>> i'm going to miss that. >> doesn't bother me. >> i feel parisian when i hear it now. >> it's great. >> it's been a fantastic trip. it's been wonderful to be here, and andrew -- >> i'm not going anywhere. i'll be here tomorrow and friday and i'll be talking to you guys back home. >> you got a good package coming too. >> got a lot of fun things coming up. >> see you tomorrow. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. nasdaq 100 looks to open higher by about 2% on the back of amd's strong guidance. got a fed decision today, the boj hikes and the dovish macrodata. our road map begins with a flood of corporate results, microsoft, boeing, starbucks with a cautious consumer, and pinterest

tumbling on weak guidance. we are awaiting the fed. futures are rallying on this last trading day of july as investors seek new clues for the rate cut path ahead. this hour, we're going to be joined by the ceos of amd and t-mobile. we're going to break down the quarters with both, talk about the a.i. boom, the state of the consumer, oh, a lot of other things as well, carl. let's begin with microsoft this morning, beating earnings and revenue estimates, but this miss on cloud a bit pressuring the stock in the premarket. certainly on the call last night, satya nadella did discuss azure and capex. >> the azure a.i. growth, that's the first place we look at. that, then, drives bulk of the capex. basically, that's the demand signal because you got to remember even in the capital spend, there is land and datacenter build but 60-plus percent is the kick. that only will be bought for inferencing and everything else if there is demand signal.

that's, i think, the key way to think about capital cycle. >> jim, you excoriated investors who sold last night too soon. >> they're a bunch of clowns. up to wait for amy hood. amy hood is the cfo. she's been an unbelievable cfo. what i would you sell this thing down 30 without listening to the person who actually is the keep r of the numbers? it wouldn't surprise me if the stock finished up, because frankly, even the so-called azure slowdown is chimerical. amy hood makes that clear. you had a couple european geographies. there's a -- what's the real item about this one? and we'll talk to lisa su about it. i'm going to use an analogy because i'm sick of talking about tech and people hating me and not knowing what i'm talking about. there's this thing called depletions when it comes to liquor. what that is, everyone trials the liquor, they trial one, and do they reorder? everyone thinks right now, oh, order a.i. and who knows if it

does anything for you? satya, who buries the lede, because he's completely calm, said the depletions are good, so to speak. people are reordering, which is the idea that if it were not any good and no roi, they wouldn't reorder. now, david, when i listen to this call, the big issue was there's not enough compute power right now. now, that means that it's not -- if you go back to the google call, which i think was very ill advised, you did not have anyone saying, we get a good demand. what you heard was, well, we better build it because we're going to be getting beat by everybody else. they're getting their ass kicked by microsoft because these guys cannot meet demand. they cannot meet demand, and i think that was the tale of the tape, but you know, sell it before amy hood. how many times do we have to have people who don't know what they're doing running big money? >> all right, we'll keep an eye on what it actually does when it opens. that said, there did seem to be this disappointment -- i don't know if you want to call it

that -- that concern that somehow the growth rated azure at 30% was not as high as many analysts had anticipated, and therefore, that is somehow indicative of, i don't -- couldn't call it a slowdown, but a concern. >> we know hugging face. how about two face? can we listen to amy hood who knows more than anybody? how about we play amy hood? >> to meet the growing demand snag for our a.i. and cloud products, we will scale our investments with fy25 expenditures. we are constrained on a.i. capacity and you do see us investing quite a bit as we talked about in builds so that we can get back in a more balanced place. >> amy watches the show, and she's quick to point out when you don't get it right. she's a nice person, don't get me wrong, but when you listen to what she was saying, she's saying, the orders are just so huge, we're not really sure what

to do. we're trying to meet demand. it can happen. we're afraid of losing demand to other people if we can't make enough. and you know, the takeaway there is that they missed azure by a point. who makes this stuff up? go back over the alphabet, and say, did youtube really miss? these are -- these are fatuous reasons to sell. that doesn't mean that things didn't get too inflated at 38 times earnings, but did you know that nvidia is now selling at 23 times next year? >> after yesterday. >> it lost $800 billion. >> down 20-plus percent from the highs. >> you want to sell it at 23 times earnings? i say, no. >> back to microsoft. to your point, it was -- we didn't have this comment from amy. she was talking about capex, which, by the way, at $19 billion, including leases, is roughly in line, but they talked about it even increasing so a lot of analysts are now going to $80 billion. the number is enormous. >> you weren't disappointed because you have what i call horse sense. >> to the point that capex, to

your point, jim, is supposed to -- is going to actually create an increase in available a.i. capacity to serve more of the growing demand. that was a key point from amy hood, which did turn the stock around even in the premarket. >> you get these people who are obviously short the stock and say, that's what she's really saying is disappointing. honestly. carl, there are people in the business, when they speak, they're not -- i don't want to use the term about when people talk and don't really -- and hype. amy hood has never -- i've known amy since she was at goldman. she's never hyped anything all her life. she won't hype her kids. she doesn't hype anything. people say, it's not that good. not that good? 30% growth, 31% growth, maybe a little bit shaky. what do people think this is, bethlehem steel, a now defunct steel company? >> the street was nonplussed. goldman reiterates a buy.

b of a says second half azure makes this whole thing temporary. there were questions about the pc unit but i know that's an open question. >> we'll speak to lisa su, i think, who's much closer to the pc unit than microsoft. microsoft -- pcs, david, pcs matter. they're part of the pastiche. you know, xbox matters. >> sure. >> but what really matters is cloud, demand, and the statement that you read about trying to meet to demand for a.i., whether it be copilot, the big proposals that are making it so that major companies are getting 2x an employee, twice out of an employee. by the way, david, if you can get twice out of employee, what do you have to -- do you still have to hire as many people? >> i wouldn't think you do. >> why don't people talk about that? because it's sad? >> it's a concern that people don't want to perhaps address

publicly, yeah. i mean, these companies certainly don't want to remind you that they may be responsible for a diminution of the workforce, i don't think. >> if you're hiring these associates for $200,000 a year and they're proofreaders and you hire 100 of them -- let's use any firm, but you have a list of how many people hire -- do you need as many proofreaders that make $200,000 a year? and the answer is, no. do people know that -- have you ever been at one of these firms? oh my god. i proofread for -- >> it goes well beyond that in terms of generative a.i. coding is obviously going to only increase in terms of efficiency and its ability, that is, generative a.i., to do what has otherwise been done by humans. yeah. >> amen, man. >> but it's back to that debate, carl, which of course is every advance in technology. people are very concerned, but ultimately, more jobs arise that they aren't aware of. so, that's the coda, every time.

>> when they made that typewriter electric, david, i got out of that smith business. the other big story this morning is boeing. revenue miss. going to try to get to their 737 production target by the end of the year, but the big news, of course, is kelly, new ceo. >> now, when you talk to the people who selected her, what you first of all get, and i know david will like this, he's going to go. he's going to actually go to the factory. he's going to live in seattle. this guy was an experienced at rockwell college which is one of the best aerospace companies. he's a customer guy too. he's not been a hands-on, get dirty, but he'll do that. david, he's 64, but he is physically fit. >> it is interesting you point out 64. >> what's going to happen when you're 64? >> it's refreshing to have a ceo who's older than i am at this point, but does it indicate this is a short-term assignment?

