yield lower, 4.17 this morning. fed meeting happening today and then the announcement and the press conference tomorrow, that will be watched very closely. quickly, look at what's been happening with oil prices, it has come back down. crude oil prices, you can see, at the lowest level since june. wheat and soybeans, those futures coming down yesterday to the lowest levels we have seen in about four years. all right. >> putting your sunglasses on. >> i'm a rebel where's yours? >> relief. thanks, everybody. we'll see you back here tomorrow. right now, time for "squawk on the street." good tuesday morning, everybody. welcome to "squawk on the street." i'm david faber with jim cramer. we're here at post nine at the new york stock exchange. carl has the morning off. futures, we begin trading a half hour from now. >> yeah. >> mixed. let's start with our road map. it begins with holding pattern. what is next for the fed, of

course, the rate cut path as investors await key results from the next batch of megacap tech earnings. we'll have pharma in focus this morning. pfizer and merck both lift their outlook, but the shares kind of moving in opposite directions ahead of the open. >> and sofi, strong guidance boosting the 2024 outlook after second quarter earnings beat. we'll ask anthony noto, he'll join us later in the hour. let's start with the markets. fed begins its two-day meeting ahead of tomorrow's decision on rates. most expect that it will just remain the same, setting up for september. did a little discussion yesterday, could it really happen, could they go for a cut, highly, highly unlikely, jim. >> yeah, look, there is always an element, imagine this, let's say i came out right now and i said, i think they're going to cut tomorrow.

on thursday, i would come in, and if they had cut, you would say i was genius. you'll forget i said they're going to cut if they don't. >> right. >> it is asymmetrical. you could look like a hero or no one remembers. and i think that what is better is just to say, look, it is highly unlikely. and then move on from it. so that when we watch the press conference at 2:45 and someone says this is a big deal, we can say, no, it's not. look, i think -- >> isn't that the tell there anyway? 4.172. we're down. we're down, you can see what's happened there in terms -- take a look at where the chart was in early may. >> it is a win. jay powell is winning. you can make some comment that says it could be a little different, but sometimes it is good. sometimes it is aaron judge. he's incredible. >> he's incredible. >> he is. >> jay powell and the rest of the team. >> jay powell is incredible. i'm using a benchmark that we

can foment a story that jay powell may be doing something wrong. but i'm trying to figure out how he can do it better and i can't come up with it. >> you are in the camp along with everyone else, i guess, it is september. >> there is a lot of things that are going not that well for the consumer, but that are better than they have been. we're not seeing a lot of bankruptcies, i would have thought we would see that by now. we're seeing slowing in auto. we're waiting for housing prices to break. supermarket gets rolled back at costco and rollbacks at walmart. tjx sales are good. it is what should be happening. i think that the mystifying thing is when you cut rates, people want to sell the mag seven and buy not small cap, that's like this rubric, want to buy things, i say, you want to buy smaller than the midcap things. >> yesterday, we had a halt in the so-called historic rotation. >> but not in the medium.

>> showed some life. >> right. >> and the russell was down. >> right. and i think that that's because there was an absence of news. now, microsoft, the way you play it for those of you who are quick draw mcgraw traders, you can't do anything until amy hood speaks. you have the ceo speaking and then amy hood. amy hood either drops the bomb or says things are better. last time the stock roared because she said and co-pilot people are buying it and they like it. and that was -- if you watch after hours, the stock is going like this, and then -- that's what you have to look for. a lot of people can't wait and read the release. that's not what's -- >> i prefer to just read them and then talk about them the next morning. what are we going to be talking about tomorrow morning when we digest microsoft's earnings. i assume i'll be focused on capex and how much they're spending and what the commentary around it is and is there anything that indicates their concern somehow about -- what are you smiling for? >> if they say they're not

spending a lot because they don't have an roi, then nvidia and they go down, if they say they're spending a lot, and they're hoping there is an roi, their stock goes down. and you get nvidia done. >> the answer is don't buy microsoft going into the print. >> you can say it is down enough that you can. but i think the odds favor other stocks. that's all. the odds favor other stocks. and i think that these stocks have had a big move, they have been considered share donors, charts are absolutely awful. and a lot of people just say, you know what, i see what's going on, you have to buy smaller cap and get out of bigger cap, you have to buy f5 and i wish there was an enough money around you didn't have to sell the mag 7, but it seems like the honey pot and that's what you see. look at that chart. >> the market cap of the s&p until they talked about -- >> amazon, i think amazon will be a really good quarter. maybe by then the mag 7 will be

down enough that you want to pick at it. i was watching this show with mark soderbergh and -- >> jensen huang. >> it is very positive. i said this is positive, i'm going to go by stanley black & decker. >> you're in that camp. take a break from the biggest of the big. >> take a summer vacation from mag. >> the broadening isn't a bad thing. it doesn't mean you should be heading into small caps. you should be heading into the stanley black & deckers of the world. >> the small caps is an illusion. people say which small cap do i like? it is like if you go and buy the s&p midcap 400, in the top ten you're going to get three banks that you never heard of, i'm not kidding. >> you're right. >> and then you'll get three home builders, and it will be toll and horton and taylor morrison and that's six out of ten. and that's what you're looking at. people are just buying the

index. they're not buying the individual stocks. the individual stocks, you can get a real clunker. >> yeah. >> that's the trade. not the russell 2000, that's not the trade. >> what about the -- >> it is the s&p midcap. >> i'll end on -- we'll get to some of the earnings movers, we'll get to the earnings movers this morning. katy huberty, yet to see a cross asset rotation from bonds to stocks and it doesn't look like that shift will happen or would happen anytime soon. >> i hate to disagree with my favorite former apple analyst. >> why would you stick with 5% when it becomes 3%? you wouldn't. you would look for stocks that have a 3.5% yield that are doing well. or you look for mlps which have been terrific in the natural gas and oil space and you sell the cds, when they come due, you take the money. i love that call, it is not historical. historical every single time you had the rate cut, people put money in stocks, every time. >> let's move on.

>> 1994, 1996, rate increases, people still put money in stocks, which was very odd. >> right. that was the beginning of -- that was the netscape ipo and -- >> that was because there were secular changes at work. jensen huang saying that. >> aren't there secular changes right now, 30 years later? >> there are, but we had a huge move. and now we're waiting for roi. service now comes on. >> we can be waiting a while for this roi. >> bill mcdermott said things were great and the stock went up 100 points and then didn't give up the gain. that's because they have really -- now, they really made some real strides in making money in a.i. the next thing is will salesforce and workday, will their a.i. product do well because they have the data so to speak and we won't know until we get to -- we get to dream force and then we'll see. but, you're right, if service now is the only one that has roi, that is not great.

it is not great. >> let's move on to some of the earnings movers this morning. not small companies, want to start with png, down a bit. >> down 10. procter is very cautious as they always are. they talked about how raw costs are not going down. some products got too expensive and they had to cut back. what happens, down 10. there was a producer in our office this morning, stock was down 6. i said the stock was down 10. i'm not a visionary. i know the way people trade procter. procter lowers the boom, john mueller is cautious, the ceo, and people sell it down 10 because the next -- they're afraid it will go down 12. the people are selling it now are not even waiting for the quarter, not waiting for the conference call. there will be cuts in procter and people say just own procter.

