the games begin, by the way, at 7:30 on nbc eastern time. >> and we are going to be watching. andrew, we will see you, i guess, tomorrow, and we can't wait for it. next week, monday -- >> you will. i won't see him until -- i'll see him sunday. >> that does it for us. join us in paris next week. right now, it's time for "squawk on the street." ♪ good morning, welcome to "squawk on the street," i'm david faber with sara eisen and mike santoli. we're at post nine of the new york stock exchange. carl and jim have the morning off. let's give you a look at futures as we get ready to begin trading for the final session of the week. you can see we are looking for a sharply higher open. and our road map does start on those markets as you very well might expect. stocks looking, as you just saw, to open higher. it's been a wild week of trading. investors, perhaps, optimistic.

the latest pce print suggests the fed remains on track to cut rates shortly. plus plenty of earnings reports to monitor this morning. bristol myers, charter, 3m among the biggest movers in the premarket. bitcoin rallying, closing in on its march record. the move higher coming ahead of trump's appearance at bitcoin 2024 conference. we're live for you in nashville with the latest. all right, let's start with what is the fed's preferred inflation gauge, pce, rising 2.5% in june from a year ago. that was in line with expectations. this as the broader markets all sit lower on the week after another volatile session yesterday. who better to discuss this with than sara eisen and mike santoli? all right. i know it's the preferred gauge because of you. what do we think of the number? what does it say for this ongoing debate? i? it's a preferred gauge and a preferred reading on inflation. no upside surprises, pretty much in line with consensus, and shows that we're not getting

that kind of inflationary spurt that we got in the first quarter. i know we have been saying that for three months in a row, but it's always good to see that we're not seeing inflation flare, especially because there was a little bit of an upside surprise on yesterday's gdp pce report. little bit. and you can chalk that up to a may revision higher in this report, but the june numbers are out. and they look good, both on core and on the headline numbers. if anything, it just -- you go into next week as a fed member with more confidence that you can start to signal a september cut. the economic data is okay. good, not great. showing that we're slowing. income's come in a little bit worse than expected. spending comes in a little bit worse than expected. the savings rate goes down, which is a sign that americans are tapping into their cushions from post-covid. and so, it's appropriate, i think, if you're a fed member, and a lot of economists here agree, that you should be paying

more attention to the downside risk to the economy now because inflation does look like it is coming down to that target. it's not at the target yet. we're still, what, 2.5% on the headline number, but it's getting there. >> 2.5% by this point, by the fed's own collective projection. they're talking 2.6% by the end of the year. it's right in the zone where they thought it should track. and the thought is, there's a lot of room to cut. and i do think the market certainly has greater attention on the deceleration of the actual economy, and some choppiness in consumer behavior, and you look at housing, really looking bumpy right now. drying up of activity. you're seeing the automakers have not such great things to say about the immediate outlook. so, it all does fit together. it also hits a market, though, that i think, at the end of the second quarter, and then with that kind of lunge higher in tech into the first two weeks of july, really did crystallize around a perfect soft landing

scenario. so, to me, it's exactly at the end of the first quarter where you finished at this record high point, tech leading the way, but you also had the soft landing and earnings growth expectations all working together, and you have had reasons to have doubt around those edges. have we overpaid for tech earnings? that's a big question. >> yes. >> and what does it mean that we can rotate around them? what does it mean for the stability of the market? >> multiples have started to come down for these biggest companies given this massive rotation we've seen and talked about for the next couple weeks. let's get to that, mike, because we end another volatile week, as we've just said, in which we've seen mega cap tech once again decline while the iwm, the russell 2000 etf, has been going higher. >> russell is end the week up 2% with the nasdaq down 3%. >> these differentials are historic in nature when you add up what's gone on over the last few weeks. what does history tell us, if anything, in terms of a move like this?

>> it's all the exact 180-degree opposite of what we were complaining about, or many were, for months before. mathematically, there was so much embedded in the very top of this index and there's been this fascinating work that shows that the s&p 500 is less correlated to the stocks within it than it is to, like, the bond market and other currencies and things. in other words, it's trading as its own thing because the top five or seven stocks are that big. now, what does it mean history-wise when we get one of these reversals and you get a broadening out of the market? usually, it does buy the market a few months of, hey, nothing bad tends to happen, and sometimes, you get some follow-through, but i do think the erratic nature of the specifically small cap revival probably has a risk of kind of petering itself out or just kind of losing a bit of steam because it is so mechanical and forced. it's kind of like when the market rallies, and you see the most heavily shorted stocks go up 30 and 40%.

it doesn't mean those are going to be the stocks that lead the way the rest of the way. it just means you had this huge lift of pressure, and really, what's gone on is the most popular trades have come in. people have reduced risk in general. that means most of the stuff they owned is being sold, and you're rotating a little bit into the rest of the market. it's not unhealthy, but i also don't think it's over. yesterday's intraday rally was interesting, made sense on a lot of bases. s&p, 5% down from the high. the nasdaq 100, 10% down from the high. you hit some key technical areas. starting to look oversold in semiconductors, in particular, which have basically been the lead on the upside and downside. s&p 500 gets towards 5,500 and you lose 1.5% off the intraday high. that's typical high volatility. we're looking for traction in a pullback type mode here. i think pce sets the macro on a pretty comfortable spot. it's much more about the market mechanics and how high the bar is for earnings. >> when you said that we got out

of a lot of popular trades, i've been talking a lot about this move and the dollar-yen. it's sizable this week, 2% move for stronger yen is a reversal that we've seen, and you know, you saw similar type reversals from other crowded trades like gold and bitcoin. dollar/yen is considered a litmus paper because it's a funding carry for some of these trades. how much of the overall move, and this extends to the rotation and equities too, is, you know, fast money, technical, machine trading, flush out of these crowded trades, instead of a fundamental reason to buy small caps at this point. that's a question to determine what inning we're in. >> exactly. and i think the fundamental basis has kind of been there but it's not been an immediate catalyst and i do agree with you, it's mostly been about tactical repositioning and the stampede out of these crowded dr trades. i showed last night, on a

one-year basis, the nasdaq 100 and the nike 225 have been the same chart. long nikkei, short yen. you're having people look at this activity in dollar/yen and say that's a bear market in the yen that might actually be spent at this point too, which would be net equity positive. i don't really worry that much about the causal relationship. it's much more about, it all happening at once, because people got too far on one side of the boat and now they're come back. >> nikkei down 6% this week. >> really? it's funny hearing andrew talk to bernard arnaud about chinese consumers going to japan. >> japan was the star of the luxury reports. i mean, double-digit growth in japan, slowing demand in europe and the u.s. >> nicest stores there, too. they're beautiful. >> in japan, oh, i know. they do shopping so well.

u.s. department stores need to be more like japan. >> that was -- i wasn't expecting that when i went to tokyo years ago. all right. back to the u.s. let's talk about the upcoming election for president. former president obama now endorsing vice president harris while former president trump prepares to meet with israeli president netanyahu. that will be later today. when it comes to business leaders who are working through what either candidate could work for, barlry diller gave his thought on the harris campaign this morning on "squawk box." >> i hope that she does not tack, let's call it, left. i hope she is the center, little "l," candidate and that she really does seize this moment, and if she does, she'll have the energy and excitement of the majority of the people, and she will be the next president. >> seemed somewhat confident of that. of course, something that will indicate that, perhaps, is the

vp pick from the expected nominee, vice president harris. she's not, obviously, the nominee of the party as of yet. >> she doesn't have a lot of time to do it, unlike a traditional cycle. we are increasingly hearing from business leaders. yesterday, we talked to peter orzag, the ceo of lizzard, but he also came out. listen, here's what he said about the vice president. >> i've known the vice president for over 15 years. i've always been impressed by her, and i think she would make a terrific president. >> but you know -- >> one of many of those typically democratic donors as well that was on a call earlier this week. so many of the names, we know well. >> roger altman. >> ray maguire. it goes on and on. and i did hear from people who were participating in the call that there was more enthusiasm in terms of giving money, which obviously is going to be very important in these last hundred days. >> her fund-raising haul this week has been nothing short of