>> conceivably. >> he's going to get this right for three years and then you're done? >> not three. it's going to be five, six. >> okay. >> and what's great about this guy, frankly, is that he is universally respected, and he doesn't work at boeing. it almost demanded, carl, that they do not have a boeing person, because the culture must change. i think this is the beginning of major changes. i think that that whole crew that moved to chicago and moved to washington, i mean, these guys, the faa blew this company up, and i believe this guy is an faa-blessed guy, and i think that matters tremendously. that's why the stock is up. >> taking a big charge on the regulat regulatory headaches that they have had to deal with. what about their production? can they get to 38 a month by the end of the year? >> i think he would say, why did you give me that number? i'm not prepared to do it. i think he's not a blowhard. i think he's not going to be sitting in some lake house telling you everything is good.

selected by mollenkopf. you know mollenkopf. a a and getland too. mollenkopf, he's a scrappy baltimore guy that i don't want to cross. >> he's a serious gentleman. steve mollenkopf is a serious gentleman. he is a nice guy, actually. once you get to know him, jim. >> it's just as bad when you get -- no, i happen to like steve, but i would not be on the other side of steve. for instance, he ran qualcomm. why don't we speak to someone who runs amd? >> that would be amazing because amd's earnings are getting a positive response in the marketplace this morning. >> david, there's a back story. these guys who -- >> that said, the stock has been down 22% over not a -- a very short period of time. >> you're doing that, mrs. lincoln, how was the play stuff. >> let's get to lisa su. >> amd reporting a super strong quarter. sending shares much higher. of course, when it was first announced, the stock was actually down. a lot of this is around a.i. adoption. we're going to have pc.

ceo lisa su joins us now first on cnbc to discuss the quarter. lisa, great to see you. >> good morning, great to see you guys. >> oerkkay, lisa, on page five your conference call, you said something that i think was jaw-dropping. you said, "as a result, we are now expect datacenter gpu --" david, that's important. " -- revenue to exceed $4.5 billion, up from $4 billion that you guided in april." you just guided up $500 million in one quarter? >> well, first of all, we had a very strong second quarter, very excited about the traction that we're seeing. it is all about a.i. you know, i know you guys were talking about a.i. in the earlier segment. there's no question that a.i. is like the biggest technology advance over the last 50 years, and we're very excited to be helping power that foundation. so, yes, we were able to -- had a very strong datacenter quarter. you know, we more than doubled our datacenter revenue in the

second quarter, and we see strong growth into the second half of the year, so part of that is, you know, acceleration in our a.i. growth, and that's what allowed us to increase our guidance from greater than $4 billion, you know, 90 days ago to greater than $4.5 billion for the year. >> extraordinary guide up. one of the things that has bothered people ever since the alphabet call was the notion of, we better build it because they might come, and if not, we're going to fall behind. when i listen to your call and to you, i feel it's the opposite. i think customers are desperate for compute power, whether it be from you or nvidia. they've got to have it. you're taking share when it comes to some parts. is it not true that the real issue is, can you meet demand? >> it is absolutely true that compute is really the foundation for what unlocks all of this, you know, a.i. capability. it is true that the supply chain is very tight right now, and frankly, people need more compute. we're in a very, very strong position in the sense that we're continuing to ramp up our

mi-300, which is our a.i. compute chip, but we also see, actually, you know, broader demand trends that say, even in traditional compute that had taken, you know, a little bit of a slower start for the year has actually now seen some very positive signals, so we see that on the traditional datacenter cpu side as well. overall, when i talk to ceos and cios across the enterprise, i think this is an opportunity to invest. it's an opportunity to invest, to really capture all of the capability of a.i., and it's also an opportunity to refresh datacenters that have been aging for some time. so, these are some of the trends that we're excited about going into the second half. >> so, lisa, maybe because you're a plain spoken person like my friend, david faber, both from queens, i might add, can you please explain to people that even though a.i. is not necessarily curing cancer or putting a man on jupiter right now, it is integral to many of the organizations that you deal with and talk to every day?

>> absolutely. first of all, great to see david and carl as well. when i look at a.i., i really look at a.i. as trying to really help every enterprise, you know, every company, every sector really become more productive. and we see it in many different ways. from simple things, you know, you'll hear people talk about call centers and customer response, and i call those very low-hanging fruit. to much more complex things like designing better chips. that's something that we do in our semiconductor peers do or designing better factories or actually even helping discover the next big drug discoveries and the health care things that you mentioned. i do think this is a long-term arc, so people are always expecting things to happen overnight. this won't happen overnight, but the time to invest is now so that we see the payoff in the one, two, three, four, five-year time frame and that's what companies are doing because we see the huge potential for using a.i. in all of our businesses.

>> lisa, it is david. back to the m-1300 and the guide to $4.5 billion that i think is being embraced by investors. i've had a couple ask why it isn't higher if you annualize the quarter and add in a growth rate, it would get you oozas hi as $5 billion. are you being conservative? >> the way we look at these things is we call it like it is today, and what we see is it was very important w started the year to pass some important customer milestones. we have some great partnerships out there. we've talked about microsoft being a very strong partner for us across the datacenter and especially in a.i. we've talked about meta, oracle, we've talked about a lot of the oem partners as well that have adopted mi-300 and we wanted to go through some of the key milestones so the fact that we sitting here at the middle of the year and calling $4.5 billion for the full year

is a great place to be, thinking about where we are on this trajectory, and we'll continue to call it like it is as we see every quarter. >> this came up. something about a high-bandwidth memory problem that had you losing some yield. it was not you, it was related to a supplier. was that an issue that has been resolved? >> you know, david, i would say that there's a lot of noise in the system, and i would really not pay attention to those kinds of things. are these extremely complex products. mi-300 is over 150 billion transistors. of course we're always working things realtime, but as far as, you know, we look at this, this is a very, very successful production ramp. we're very excited. we're seeing mi-300 in our customers, datacenters, in volume, running production traffic, giving great results, and that's what gives us the confidence for the growth trajectory in the second half of the year. >> lisa, you might have heard me and jim talking about pcs a moment ago. where are you right now in terms

of whether or not a.i. empowered pcs will drive consumer demand? >> absolutely, carl. i'm bullish on a.i. pcs. i view a.i. pcs as really a category-changer for the pc market where, you know, we see an opportunity not just to do the things that we normally do with pcs like gaming, as well as enterprise, productivity-type applications but a.i. will give us another capability with the pc that allows us to do things locally and a lot of people, although we like working in the cloud, it is -- this is some latency involved with that and the idea that you can do things on your pc with your personal data, i think, is a positive. the way to think about this is we're very excited about a.i. pcs. we just launched a bunch over the weekend. it will take some time to go fully through the pc ecosystem, so i see second half as a positive for pcs and as we go

into 2025, even more excitement around a.i. pcs. >> lisa, let's talk share, both high-end when it comes to what i would regard as being accelerated computing, and also lower end, like what you just talked about with pc. i see -- and you can tell me if i'm wrong -- that there's so much business that i'm not concerned about you and nvidia. i think that everybody is completely overwhelmed when it comes to compute power, both you and nvidia. on the lower end, when intel was at five, when you were at five, and intel was at 40, you scold me -- schooled me in a way that made me think that you would be at 40 and intel would be at 5. the latter hasn't happened yet, but you're taking share from intel on the low end and doing whatever you can do to meet demand on the high end >> the best way to think about it is, jim, i think about computing as end-to-end compute. you need the most powerful stuff in the cloud and we certainly love the work that we do with all the hype scalers, and you need the right compute at the edge and the client, and we have an end-to-end computing portfolio that allows us to really service all those needs.