you don't sell one of the great companies of all time at 158. that's where i would say -- >> you've occasionally been stopped a bit by the multiple. where are we right now? >> the multiple is high. >> okay, the multiple is high, yeah. the multiple is high. >> better job than procter. that's the organic growth is a little bit better. >> 2%, okay. >> true. >> it is. >> they're selling shampoo, they're not selling blackwell chips. >> operating cash flow is 19.8 billion, net earnings 15, that's for the fiscal year. >> right. >> it was not a great quarter. they were cautious. doesn't mean it is a bad quarter. it is procter & gamble. people are asking as if they miss the big cycle in a.i. no. it is just -- surfactant, that's the stuff that cleans your hair. i don't have any surfactant, but

i think you sell it down 10, you're scared, and what i'm saying because you think it is going to be down 12, so just compromise, buy it down 11. it is procter. it is always going to be there. but this market likes to go to extremes. >> merck, one of the larger companies out there. >> that's another one. merck did great -- keytruda was great. >> keytruda is amazing, the cancer therapy used with so many other things. $7.3 billion in sales for the quarter. >> they have other drugs in the pipeline that will be terrific. buy that stock down 5. >> sales overall for the full year, somewhere in the 60, what did i see? 63.4 to 64.4 billion. it gives you a sense how important keytruda is. if you annualize those numbers as a percent of overall sales, keytruda is the most, by far. >> and, look, you can say, listen, any company that is levered to one drug could be in trouble. that's why rob davis is going on

this tremendous spree for other drugs that i think are going to be successful. i think you buy merck, knowing that rob davis has an ace up his sleeve. made great acquisitions, made them and talked about them on "mad money" and i was mesmerized by how good they are. procter going against the grain and merck going against the grain. you can't buy stocks up 5 and up 7, that's what idiots do. >> you're talking about trading within the day here. sometimes i -- you go back and forth between being in the moment and then talk longer term and i think sometimes people confuse the two. >> well, the national association -- i'm saying the national alliance on mental illness is ringing the bell. i have every right to be bipolar, pal. i'm not schizophrenic, thank heavens. >> thank god for that. >> that's one that bristol-myers is working on and they'll have the first breakthrough in 30 years, schizophrenia. 30 years. >> we're going to talk a little pfizer. we'll get to that in a bit.

>> keytruda is great. rob davis is great. mueller is conservative, the growth, you're getting procter, one of the finest stocks, down 11. we sold some at 166. i am anxious to buy that stock back. all right? >> all right. we have covered that. we got a lot still to come, including a rare joint appearance, jim mentioned it, from mark zuckerberg and jensen huang. they sat down to talk about the future of a.i., they endedup swapping jackets. look at that new look for zuckerberg. >> very cool. >> the hair. >> very cool. >> he looks like a -- >> i kind of dream of one day, like, you can almost imagine all of facebook or instagram being, you know, like a single a.i. model. >> every single restaurant, every single website will probably in the future have these a.i.s.

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there have been too many things i've tried to build and then have just been told, no, you can't really build that by the platform provider that some of them are, like, no, [ bleep ] that. for the next generation, you're going to build all the way down and make sure that -- >> there goes our broadcast opportunity. >> yeah, sorry. sorry. >> beep. >> yeah. you know, we're doing okay for 20 minutes, but get me talking about closed platforms and i get angry. >> that was zuckerberg and jensen huang last night at sig graph, a major computer graphics

conference. jensen is a man of many talents. he can moderate fairly well in the moment, calling out zuckerberg for dropping an f bomb there. >> that is his home court. he happens to love that conference. that's why he's there. look, all this is dross. what matters here is that jensen huang didn't like mark zuckerberg. they were opposed. i met -- at one point in one of the meetings with jensen, he talked about how the model that mark zuckerberg thi had is base combat. he didn't want to be part of combat, he wanted to be part of peace. >> what happened? to let our viewers -- you know both of these guys. what happened here? >> okay, they got to know each other very well. they met each other a bunch of times out of work. and came to -- and over time they really genuinely enjoyed each other. and that's who they are. but i got to tell you, jensen

wanted it that way. jensen knew that mark wanted to be a gigantic client and did not want to dislike him. he wanted to know more about him. i told him i thought zuckerberg was a reasonable man. you have to get off the desk. and see him in real life. >> what do you think about the fact that okay these guys are hugging and seemingly friends? is there a -- >> a takeaway? >> yes, for the business community, for the world at large? >> yes, mark zuckerberg believes in the industrial revolution, he believes in blackwell, he believes that blackwell is going to be the -- the latest iteration of shipping. >> yet to come out. >> is going to be nvidia. nvidia is what everybody has been missing. i don't think people realize the step change between the current and the new is that they can feed everything in video. you can feed movies of james

bond and that's why they do have the robot that can pour drinks so you can say and -- >> they train on all 13 years of worth of our shows here sitting here the three of us. could they train on that too? >> it was me, and he said he had worked all weekend on the philadelphia lilt, which is not unlike kate winslet when she was in -- >> they can input video and train it as well. >> it is eerie. no one would know it wasn't you. >> the rate of change is accelerating. we haven't talked about it as often lately, but it is still coming. >> yeah, i think what you're seeing was not convenience. it was not convenience. i will tell you i think mark zuckerberg has changed. i text him, i say, listen, you got to come on about the ray bans because the a.i. is good. i don't get what i want. but i'm not -- that doesn't mean i'm not going to try. >> keep trying. keep trying. >> i'm a reporter. >> that's what you do.

>> i have merck down 5. >> coming up, apparently he's a reporter, it is his mad dash. >> did you cover homicide? i covered homicide for two years. i wrote so many obits, it was horrible. >> a lot of obits. that's terrible. rrleeah. teib. what a job. thank god for bourbon. >> thank god for bourbon? >> i was 11 to 7:00. it's me. (man 1 vo) i have people, people i can count on. (man 2 vo) i have time to give (grandma vo) and a million stories to share. (grandpa vo) if that's not rich, i don't know what is. (vo) the key to being rich is knowing what counts. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description.

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let's get to a mad dash. we got six minutes for an opening bell right here at the new york stock exchange. stanley black & decker, now you want to do it. >> listen up, this is a story of great expectations for procter, which it doesn't deliver and then a company that people think is never going to get it right, this is black & decker, but also you may know the wall. if you're a professional, like i am, and they had good gross margins, nice expansion, but they had 1% organic growth. so, there is some guys who go from uh-oh, worried about organic growth to 1% and that's what people are looking for. this is the smaller cap revolution. not the small cap. that's a canard.

this is smaller cap. and what is interesting this is happening with renovation not doing that well, we know that they had a good quarter. mohawk had a good quarter. people are getting a jump on the rate cuts and they're using this forecast adjusted by 20 cents, free cash flow much, much better. this is what people want. they want plus 1 from stanley black & decker and not plus 1 from -- >> they got two. procter & gamble. i don't know what the respective multiples are of the two stocks. >> multiples going up. it has a 3% yield which people like. it shows you that their balance sheet is not as stretched as they think. they brought back debt. what matters when you seeing some like this is that they are saying, hey, look, we think things are going to get better. >> yeah. >> and when the fed cuts, they do get much better. the stock happened to be at 200 before covid. so this is the kind of thing the

market likes and the market doesn't like procter. tomorrow could be different. >> tomorrow will be different. >> yes. >> it is a new day. >> i think you buy stuff that -- look, if you want to have a long-term position in procter, do it today. if you want a short-term trade in stanley black & decker, blow it out. >> got it. >> i don't think you should, but that's what i have to say. there are a lot of young people here. when i ask them what network they are at -- >> they knew. >> they knew they were at cnbc. >> opening bell four minutes away.