amazing. i think the question now -- and when you ask these business leaders the follow-up, i mean, andrew did this morning. we did with peter yesterday. what do we expect for business from a harris administration? a little less clear, right? consistency from the biden administration, but how's that going to manifest in terms of antitrust policy, regulation, trade? some of these are big question marks we're going to need to -- >> and the expiration of the trump tax cuts is the one thing that any president is going to have to address, and if there's a split congress -- >> i don't think she's going to do that. >> i don't think she's going to advocate for the continuation of the trump tax cuts, but there's probably a space in the middle there. >> does she advocate for a higher corporate tax rate? >> by the way the law is written right now, it just happens. >> i'm hoping for just happens and then we get the salt tax deduction back. it's the biggest tax cut than i will ever have experienced and many other w-2 employees in blue

states. >> that was painful when it went away. >> it continues to be painful. >> yes, continues. well, broader markets taking a breather in july, but not bitcoin. in the green ahead of a widely anticipated speech from former president trump this weekend at a major crypto conference. he's also going to have a big fund-raiser there. cnbc's mckenzie is there in nashville where i'm sure there is a lot of excitement building. this is not your typical bitcoin conference. >> it's not. it's the big flagship event of the year, bitcoin up 5% ahead of those remarks tomorrow. the former president's total 180 on his crypto stance has made him very popular with this voting bloc, but before the republican presidential nominee takes the stage, we're going to be hearing from a half dozen other republicans and democratic lawmakers. you've got bill haggerty, marsha blackburn and tim scott on the agenda today talking about their vision for how d.c. could shape crypto regulation in the u.s., but everyone is waiting to see

how far trump will go in supporting this technology when he promises to do for crypto innovation if re-elected as president. we know that in the past he's made the suggestion that all future bitcoin should be mined in the u.s., but he's going to have to make some big promises to live up to all of this hype. just one example. bitcoin got a boost to the $68,000 level briefly on tuesday ahead of this event after reports that senator cynthia lummus would introduce a bill that would require the fed to hold bitcoin as a strategic asset. she also speaks on saturday, we'll see if that comes true and if donald trump has any big declaration of his own. >> i think the biggest thing that we've seen in '24 is that this not only is being viewed as a more legitimate and important issue, but that that transformation has actually become, now, bipartisan in nature. >> just there you're hearing from blackrock's head of digital assets, so clearly, some people

within the institutional community here are hoping for this to be more of a bipartisan conversation, but overwhelmingly, i've been on the ground in nashville since tuesday, everyone is talking about trump and how they're planning to go all in for him, and they're showing up not in just in-person but also voting with their pocketbooks. >> you mentioned the idea of a government buying bitcoin as a strategic reserve. there's certainly something. are there any other pieces of legislation that former president trump could talk about or show a distinction from the biden administration? particularly the s.e.c. and gary gensler, who gets the most, i think, flak for being anti-bitcoin in this administration, where he could talk about a real agenda? >> no, it's a great point. last month, you know, trump was quoted as saying that he was going to end joe biden's war on crypto, and just as you said, sara, that starts with the s.e.c. so, he's been in conversations, being advised on who could potentially replace gary

gensler, be more friendly to the community. he's been talking about rolling back regulation, which is a mixed bag. of course, we saw the washout of 2022 and a lot of that came from not having enough compliance, not enough hard and fast rules. his vice presidential pick, jd vance, also has his own crypto regulation that will go up against what we're expecting to see from senator lumis, so a lot of different pieces out there. i think people are very keen to see if the u.s. might at bitcoin to its balance sheet, though. >> mackenzie, thank you. mackenzie sigalos. after the break, apollo's chief economist. let's give you a look at futures as we begin trading 15 minutes from now. nothing's changed. we are looking for a srphaly higher open. a lot more "squawk on the street" straight ahead. [crowd chanting] they ignored your potential, and mocked your ambition.

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welcome back to "squawk on the street." year over year, core pce coming in slightly higher than expected in june ahead of a big decision on rates next week, though it was mostly in line and showed a lot of progress. traders sticking to the view that the fed will cut rates in september. here to break things down is ap apollo global management's chief economist. does this cement the view that they'll start hinting at september next week? >> today it was actually the case that core inflation was a little bit higher, and that's also what we got in the gdp report yesterday, so combining that with the overall gdp headline of 2.8% growth, strong jobless claims yesterday, retail sales for june still strong, tsa data also strong. across the board, you're still seeing reasonably strong growth in the economy. yes, there are some pockets of weakness, and we're all watching that very carefully, but i think

the main message from the data we've gotten this week is still that the economy is doing quite well. inflation is coming down, but it's just not coming down as quickly as everyone would like, and finally, we have two more cpi prints before the september fomc meeting so yes, the fed may cut in september, but let's just wait and see a little more progress on the inflation front, exactly as jay powell has been saying. >> you are not convinced? it was a pretty -- core pce, and i -- we're going to do decimal points here, because 0.182% was the monthly change. i mean, that -- that's okay. and even with the may revision higher, we're not talking about any kind of flare-ups of inflation like we saw in q1, and torsten, incomes were lower than expect, and spending was lower than expected. >> understood, but the tailwinds coming from the gains in the stock market, the s&p is up more than 10 trillion since the fed decided to talk about cuts in november of last year. that tailwind to consumer spending is the whole reason why

we're still seeing strength in hotel, airlines, restaurants, concerts, sporting events across theboard. it's not surprising that consumers are doing so well, despite that the fed has hiked. i know everyone wants this cut to come, sooner rather than later, because it does make sense from a number of different dimensions to normalize interest rates but at the end of the day, if the strength of the economy is still running the risk here that we might get another flare-up or more tailwind to the economic outlook, then i think it's premature to take out the champagne bottle and talk about a dramatic amount of rate cuts coming. >> just because the stock market is going up? that's going to happen any time they go into a rate cut. if you look at some of the labor market measures, the fact that unemployment has gone up to 4.1%, and i -- i get it. it's still decent, but we're seeing a move up. the job openings picture. the openings ratio to unemployed people, the unfilled jobs to unemployed. i mean, all of those point to

cooling in the labor market, which is something the fed -- it's part of their mandate, and they have to prevent it getting worse. >> hold on. i hear you, sara. hold on. nonfarm payrolls was 206,000 last month. it was 200,000, 12 months ago. in that sense, we're still seeing steady job growth. some of that is likely immigration, and immigration is likely also the reason why the unemployment rate has gone up. we're not seeing layoffs go up. we're seeing people show up at the labor market and looking for jobs and therefore job growth is still steady. but you're right, there's some weakness in the labor market indicators but does that justify the pricing of three cuts this year? i don't think that's the case. i think the economy is doing quite well. there are some signs of weakness here and there, but that's what we have seen all along as a result of the fed raising rates, hitting the balance sheets that had the most debt. so, overall, i think the economy is chugging along very nicely here. >> okay, well, that's the -- that's the hawkish view, which

maybe that will be a view inside the fed as well next week if the debate goes on. torsten, thank you very much for weighing in on pce. appreciate it. from apollo. >> "squawk on the street" coming right back. moving forward with node- positive breast cancer... ...my fear of recurrence could've held me back.

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there it is. a look at -- we start trading four minutes from now, so you get a sense as to whether that follows through, but we are looking for a sharply higher open, in part of what we discussed here, that pce number coming in, in line. doj antitrust chief jonathan kanter is going to join us coming up. t bins f ba y areas odete inheusescommunity.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, let's take a look at shares of 3m, up sharply this morning. mike, you know, i mean, sales numbers, topline, you wouldn't think much of it given down 0.5% year over year, but it's all about expectations. >> all about expectations. pretty depressed valuation. clear upside beat to earnings. even organic sales growth, if you adjust for the expected headwinds, 1.2% annualized. that's better than expected. and clearly, they've also blessed the street's current

full-year view, the guidance was raised. i think in general, though, we have embedded low expectations for a disappointed company, a new ceo who's only been there a few months, a huge opportunity for simplification of this company and lot of people have to be convinced. >> the bellwether. i feel like it's not really that. this is more of a self-help exec execution story now. >> that was the opening bell, of course. take a look at the realtime exchange. as you might expect, given futures, a lot of green. here at the big board, super group betway and manchester city announcing betway's deal to become the official betting partner of the english premier league champions manchester city football club. that was a mouthful. at the nasdaq, n.i.p. group, ipo today.