certainly, i'm very excited about the market. we called the a.i. market last year at upwards of $400 billion over the next 5 years, and we see that. there is tremendous need for more compute for high-end a.i., but we also see a need for compute across the edge, as well as the client, so these are all great opportunities. yes, i love large market. i also love the fact that i think we have a very competitive product portfolio, which gives us the opportunity to gain share. >> we have seen a pullback in some of the hyperscalers lately in the stock market, in part because of this continuing question, lisa, as to whether all of this enormous spend will actually get a significant return on what's being invested. and the worry is that at some point you hit a wall and the spending slows. how do you think about that from the larger perspective? >> i will say, david, from the conversations that i have with

our customer set and sort of broader industry, we can see that a.i. is a multiyear -- i would call it a supercycle, frankly. there's tremendous need for more compute. now, how it goes on a quarter-by-quarter basis, obviously, you guys are hypersensitive to a percent here or there, i wouldn't be hypersensitive in those areas. i would say, are more customers using it? is every enterprise asking for it? are we seeing more applications on a daily, weekly, monthly basis? the answer to that is, absolutely, yes. everywhere i go, everybody wants to talk about how can we incorporate a.i. into our businesses faster and more efficiently, and we're all learning along the way. that's the beauty of technology this early in the cycle. there's a lot of learning and experimentation, but definitely, there will be the return on investment on the other side of it. >> we know that jensen huang says the return on investment, ceo of nvidia, is almost instant. i believe that you would say that an employee may be doubly

productive with a.i., and yet we still don't hear from any executive, we have a.i., and we've been able to trim staff. we've been able to become a much more productive and we've been able to boost earnings per share. when will an executive come on and say, listen, our numbers are going higher because of a.i.? >> i believe that you will see, overall, a.i. will increase productivity, will help us get more productive, and most importantly, help us get better products out faster. so, i think all of that is there. now, i don't believe that things are instantaneous. technology takes time to adopt. that's just the way technology cycles are. we're investing today for the return in a couple of ears, and i think that's absolutely the right thing to do. that's the way we think about these investment cycles. not quite instantaneous, but they're definitely coming, jim. >> lisa su, thank you, and the guide up was amazing, even though david wanted double the guide-up. we're going to let you have the guide-up because it's the

biggest one i've seen from your company. lisa su, ceo of amd, thank you so much. >> thank you. great to be here. we'll take aquick break. we'll get to so many names, mastercard, starbucks,onle mdez, humana, dupont in a minute. -to-, like dynamic charting and risk-reward analysis, help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley

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>> announcer: the opening bell is brought you to by nuveen, a leader in income, alternatives, and responsible investing. got to take note of the premarket here as the nasdaq looks to jump about 400 points, jim. although the qs are now lagging the spidrs year to date. >> you're still dealing with the notion of an nvidia that's lost $800 billion in market cap. you're still dealing with the notion that people think alphabet had a soft quarter, then verify bid pied by pintere which seemed to have a soft quarter. we're dealing with the notion

that these companies do not benefit from rate cuts, versus the stanley black & decker. they don't -- they, the market, would still prefer something that's levered to lower rates that speaks today. >> we will see what we get at 2:00. bank of japan, of course, hiking a quarter point. at the big board, it's blackberry, and at the nasdaq, armada acquisition corp., a blank check company. we're back above 5,500. bottom line, jim, is you still are hesitant to let go of the mag seven trade. >> yeah, because if nvidia's selling at 23 times next year's earnings, which is my calculation, and it's the greatest growth story of our era, i'm going to have to stick with it. i can't get rid of it. i have to own it, not trade it. look, let's not -- let's go back to what's going to happen later this week. apple. if apple can tell you that the individual around the globe is

buying a good pc and taking the services, then i think that can make it so that people feel more at home because it's a high-cost thing. i mean, here's something really crazy. mcdonald's lowers the price of a hamburger and then people come? it's interesting, starbucks still has not lowered the price of a cup of coffee, but they have for the rewards. we do have to talk starbucks because a lot of people hated the quarter. i didn't hate it as much as other people. it did have the gift that's the trojan horse, which is china. down 14%. if you have china, other than dupont, other than dupont, if you have china, you missed your quarter. >> yeah. marriott too, lowering guidance. >> wasn't that something? soft u.s. but then lower china. i remember when they built up in china, david, china is -- can we just call it a disaster? do we have to hold back? >> you can call it whatever you'd like. starbucks, obviously, is getting a positive response. they did acknowledge elliott as a shareholder. they talked about constructive

dialogue with elliott, which as our viewers know is probably the premier activist at this point in our markets. unclear where that goes, whether they end up with a board member or two. i'm told -- i believe that stake is a significant one, as much as $2 billion. >> yes. and i understand that it is -- that that's not just fatuous. that's real. >> and what, jim? what happens now? >> okay, here's what i think is the real story with starbucks, and it's a painful one, actually. they have -- the people who are already customers, in other words, the bottom of the funnel, are doing -- they're spending a lot of money now. they've picked up in transactions. it's going well. but david, the casual starbucks drinker, who may have been affected by mischaracterization of starbucks by its relation to a country and an issue, that's still there. >> that's still an issue. you're obviously referring to what are kind of boycotts related to -- yeah. to gaza, essentially. >> it's hard to talk about

because they -- >> it's bizarre because it's like, why? why? because howard schultz, the founder -- not even founder, but the man who's most associated with it is jewish? i guess that's the reason. they don't discuss it, do they? >> no, they call it a mischaracterization and i'm going along with them because i have no desire to stoke or to -- >> but it's had an impact. >> that's the casual -- the casual starbucks person, for some degree, has been disswuade by protests and boycotts, and carl, it does have a stigma that i think is undeserved, but it doesn't matter. who am i? that has hurt the person who says, maybe i ought to go to starbucks. that's real. >> the last time laxman narasimhan was on with us, it was about throughput and mobile ordering. >> they're getting better at that. there's a couple of seconds they're saving and obviously what they're really doing is trying to figure out where the siren points are, the crisis points. they're getting to that. do i think that this was an

inspirational quarter? i think that this was a quarter with just said that starbucks may be out of the existential in the u.s., but china, who the heck knows? china is so horrible for almost every single company except for the companies that are involved directly with public health. for instance, ge health care will tell you that next quarter it's going to be better. but i have no solution. if i were laxman, i know i can change things in the u.s. by making things faster, getting the labor force to be better. i don't know what they can do in china. they can't shut it. i know what i liked about -- what i thought was surprising was starbucks still has a lot of cities where it's underrepresented. laxman's using tier 3 cities in our country too, so the hope is that they can start putting up new starbucks where they need them and have them be efficient, which is what laxman's real calling is, not coffee. >> guys, i did want to draw your -- both your attention to the fact that nvidia shares are

up 7.5%. obviously, amd is up a like amount. the capex numbers from microsoft have to certainly be viewed positively in terms of what that means for nvidia, not to mention, of course, just amd as well in a way helping. the stock was down sharply yesterday, jim. >> yes, it was. >> it was a painful day yesterday for those who were sort of still caught in that rotation on the wrong side. >> yesterday was the -- was the day of maximum despair, and then microsoft didn't help that that stock was down 30 when they reported. david, look. i like what lisa su said very much. i really like what nadella said on the call. i keep going back to the alphabet call, which was not good, because the alphabet call said, listen, they have to do it. if someone doesn't do it, they may lose. that's a terrible roi. that's, like, no roi. and that's been dissuaded on top of this, which makes you feel better about nvidia, about jensen huang, and by the way, about meta. >> meta as well.