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the opening bell is brought to you by nuveen, a leader in income alternatives and responsible investing. >> all right. we got less than a minute before we get the opening bell here at the new york stock exchange for trading on this tuesday. anything you think is sort of a key to this market as you and i like to do it this time? >> i'm going to mention something, i did not -- i was not aware of someone doing a great job until you interviewed him. and i said, oh, my, alex chris is going to --

>> paypal. >> gross margins going up, volume is fine. i don't know how -- i did not know his work until you brought him on. i've been following ever since. he told a very compelling story. he said it would take some time. he did not say it would be next quarter. it is this quarter. congratulations. >> back to paypal in a bit. here is the opening bell. futures kind of a little stronger. moving to the upside there. got close to the open. here at the big board, the national alliance on mental illness of new york city, at the nasdaq, carnegie hall celebrating the launch of youth world practice practice practice. >> could not resist. >> orchestra week at carnegie hall. i haven't been there in a long time. i got to make that a point. >> it is an exciting day. >> is it? >> microsoft, meta, apple, and

this is all we cared about. here, we're thinking okay, procter and merck, tell me which smaller comap company could say something that moves the needle. amazon will have an excellent quarter, and talk about how prime day, they cut prices up to 15%, i don't know if people care. i think people -- the only thing people cared about, they couldn't get the yankees and phillies game. >> amazon, listen, the focus has been on the spending side. it is amazing what they have done logistics-wise today in "the wall street journal" they have a report on how amazon is getting into rural areas in a very significant way. competing with the post office. larger in many ways than u.p.s. and fedex in terms of ground operations. to conceive what they have done, but we do remember, of course, the quarters in which we with look at those numbers and say how can this be?

the question has been when will they rein it in, but they did create in what space of four or five years. remember we used to drive, you would see an an zoom truck, you can't get on the road for a lengthy trim and not see numerous trucks. >> if they sell, they ought to go back and see why you would sell it. that company, when you read their quarterly statement, has so many things in the pipe, as you say, it is a very exciting company. of all the mag 7, it is my favorite. >> is it really? >> they invent, invent, invent. apple is a cycle. they have -- with service stream. meta is a black box. not that expensive. alphabet did a good job, no one cared because of youtube, youtube was good. tesla they hated. tesla was a pretty good quarter, he laid out a larger vision that was not vehicle. that's really terrific. >> and microsoft. >> that's the quandary, if they choose to talk about the news cycle of pcs and about the

adoption of co-pilot, and as you're growing and not using share to google cloud, which is very good, then you have a stock that works. but they have to -- they have to check off every single one of those boxes. >> how can you say amazon is your favorite over nvidia. that's not possible. >> nvidia is my favorite company. amazon is my favorite stock. they're very different. because nvidia stock goes down pretty much every day versus the smaller cap semis. >> it is up 125% year to date. >> it is a second best performer in the s&p. so, i don't expect the second best performer in the s&p to knock everybody flat. and i know that -- i just say you own it, don't trade it. there is people who just keep thinking, wow, this is going to be fantastic, and these people are sunshine soldiers. they're summer patriots. i don't have time for -- >> we have amazon up 1%. i spent a lot of time talking about the logistics, all related to selling things and retail and

delivering them. the most important unit of this company continues to be amazon web services, which is by far the faster grower, the key contributor to its profitability so that will be the focus one would expect as well. >> if you remember, the stock -- you look at the bottom, people thought that amazon web services was going to go below double digit. i come in peace, i never like the fights, but, you know, i was, like, if you can't grow this thing at 10% -- and you got the sjejenga, all these differe warehouses and he said, hey, the -- these companies have great heads of divisions, retail -- that guy is a genius. the cfo is a total heavyweight and to walk you through why you're wrong or why you're right to be concerned. but at all times, they are so in control of their destiny. it is a delight to speak with them. it is a delight to speak to

jassy, the ceo. with jensen, it is jensen. he's mesmerizing, has a longer term view. if you sell the stock, you decided the longer term view doesn't matter. the longer term view is bright for nvidia, not for the stock, just the company. they're very different animals right now. >> all right, again, we're going to be discussing microsoft and amazon and meta and apple as this week goes along. no one is going to -- it was a fun thing to talk. but zuckerberg is saying, listen, i need your stuff. i have so many different ideas. >> they're the only one open sourcing too with lama 3. >> lama 3, everyone says what is lama 3? it is the code, the secret. i just like both companies. do i like both stocks? i like meta stock more than nvidia stock. >> meta more than nvidia, amazon more than meta. >> the advertising can be unbelievable for meta.

reels is a better place to put a lot of things than ticktock. zuckerberg unveiled reels and people said what an also-ran. reels was really good. you got to use the products. you have to just say, i want to use every product, like the ray ban glasses you laughed about. >> i have not laughed at the ray ban glasses. i laugh at the vision pro. look at that. shut him up. can we talk crowdstrike for a second, please? >> okay. >> yesterday, you did the mad dash. >> i didn't know that -- >> let me set this up. it wasn't on you, you were talking about the fact that many wall street analysts were rallying behind the name, saying, okay, the worst is probably over. and then, of course, we report this story at cnbc. david boies is coming after them. the concern here is that delta

is just the first and there will be many others and what is the liability and the stock is down 5.5%. >> i'm looking at one of my favorite sites called one mile at a time. it talks about how delta had an operational meltdown. if they were the one that totally broke down, they couldn't handle what happened. so i don't blame delta for being angry. but i think they just go sue the other guys, they may not have had the systems. everybody else had systems to deal with except for delta. do we blame delta? i don't know. i think this may be a long and protracted battle that could end up being much ado about nothing. >> crowdstrike will deal with a lot of lawsuits potentially. fair to say? >> no, i'm saying not a lot of lawsuits because not many companies -- in my favorite site one mile at a time, delta horribly -- i'm not a hack, it is just i discovered this site. delta horribly underperforms

purees with recovery. it is about -- this is not about the lawsuit, but the delta was the one -- now, delta, by the way, ed bastian going to be on -- >> he is. he's at the olympics, i believe. >> i hope they ask him about this one mile at a time at the olympics. i guess he's got a lot of time on his hands. people have a lot of time on their hands. me, i ain't going anywhere. >> you're staying right here. >> yeah. i was up at 3:30 trying to do this darn job. >> i'm glad to hear that. >> i'm not at the olympics. >> you're not. >> you could be there working. no. this is go time. >> apple. let's talk about apple because yesterday the story -- i set it up, then you talk. >> you're right. >> i set it up. >> hanging curve and i have my bat on my shoulder. >> this is where i set it up. are you ready? >> sure. >> yesterday we had the story from bloomberg indicating in some way there was a delay in a.i. that really wasn't the right word to be using. but there was a question as to

whether it would be released with the new iteration of the iphone and then later in the day, we get apple releases first preview of the long awaited phone a.i. >> apple is very hard. i like to watch these stocks of sky works and qorvo. those are the suppliers. they're not allowing -- it is fight club apple, the first rule about doing apple, you can't talk about apple. sky works solutions and qorvo, and you will see that these are the charts of the orders of -- that apple plays. and they're amazing because they're showing you that the business is so big and, david, who is going to give them all the a.i.? which company is going to fawn over apple because they want the billion plus users. you don't know. but one of them, we think it is going to be alphabet. >> we do. >> yeah. >> and that's just a great thing. i remember speaking to tim cook, he said to me, i said, which one

is going to give up the ghost and give you the a.i.? he says, how about this, maybe they all do. >> maybe they do. >> it is good -- >> i thought it was very interesting yesterday, when you talked about apple and you referred to them as a free rider, i thought that was a -- >> it is an interesting concept. >> when you have -- >> they're not having to spend nearly as much as the hyperscalers. >> that's why i like the stock very much. >> they benefit from all of that. >> they are benefiting from the fact they have the -- >> a billion devices out there or more. >> of any company in the world and they have got -- look, they are a winner and you want to be in their phone. and that's why you don't sell the stock. you just don't. >> we got a couple of minutes before we get to -- >> want to talk diageo? can we get deo? this is one that is shocking. if you were clueless and knew nothing. if you've been following the liquor business, you know it is

in maybe a decline that could be the largest in history. and that's because the gop desk ones, they raised price and because there is a whole generation of younger people who do not want to hurt their bodies. and there is cannabis. now, let me just give you a fact. they have casa migos, the high end tequila and they celadon ho sell don julio. their blanco casa migos is for one liter is down to $33.56. it is on special right now. >> that's a good price. >> what? >> that's a good price. >> they have too much inventory. go to that and you can see -- >> do i have to go there physically? >> you can go on the website and see they have got a discount right now, it is almost in half. so people who want that casa migos, go to the pennsylvania liquor control board and order from there. the don julio is 16 bucks.