i'll start with charter, one of my areas, favorite areas. stock is up 13%. a lot of shorts in the name at charter. one of the larger cable companies in the country, competing against the likes of comcast, which reported earnings earlier this week, which is also beneficiary of charter's numbers. why? well, even though they lost broadband subs, it wasn't nearly as much as anticipated. i think it was 149,000 was the loss. there were estimates auto there that they would lose as much as -- let me take a look at some of the numbers here -- 250,000 subs during the quarter, perhaps even more. that did not come to the fore. that is seen as a real positive this morning. again -- oh, actually, i'm seeing 400,000 negative. street was at 257,000. i'm looking at a wells fargo report. unpredictability, though, of this affordable connectivity program is the key. we've talked about it a lot. remember, it expired. it was helping people pay their

broadband bills or their wireless bills. you heard it figure into verizon's numbers. it's figured into the comcast numbers as well, not as much for at&t. here, chris winfrey, the ceo of charter, discussed the impact of the acp during the conference call. take a listen. >> during the second quarter, we lost 149,000 internet customers, most of which was driven by the end of the affordable connectivity program. we've retained the vast majority of acp customers so far. the real question is customers' ability to pay, not just now but over time. i expect we'll have a better view of the total acp impact once we're inside the fourth quarter. the lack of acp will also drive higher levels of market churn and selling opportunities for connectivity services over time. >> so, any number of these companies working through sort of the questions around this important program that helped, obviously, to enhance the rolls of customers, many of whom they're trying to keep, but affordability, obviously, sara, continues to be a question for

some of these people on the lower end of the income scale. >> it's a theme we've heard across the earnings spectrum and consumer companies, especially. the only stock doing better in the s&p right now than charter is deckers outdoor corporation. this is the parent company of hoka, and that's the story of the strength in this stock and this earnings performance. decker reaffirming its fiscal '25 revenue but beating on the top and bottom lines in a big way. hoka, up. ugg was up mid-single digits as well. there's a lot of excitement, and the global expansion of hoka in particular is really taking hold. the stock is up 70-something percent in the last 12 months and it's going to be up another, i don't know, 13%. >> see that peak there? that was june. that was the peak in all momentum factor beneficiaries. and so, they had this huge

surge. it's a category killer within consumer. it looks a lot like chipotle. and a few other anointed names. so, you had this huge unwind of that trade, and now, they got the fundamentals come in and say, actually, the story hasn't really weakened at all. it's just about the kind of valuation and the -- and sort of the relative positioning of the stock. >> which shows it hasn't been fundamentally based on some of these stocks. >> so maybe the upside was kpaj rated in the momentum surge and now the selloff overdone, absolutely, since the last month. >> they're given reason to buy. they're talking up new no innovation and rollouts, including the bondi line of hoka. i was stands in stark performance to nike and lulu lemon. i know lululemon is less in the sneaker business, but when you hear about the market share declines and hear about hoka -- and we talked to new balance, it's a private company, but they've doubled their business

in the last few years. you see where the share gains are going. >> you could definitely argue that deckers, though, has become a lot more hit-driven, so it's sort of like as long as that remains the hot brand. it is now, you know, 28 times earnings. used to be kind of a 15 times, you know, more slow and steady. so, obviously, changes the equation there a little bit. >> they're getting full price. >> i want to get to the blow-up of the day. and we have had a number to have them this week. yesterday, edwards life sciences, our viewers may recall, losing over a quarter of its market value. today is much worse, and it's another large company from a market cap perspective, or at least it was at the beginning of the morning and i'm talking about dexcom. had been almost a $43 billion market value. a lot less now. look at that loss as the company both reports topline miss for its second quarter, its revenue number, and also reset guidance dramatically, driven by what they're calling three main

factors, a salesforce realignment, rebate timing having been accelerated, and as well, sort of some issues in terms of patience and the channel and things of that nature. all of which is simply to say that this thing is not getting -- fewer customers b-- y the way, i haven't explained. glucose monitoring systems is what we're talking about here. mike, we see these, and we have actually a few times this week seen dramatic selloffs in some names that really, when they miss the top line, it's over. >> in the growth part of health care, in these areas within health care that are seen to have these massive demographic headwinds and great unit economics and all the rest of it, so, yeah, obviously, not a lot of patience for that story. are they talking about the diabetes drugs at this point? i mean, obviously, it's gotten -- >> is it the glp-1s that are affecting it or not? i saw jim cramer, who is off, but doesn't mean he's away, talking about he thinks maybe abbott is taking market share in some fashion, even though there

are some analyst who are defending, saying it's not a market share question. i think investors at this point are saying, well, i'm going to sell now. we'll ask the questions later. >> it also -- it comes down to, have they already maximized, in a short-term basis, in terms of their penetration, you know, if you get to be a growth company and you have to hit your numbers, there's always these little pull-forwards and you have a hiccup on a couple of things in a quarter, and this is what happens to a growth stock. did want to -- we got to see the follow-through in alphabet today. it's continuing to weaken. this has been a negative reaction to the capex numbers and a little bit of a modest miss on the earnings, and then we have the openai headlines that hit during the trading day yesterday in the afternoon. launching a search engine. >> search gpt. >> and i mean, obviously, heavy sentiment, i guess, related to that. nobody can calculate what the actual effect is going to be, what the uptake of a new search engine might be, but i guess it just sort of -- all the news this week pokes at the weak

points in investors' view of alphabet, even if it's not necessarily the business itself. >> it's funny. yesterday, i was making the point of how short-lived the seeming threat from investors' perspective was to their monopoly in search, and literally, a few hours later, you had those headlines, and the stock started to suffer a bit. it's not quite -- they're not crawling the entire web the way google does. and by the way, important questions for publications that rely on google search to take people to their website where they then get advertising traffic that are raised by this, because it will give you a much broader answer that may be sufficient beyond having to actually go and read an underlying article. >> openai also has content partners, right? they're going to feature in their results. >> potentially pay. we'll see. >> how is that different than what the chatgpt function, which you go in and search, and you get answers, primarily from the web? i mean, maybe this is just them saying that we're directly coming after you, google. >> it's giving you more of a list.

i haven't -- i haven't worked with it, so i don't know the answer to that. >> the interesting questions about microsoft, too. microsoft with the relationship to openai, having access to it on some level for bing, which is microsoft's search engine, i think it's sort of unclear how that plays out and the degree to which there's potential competitive frictions along with the partners. >> meanwhile, mike, based on the last quarter from alphabet and the topline growth rate and where their operating income number came in, you're talking about a stock that's trading around 20 times. >> it's a discount to the market at this point. yeah. the overall market is, you know, 21, 22 forward at this point. 21, call it. and so yeah, it's happened from time to time. and it's interesting, because investors chronically don't give alphabet a very long leash on capital allocation and on the urgency of strategic shifts. they kind of feel as if the core business is so perfect and profitable, and it's all loss from there. in other words, it can't get

more market share. again, that's -- you have these bouts of doubt, and then everybody recognizes the incredible, you know, mechanics of the business itself and the dominant position it has and the fact that it's an amazing model. so, we'll see. >> i do wonder if -- i mean, talking about the rotation that we saw out of tech this week, the earnings were tesla and alphabet, and they didn't live up. next week, though, we get the rest of the mag seven, x-nvidia, so we'll get the microsoft and the meta and the amazon and perhaps it will be on them to see whether this rotation continues. >> i would argue that you do see a little bit of -- even in the bid today, it's like, how negative do you want to get when a few of the best companies in the world are about to show how good they are next week? i think semis, they were primed for a bounce. they're getting a bit of a bounce today. i don't think you have to say the rotation is over, the market can't stay broader. you know, and still say you can get some relief from the nasdaq. those two things can happen at once. >> sara, i did want to get your

take on colgate. last time i covered this company, there were rumblings of activist trying to get the company to split, and then the activists leave and they have a great run this morning. >> it was a good quarter, especially looking at it compared to some consumer staples and household products makers. net sales at colgate increasing almost 5%. organic sales, 9%. they lifted for the 2024 guidance to 6 to 8%. they raised their adjusted earnings guidance 8 to 11%, and here's the kicker. the volume mix was good. they saw volume growth in all of their categories. it wasn't just pricing leading the way, and that is what separates colgate apart from some of the others, especially the large cap peers. they're managing this shift, this industry shift. everyone's trying to chase volume now and bring down prices and get that mix right so

consumers come back. they are clearly managing it if they're seeing this volume growth in six divisions and four different product categories. how are they doing it? i don't know. the ceo never talks to us. but they're clearly doing it right. >> yeah. i just think it's interesting because, again, last time i followed it, you know, they have hills. they had to separate them. it was all about that. they basically -- it didn't really get a lot -- >> they have oral care, health care, a pet business, they have a lot going on. >> guys, i wanted to follow up on a story i did yesterday, of course, about that lawsuit that has been filed by warner bros. discovery against the nba over, of course, their matching rights for a deal that went to amazon. a number of questions i've gotten incoming. well, where's the lawsuit? fair questions. it's coming. my understanding is it was filed with the new york state court, and in new york state court. that court needs to unseal it, allow for a redacted version to be filed, and then it will become available, most likely later today.