>> yes. >> why? >> because meta is a huge customer now, which is kind of unbelievable, because five years ago, i never would have imagined they would be because of -- jensen wasn't that crazy about their business model, but meta is a huge customer. if you talk to lisa su, some of them we've almost forgotten in the discussion, which is elon musk. they bought 50,000 of the h-100s and now you've got the blackwells and what they're all saying is they're being used. the h-100 is being used. they're not sitting in a warehouse. i think that the demand is there. i think that the really important people are elon musk and mark zuckerberg, because they're the two that present use cases that are not a traditional compute. they say good things. elon said good things about nvidia, but if mark says good things after his fireside chat earlier in the week, that will really make it so you get a second day. >> morgan stanley today, nvidia, top pick, doesn't change their number on target or earnings. >> that was a good piece. again, 23 times earnings. remember, nvidia tends to

surprise to the upside even more than the $500 million guide-up that we just got from lisa su, but if nvidia surprises, it may turn out to have a high teens pe. now you're starting to talk about a pe that's dramatically lower than procter & gamble. >> wow. >> diapers. >> yeah. >> and screwed up in china. geez. anti-corruption. david's been -- you guys have been to china. is it anti-corruptive to chew gum or something? >> that's singapore. >> that's right. they whip you. but china, anti-corruption, procter & gamble. procter & gamble is like the most honest company in the world and they're nailed for anti-corruption? what is going on over there? i guess they're also -- they're so afraid of telling the truth. >> it becomes more and more difficult to find out what's going on there and you can't really talk to people in china

about what's going on because they don't feel free to discuss it. i had the opportunity to meet with a lot of chinese businessmen and women from the business community and of course it's what you would expect. it's not black and white. it's very gray. >> is fascism gray? what's gray about fascism? >> they're still capitalists, a lot of people i'm talking to. >> they're capitalists? >> yeah, the person who runs cic, yes, they are capitalists. >> they're the first to go. >> meantime, china manufacturing pmi, down three straight months, jim. if it weren't for that, it might be even higher. >> i love to tell the truth about china, which is that business has ground to a halt unless it's emergency services. real estate is not doing anything. the state-owned companies are not growing. i mean, you don't -- people aren't drinking a cup of coffee. honestly, carl -- >> there's a lot of debt all

over there in different pockets. >> don't cry for me, china. >> may not be fully recognized, particularly at the local level, taken on by municipalities that thought that they were going to be able to meet those interest payments by selling property that they were not -- that they have been unable to. that continues to be a real issue for china. >> do you think it's the military that can save them? >> the military? >> you grow the military? >> i don't know. you know, at the same time -- at the same time, huawei, which we were supposedly putting out of business, is more dominant than it's ever been in the chinese market. you can say one thing, but there's also another, which is that they do manage to continue to grow companies rather well with state support, no doubt. >> would you rather own deckers, which is hoka? would you rather own on, or would you rather own nike? >> well -- >> who's got a big china business? >> i don't like ons because they squeak. >> you get pebbles stuck in them. >> i'd go with hoka. >> that's good.

hoka for $300. what's happening, carl, that i think everybody realizes is that the consumer is tapped out there. whether it be for an expensive cup of coffee or jordans. so, then, the question is, does the consumer have enough money for an apple phone without a phone company like a t-mobile or verizon that's backing them up? and that's what i want to know. >> we're going to talk to sievert in a minute. props to our friends at "squawk" today, great show with the chiefs of mcdonald's, coca-cola, our bosses at comcast, and delta where ed bastian talked about what kind of recourse they might have after losing half a billion dollars in five days. take a listen. >> i think this is a call to the industry. everyone talks about making sure big tech is responsible. well, guys, this cost us a half a billion dollars, so that's what's -- >> what's going to happen? you're suing. >> we're going -- we have no choice. over a period of five days, between not just the lost revenue but the tens of millions

of dollars per day in compensation and hotels and we did everything we could to take care of our customers over that time frame, we have nowhere -- if you're going to be having priority access to the delta ecosystem in terms of technology, you've got to test the stuff. you've got to -- you can't come into a mission critical 24/7 operation and tell us we have a bug. it doesn't work. >> went on to say they had to physically reset some 40,000 servers. >> social it's unbelievable. it's just unbelievable. we have some of the companies that have done well were companies that had no money and didn't take the update because they didn't have it, and then i think that we're going to hear from tim cook that maybe you need to have apple in the enterprise because apple didn't have this problem. so, i think that's one of the things i'm looking forward to speaking to tim cook about. david, apple is coming through in so many different places as positive, including being able to take a.i. from other companies. that's going to be the battleground.

that's the stock that's the battleground. that's the one you need to be focused on. >> we're going to get results from apple. you're going to be bringing us, i believe, as you typically do, at least some portion of a conversation with tim cook. >> absolutely. >> and amazon also yet to come. that stock is up another 2.5% as well. so, earnings from both of those are on their way. speaking of earnings -- >> can i just tell you, do you know matthew mcconaughey, the actor? >> i don't know him personally, jim, do you? >> he was sitting to the left of my wife, and to the right was a guy, mike sievert, and my wife said, boy, that guy, he's so boring, but wow, who was that guy from t-mobile? he's dynamite. >> well, speaking of mike sievert, amazingly enough, matthew mcconaughey is not here. >> sorry, matthew. >> good morning, guys. >> sievert is. let's given you a quick intro, mike. your second quarter revenues from postpaid phone net ads were ahead of estimates. you raised full-year customer and free cash flow guidance.

thank you for joining us. >> great to be here. >> 770,000 postpaid phone customer additions. that was top of the industry, despite what seemed to be, and concerns were there that you raise price, would that actually hurt? it didn't seem to. why not? >> well, david, it was the biggest q2 on customer growth in our company's history. and it really shows that we've got a bond with customers. they trust us to be the best value, and over time, every company has to keep up with the times and make some changes, but they trust us that we deliver the best value, and increasingly, that we deliver the best network. when you add that up, we're able to outperform the entire industry, more than at&t and verizon combined on customer growth yet again this quarter. >> yeah. mike, i got to get right to this because it came up so often in the call. there was a heard on the street in the "wall street journal," and this is the fiber part of your business, which frankly we rarely, if ever, talk about. fixed wireless, yes.