this is a once in a lifetime definition of how they raise the price for casa migos so much. all blancos have to be the same by regulation of the government. it is just people that -- i want a margarita with casa migos. why would you want to do that? >> guinness saw double digit volume growth. >> nobody cares. >> nobody cares, jim? >> no. because constellation brands is selling really well. that stock goes down every day. >> we got to do sofi now. >> want me to? constellation is down again. let me go there. >> all right. >> sofi second quarter results out this morning and we're going to find out from anthony noto, the ceo, that the numbers are really great. we want to see if the stock will react to it because it is not reacting to the last two times that they had good numbers.

anthony noto, welcome back to the show. how are you doing? >> doing great, jim. thank you for having me. hi to you and david. >> i got david here too. so, anthony, explain to me how you can have such extraordinary numbers, and why do you think the market is not reacting to the fact that you're 40% now of a software product that is absolutely terrific, you have a declining number of charge loss, which is amazing at this point in the cycle. you got people, huge number of people signed up, when do people realize you have a breakout of tremendous proportions and go ahead of it? or do they have to see the real br breakout before they realize, why didn't i buy that stock? >> i think this quarter is definitely a milestone quarter when people sit back and do the work, they'll realize the magnitude of the transition we made. we have record revenue as you know, almost $600 million, up 22% year over year. that never would have happened without driving dive ing divers

outside of lending. it is driven by both 40 plus percent product growth. both will continue to propel the growth of the overall company. so we made a transition from risky capital intensive money business to higher return, less capital, less risk financial services business, that's been happening throughout the year. and without the scale that we have achieved this quarter, we never would have gotten to another quarter of record revenue and really strong improvement in profits and some good underlying trends as you mentioned at lending which is an optionality on rates coming back down. in terms of the stock, it is a question of where are rates going, where the economy is going, because people feel great about the results, now they're worried about what is going to happen next week, next month. we did point out we saw an inflection point in our personal loans which is an important milestone as well. >> do you think, anthony, there is the possibility that people still remember the heritage

which is student loans, and they say, as president biden forgives student loans they can't own sofi stock. >> on the earnings call, we had analysts ask questions 99% of them were about lending. there was only one question about the financial services segment and a question whether we could sustain the 80% growth or not. i talked through product growth of 40% and revenue per product growth of mid-20s to 30%, which there is still a lot of upside in both of them and their focus is on the thing we used to be as opposed to the thing we have become and we're trying to emphasize the magnitude of the innovation we drive. we're broadening auto, home and life insurance. our credit card business is starting to make a turn. and so we're seeing really strong trends outside of the traditional lending business and it is going to take a while for people to accept that that's the driver of growth going through

the rest of the year. >> i think that's really important. you do allude to the fact that you are becoming aws of financial services and i've known you for a very, very long time. i thought, when are people going to recognize that this is actually an enterprise software company that caters to individuals. not individual borrows, but individuals, why is that so hard? why can't people see it is enterprise software? >> i think it is a matter of people hearing the metrics over and over for the first time. today was the first time we talked about our interchange revenue, which is growing very nicely. we also for the first time started to break out the growth in aum as well as our noninterest income financial services which ties to the two numbers. they are much more transactionally driven without a lot of risk and don't require a lot of capital. >> anthony, on the macro, we don't expect we're going to get a rate cut tomorrow. but we do -- or many expect we're going to get a rate cut come september. what is that going to mean overall for your business?

>> a declining rate environment is -- it will be a tailwind, will increase the amount of home loan or financing which we're now doing quite well. we saw a strong trend in home loans, up 71% year over year. we're doing home equity loans, a good diversification, secured product. both businesses would benefit from lower rates. student loan or financing to jim's point, there would be a lot more demand for student loan financing, the rate they have relative to a lower rate benchmark rates would give them more of a savings. it would be a tailwind there. i also believe we see a tailwind to our invest business, which is also seeing great growth in aum. as people have less yield in money markets and fixed income, they have to go back to equities as a higher percentage of their portfolio. that business would also benefit. and last, the value of the loans on our balance sheet and declining rate environments increase the value in the loans. >> right. look, anthony, again, you know,

people call in all the time on "mad money" and all i can do is talk and praise. you're doing what you can do. it must be frustrating to be you. but i want to thank you for coming on "squawk on the street" and always telling it straight. >> thank you, jim. thank you, dave. really appreciate it. at sofi, i said in the earnings call, we like hard. hard is durable. hard is hard to replicate and we have a great motor on our business. we'll keep executing and we know it will be reflected over time. thank you. >> you're welcome. anthony noto from sofi. before we head to a break, a quick look at the bond market. talking about rates just now. treasuries this morning, we'll keep an eye on that ten-year. we head into the fed meeting, on the two-year as well. we're around the same level that we have been -- yesterday, 4.16 is the number on the ten-year, 4.379.

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okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot let's take a look at pfizer. shares are down for the year but up after the quarter.

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you want to do stop trading mcdonald's. >> the theme of the morning it's not a big from big cap or mega tech into small cap. it's a move from things that have done incredibly well like nvidia to things that haven't. mcdonald's down 11. they commit to a cheaper value meal that i think is for real that's going to help their sales. yesterday goes up big and today it's going up. you want to be involved with companies like stanley black and decker which have been dogs, but suddenly have a path. that's not a bad way to go. by the way, sometimes the market misjudged. i think merck is doing good. proctor will be good six months from now. >> we had on a well-known analyst, befuddled why the stock

mcdonald's was up yesterday. that was not a good quarter and had a buy on the stock. >> he's been around a long time. >> that surprises me. >> it had nothing to do with mcdonald's. >> right. didn't have to do with the fundamentals. >> i'm saying, because -- that he wouldn't be befuddled if he recognized the rotation is taking money from really great companies into companies that are not doing that well, but betting they will do well. that's okay. because if you look at it, if you bought stanley black and decker two weeks ago you're up a lot. t 3m, no one thought he would do well, but bill gives you a path and 3m goes up a lot. recognize the zeitgeist more than the company. it's my consistent. sounds inconsistent. it says buy proctor down ten. i don't want anyone to do that >> i get it. >> we're trying to put it in context. >> good. i always enjoy our time together. >> i do too. >> yeah. what are you going to do on your

show other than miss me? >> this is an example of the zeitgeist. i have huntington bank shares in ohio, and steve steinour told me during the mini crisis, we're fine, he was, and he will tell me the straight dope about small cap and medium sized banks that are so fabulous. they've been fabulous. >> see you tomorrow. >> absolutely. >> right here. >> absolutely. >> glad to hear that. breaking economic ta rhtdaig after the break. don't go anywhere.