so, stand by. of course, then, we will get to see at least the arguments in the complaint in terms of why warner bros. discovery feels that it did have matching rights that were not -- that were abrogated, essentially, by the deal that was signed by the nba with amazon. what will come into play here is a key in terms of something that was written some time ago, really before sort of the modern streaming era, at least in terms of definitions could become important here. but there are also some differences, the nba will tell you, that are right off the bat. amazon's willing to put three years of the deal in escrow. warner bros. discovery was willing to only offer a letter of credit. it's not a full streaming deal in the sense that amazon is pure streaming, and by the way, had obligated to -- now, it depends on which side you talk to -- either as many as 80 million domestic homes or 100 million, but the point being, they made a representation of homes that would be available that warner bros. discovery was unable to meet. and then, of course, the back and forth that i certainly hear about now in terms of the

negotiation itself during the exclusive period. they were very close, i'm told, although it depends, again, which side you speak to in terms of the dollar amount and how much they were -- how much warner bros. discovery was not quite meeting the nba's ask during the exclusive negotiating period, which, by the way, was not for the amazon package. it was for the package that ultimately went to our parent company, nbc. now, i've heard it may have only been a few hundred million bucks a year, but i've also heard that, well, certain playoff games were there, then they were pulled out, so there's always that back-and-forth as well. and then, i am told warner bros. discovery, after exclusivity, came back and said, we'll take what we rejected, but it was too late because our parent company, nbc, had made a bid that the nba was quite happy with and that was above what they had asked of warner bros. discovery. all this will play out incourt. again, we should see the complaint perhaps as soon as later today, i think for reasons i just explained, it's been delayed perhaps a bit more than had been anticipated, and we'll

get the nba's response as well. it's going to be a fun one to follow in terms of how it plays out. barry diller had some thoughts on it as well earlier when he was interviewed by andrew sorkin. i believe we have that if you want to take a listen. >> when you've got matching rights or first refusal rights or whatever, and you exercise them, then when you get into it, when people say, oh no, you didn't quite come ump to what w thought it was, that's a real litigable matter, so he's got a very good chance to at least muck it up so that they settle. >> and perhaps that would be something warner bros. discovery would be happy with, take some money and call it a day. >> i just wanted to hit the auto stocks. they got crushed this week. and last week. all earnings season, even gm, which actually reported better numbers, got hit. it had run up into the report. but then came tesla. ford, yesterday. ford is down 20% this week, and look, the big miss there, the warranty expenses, worse than

thought. jim cramer had a real mea culpa on the show last night. i wanted to see what he said about ford because he had liked it. just said that he was wrong because the warranty was a bigger deal than he was led to believe from the ceo, farley. >> seeing no rebound thus far in shares of ford. to your point, gm is up. tesla's having its worst week since april. >> stellantis. >> stellantis got hit. >> stellantis got -- >> mercedes is today in europe. >> and gm was the better number, it seems, but there were other aspects of the report that were not -- that were frowned upon. >> it had a nice run-up, but the mercedes was the latest one, also, today, also reporting a sales decline. they lowered the ceiling on the margin story, and for them, you know, the issue that they cited, china has an impact on the luxury auto market. also talked about, you know, ev demand, and that may be the overarching theme here is the

weakened demand for evs and the punishment of the stocks. >> it's the -- the growth rate is slowing in terms of -- and although the price keeps coming down to a level that's almost equivalent to i.c.e. >> markets have just impatience with how much capital's getting consumed on the way to scale in ev. and you know, adam jonas at morgan stanley also with mea culpa on ford says, it's like a mid-teens free cash flow yield right now. >> wow. >> based on the new guidance for free cash flow. market just doesn't want to hear it. >> didn't care. gm trades at five times earnings, right? >> so, then, the war is pricing and margins, and analysts told us yesterday on ford, that is another big concern. >> real quick, guys, a story we followed yesterday. southwest airlines, stocks down yet again after a lot of those changes. not enough for activist investor, elliott, which comes out in a statement, don't always see that from elliott, with strong language. i'll share a brief part with you. they say, "this failed leadership team's initiatives and obvious attempts at self-preservation are simply not credible."

what that means and what comes next from here, unclear. but elliott, certainly not happy. >> southwest shares down a little bit more than 1.5%. we have a lot today. we have more to get to. before we head to break, want to hit bonds. for the bond report, show you what treasurys are doing this morning. earlier, they were rallying with yields lower, and we did get a slight rally overall this week with the focus on the weaker data points and the more benign inflation reads, i would say. u.s. ten-year goes below 4.2%. we'll be right back here on "squawk on the street." (♪♪) car, this isn't the way home. that's right james, it isn't.

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the material sector been a laggard this year, but if you're hunting for yield could be key names in that group to watch.

dominic chu has been tracking the action. >> mike, it's been an under performer for sure but the material sector is only about a 2% weight in the s&p 500. the second smallest sector. looking for yield we look for some of the ones that maybe have some relative safety on a percentage basis. take a look at some of these names. the s&p 500 said which ones have an above sector yield that's roughly about 2%. if you look at the entire sector, but still have positive price performance. that is the screen that we used here. if you take a look at some of the results coming outfi of tha screen that is where you see interesting names come out. with regard to those names, dividend yields north of had or 5%. something to keep an eye on as we watch some of the names out there. if i would show them to you, you could see some of the names out there, there. one of the things we want to watch is dividend yields. keep an eye on the material sector. i will send things back to you.

>> thank you. >> i did want to hit this indictment this morning of somebody our viewers may know well, andrew left from citron research, frequent on a guest of a lot of different networks including our own. a grnl returned an indictment charging him with multiple counts of security fraud for a long running manipulation scheme that reaped profits of $17 million. you go to jail when the doj comes after you. not just the sec which is involved which is civil. doj is criminal. here's something from the press release alleging left commented on publicly traded companies asserting market incorrectly valued the company's stock, advocated current price too high or low, sensationalized headlines, maximized reaction and then knowingly exploited his ability to move stock prices targeted to stocks that were popular to retail.

posted recommendations and really, mike we didn't get to the heart of it, and then of course often did things that were contrary to what he was saying he was doing. >> that's the key you mischaracterize your own interest and then convey anything that's deemed to be misleading or deceptive or knowingly wrong, that's where you get into trouble. it's not just expressing an opinion in stock that you own or short or whatever. >> right. >> it's that contradiction and potential for misleading investors. >> false representations are the key here. 25 years is the maximum penalty in jail. coming up in the next hour, the head of antitrust for the doj, a different area for the doj, attorney general john canter talking the regulatory picture ahead, assistant attorney general for the antitrust division. we're coming right back.

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good friday morning. welcome to another hour of "squawk on the street." i'm sara eisen with david faber. mike santoli will be back for the 11:00 hour. we're live from post nine of the new york stock exchange. carl has the morning off. the s&p is up now almost a full percent. the dow is doing the best up 575 points, thanks to some big winners like unite the health care and 3m. nasdaq up 1%, trimming back losses for the week. nasdaq down 2% for the week. the dow higher and the s&p 1% lower for the week. a big rotation out of tech into small cap and cyclical groups. everybody is rallying. the nasdaq higher thanks to nvidia, meta, broadcom, charter, we'll talk about and amazon. treasuries are rallying after we

got more in line inflation numbers. the 10-year year 4.2. consumer sentiment data in a bit as well. we're 30 minutes into the trading session, some movers we're watching, norfolk southern heading higher. the rail operator posting its first quarter revenue growth in five. wraefl break down the action with alan shaw. deckers, the company behind uggs, top gainer after strong numbers, beating on the top and bottom line and raising its gaps. look at the move in shares of dexcom, tumbling after the diabetes management company's earnings beat estimates but revenue and guidance disappointed the street and the stock is getting pummeled down 40%. >> just crushed. we got consumer sentiment out moments ago. to rick santelli for that. good morning, rick. >> good morning, david. indeed, now these are july final reads on university of michigan sentiment so they will replace the mid month read.