high speed internet adds. >> that was the highest share of the total broadband industry we've ever taken in a quarter, about 75% of all industry broadband nets, including all fiber, all cable, and all fixed wireless, 75% taken by t-mobile in q2. >> how much of that 406,000 was fixed wireless as opposed to fiber? >> pretty much all of it. we're really just getting started on fireworksber, and we that big announcement of our joint venture with kkr. we picked metro because it's the best. and so, we wanted to be in business with them. we have a business plan of achieving 6.5 million homes passed by 20230 with no further capital calls to support that business. >> that's the key question. people want to understand how you're financing this, what the impact will be on your other capital allocation decisions. so, how do you explain this

fiber strategy vis-a-vis, especially, capital allocation? >> well, we're in it because we thinking we can make money in it and we think we can outperform purely disinterested financial investors because we've spent tens of billions of dollars building a brand, building a scaled national capability, collecting now with this quarter more than 100 million postpaid wireless customers that we can sell into. that's a milestone for us. and so, those are advantages for us in the fiber space. we're not doing it to defend a wireless business. we're doing it to make money, and of course, we're doing it in business with the very best. >> and you believe you can compete on price in that business as well? >> absolutely. we can compete on price and quality, and with pure play fiber business, you know -- >> you keep saying pure play. >> look, this is an asset -- with fixed wireless, we have the best value, and so now, we're covering the other end of the spectrum with the best product. what that means is this is fiber to the home, symmetrical speeds,

highest performance available to consumers. >> no latency? come on. >> this is going to out -- cable for quality on the one hand but on the other hand, we outcompete them on price with fixed wireless, so there's a -- it's a great opportunity. >> if i'm watching a football game, if i'm watching the kansas city chiefs versus the miami dolphins on peacock, are you telling me that your product is as fast on -- >> if you have ten high-definition tvs in your house, all watching separate channels, we got you with our fw product. >> when do you max out? i can't believe you're able to put more than 6.5. that must be it and cable starts doing better. >> fixed wireless product, our view is this is a long-term business with room to run, and not everybody agrees with that, but then again, not everybody thought we would be able to do five million subscribers in just the the last three years. there's a segment for this. >> and the capacity won't be capacity-constrained, to jim's

point, over time? everybody assumes it's going to run out of steam. obviously, pure fiber is a different strategy. >> and now we're augmenting it with fiber so we have multiple ways to attack the marketplace and serve customers in a very complementary way, one that's based on value, taking advantage of our embedded assets in wireless and one that's based on super high quality with the very best assets in the space. >> what if the terrific people at at&t and verizon who you respect and trust decide to go to tim cook and say, you know what, we are really in trouble. this t-mobile is killing us. we got to give away the 16, the 17? is that okay for you? i have to believe that verizon and at&t are not happy with how they're doing versus you. >> they also had quarters that were better than were expected of analysts, so the overall market is very, very healthy. and you know, we're all expecting a big iphone launch this year. i'm excited about it. i think consumers are excited about a.i. but it's hard to predict what upgrade rates will be because a lot of that a.i. technology is

also good on your existing phone so we'll have to wait to see what apple unveils but t-mobile is ready to compete either way. >> on the home market, we talk a lot about this lock-in effect in housing where rates are high and inventory's low and people don't move. if that were to loosen, does that unlock more opportunity or is it more about getting people to switch in their existing home? >> i think it's about getting people to switch. moves are a big opportunity. they always have been in the market and it's certainly an opportunity for fiber because now you're going to make a fiber choice. but look, fiber's just a lot faster. especially on the uplink, and fixed wireless is a lot lower price, and so both are reasons to switch. more than half our customers on fixed wireless are coming from cable. >> to jim's point on apple, it's not an unimportant one. we don't know what the phone's going to be exactly, but do you think you're going to have to be in a position to subsidize it to compete? >> that's been the case for a long time. this has been a market where the promotions, iphone 15 on us, you see those consistently across

the industry. i don't expect a big change in the competitive dynamic. all the competitors compete ambitiously, especially around launch time. i don't see a catalyst for much change. we intend to be there with great offers for customers, and we're excited to see what apple will unveil this fall. i think it's going to be an exciting launch. >> do you? dupont do you know anything we don't know? >> i'm a fan >> mike, finally, another company we talk about, starbucks, are you happy with the direction and management of starbucks? >> i'm pleased to be a part of the company. it's a company with just a storied history and tradition and incredible opportunity, and there's some near-term challenges and you heard the team talk about those yesterday. so, the board's very actively engaged in all that, being helpful and supportive. i think there's changes that are required, and laxman outlined some of those yesterday, including a strategic change in china and other changes that are coming, but i think what the team needs is a little time to

correct some of the near-term challenges that have -- the company's been struggling through. >> mike, we always appreciate you keeping us up to date on t-mobile and the continued success the company's had. thank you. >> appreciate it. >> see you, mike. chicago pmi is on the tape. let's get to rick santelli. hey, rick. the company has had. thank you. >> thanks, guys, appreciate it. >> chicago pmi is on the tape let's get to rick santelli. >> the weakness continues. chicago pmi for the month of july expected around 45, comes in at 45.3. yes, it's a smidge better than expectations but it's lower than 4 47.4 in the rear view mirror and this is the 23rd month with one reading above 50 that was november of last year. weakness and employment cross-index came in light. adp the weakest going back to january of this year. we can see yields moving lower,

extremely lower today in front of the fed ten year getting closer to 4% and if you look at two year we are now at 433, down 3. we're comping the february and two year to march in ten year and "squawk on the street" will return after a short break.

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let's get to jim and stop trading. >> when visa reported they really laid an egg. we see the consistency coming from master card.

healthy consumer spending, huge strong cross border growth, all good. strong demand for their value added services. when visa came out that was the down beat portion of the earning season and i think that puts this one takes that bad taste away. i was going to do dueppont, everybody division is breaking up and doing well. >> to your point about the industrials, jci, borg warner today all high single digit gains. >> yes. ' 'eaton is a trend stock but it's hurt by the fact that data centers are not going to be built. microsoft and amd put that story to bed, there are going to be more data centers built.

>> nclh helping returns about travel and cruises. >> i hope that reflects well on disney which has been rather quietand awful. >> how about tonight, jim? >> what's the matter? i'm sorry, suboptimal. i forgot to be a diplomat. people want diplomats. >> the world needs diplomats. >> look, they were a great team but 25 and 22 in the last few and they're awful and stink, that's the world i'm from. the quarter from disney is not good. they stink. they lost last night to the yankees. they walked bryce harper, we lose, they come back in the 11th. for sports we have rigor but ceos paid the same price as people who are professional athletes we have no rigor. we can't insult them. bryce harper insulted every

athlete in philadelphia. but no ceos, they're fine. they're fine, okay, not bad. >> fair point. >> disney down from 120 to 90, easy come, easy go. >> the cast members got a tentative agreement. >> did you see the cast member smoking the cigarette on without the mask on, terrific. no, it's fine, anyone that makes 35 million, they're immune from criticism, whether it's a ceo, athlete, all of it. >> all of it? >> once you make 35 million you're the man. >> we'll see you tonight, jim, "mad money" 6:00 p.m. eastern time. after the break, housing data, don't go anywhere. . (♪♪) surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund

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good wednesday morning. welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber live as always from

post nine of the new york stock exchange. stocks are rallying today. we did get a bunch of economic data ahead of the fed this afternoon. the s&p is up 1.25%, nasdaq surging 2% on the final day of july, the best month of the year. the dow underperforming, though, it has outperformed on the month. looking at treasuries, seeing yields lower as well. 10 year yield just below 4.1%. so a lot of high expectations for the fed to signal a cut this afternoon. we'll talk about that in a moment. 30 minutes into the trading session. here are the movers we're watching. boeing, the plane maker reporting bigger losses and naming a new ceo. microsoft under pressure. growth in the company's main cloud computing business azure narrowingly missing and overshadowing a top and line beat. amd rallying, ceo lisa sue

joining us in the last hour talking about the growth in a.i. listen. >> you see, i view a.i. pcs as really a category changer for the pc market. where, you know, we see an opportunity not just to do the things that we normally do with pcs, like gaming as well as enterprise productivity type of applications. but a.i. will give us yet another capability with the pc that allows us to do things locally. and a lot of people, although we like working in the cloud, there's some latency involved with that, and the idea you can do things on your pc with your personal data is a positive. >> a.i. pcs, the semis on pace for the best day since last february but the worst month since 2023. >> home sales data came out a couple of moments ago, up 4.8 in june, we were looking for 1%,

that's making it the best frint of the year so far. prior was down two and change. >> lower rates, mortgage rates good for housing. >> although mortgage apps weren't on fire. >> we're still in the high levels. because it's fed day we look back at where rates that affect you were before the fed started raising interest rates during this cycle a few years ago and where they are now. and they're significantly higher. so we put together the 30 year mortgage rate the home equity rate, which is also significantly higher at almost 6%. this is how ordinary people feel what the fed has done between march of 2022 and now. those rates in march 2022, were lower before. that was a run up in anticipation of the fed raising interest rates. that's the backdrop for today. >> not to mention the 10 year is below 4.1. >> that could offer some relief. we're at the lowest levels since

march as the market prices in about 100% certainty the fed is going to cut rates in september. the question today is how they signal that. how fed chair powell in his news conference and how the committee in their statement signal they have made more progress on inflation because they have. but don't go all out tele telegraphing and tying themselves necessarily to a september cut because there are two more inflation reads in july and august before september. look at treasuries, yields are lower. adp private sector jobs that was a bond friendly report because the headline was lower than expected, 122,000 private sector jobs added. less than expected not the best correlation to the government report which we get on friday. here's the breakdown. this is actually the pay breakdown. but one thing i wanted to point out on pay overall is that the median change was 4.8% for job stayers and that was the lowest it's been. and for job switchers who get

paid higher, 7.2% is also a lower number. so again, fed friendly, put that with the employment cost index report that came out today as well, that was lower than expected and a reversal of the early quarter and more progress on the inflation front which is what the fed wants to see and the market wants to hear from fed chair powell today. >> you're not expecting any surprises then, as you say, just the language how he signals? >> it's how he signals and the committee signals. i think the surprise would be if he doesn't -- if the market isn't convinced he's committed to a september cut, that could be a hawkish surprise. a dovish surprise could be more telegraphing they're ready to go into an easing cycle. if you listen to the corporate commentary, just the last 24 hours from the consumer, which i'm sure the members of the fed do, hasn't been all that hot. listen. >> you're seeing that the consumer is eating at home more often.

seeing more deal seeking from the consumer. and you're just seeing i think a trade down even within either units per trend action or within mix. all of those things for us are indicators that the consumer across a number of these markets is being very discriminating. i would point out consumer sentiment in most of our major markets remains low. >> at the end of 2025 we continue to expect the environment around us to remain volatile and challenging from input costs, currencies, consumer, competitors, ret retailers. >> i think we are operating in a challenging consumer environment. >> lowering from consumers they have moved to a basket size they can afford and if the biscuit brand they like, it can fit in there at the right price point they buy it. if not they will not buy any bis

biscuits. so these days we have to be much more aware at which price point we offer it back. >> it remains a difficult consumer environment. >> that was the week according to consumer ceos everything from mcdonald's to starbucks to the packaged food companies. apparently there's pressure and that weakness is something for the fed to pay attention to. part of the mandate is employment and growth and the other part is inflation. so one key phrase, you asked about the surprise factor in the committee's language to watch. they said inflation has eased over the past year but remains elevated. do they take out the remains elevated or signal in some other way? just something we're going to be watching. european inflation didn't go in the right direction today. it was hotter than expected. >> you didn't want to talk about the japanese central bank? come on. >> i was waiting for the prompt. >> there it is. i gave it to you. >> so bank of japan managed to surprise today and the market

was impressed with it, even though there was expectations they would hike interest rates and they did, they cut their quantitative easing program as well. so the yen rallied and that's a story of the last few weeks as the ride, but the rallying yen is a factor here. they did manage to get it to go the other way. because the weak yen had been painful for so long. good on them for surprising. it's hard in this central bank era where the market expects every move and all the moves were tell gratedegraphed they w to do so. >> got numbers on the july intervention and the. >> let's get to phil lebeau with boeing's details. >> it's taken four months since boeing said they would start looking for a new ceo.

they have one this morning announcing that kelly orkburg he will become the company's next ceo. he moves into the top job, starting next week, all eugust . if you're at homing saying who's ke kelly ortberg, he's 64 years old. the boeing board has waived the mandatory retirement age so he can serve for an extended period of time wp ran rock well collins from 2013 to 2021. oversaw the merger with utx in 2018. his background in terms of college education, mechanical engineering. that's crucial. if you go down the list of things that people were saying this is what we need, an engineering background is one of those things that was listed, as well as being an outsider, having vast experience within

the airline industry, rockwell collins was one of the largest aviation suppliers when kelly was running it. in q2, there was larger losses than expected. revenue light of expectations at $16.87 billion. the company did however reaffirm its commitment or its target of building 38, 737 maxes per month by the end of the year. they're not close to 38 at this point, that's what the target is for the end of the month. they've had that out there really over the last couple of months said that's our goal. reaffirmed it today and the 787 reaffirming of five per month. the quarterly conference call is starting in about 20 minutes. we'll hop on that call. dave calhoun will be running the call along with the cfo of boeing.

kelly ortberg won't be on the call. we'll let you know what they have to say, it starts in about 20 minutes. >> 64 is not old. but it's older. you pointed out waiving the retirement age, how long is this guy going to be around? did he sign a contract? >> i don't know the length of the contract but it's not a one or two year stint. the fact they ragot rid of the mandatory retirement age,i don't think kelly would come in unless he had a mission. and remember, they have a slew of issues there that go beyond the commercial airplane. defense, posted a million dollars again, that defense business is a huge mess right now in terms of certain programs

there. and then you add in other things, dealing with the government, regulators, he has a full plate so it's going to take a while. i wouldn't be surprised david. people said was this a kitchen sink quarter? i don't think so. new ceos have a honeymoon period so say let's bring it down and clear the decks as much as possible. >> we'll find out more about that. phil, thank you. let's get the reaction from the street. buy rating on boeing, target price 270. sheila, what do you think of this appointment? >> lots of upside. i think kelly is -- one thing he'll brick, he's not the manufacturing guru of larry, but i think what boeing needs is somebody that listens, listens to the faa, to the workforce, suppliers. he was a big supplier at rockwell collins there from 1987

his entire career and he grew revenues and was a growth d driver. he took share away from honeywell on the avionics side. so he's the next best thing. but i think he's going to be well liked by the workforce and boeing needs that. this isn't a kitchen sink quarter. >> does that mean there's one to come? >> i think it's slow and steady improvement. i think that will be appreciated by the street. so yeah, i don't think it could get worse from here. i mean, if you look at -- at the quarter deliveries we're at 2021 levels. that's where covid deliveries look like on the max. so we have big improvements yet to go on the 737 and 87. the commercial programs are at lows here. defense need more program management and that's where we see more of a kitchen sink.