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good tuesday morning. welcome to another hour of "squawk on the street." i'm david faber with leslie picker, we're live from post nine at the new york stock exchange. carl and sara have the morning off. let's give you a look at markets and treasuries as you see we are up on all the major indices. there is the 10-year moving up a slight bit in yield. fed meeting begins today. >> and we're 30 minutes into the

trading session. here are movers we are watching. shares of procter & gamble take a look at those sinking after posting mixed results. currently down nearly 6%. the company posting its first volume increase in two years but results fell short on revenue. take a look at at f 5, one of the biggest gainers in the s&p this morning. shares spiking up about 10.5% after better than expected earning there and a full-year guidance raise. as well, we've got paypal in the green after a top and bottom line beat with total payment volumes up more than 10%. the company raising its full-year earnings guidance and those shares up more than 8%. and check out shares of novavax, plunging double digits this morning down nearly 19%. the stock downgrades to an underweight at jpmorgan saying the stock is overvalued. consumer confidence out a few moments ago and rick santelli has the numbers for us. rick. >> yes. not only that, job openings and labor turnover known as jolts,

jolts coming in near expectations, 8, 184, 000 better than expectations and you see interest rates moving up a bit. not only this a bit better, june read, last month it was revised from 8, 140,000, up to 8, 230,000. which peens last month is the best month since march when it was 8, 355,000 and, of course, this fits right in a little bit lower, and it turns out that now this is the lowest level since april. but for the revision. if you look at consumer confidence, these are july reads. 100.3 on headline, better than anticipated although a big downward revision in the rearview mirror. 100.4 for june becomes 97.8. that makes 103 the best level since may when it was 101.3. if we look at the present situation, 133.6, sequentially

following a down revise, 141.5 that becomes 135.3. now 133.6. that is the lightest leveling if back to april of back to april of 2021. expectations 78.2, another downward revision to june, 73 becomes 72.8. 78.2 now becomes the best read going back to january when it was 81.5. the second best read on expectations. yields, well we've moved up to 4.18. and that would basically represent very near unchanged on a 10-year. if you look at a two-year below 4.40 that would be close to unchanged. we want to pay very close attention to the beginning of a two-day fed meeting. nobody expects a rate cut, but everybody is going to be perusing the statement and q&a and make sure that is still on

tap. leslie picker and david faber, back to you. >> rick, thank you. yes, there will be a lot of parsing of words over the next few days or so. as you mentioned the fed kicking off the two-day meeting as calls for policymakers to cut rates grow. our next guest isn't worried saying earnings season has been a, quote, tired goldilocks story. rbs markets head of u.s. equity strategy laurie carveseena joins us now an s&p target of 5700. laurie, so tell us about this tired goldilocks story and how that factors into what the fed does or doesn't do. >> sure. i think as we go through the earnings calls, right, my team and i we divide up the sectors and read and piece together the story. that's challenging early on, right, where all the data is still coming out. i think what we're seeing on the macro demand consumer has been an ongoing combination of resilience, managing through. we are acknowledging some pressures from interest rates,

from inflation, so that's where tired goldilocks came out and ta goldilocks doing a whole lot of work right now, but we seem to be getting through it okay. >> if you're a fed official talking with laurie and your team about kind of what you garnered from these conversations on the earnings transcripts, what does that say to you? does it say it's time to cut rates because, you know, things are okay? they're holding up okay, but things could deteriorate from here? do they look kind of better than the market is giving credit for and, therefore, maybe it's best to hold on? >> when i talk to our rates strategy team and our fed call, they're looking for september as the first cut and every other meeting and so they see the next one in december, and when you sort of take their views versus a lot of other rate strategists on the street they're looking for a shorter and shallower cycle. a lot is because they have this underlying idea that the economy is resilient and they might have a greater faith in that resilience than maybe some of the other forecasters on the street. does it change anything in

september, no. does it temper your expectations longer term, probably sfwr it's okay not to know all the answers, laurie, and you make that clear when you talk about the answer whether this rotation we've seen is durable. you know, you discuss that in some of your notes. is it short term or not? what is going to help you sort of formulate an answer to that question >> it's a great question and i find that there's just such a consensus now. the rotation has started, and it has more room to grow and everybody has been waiting for it, and i'm hopeful and seeing things that indicate from the trading side, potting on ftc, nasdaq 100 futures barely turned lower. that being said if you look at small cap futures the other side of the coin they've surged high and we've now gotten into net long territory. we're getting close to where we were last december and january when the trade topped out. so we do want to be mindful of head fakes. watch the position data closely. i'm watching earnings sentiment and more thinking about the short-term trade.

if i look at the gauge, where we take numbers up or down and who is doing it the most that stat favored large caps for most of 2023. buy mild. but guess what, november december when we got the move in small cap that gap closed and small cap went back to parody. guess what happened on the stat the last month or so. it's gone back to parody and back where we were november, december, early january, where it fizzled out. i want to see that data point really move firmly in small cap's favor. not just in you have to catch up, i think small caps have to assert themselves. >> it's unclear they will be able to do that. the earnings power of the largest caps would seem to be strong right now >> so we also look at this on top ten names in the s&p, proxy are to mag seven plus and compare it to the s&p. that stat is very much still dominant for the top ten names even with the missteps we've had early on. it's narrowed a tiny bit, but

there's still a lot more room it needs to fall to really convince us that the rest of the market that earnings enthusiasm is there. >> thank you. >> thanks for having me. >> two of tech's biggest leaders making headlines overnight. nvidia's jensen huang alongside meta's mark zuckerberg. julia boorstin has some of the highlights. jim said these two were not always friends, but they seem to be quite friendly now. >> they definitely seem friendly now, david. nvidia's jensen huang and meta's mark zuckerberg together talking about the increasing power of generative ai to augment workers' and businesses' capabilities. they sat down together exchanging jackets. during their conversation, meta announcing the launch of its ai studio built with its llama.1 engine allowing anyone to create an ai extension of themselves trained on their data to answer questions or interact with fans. >> it's an agent, but it's you

train it to kind of on your material to represent you in the way that you want. i think it's a very kind of creative endeavor, almost like a piece of art or content that you're putting out there, and, you know, it seems to me it's clear it's not engaging with the creator themselves but another interesting way like how creators put out content on these social systems to be able to have agents that do that. >> zuckerberg and jensen huang talked about the advantage of an open platform, zuckerberg expressing his frustration with apple's closed system. >> there have been too many things i've tried to build and told no, you can't really build that by the platform provider. it's like no [ bleep ] that. for the next generation, like we're going to go build like all the way down, and make sure that -- >> there goes our broadcast opportunity. >> sorry.