mid month read was 66.0, but remains the weakest since november of last year. mid month read still remains the lightest level since december of 22. what may lie ahead in the form of expectations, mid monday read, 7.2, this moved up to 668.8. to find a lower number you have to go back to december of last year. 66 let's get to the inflation numbers which saw mild improvement in the pce. if you look at one-year inflation, 2.9, remains at 2.9. what's notable the lightest one-year inflation based on the surveys going back to december of 2020. and finally, on the five to ten-year outlook it moved up.

mid month read 2.9, now moved up to 3%. 3% equals where we were in april, may and june. we started the year out at 2.9%. yields, well dramatic movement on short end which explains much of the deinverting of the yield curve. 4.38 in twos, down 13 on the week. 4.19 for 10s, 4.20, down on the week. >> these sentiment numbers are much lower than they were this time last year, right? >> absolutely. if you look at where we were on some of these numbers, going back, just think we had the high watermark this year on headline. it's 79.4. that was in march. it's now sixty-six point 4. current conditions sixty two point 7, 82.5 in march and the cannottation is sixty eight

point eight, actually 75.2 in february. you're exactly correct they have taken a hit the last month. >> all right. thank you very much. rick santelli. i ask because i know, the treasury secretary yellen pays attention because they look at it as a whole for how the administration is doing on the economy. people feel lousy even though inflation rates have come down and the economy held up, consumer sentiment compared to where we were a year ago, by current conditions, it's about 20% lower than where we were. anyway, just to put those consumer numbers in context now ahead of the election. so the story this week has, obviously, been weakness in the nasdaq which is bouncing back today and i know i've showed you the -- >> bouncing back today, although still -- >> down 2%. the japanese yen i wanted to point out the evercore chart, it's not just me, they said here's tokyo versus santa clara.

the nasdaq 100 versus the dollar/yen. and they pretty much -- >> santa clara, explain that. >> the nasdaq, silicon valley, california. >> i get it. >> get it. >> too cute for me. >> they're correlated. >> yeah. >> the strategists when they're doing dollar/yen charts they have to get clever. >> a lot of technology companies that are not there but okay. >> you get it. >> come on. >> i just want to make sure i understood. what's the point of that chart? >> when the yen rallies, it hurts the nasdaq. it's kind of a classic risk on, risk off kind of trade. safe haven yen, it's considered like a, you know, place you go for safety which wasn't necessarily the case. it's also just snapped and unwound from a very crowded trade, but it -- clearly that was all correlated. the backdrop here is that the market is preparing for the fed to start hinting at rate cuts next week. we continue to get data that shows that they can move in that

direction. even the gdp that we got, everyone was excited about the 2.8 number for quarterly growth in the second quarter that was better but there was a good chunk in inventory build. if you take that out it's more in the 1% number. good for where we are in the cycle but not necessarily booming and gives the fed some breathing room. that's been the story of the week, and then we've got a lot of earnings and commentary and color about how consumers are faring all oefrlds world. here's what mercedes cfo says. >> in europe, we see the overall sentiment improving, more detailed picture in europe remains, however in china, we have a cautious view on the sentiment and fierce competition and entry to a certain extent in core. in china we target successfully defend our leading position in a softer market environment. in u.s., we continue to see a solid momentum for sales and demand and expected positive

year on year development driven by the -- >> the other theme we're picking up in earnings is talking about price moderation. inflation coming down. input costs coming down. here's what the colgate ceo says about pricing. >>, obviously, we think with the pricing that we've taken and strong productivity moving through the pnl, particularly with the volume starting to inflect much more positively, we think we're set up well for the back half. we will see some inflationary commodity increases, at least in terms of where commodities are in the back half, but nothing that gives us tremendous concern, particularly given the strong margin profile that we have across the business and where we're seeing the growth. >> so nothing too concerning on the inflation front, but there is still some inflation in the system which i've heard, for instance, from a coca-cola, they're seeing sugar prices go up.

3m talking about inflation. the new ceo bill brown, first quarter, saying at a high level we've done a very good job at covering inflation and we'll see incrementally positive pricing this year but when you get to a granular level this is discounts of pricing and margins for the volume and size of the customer. everyone trying to figure out the volume pricing mix with inflation coming down how you can drive growth after an inflationary period. >> right. >> what's your sense in terms of you've covered this closely, we're at the end of earnings season for many of these companies. they seemed to have managed it fairly well. >> i mean, we're still getting growth, right. we're still getting revenue growth. if you look across the companies. we're going to get more earnings. overall, revenue growth and especially in the consumer companies that i cover, they're still getting benefits of pricing, but those benefits are coming down and there are worries from investors is that they don't have the kind of

pricing power that they had and we're waiting to see if they can still drive growth. even in the autos, that was a factor with ford and talking about how demand is shifting and what they're going to do on pricing. it's been a wild week on wall street with the rotation we've been talking about. big swings yesterday. the s&p down 2% now on the week. nasdaq down a little more than that. let's discuss how to navigate the volatility. joining us at post nine is cio for wealth and investment management at wells fargo daryl krunk. welcome. >> thank you. >> it's been a whiplash this week and today is making up for it. i think i said the s&p is now only down a little more than 1% given what with you -- we saw. do you stick with the broadening theme or big tech. >> we're bidding away from the small cap theme. you have to ask your question, is it a reaction or is it a true rotation? right. if it's a reaction to, you know, long-term under performance and everything else, i think you let this play out a little bit. if it's true commit capital over time, you still have everyone

knows 40% of the russell are nonearners. the equity risk premium on small caps, am i getting paid to take the risk today at the price levels based on earnings, it's close to all-time lows. right. it's not at year lows, cycle lows. it's close to all-time lows. i'm not getting paid to take that risk today. the only positive that i'm really finding in small cap is 40% of small caps debt is floating rate. if you believe the fed is going to lower rates aggressively, right, that favors small cap, put a tailwind into it, you can make that argument and that compares to about 10 to 12% of the s&p and floating rate. there is a play there on that side of it. but we still think it's more of a short-term reaction than a true rotation of -- >> a true rotation would be what? what would give you more confidence? >> i would say you have to believe it's probably early cycle dynamics, david.

there's nothing in the data today that say geez, we're going to lift off of this and just roll into the next business cycle, early cycle, and rotate into high beta plays like small cap, right. you can get some catch up, reversion to the mean, from this three, four years of systemic, long-term under performance and i think people are looking for value and i understand that. you're also seeing some rotation out of small cap earners, knew mid cap, right, as everything rolls out. actually small cap earnings are deteriorating still relative to large cap earnings. >> aren't we heading into a cutting cycle? or maybe not. maybe we will get a few adjustment cuts? >> we have that conversation all the time. you go back to the beginning of 2023, priced in three rate cuts we didn't get, the calendar turned, six to seven rate cuts, we didn't get. september is live and they go. the fed funds future 2.5 for this year and 4 next year, six

point five cuts. if we get a soft landing do we need six and a half rate cuts? something is amiss there, right. there are signals and signs, look at oil prices, three straight weeks of decline, negative returns, copper down 20% r you guys have noted well all the consumer earnings, right. think of autos, retailers, airlines, even some of the transports like ups, right. they're not flashing great signals at this point. >> what gets us back to mega cap tech then? when does the rotation end? we're running out of time. >> we think you will rotate back to big cap tech as it is the core earner but at what price. the gig sector is trading 36 times earnings. it's expensive. i would rather go to comp services and get a much better, 17, 18 times and similar beta play. >> thank you very much. >> a little bit different.

we have strategists say buy the small caps. refreshing. well done. >> as we head to break our road map for the rest of the hour. regulating big tech. the justice department antitrust chief jonathan kanter joins us next. >> the paris olympics are under way and our andrew ross sorkin is there. he's speaking with top ceos, so we will head to paris. >> shares of norfolk southern, the railroad rallying on the back of the latest results. the ceo joins us to discuss the company's outlook. big show still ahead with the dow rallying almost 550 points. stay with us on "squawk on the street."