>> when dave calhoun was hired to lead boeing he was hired to fix it, fix the culture, the safety record, so what is going to be different this time? what's needed? >> i think david wasn't an outsider he was on the board and he had different characteristics to kelly. i think kelly will be listening to the workforce, more present with them and listening to the suppliers and that will go a long way. that's the difference. also dave took over during the pandemic which was difficult and he had a learning curve. i think kelly the differenceis he ran an aerospace company for a long time. and he was very involved with capital deployment. during his tenure he bought two large companies and sold his company to united technology so he could do more with a balance sheet and that's a positive catalyst. >> how quickly do you begin grading him? do you give him a year? how long before you want to see

the improvements you expect may take place under his leadership? >> i think the easiest way is look at monthly deliveries. boeing accomplishes it every month and the share price essentially track that is. you have a low base of 22 delivers on the max and the 87 subfive so anything above that helps to get the stock going in the interim term and the long term to get the stock to 27 0, 300 is about improving cash flow and driving steady improvement. july deliveries, that won't be kelly but i think more positive. union negotiations come up in september and he'll be involved in that. so i think we'll see small positive catalysts along the way. >> year-to-date free cash flow burn of 3.8 billion. so they have a long way to turn it around. sheila, appreciate it, thank you. >> thank you. as we head to break, shares of mov down but off the morning

lows, how to play that stock from here. stock is rallying for starbucks. we'll tell you why analysts are feeling better about the results. it is the last trading day of the montht' is been a volatile one for sure. we'll talk about the sectors you need to watch for august when "squawk on the street" continues in a moment. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

microsoft shares trying to unwind some losses from last night.

azure and other cloud services fell short of growth estimates. our next guest maintains microsoft as the top pick bullish on a.i. joining us is brent phil. a 550 target and buy on the stock. always good to see you. the title of your note is tripped on the hurdle, still leading the race. is the hurdle about azure? >> it was. good morning, carl. you know, they effect i hively a high bar to hit. they missed their own expectations and the street was higher. so we think it was a short term stumble. they're so far ahead of others in the a.i. race we don't have an nvidia of software, microsoft is the closest to it given their positioning in the a.i. so today we think there will be a reacceleration into the back half. this is on expectations.

it wasn't competitive, just a little weakness in europe and transactional weakness in the quarter. this was their lowest beat in six quarters. if you want to be honest about the situation, you know, they've been putting up way better quarters. this was their strong q4 everyone was searching for a little more answer about what happened. but again i think we're talking again as we said, they missed by inches but the dpacompany is st ahead by miles. >> what number are you using for full year cap x? are you convinced about their arguments, the durability of investments. >> it goes to $80 million which is the gdp of lux emburg. you think about the number it's insane. higher than most of the other cloud providers. and as they said on the call, they can't keep up with demand.

a.i. demand is higher than what they can actually provide. so everyone is saying how do you know this is going to work? we've said, look at what they did with windows, in gaming, with azure. nadal and amy hood have been so far ahead of this. and everything they've invested in has paid off, the fact that they improved margins in the year of a.i. tells you they're going to make money. it's incredible what they're able to do on the bottom line in the face of all the spend. so everyone asks what gives you conviction, the conviction is 25 years of covering microsoft, every dollar they put in, they get more out. i think this is the same. it's early. we're like mile one of the marathon and it's hard to see but based on their track record, all roads lead back to this is going to pay off. >> well, yeah. informed shares are showing up over 10.5% right now. what does it mean for the rest

of your coverage universe you see microsoft spending this money and you're a believer they'll see a return and jen raft great margins on it as well. >> as a software analyst i said this i want to be a semi and internet analyst right now. semi is not the place to be. you have cap x going up $10 billion plus on top of our forecast. it's going to amd, nvidia, arista for networking. it's going to a.i. infrastructure. the foundation of the house has to be built, the plumbing, the con concrete, the wood, that is not our vendors, the software vendors are our art work, they get hung at the end of this. so software is the tail end of this, it's not the first place that monetizes. so it's not great for software short term. i think over time it will be good and it's more of a 25, 26

event. so as i said, software and the rest of tech are going to lead the way. software is going to lag but should be good into 25, 26, valuations aren't crazy, multiples have been reset. the backdrop of demand is coming but investors have to be patient in the software industry. >> we'll stay in close touch in the back half of this year, into next and talk about pc. appreciate it, as always. >> thank you. after the take, the street's takes on starbucks after the shares rally despite the miss and what investors need to know about the comps. 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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and on-time close guarantee. welcome back to "squawk on the street." let's get to megan in d.c. with a news alert on the chips. hey, megan. >> hey, carl. cnbc has new details on the rule the congress department has been working on blocking exports of chips, from some foreign countries into china this would expand u.s. powers to do so. three sources tell me the rule is in progress, currently in

draft form and subject to change and we could see it in the next month. but also this has been the subject of intense debate in the commerce department and the u.s. and allies. some allied countries are expected to be exempt from the rule, including japan, the netherlands and south korea. this confirms a report from earlier today on this. it's a major win for japanese, dutch and korean companies. especially asml and electron. both have ties to china but it's bad for u.s. chip makers like micron or kwqualcomm. one person described it as a worst case scenario that hurts u.s. competitiveness and u.s. national security interest and limits the impact of the rule in slowing china's progress in advanced advanced chip manufacturing, so a lot in flux as the u.s. works to balance the issues of national security and

competitiveness with working with their allies. back to you. >> it's surprising that it went this way, isn't it, megan? because the thinking was that the u.s. chip makers lobbied so hard to include the foreign chip makers as well because it makes their life difficult. not to mention it gets the semiconductors in the hands of the chinese. why are they going the other way? >> absolutely. you have to imagine this move is a boone to the allies. it's some sort of a step to make sure they're happy at the expense of the companies. again i would say we might see this shift a little bit because clearly we've seen a lot of disagreement internally and that's why you're seeing the leaks now. clearly i think they're trying to smooth things over with the dutch, japanese, and koreans. but you have to wonder what it means for the u.s. companies what they'll be lobbying to do next because of it and whether

because of it, it changes. they want to freeze chinese technology in place, and staying a generation or two behind everyone. so you have to wonder about the impact of this if they do allow for such sweeping exemptions. >> megan, thank you. another quarter of declines for starbucks. shares though, still higher a though off the highs of the morning. kate rogers with more on the street's reaction. >> good morning, it was a mixed quarter for starbucks with challenging sales numbers in key markets including china. but the takeaway from the company is it has confidence in the plan to turn things around. it reaaffirmed the full year gui guidance. executives said there are reshoots and promotions are helping to boost average tickets in the u.s. the ceo said we're not satisfied with the results but our actions are making an impact.