sorry. >> beep. >> yeah doing okay for 20 minutes. get me talking about closed platforms and i get angry. >> as for the value of open source ai zuckerberg and jensen huang talked about everyone having the ai assistant and zuckerberg thinks the next computing platform is meta's ai powered smart glasses and think they will be as prevalent as smartphones and the fact that they're just about $300 each makes them accessible. guys. >> we'll all be wearing those. speaking of meta, i see some headlines crossing in terms of texas and the company and a settlement. can you tell us about it? >> that's right. meta reaching a $1.4 billion settlement in this facial recognition privacy lawsuit in texas. meta issuing a statement saying we're pleased to resolve this matter and look forward to exploring future opportunities to deepen our business investments in texas including potentially developing data

centers. the attorney general also issuing a statement about this, the settlement of the unauthorized capture of personal biometric data, they say this is the largest settlement obtained from an action brought by a single state. based on that settlement from meta, looks like they are ready to move forward and invest in texas and my understanding is that meta did not necessarily admit any wrongdoing in the settlement, but that they're securing this $1.4 billion to address this issue by metric data capturing. >> that's a large settlement. julia, let me come back to what we heard from zuckerberg, and maybe you can fill in a few blanks. he's talking about the avatars, it won't be the creator, but it will be your agent. what does that actually mean in the real world? >> what that means is if you're a popular creator on meta, i'm sorry, on meta's platforms like instagram or facebook and instagram you have followers,

you're posting things, people post comments, they dm you. now you will be able to create an avatar that's trained on you and on your data and then that avatar could have conversations with your fans. so you yourself wouldn't have to send direct messages back to your fans. you can have someone send those messages in your voice. david, if you had a lot of fans who wanted to message you on instagram, i don't know how active you are on instagram, you could effectively, train your avatar on all of your breaking news hits, all of your faber reports and then that avatar could have those conversations in you. >> thank you. that helps me understand how i might use it. don't really have anybody following me on instagram. there's always the future. thank you. thanks for explaining all of that. as we head to a brek, let's give you a road map for the rest of the hour. we have a big test for big tech and this market rotation. we're going to get microsoft's

results after the bell and we're going to get you ready. >> results from cnbc's exclusive fed survey as the fomc kicks off another meeting on rates and some say the rate cuts are coming. >> and "squawk on the street" heads live to the olympics in paris. let's do it now. andrew ross sorkin has more on what's head. andrew? >> thank you. we've got a lot coming up right here in paris at the olympic games. ahead, we're going to bring you what is trending and there's a lot trending and a couple things going viral, some of which just happened. we'll tell you about it. david solomon, coo of goldman sachs making comments about what the fed maor my ay not do next. we'll tell you all about it when we return.

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ultimate entertainment experience and save on some of the biggest names in streaming, all for just $15 a month. get the fastest connection to paris with xfinity. welcome back to "squawk on the street." andrew ross sorkin is live at the paris olympics. big interviews including having spoken to goldman sachs' david solomon. >> thank you. we'll tell you about david solomon's comments in just a moment. it is hot by the way, 95 degrees plus hot, but what else is hot, tough loss for team usa. coco gauff knocked out of the single's competition after what is going to be a viral moment, a big-time argument with the referee in the second set and want to bring your attention to what's trending all the way from

tahiti where surfing is taking place. brazilian surfer gabriel me dina posting the highest single wave scored in olympic history. this shot capturing me dina in the air. it has gone everywhere. he is not on top of plastic. that is a shot. no ai, no photo shop or nothing. they captured him right there in that moment with his hand up. everybody is talking about it. on "squawk box," something else, goldman sachs' ceo david sol mon weighing in on the state of the economy. take a listen to what he had to say. >> look at mcdonald's earnings there's no question there are some shifts in consumer behavior and the cumulative impact of a long inflationary pressure is having an affect on consumer habits and we watch that closely. >> we talked about some of the issues of procter & gamble and their earnings and others, he's expecting that we won't hear

much today or rather tomorrow from the federal reserve, but is expecting an interest rate cut come this fall and september. in line with where the markets are at this point. by the way, he was out of line with some of the markets before saying that actually the fed wouldn't be cutting, and he was right. so we're going to keep our eyes on that. he also talked about m&a activity and how he thinks it's going to be picking up this fall, irrespective of who wins the presidential race, and we talked a lot about that race and what it may mean for regulation and the like. >> yeah, i heard you pushing him a bit on it trying to get an answer from him. he really didn't want to seem to want to give you much when it came to politics. i was surprised to hear that on m&a. i hear something different, but, obviously, he would have a pretty good idea of what the pipeline looks like. whether we really get announcements prior to the election we'll have to wait and see. >> you bet. i think you're 100% right and i think your reporting and my reporting would suggest things seem calm this summer. he's talking about this

pipeline. i think a big piece is the private equity component. whether some of the private equity firms which have played a massive role in the mergers and acquisitions world decide they're willing to sell and main not collect the premium that they were expecting to sell. i think there's been a real big ask there and that has been a feature of the market in terms of m&a. we'll see whether there are more deals come this fall. >> that valuation gap, i think a lot of people say that could improve by early next year. andrew, i wanted to pivot you towards another i don't know if it's like a controversy or, you know, a battle of sorts, which is your team's fencing activities that took place. tell us more about that and what you learned from the fencing experience? maybe you could use it as a metaphor for what you're seeing in the markets too. >> you know that joe and i do verbal fencing on the broadcast on most mornings and so we decided to actually go at it this time with swords. and you're going to be seeing

tomorrow we'll bring you some of the footage you're seeing some of the shots right now, but we've got hero shots and the whole thing. joe and i did go at it. i sparred a bit with becky and she sparred a bit with joe as well. we use the saber as opposed to the foil. saber is more of a slashing motion as opposed to a right to the heart. i've got to tell you guys, the grand palais, fencing has been outrageous. the space that they're in, what's happening, france winning gold after gold and it's electric. it's electric. if you've not seen fencing, definitely go check it out. i should also tell you, today starting i think just this afternoon, in fact, your y afternoon, our evening, simone biles is back in competition and i think we're all going to be watching for that. women's gymnastics at 12:15, you can watch it on peacock and it

will be in prime time on nbc and then there's a whole bunch of other events that we're going to be watching including men's freestyle later this evening. >> those are all must watches. i have to know, andrew, the winner of the fencing, do you get bragging rights or something else? >> you know, we're still here, basically. >> a medal. >> the winner is alive. here i am. you don't see becky or joe here. no. we -- >> tbd. >> we did not -- we didn't take it to the extreme or to the end there, so there was no official winner. it was on the honor system. that's the other thing. we were wearing the electric suits but they weren't on. it was the honor system whether you were slashed or not and you might know who is more honorable than others. so, you know. >> well, it sounds like we don't need to send out the paris emt to their hotel room so that's good news. >> you can hear the sirens.

they're everywhere. >> thank you much appreciated. >> still to come merck and pfizer out with earnings and updates on their weight loss drugs. what it could mean for shares of both names after this. back in two.

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

. pershing square's fund delayed and downsized but in several background conversations i'm told it is a go. psu has refiled with a $2 billion offering size this morning, a fraction of the $25 billion figure initially floated in the media. size a big point of contention, though, in the weeks since between the fund, and its perspective investors. unlike a company ipo where you can somewhat tag an implied valuation to fundamentals a closed in fund trades on supply to demand. if the supply is too big it's harder to drum up demand to engineer a premium in aftermarket trading for these closed end funds. i'm told the vast majority is something like 95% of institutions wanted to see the cover refiled before putting in orders at $2 billion the deal over cub described i'm told

which means there are more end cases of interest than stock to sell so they could off size and have several days to make that decision. nothing set on that front. we spoke on the show about that letter that bill ackman wrote to strategic investors that ultimately had to be disclosed in a regulatory filing. the letter included posts as one of the firms that placed an order to the tune of $150. that's what ackman wrote in the letter. that revelation spooked media from following through and caused him to drop out of the deal. i am told the others mentioned in the letter have kept their orders. the let are caused a delay in the deal because the sec needed time to review it before giving an official signoff the review has transpired and they are targeting next monday to price and next tuesday to list the ipo. there are still questions, after market performance, we talked yesterday about how closed end funds tend to trade at a

discount to net asset value and so -- >> how do you keep it up there is the question or am i -- not me, but are investors going to have an opportunity, if they think that bill ackman has a track record they like, to buy it at a discount in the future, why would you participate in the ipo. not just enough to get it popping at the open, but it has to stay there as well to justify what he's talking about. that said, still $2 billion in permanent capital he didn't have. >> right. >> even if he started with $25 billion as a target, it's still $2 billion. >> $2 billion yeah. >> the biggest ipo of the year is $4.44 billion and that's a company not a closed end fund. it's kind of this next stage and kind of evolution in the hedge fund kind of structure when you think about it. this is something that's going to have no management fees for the first year, no incentive fees in perpetuity. >> that is 2% after that.

