. stay tuned. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley

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joining us now with her view on the market and some top picks, jo ann feeney, portfolio partner and a portfolio manager at advisors capital management. the great rotation. it's on, it's off. is it on, jo ann? >> good morning, joe. no. i mean, people are looking for other places to find some

appreciation potential after the big run for the big tech stocks, and given that the economy has held up better than expected, looks like rate cuts now far more likely than they were a couple of months ago. investors are finding more comfort in the recognition that lower rates are going to help biotech, help health care more generally, help industrials, so there are other places to invest besides the big tech companies, and in addition, we're seeing now some improvement in some of the cyclical areas, not just in consumer but also in tech. look at seagate's results. really interesting signal. texas instruments signaling improvement coming in automotive. that's a very good sign. inventories have been worked down already in china. so, we're getting some good information out of these earnings reports that we think are going to be far more impactful on where the markets go than even the fed decision because that's pretty much baked in at this point. >> and no one can predict the future. we've seen quite a few reports so far. what are you going to think

we're going to see for the rest of the reporting season? where do we find the best value? >> you know, joe, one of the things we're concerned about is really what the outlooks are going to be for different companies in the consumer space. we see earnings now as separating the wheat from the chaff. it's not going to be an industry goes this way or that way. it's going to be company specific. look at the consumer space. we had reports out of polaris, for example, highly discretionary spending category and compare that to other areas of consumer that are doing well, so consumers clearly facing struggles in their pocketbooks, trying to economize, cutting out those high, expensive outdoor toys and going and sticking with more of the essentials and some of the more affordable ways to get entertainment. so, it's going to be company by company. we still like the off price retail like tj maxx. we still like places where demand is relatively inelastic. people need places to live. we still favor lennar over the

long-term. home depot, because you're going to need to keep your house maintained. but we also, again, still like some areas of tech, whether it's a.i.-related like nvidia and broadcom or the new pc cycle that we think is coming which we think will benefit amd and qualcomm. >> i'm going to write them all down as quickly as i can. time's up. thanks, joanne. join us tomorrow. "squawk on the street" is next. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange. futures are red as alphabet and tesla earnings lead to some mag seven weakness. meantime, some macro worries getting folded in as well from visa, capital one, lvmh. two-year yield is the lowest since february. our road map begins with warning signs for mega cap tech. tesla and alphabet fail to impress. plus visa saying consumer