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antitrust is going global with a joint statement on ai competition concerns. our steve kovach joins us here at post nine, and he has an exclusive interview. >> hey, david. joining me is the head of antitrust department of justice jonathan kanter. thanks for joining us. >> thank you for having me. great to be with you. >> so this letter you point out a joint statement with your counterparts over in the united kingdom and eu and, of course, chair khan at the ftc. i was digging through it, one of the things you mentioned in this joint statement is chips, and we've seen tons of reg. >>er to action against established tech giants, of course, but when i read chips i think of one company, i think of

nvidia. and i also think that nvidia doesn't really have any competitors right now. people are trying and we see amd and other companies working to build their own chips, but right now, nvidia is the only one in the game. how do you guys think about that when there is no other competitor in a market like these gpus used to train these ai models? >> sure. i want to to be clear. i can't talk about specific companies or investigations, but what i can say we are thinking about ai and competition, everything from the chip down to the end user, and when there are bottlenecks around infrastructure or other key components and inputs, that's often where antitrust can come into play if companies are maintaining their power by excluding the ability of rivals to innovate and compete. >> what if there are no rivals? >> well, we want a world where, one, there is room for investment and development in growth into new rivals and technologies. we also want a world where new

d disruptions and inflection points can emerge. that might mean the ability for companies to sponsor new entry and rivals through interoperability, through mixing and matching components, in various different markets and so we have to stay focused on enforcing the law. our job is to make sure that companies are abiding by the antitrust laws and that opportunities to compete and disrupt are -- remain, and can have their full effect. >> so you just mentioned interoperability and i think it's an important one because we've seen this with regulations over in the eu. this idea that these platforms, large platforms, need to be able to talk to each other. the famous green bubble example that you love to use with apple and android messaging. talk a little bit about how that applies to artificial intelligence. is something you would like to see? we know apple just released their artificial intelligence product or announced it rather

and it's going to have some interoperability and they're letting some other ai models on to their system. what does that supposed to look like to you on the ai front when you talk about interoperability? >> yeah. i have the good fortune spending the last two days on the west coast sitting with entrepreneurs, developers, many of whom are investing in and building out small and new ai startups that are highly inknow vietive and really exciting and what i heard overwhelmingly from those innovators they want an open interoperable environment, one where they can rely on the availability and awareness of accessible, affordable technologies where they can build and mix and match and build companies that hopefully will one day become public companies that can then continue to provide innovative products and services. so we can -- we believe there should be room for all sorts of business models, whether those

models are closed proprietary or open or open source, the rising tide really should lift all boats. >> sam altman, the openai ceo, wrote an op-ed in "the washington post" this week talking about authoritarian ai and points to china and russia as two examples of that and how we need to protect ourselves against that. we've heard these kind of arguments before from other big tech companies saying, you know, if you don't let us do what we want to do china is going to come in and beat us. how do you think that plays in on the ai front based on what you you just -- what altman said in the op-ed? >> i would never bet against the enfwi new whichty of american companies. our super power in the united states is our ability innovate and grow and from the innovation to come from all corners of our society including small companies, medium sized companies and large companies. we are at our best when we are

enabling as many innovative competitors to reach market as possible. that's ultimately how we are going to succeed. that's how we have succeeded and i think it's really exciting. we need to make sure there's an opportunity for companies to compete and build. >> you guys are in the early stages of your antitrust case against apple. that does not really deal with artificial intelligence. it's more of the technologies that really came to the floor 10 to 15 years ago that started developing. why not include artificial intelligence in that? are you behind by the time this case is wrapped up one way or the other, ai will be out of the gate? how are you thinking about that in your case against apple? >> so one of the -- we follow the facts in the law wherever it takes us and bring cases when we believe we have the law and the facts on our side. we have a lot of our cases involving incombnts technologies, about the the truth is that incumbent

technologies often become the platform for the next generation of innovators and it's important we enforce the law now to make sure the next generation of disrupters have the ability to see the market and reach consumers. at the same time, it's really important for us to make sure that one of the reasons behind our ai statement is to explain that sometimes early intervention and compliance on the front end can mitigate the need for invasive regulation or intervention through law enforcement on the back end. as we are at the dawn of this new generation of ai driven technologies, we want to make sure that companies are complying with the law, so that everybody can innovate and so that we're not forced into a situation a decade from now where we have to engage in invasive and enforcement of regulation. >> sara or david? >> yeah. i'll follow up. it's david faber. i'm curious when i heard you talk about your conversations with the smaller companies in silicon valley, open source, for example, are they embracing and

do you, perhaps, meta's efforts there in terms of open source when it comes to their generative ai platform llama, is that the kind of thing that you want to see from an antitrust perspective? >> we want to see everyone have the ability to succeed, and that includes business models that involve open source technologies. so we don't take sides. we don't pick winners and losers. that's not our job. open source models have the potential to shift value down the stack to innovators and allow them to realize the fruits of those benefits. one of the things that we talked about in our ai statement is making sure open stays open and so one of the themes in some of our previous cases is that companies started with open models, but then closed them over time and shifted value back to the platform and away from the developers. so, you know, we think a little bit of healthy compliance by companies on the front end will allow some of these exciting open models to succeed and

create the next generation of innovators and again, we want different business models to reach market and thrive. >> speaking of your job, i wanted to ask a broader question about the administration's approach, your and the ftc's. does kamala harris, the vice president, support the biden administration's approach and get involve and engage with you about the antitrust policies? >> so i'm a sitting official at the department of justice. it's not appropriate to speculate about politics or elections. what we do on a daily basis with our law enforcement is independentp with follow the facts and the law and that served us well. we brought actions that are helping to -- we hope will lower the cost of live music tickets, lowering the cost of airfare, making it less expensive to buy a home, lowering the costs of groceries at the checkout line. making it easier for folks to get availability of financial

aid and so on and so forth and that's what we keep our eyes on every single day and wake up thinking about. i know that's the same over at the ftc with chair khan who has been great to work with, her fellow commissioners and the hardworking public servants at the ftc and doj who inspire me personally every day. >> what do you think of the fact that many in the private sector tell us that they are not pursuing m&a because they're worried about the lengthy and abusive process, merger process? is that your goal? >> of course not. that's not what we're seeing. the data says something very different. the data says that most transactions over 95% never even -- na get filed with us they have get a look. it's single dij its that do it and a smaller percentage of that that end up in an extended review and potential action. plenty of deals are happening

and what i heard overwhelmingly during my trip, for example, out west recently, was resounding support for a lot of the work we're doing because companies, particularly new innovative businesses and startups, want the ability to compete and compete successfully. i'm really proud of the work we're doing. it's delivering, again, like i said, lower airfare, making it less expensive to buy a home, lowering prices of food, making drugs an pharmaceuticals less expensive at the drug store and health care more accessible. these are the things that we benefit from when we enforce the antitrust laws and we keep our heads down and do our jobs. >> jonathan, something we talked about a great deal here, coming back to tech, is the enormous amount of capital simply needed to develop these generative ai models and deploy them. there's only a small handful of companies that have the wherewithal to get that done. that doesn't seem to have any chance of really changing. we're talking about hundreds of

billions being invested. how do you view that? it would seem as though they're certainly able to choose how they want to invest and it's unclear whether they're going to get a return on it, but there's only four companies that conceivably are even in that position? >> yeah. when you have markets that are heavily dependent on data and compute and infrastructure, it becomes expensive and scale becomes the name of the game. we've seen business models help emerge to manage that and those might be open source that helps the rising tide or can help the rising tide lift all boats or other kinds of layers that enable switching and value generation throughout the stack and so we think that companies are really good at developing solutions to help solve some of those problems and figure out how to differentiate. we want to make sure everyone is playing by the rules so that those innovations and the flexibility that comes from those innovations can see the

light of day and succeed. >> jonathan, just one final question here. you were talking about -- in response to sara's question about you don't really see in your data that there's kind of this idea that people aren't attempting m&a because of the regulatory process they're worried about. we heard tabout this with wisconsin walking away from the google offer of $23 billion in order to go forward with an ipo and one of the reasons is because they were worried about the regulatory process. when you hear that what do you think? >> i can't comment on that specific transaction because i don't know what happened or didn't happen. what i can say is there might be instances where companies have really dominant market positions might be more restricted in the kinds of acquisitions they can make or might feel like companies want to sell to them might feel more restricted. that's a small sliver of transactions. the vast majority of deals never get any inquiry at all, and are