>> i believe it's 2% after that. it's a good test on kind of the demand and the appetite for something like this relative to the historic private structure we've seen. >> if it does do well we could imagine he may want to issue more as time goes on. >> and others too. >> and others. >> substantial social media following is what differentiates this. can't be like a no named hedge fund manager that wants to raise $2 billion. >> the history of these to the extent they exist they trade at a discount. we'll see. thank you. some of pharma's names are out with earnings and new updates on what else, weight loss drugs. over to anjelica peebles who can fill us in on what's being said this morning. >> yeah. merck shares are getting crushed this morning down about 9% right now. that's after they beat on the top an bond market line in the quarter but their hpv vaccine gardasil missing estimates. merck's warning of a significant step down in shipments to china and analysts grilling them on

what's happening and whether this is temporary or we should expect more in the future. merck saying they still think gardasil sales can reach $11 billion by 2030, but there's skepticism here. merck getting a lot of questions on their new drug for a rare form of hypertension and sales of renvir reaching $70 million but most from distributors stocking the drug versus patients taking it and analysts wanting to know when we can see more people getting that new drug. remember, merck's cancer drug keytruda will lose patent protection later in the decade, so the story here is all about what's next for merck. now we also have pfizer's earnings call getting under way in a few minutes and this is the first time we're hearing from them since saying they'll keep working on their once daily obesity pill. we'll be listening for any updates on that compound or any of pfizer's experimental obesity drugs and ask albert bourla for their obesity efforts when we talk to him at 1:00 p.m. eastern

on "the exchange." >> angelica, on merck, i had not noted that significant decline. did that occur during the call versus the earnings release? i'm curious to get more color if possible? >> shares were down this morning after the report came out, but we saw the significant de cline coming during that call because the miss wasn't that big. it was just a little bit shy, but then we started to hear more about the significant step down that they talked about and analysts just really asking over and over, what's happening, will this change, and that was the focus of the call and the -- when renvir will launch. >> looks like investors not satisfied with those answers there. thank you. >> thank you. after the break, rate cuts may be coming, but the question is, when and how many? exclusive, we will break down results of our cnbc clivexuse

fed survey next. (reporters) over here. kev! kev! (reporter 1) any response to the trade rumors, we keep hearing about? (kev) we talkin' about moving? not the trade, not the trade, we talking about movin'. no thank you. (reporter 2) you could use opendoor. sell your house directly to them, it's easy. (kev) ... i guess we're movin'. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. our friend sold their policy to help pay their medical bills, and that got me thinking. maybe selling our policy could help

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welcome back. i'm silvana henao with your cnbc news update. a third child has died following a stabbing attack monday at a taylor swift theamed dance class in england. eight children and two adults remain hospitalized. the pop star issued a statement saying she is at a complete loss for how to convey her sympathies to the families. a 17-year-old has been arrested on suspicion of murder the brand new acting secret service director is on capitol hill today with the fbi deputy director to testify before senate lawmakers about the security failures leading up to the attempted assassination of donald trump earlier this month. it comes after a similar house hearing last week led to the

departure of ronald rose's predecessor kimberly cheadle j tesla issued a recall for 1.8 million cars after receiving reports their hoods could pop open and unintentionally block the driver's view. no injuries or deaths have been reported and tesla says only about 1% of vehicles are likely to be affected. the recall includes some 3s x and y models. >> thank you. cnbc out with its latest fed survey, policymakers meet on rates. over to steve liesman who has the numbers for us. >> hey, david. rate cuts are coming, according to respondents to the cnbc fed survey. just not now. but there's increasing confidence the fed will be able to cut in the fall and a new focus right now on just how far they go over the cutting cycle and how they get there. 81% see that first cut coming in september. 86% see the second cut in december. note that this is a little more

hawkish than the market which has three cuts really built in in the futures pricing. this group a little bit more cautious or thinks the fed will be cautious. 73% say the fed should ignore politics figuring out what to do in september. let's do the math. the current rate 5.38. the year end the average forecast for the fed funds rate is 4.91. call it two 25 basis point cuts this year. 3.94, call it another four cuts next year or every other meeting with the long being 3.1%. that tells you the fed is going be to tight or perceived to be tight over the next year and a half. chad morgan portfolio manager at stifel nick class says the federal reserve is in the catbird seat. money supply and inflation trends are moving in the right direction and credit conditions are favorable. we expect a well rehearsed rate cut at the september meeting. so 36% still think the fed is going to cut too late b us

there's a growing number who think, maybe the fed gets this right. . 36 think they get it right. should the fed hold rates steady before the election to avoid the perception of political interference? 73% say no, don't worry about it. our work shows the fed will move in september whether or not it's a presidential election. 23% want the fed to hold off. peter believes, quote, the rate cutting cycle will be more of a tweaking as the fed tries to balance the fear of inflaming inflation while trying to keep the economy growing. that is supposed to say we're supposed to slash for a recession. expect the fed statement tomorrow and the fed chair to provide some limited guidance that there is more confidence inflation is declining and rates can come down. but he's not going to show his hand in how far and how quickly he's going to get there. guys? >> yeah. i know you will be parsing over every word, steve.

thank you. our next guest pushing back on hopes for september and november cuts saying the inflation picture remains murky and recession fears over blown. former richmond fed president joins us now. give us a sense of your thinking behind that and the data that you're focused on and what the market might be missing? >> it just comes from looking back at the inflation data over the last year or so. inflation has been streaky and i think the last two months good inflation data are hardly decisive. back in december, when at that meeting and the release of the summary of economic projections, the fed and powell got everybody excited about lot of rate cuts this year and then we had three good inflation numbers in hand below 2.2%. then they got a couple more data and then the beginning of the year was terrible. four months of really bad inflation data. now we've had two months of good inflation data. that seems hardly enough to rule

out, you know, a bigger, you know, resurgence of return much three 3% or 4% inflation. if you look at the underlying factors, you got wages that are still growing at a rate that's inconsistent with pre pandemic rates of wage increases and so it suggests there's still inflationary pressures in the pipeline. i would go beyond that, go on. >> oh, no. after you. >> i just also mentioned that the fed traditionally strives to avoid reversing course within 18 months after a rate cut and they're going to -- i think they ought to be cautious about doing that again. and there's a good reason for it because when they bring down the overnight funds rate, they want to bring down expectations of future funds rate. they don't want people to think it's going to be reversed any time soon. so that's historically been something the fed stuck to, and i think that's going to make

them hesitant to move until they're sure they are not going to want to reverse course. >> that's true about the 180 and what that might do for market volatility there. what about the other side of the mandate with regard to the labor market. you mentioned the risk of inflation data and some potential lags on that front. what do you make of the current situation with regard to the labor market, especially compared to where we're at the beginning of the year? some would point to cracks forming in the data there. >> so the last year the labor market was exceptionally strong, if you look at employment growth. came in much better than expected. second half real growth in terms of real gdp hotter than expected. what we've seen this year is settling down into a moderate rate of growth, one that's sustainable, really a sweet spot as christopher waller put it. i think that's the tendency. we're not flipping over into a contraction scenario by any

means. there's no real signs of that. sure, the unemployment rate has crept up but 4% is still a fine unemployment rate and indicates a job market that is healthy and sustainably so. >> i want to ask you a question that steve asked his survey respondents, which is, kind of given all of that and the picture that you outlined there, do you think that the fed, if it does indeed cut in september as the market is exampecting, woul be cutting too soon, too late or just right? >> that would be too soon and signaling something at this meeting runs the risk of pulling down the yield curve and setting off inflationary pressures that they didn't intend to and they would like to keep at bay for some time. i think that if people got the sense that rates were coming down dramatically in the next 12

to 18 months, that could stimulate spending and we could have more spending growth than we really need and consistent with inflation coming down to 2%. >> all right. we'll see. really appreciate you being here with us sharing your perspective on what you believe to be a much more stable jobs market as well as the potential for some lags on inflation. jeff lacquer, thank you. >> thank you. still ahead, a big test for big tech. microsoft will report results, that will be after the bell later this afternoon. meta is tomorrow and amazon is trsy. 're going to get you ready. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates

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talk to your doctor about reducing your risk. for the magnificent seven names report earnings this week microsoft results will be out after the bell today. our next guest upped his price target ahead of earnings to 485 and says data center spend could hit record year numbers, year over year in terms of growth i should say. joining us piper sandler's bret

graceland. we go into the quarter, i think, there's concerns about -- and you write about them -- ai overbuild, so to speak. you're spending more than you're going to get a return on in any timeframe at least that investors care about. so will we get any clarity on that in this quarter? >> yeah. i think this is a great opportunity for microsoft to reframe the discussion. there's been a lot of debate around this ai $600 billion will we ever see a return on these investments and i think it's important to think about ai as part of a bigger picture and the bigger picture for microsoft is, it took them about 13 years to build $100 billion cloud business. we think they're going to build the next $100 billion in three years. so think about compressing your capex spend, your data centers over three years versus 13 years prior and if you put that into context you'll understand this investment cycle is not just about ai. i think it's much bigger.

our whole thesis we're talking about all year has been don't sleep on microsoft cloud. it's more than just ai. >> all right. so tell us, what is the more, given the market's focus seems to be so centralized on ai? >> the more capex spend is data centers in mexico, malaysia, indonesia, you're talking about data center builds in the midwest, they have to procure power for these data centers so they're talking about 15-year power agreements with wind farms, $10 billion power global deal with brookfield, so these are long life investments. they might show up in one quarter, but they're going to be able to sustain cloud services for a very long period of time, so again, if you put the bigger picture in to perspective here we think microsoft will do that tonight. i think you'll understand there is a great rewards also i would also point to the ai return is

focused largely on incremental revenue. i think the big opportunity with ai is lowering costs. if i think about the s&p 500, about $16 trillion of revenue are generated by this. $13 trillion of cost bloat. so big opportunity for ai to reduce cost. i think people are talking about the incremental revenue, the real benefit is on the cost side. >> yeah. all right. you're a believer in the capex will support, as you said, the doubling of cloud revenues over a very brief amount of time. what else may we hear and see in the earnings report that investors should care about this evening? >> i mean, listen, i think there's going to be the flip side of investment is going to be a drag on gross margins and i think it's been very clear people are going to be watching that operating margin number very closely. you see some layouts of microsoft committed to making sure optimizing the extra costs

they're taking on to support this cloud ai opportunity with sustaining operating margins well above 40%. >> appreciate the blueprint, so to speak, for upcoming earnings. we'll be watching them closely. thank you. >> thank you. >> coming up next hour, paypal lifting its profit forecast, shares surging and bill harris joins "money movers" to break down the quarter. >> still ahead, crowdstrike, one of the biggest laggards on the s&p this quarter after that global i.t. outage and now some are saying pay up. atnvto need to know next. don't go away.

it's been a week and a half since that global i.t. outage tied to crowdstrike which led to thousands of cancel the flights and now one of them is saying, pay up. let's get to phil lebeau with that story. >> leslie, that airline is delta. it has hired famed attorney david boyes, who has a long history when it comes to dealing with microsoft, as we all know going back to the early 2000s. he will be leading the effort from delta to seek compensation from microsoft and crowdstrike

due to the impact of the outage starting on july 19th. you're looking at shares of delta, by the way, since that day, friday the 19th. here's the impact on delta. they had almost 7,000 flights that were canceled, ticket refund requests of 93,000. 80,000 reimbursement requests. these were people stranded at an airport, had to check into a hotel, transportation fees, whatever it might be. it was a mess for delta. they struggled more than any other airline to come back from what was a software airline who were impacted, they had some impact and they got on their feet relatively quickly. not so much for delta. they're still processing more than 100,000 claims. as you take a look at microsoft and crowdstrike. the estimate that is out there in terms of the financial impact

for delta, $350 million to $500 million. those are just estimates. not surprising this happened, guys. i'm sure we'll see this from other companies as well. outside of the airline industry. but delta really is the one airline that took a big hit because of this outage. >> how much is dell to blame? >> good we. >> he said we have the backup systems. they benefitted because they didn't have the technology, said they prepared for it. so, where's the blame here? >> and, david, to your point, american airlines was also hit early that morning. i was in cardiff, wales, when that hit. it wasn't a matter of hours that american airlines started putting flights back into the system and was generally back in

at full mode over the course of a day or two. not the case at delta. i'm sure microsoft and crowdstrike would say, wait a second, they would hit as well. they didn't have the same impact here. all of this will be fleshed out in some fashion, whether it's a lawsuit or negotiation. >> insurance doesn't cover something like this. how does the insurance break down farrelltive to -- >> that remains to be seen, leslie. yeah, i'm sure crowdstrike would come back and say, wait a second, this is the reason you have insurance here. delta, their argument, and clearly -- we don't know what their full argument is but in hiring david boyes they made it clear they believe this goes beyond a usual outage. this goes beyond a software glitch. as a result, they believe that the compensation should be coming from microsoft and/or crowdstrike in some fashion. >> yeah, finally, we got a mover here in your sector.

jetblue, we don't talk about it that often. talk about why the stock is up so much. >> welcome, welcome quarter, david. for joanna garrity and the team at jetblue. she moved into the ceo spot at the beginning of the year. and basically her message was straightforward. we'll talk with her this afternoon on the "closing bell." stop with the worries about expanding and picking up market share. start working and focusing on flying profitable routes. we really saw that come through in the second quarter. third quarter will be a little rough. the guidance is below what analysts were expecting. you can understand why the stock is up 21%. >> yeah, wow. phil, thank you. phil lebeau covering it for all including that move in jetblue. i wanted to come back to merck. during the conference call the company starting to put some sense out there that gardasil,

important drug for them, maybe there's some slowing there, and saying things about a relatively new therapy in terms of it just coming to the market and the launch. maybe they didn't hear what they wanted to hear as well. >> sounds like they asked a bunch of different ways, weren't completely satisfied by the answer. you can see the stock price down 9.5%. >> that's ugly. that's also -- pfizer reported a good number but it's getting penalized as well, down 2.5%. vegetrghahd more live market cora sait eafor you. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our retirement. but we quickly

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good tuesday morning. i'm leslie picker with brian sullivan live from the new york stock exchange. why citi's head of equity strategy says a pullback could be ahead of q3 but will it be a great buying opportunity? some fintech findings, leslie. and the takeaway on a suddenly red hot paypal with the former ceo. and then ten stocks that could benefit from a potential second trump presidency. jeffries gives us those names this hour. >> all that's