happening. so the deal economy is alive and well and big companies, small companies, i was listening to your reports are doing well, and i think we're proud of that and a little bit of antitrust enforcement when appropriate when the facts and law require it can go a long way to help oxygenating markets and companies that want to innovate and succeed to thrive and we're also seeing companies go it alone, staying independent, going public, which we think is a wonderful thing. >> regional banks, regional community banks hear all the time feel like they want to merge and your office and the administration has been resistant to that. is that not true? >> i don't think that's accurate from our perspective. i think we are focused on making sure that the mergers that have the greatest impact on financial services to the country are our

focus, and so we are -- again, we are a law enforcement authority. there are bank regulators who need to do their jobs as well, but we focus on the facts and the law. if a deal has a significant effect that might increase the cost of banking or make it more difficult to access capital, then those are the kinds of things we are concerned about. like i said, the number of transactions that actually get a look is extremely small, and the number of deals that actually get blocked is even smaller. >> all right. jonathan, thank you so much for joining us. we'll leave it right there. jonathan kanter from the department of justice. david, i'll send it back to you. >> thank you for bringing that to us. let's get reaction to what we heard from the doj's jonathan kanter. joining us now roger mcnamee, early facebook and google investor, often cranky, always interesting, roger, are you. so i'm curious -- >> how he would describe you. >> roger and i are similar in that way. what are your thoughts about

what you just heard? i'm always interested to get your take, given your previous comments on these matters? >> so david, i think there are two things that everyone should take away from jonathan's interview. the first is that democracy has been under assault in this country for several years, and it's simply a fact of economics that when you concentrate economic power, there's a point beyond which concentrated economic power threatens democracy. i think we have passed that threshold some years ago. so the biden administration shows -- and, frankly, this began under the trump administration, but they chose to use antitrust to try to restore more balance to protect democracy. in the case of jonathan kanter and lina khan, what's really amazing is the biden administration took two people who are not just scribbly well

versed in competition as an issue, but really importantly, they understand technology. i mean, you listen to that description of the tech issues around ai by jonathan kanter, and you can't help but take away from it that he has a very, very good understanding of where the levers of power are, that the issue in generative ai is not that there's something, you know, that people are doing that is bad per se, but rather, that the architecture of that product and the architecture of the industry are designed to create global monopolies. and that is clearly something regulators are going to have anxiety about, and they're expressing it now, which is exactly the right time to do it. don't wait until it's too late. step in early and, you know, provide a framework so the companies and the industry know what to do in order to comply. >> here's the thing, roger, everything we hear from business, from bankers, small and large, is that they are

holding back activity, that they are holding back. reid hoffman, billionaire linkedin founder who will back vp kamala harris for president said, i really hope she, though, will get rid of lina khan from the ftc. this is clearly going to be a political issue, and there's not evidence that what he said is true, it's not holding back deals and that it's not hurting -- potentially financial stability. i mentioned regional bank, community banks, there has been resistance there on the regulatory front. >> sara, let's put this in context. for the last 40 years, corporations have had free reign and they've used it successfully. we see it in the stock market. that's why we're at all-time highs. companies have had the freedom to do whatever they chose. and they like that freedom. they're reluctant to give that up. that is understand pblable. the flip side, look at the politics of the country and how

divided we are. these things are, in fact, related to each other. you saw the oil industry step up to try to invest in one side in this presidential election. you see reid hoffman stepping up on the other side. both of them are expecting a return on that investment. that is also a problem, right. citizens united has basically said the government is for sale, and in a democracy, that's a really, really dangerous thing. i think it's totally appropriate for corporations to say, hey, wait a minute, we don't like this, but i think the flip side of it is, the country has an opportunity to make a choice and it's going to do that in november, as to whether we want to live in a country where there is nor balance, where it's not just the rights of shareholders that are taken into accounts but the rights of everyday citizens, communities where people live, of the customers, the suppliers. you know, when i began my career executives were responsible to all of those constituents, but

beginning in the '80s we shifted that so you only focused on shareholders. obviously, from a shareholder point of view that's been a spectacular thing b us the flip side is, it's had a huge cost to society. are we going to re store some balance or not? this is the fight we're in right now this year, and in november, the country is going to be able to weigh in. >> i would reference that business roundtable communique from a few years ago in terms of different constituencies, what was a significant change, somewhat, roger. let me end on tech, given your long history. you know, would you agree, though, that oftentimes the antitrust regulators are focused on a dynamic industry on which the things they're focused on change, and their original premise wasn't the correct one in terms of trying to regulate a certain area of that business? >> i think historically that was true. i do not think that is true today. i think these people are far

more sophisticated. david, i would actually push back on the question you asked jonathan earlier, because to me, the colossal amount of capital that is going into generative ai is, in fact, a signal that it may be the wrong architecture. that in fact, there is a better way of doing this. i mean, keep in mind, because it's just a statistical process, by gathering all the data, at least half the data you're gathering is not useful to what you're doing, right. it's below average quality data. so you wind up in a situation where that may not be the right approach, where it may, in fact, be better to have small or -- smaller language models highly curated, highly focused and lots of them. i think that would be -- create a much more robust situation. the lesson we should be taking from crowdstrike is that if we have only one vendor of the key things, so microsoft for the applications, crowdstrike for the cyber, and you have a

mistake, the ripple effects are felt by everybody. and antitrust law is designed to make the economy both fairer, but also more resilient. our economy right now is incredibly fragile. in tech we have monopolies everywhere, and, you know, it's my great hope and the politics of this year, take us to place where we continue increasing the balance. i do believe that at some point, artificial intelligence is going to be incredibly valuable. i just don't happen to think -- >> i know. >> that the approach -- >> yeah. the return on investment, the conversation we had most recently as well. and we'll continue to have. roger, always a membepleasure. thank you. >> take care, guys. >> often cranky, always interesting. david faber. and roger mcnamee. time for a news update. silvana henao with that. >> good morning to you. as israeli prime minister benjamin netanyahu prepares for a meeting today with former

president donald trump, the uk says it has dropped a plan to challenge his arrest warrant from the international criminal court. the court's prosecutor accused net ya ha and three hamas leaders of war crimes and crimes against humanity in may. the newly elected prime minister says he will leave the matter up to the courts. the united states arrested two leaders of mexico's sinaloa cartel yesterday in texas. is male zam bad da and the son of jailed cartel boss joaquin el chapo guzman are facing indictments on multiple charges. sources tell nbc authorities are looking whether guzman tricked zam bad da boarding a plane bound for el paso where they were arrested. former president barack obama endorsed vice president harris today, just days after

president biden withdrew from the race. it's the latest in a week of whirlwind partisan support for harris as she seeks the nomination. back to you. >> came. thank you. silvana henao. let's get over to andrew ross sorkin in paris after great interviews this morning. >> thank you. when we come back, we're going to bring you some tape of an interview with barry diller where he sounds off on so many issues, but one of which was what happens to paramount. he was trying to bid at one point for paramount. he has some interesting words about the new owner and what happened there and then a rare and exclusive interview with bernard arnault of lmvh. both of those interviews right after this.

interview with barry diller both of those interviews right

s. we've been following this breaking news in paris as the olympics gets under way. french authorities say several, quote, coordinated criminal and malicious acts overnight on a number of high-speed train lines

are causing major travel disruptions across the country ahead of the opening ceremonies for the olympics today. france's transport minister saying an investigation is under way into the massive attack. the country says around 800,000 travelers will be affected. what a mess. >> yeah. very unfortunate. the opening ceremony at the paris olympics is kicking off today, and andrew sorkin is right there. he's got a lot of top business leaders as well that he has been speaking to. love hearing from arnaud who we rarely get to hear from. >> thank you. we'll show you that in a moment. before we do that, comments from barry diller, but before we do that, i want to read you a comment from charles barkley. the big conversation happening here at the olympics despite what's happening behind us here in paris happens to be about that nba contract which you, david, were talking about earlier in the broadcast.

we talked to diller about it as well, but charles barkley out with a statement right now. this is according to the bleacher report, which is owned, by the way, by warner brothers, clearly the nba has wanted to break up with us from the beginning. i'm not sure tnt ever had a chance. tnt matched the money but believe amazon and tech companies are willing to pay for the rights when they double in the future. the nba didn't want to piss them off. it's a sad day when owners and commissioners choose money over the fans. it sucks. i just want to thank everyone who has been at turner for the last 24 years. they are the best people, most talented and deserve better and thank the nba and its fans the best fans in sports, we're going to give you everything we have next season. i read you that in part because as i mentioned, this has been a debate happening here. david zaslav who runs warner brothers is in paris and they are airing the olympics on some of their european networks. comcast, of course, brian roberts, parent company of this

network is here, virtually all of the big ceos of the media companies arer had, including barry diller. we had a conversation earlier this morning about this issue around the nba and what's going to happen if it goes to court. here's what he had to say. >> when you have a got matching rights or first refusal rights or whatever, and you exercise them, then when you get into it, when people say, oh no, you didn't quite come up to what we thought it was, that's a real litigable matter, so he's got a very good chance to at least muck it up so that they settle. >> and a lot of the speculation here is that potentially if there was a settlement, could there be a fourth package, david, that ultimately gets created out of this? how do they reslice and dice things if that would be the settlement or just a monetary settlement or would there be no settlement? we will see, of course. the other big conversation we had was around paramount, there was a moment when barely diller

was bidding for paramount. of course skydance has won the bidding, but there still is a -- and it's not over yet and could somebody else jump in. here's what barry diller had to say. >> it's hard to predict, but i think it is over. it was over for us when when the -- it's unwise to get in an auction with someone who has a pretty much unlimited balance sheet. >> in addition, david, as you mentioned we did have a really fascinating opportunity to spend time with bernard arnault of lmvh who has rarely given an interview over the past decade and sit with him actually in the christian dior apartment, the original apartment, where he lived and we talked about so many different issues about geopolitics, about the luxury market and everything else, but perhaps one of the most interesting comments was actually about profit and money and i want to play you that for a moment. there's a lesson inside it. >> and i say all the time to my

teams, don't think of money. profitability is a consequence of desirability that you create, that we create together, on your brand. >> and we talked about what creating these long-term brands are and, you know, when you ask him about this quarter's profits or even next year's profits or the uncertainty taking place around the world, he says, don't worry about it. it's a long game. it's a refreshing to hear somebody speak that way. a revered ceo in the world. we were at an event last night and just the number of other ceos who wanted to shake his hand, was remarkable. so that's what's going on here at the olympics. we'll bring you a lot more throughout the day. we should mention the olympics do begin, the early coverage, 1:30 p.m. eastern time on

peacock and the opening ceremonies keep going this evening in prime time at 7:30 eastern time on nbc. >> yeah. andrew, great stuff. i love that from arnault. sara can relate to that. create desirability before profitability and the other will follow. >> yeah. >> as you know, been following paramount and this dispute between nba and warner brothers closely. that lawsuit has been filed. it hasn't been released. it's coming in a few hours. new york state court. so they likely will go to court, but to your point, perhaps, we'll see whether they settle or not. the nba believes it has a strong case and that, in fact, the matching was not a match in any way. i went through that a lot earlier. the deep pockets that diller was talking about or larry ellison, we should point that out when he was saying that. man, you got a lot of ahead for you. anything going on in terms of the security situation, by the way, as well that you want to share? that seems to be -- >> i should say, as you know, you've discussed the arson attack that took place on the trains.

that's going to have a an impact. euro starr has been delayed, folks trying to come in from london, that hasn't fully shut down but delayed. basketball getting to france where the basketball is taking place, requires the trains. that's delayed. we're going to see how quickly they're able to get those up and there's now probably more than a dozen snipers on the top there. the streets have been officially shut through this evening, which is running along the seine river, four miles long, something like 7,000 athletes crosses 24 bridges. this has never been done outside of an olympic stadium. we are all on high alert right now. >> are there more business leaders than usual? you go to the olympics every time. it feels like they're all there. >> there's no question. i think part of it is post-pandemic. you think about the last

olympics in tokyo. and also, you know, some of the other olympics, i'm thinking of pyeon pyeongchang, harder to get to, more difficult. what could be better than the olympics in paris in the summer. this has become almost, for the world of business, almost the davos of sporting events, if you will, given all the folks who have come here, in part, to entertain clients and other things. there's meetings going on all around the city. everybody desperate to get the right sticker for their car, in part because these streets are shut down. but absolutely it is -- it's moneyball here at the olympics this year at. >> enjoy it. we'll be watching on tv. andrew ross sorkin from paris. norfolk southern shares are rallying near the top of the market. the company reporting revenue growth for the first time in five quarters, thanks to rising merchandise and intermodal

volume. our morgan brennan joins us at post 9 with norfolk's ceo. over to you. >> shares are up 10.5%. alan shaw joining us fresh off earnings last night. great to see you. seems like the headline, more efficient, despite derailment settlement, shareholder fight, and that full operating ratio, which is a key metric for the industry, a lot of investors going into this print didn't think it would be the case. what gives you confidence? >> we're doing exactly what we said we would do, morgan. we laid out aggressive targets for the year. despite a weak freight environment, we've overcome that with accelerating our productivity initiatives. at the same time we're offering a great service product. and we're growing in our most service-sensitive markets, intermodal and automotive. we're growing and driving productivity. that gives us a lot of confidence to reaffirm our margin guidance for the second

half of the year, which is effectively a 400 to 500 basis points improvement year over year. >> it's interesting to hear you say you're growing intermodal and auto. carmakers had a rough week in earnings. intermodal ties back to what we saw with gdp yesterday and the buildup in inventory. but these are very economically sensitive areas of goods you transport. how are you able to grow them right now? >> service. that's the essence of our strategy. we're improving service. we're reducing costs. we're growing revenue. we're enhancing safety. we said we were going to use service as an enduring competitive strength. we have a franchise built for growth. so, we're growing in our most service-sensitive markets. intermodal grew 8%, automotive grew 7%. we have a lot of confidence going forward. customers see our improvements. >> cost cuts, improving efficiency, and also working -- continuing to work on improving safety as well. we have this settlement tied to

east palestine derailment in the last couple of months. we've seen the investigation report details from regulators, too. can we confidently say, can you confidently say the worst of that situation is behind us? >> there is ongoing litigation, but we've certainly reduced the majority of the outstanding liabilities with the settlement. and there will be third-party recoveries as well. >> okay. let's talk a little bit about pricing because you did bring down your full-year revenue guide. what are we seeing in pricing? >> pricing in the merchandise network remains really strong. we're offering a very good product. and we're creating value for our customers and we're securing that through price. pricing and domestic intermodal is weak. we're starting to see an inflection in truck spot rates. that's encouraging for us as we move forward. and the coal market really is defined by the underlying

commodity price in coal. >> so, we have been in this freight recession for quite a number of quarters now. we keep hearing how challenging it is not only for the railroad but broader transportation industry. how much of that is a read-through to what we're seeing in the slowdown in u.s. economic growth, which everyone seems to be trying to get their arms around? >> yeah. we participate in a broad cross-section of the u.s. economy. you look in the consumer markets, the consumer's still purchasing durable goods but not at the rate it had in the past. our customer is seeing signs there might be a peak season in terms of consumer demand in the fall. they're starting to ship goods to stores and build inventory. commodity prices are weak. whether that's in energy, whether that's in grain, whether that's in metals. so, that's putting some pressure on us. so, how we overcome that has really accelerated our productivity initiatives.

we have a clear line of sight in our road map to drive revenue growth, continue to do that and drive productivity. >> finally, election season is here, it's unprecedented. how are you gaming this out, november outcomes and beyond, for the company, for the industry? >> norfolk southern we invest over the long term. we have a great franchise. we know over time the u.s. economy is going to grow. particularly in our service region in the southeast and the midwest. we do a lot of things that aadvantageous to both sides of the aisle. whether it's high paying union jobs, taking trucks off the highway, sustainability, our carbon footprint relative to truck and investing in our own infrastructure. we are a powerful engine for economic growth in the service areas in which we operate. and both sides of the aisle are interested in that, that's for sure. >> investors interested today, too. stock's up more than 7%. al

al. >> great to be with you. >> thanks for bringing that to us. a quick look at the market before we have a quick break. the s&p is up some 1.8%. the nasdaq also having a decent morning. though off of its highs. we have a mixed picture when it comes to mega cap tech. google continues to suffer a bit from the new search entrant from chatgpt. apple shares down perhaps on the market share numbers out of china for the iphone. a lot more market coverage straight ahead. this is clem.

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happy friday. good morning again. welcome to "money movers." i'm sara eisen with mike sa santoli. today charles schwab's chief strategist jeff kleintop, the inflation report and why he says the tech selloff could be as much about the japanese yen as it is about earnings. singing my tunes. plus, a more stable a.i. play for volatile times. why raymond james is raising its apple price target. that analyst is with us in a moment. imax surging