goldman out with a buy rating saying we acknowledge the still prevalent market skepticism as well as fundamental issues which need to be addressed. however we believe the worst is behind. ubs neutral, $85 price target here. results included some indications of progress against strategic plans but expect starbucks is improving frequent demand among nonloyalty customers. and j.p. morgan calling the results tolerable but not in the clear given the traffic drop in the u.s. one thing to note on the traffic drop is that the average ticket did go up because they are issuing, as all of us have seen a ton of promotions, a lot of promotional activities, and that is working because people are adding on more items to their

ticket. and that boosts the number. >> the comment on china was bearish, what's the strategy there? >> to the point of promotions, discounting and price competitiveness in china, loxman did say on the call the chinese consumer challenged. the decline in same store sales was more than double what the street has estimated but as we heard from executives, they are playing the long game there and do not look to get out of the china business any time soon. the strategy i believe is stay the course, cater to younger consumers and maintain the premium position. that's a delicate balance that starbucks is trying to walk because it needs the discounts and promotions but wants to maintain the position as higher priced premium brand. >> thank you, kate. still ahead, it is decision day for the fed. plus fed chair powell's news conference. we'll get you ready with a

former fed governor when we come right back.

welcome back. reaction is pouring in this morning after hamas' political chief was killed early today in iran. secretary of state antony blinken said the u.s. was not aware of or involved in the killing which hamas and iran have pinned on israel. israel has not commented. qatar's prime minister suggested the as is nation could cause cease-fire talks to fall apart. far right protesters clashed with police in england last night a day after three children were killed in a stabbing attack at a dance class. 40 officers were hurt after the demonstrators targeted a mosque and began rioting claiming the stabbings was a terrorist

attack. police said that's not the case. and boors head expanded a recall, the initial recall was 207,000 pounds of meat last week. the expansion includes meat intended for slicing at delis. it is the final trading day of july, the nasdaq on pace to end in the red. the russell 2000 that's the big story it's up 10% in that time. bob pisani is at post nine, going to breakdown an eventful month. >> what's great about this month, it was exciting from a stock point of view, this was the month when the great rotation got real. this is the month the rotation became more than just a one day event. going into the last day of the month, tech is up today, but the

s&p 500 is flat. but everything else further down the market capitalization scale is having a fine month look at the s&p equal weight. russell 2,000 up 10% and mid cap up 5.5%. and within the sectors, it's large from 30 from the best. banks are having a slam bank month on the earnings. industrials, health care are up, real estate, utilities and look on the bottom end, technology is down here and communication services that's down as well. so when you have sectors like banks, energy and health care, and consumer staples on the upside. that usually would signal a strong month for value stocks and that is exactly what's happening here. why is this happening? if you look at the value, value is outperforming growth here by

10 percentage points. value up about 4 or 5%, growth is down 4 or 5%. why is this happening? since small caps often have more debt and higher borrowing costs, the expectations of lower rates are a bigger factor but valuation play a part as well. large tech stocks have grown al evaluations much faster than the rest of the market. the russell 2000 would also benefit any time a rotation out of tech occurs because the weightings are different. the two sectors that comprise technology in the s&p 500 tech and communication services are 40% of the s&p, look at the russell 2000 it's a much more diverse index. great representation here across industrials, across health care, and financials. a lot of small cap banks in the russell 2000. so the important thing here is when a true rotation occurs in an environment where the rates are expected to decline, small caps are going to be the big

beneficiary here. so here's the question, what's the pain trade in august? at the end of june it's exactly what happened. rerating tech stocks and small cap and value come up. the pain trade happened in a big way, everyone was off sides. now the market is more balanced. i like the market a lot more. it's about time we got mean reversion for small caps and value. the pain trade is harder to figure out right now. obviously something big happens off sides on the election or something happens unusual in the economy, that could do it. but the market is a lot more evenly balanced now. i think frankly a lot healthier right now. and look at today in technology, we had alphabet saying we 'spending money we don't care, not sure it's going to pay off. microsoft said we're spending a lot but the demand is enormous. they said it the same thing but in a different way. demand is enormous microsoft acknowledged and everyone is going with that narrative rather

than alphabet when is this paying off narrative? same thing but slightly different spin on it. >> yeah. >> you can see the investors are reacting. >> great point. >> amd helps a lot. >> there are choices right now. thanks. bob pisani. to bob's point, a decision from policy makers this had afternoon. our next guest does expect two cuts this year, beginning in september, joining us this morning, former chairman larry meyer. the last few days we have had former fed officials argue that july should be live. you're not quite there? >> no. this is not decision day. we call the meeting dels decision day this is not a a decision day. this is a day to watch the statement and the press conference. and the objective is setting the stage, not starting. setting the stage. and reinforcing market expectations which expect a september cut.

>> what kind of pros will convince you that is exactly what the fed chair is trying to do? >> what they're talking about are progress. progress on inflation. additional confidence. the orders that suggest they're ready to go. in addition they'll be talking about the dual mandate, the balance of risk because they're not only worried about inflation, but they're worried about an unwanted cooling in the labor market. the labor market is fine right now but that's where the balance of risks are. and the labor market will determine how fast the fed cuts. >> larry we waited a long time to see the lags from the higher interest rates. what are the lags looking like when the fed starts cutting? >> i think they're the same. you know, it's a -- a year -- >> in other words, how will they know how many times they need to cut to preserve this soft landing? >> you don't know.

what they -- what they think now is given their forecast, they think they have to move towards a neutral rate which consists of being at and staying at maximum employment and price stability. that's what the models tell you the judgmental forecast and you're responding to the data. the data is telling you you're right about inflation and you're right the labor market is cooling. so everything is consistent with their expectations. >> so what should they set the stage for beyond a september cut at this point? especially when there's a debate as to what neutral looks like and when they're going to be able to get there. >> right. so first of all, they're not setting the stage but saying something that everybody should and will interpret that this is not a mid course correction. it's the beginning of ongoing easing cycle and they're searching for neutral and don't know where neutral is. call it 3 to 4%. to the extent it's 4%, that

means slower. to the extent it's 3%, that means somewhat faster and that means you have to be more cautious. you want to get to 4% by the end of next year, i'd say, and then you want to be a little more cautious because you might be where you are. look at the data, look at how the labor market is doing, look at what happened to inflation. and neutral is unobservable and that's always going to be an uncertainty but we have to see what they think it is. >> larry, it's a treat for us to get your guidance and color on an important day as always. thanks so much. see you soon. >> my pleasure. after the break the pulse of the consumer with the ceo of beca bausch and lomb as they raise guidance.

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welcome back to "squawk on the street." fresh read on the consumer as bausch + lomb reports second quarter results revenue growing

across all segments. the company raising the full year guidance. joining us is bausch + lomb's ceo brent saunders. welcome back, brent great to see you. >> thank you, great to see you, sara. >> what does it mean with eye care, a company you turned around since becoming ceo. is it the moves you're making, something with the consumer, discretionary? >> it's multifactorial, first and foremost when you put up 20% growth and see growth across all of our businesses in every region of the world you have to say first it's the team here executing and really being reenergized to focus on our consumers and patients and put the work in. i think second is you're right. these are growing markets across the board most of our markets and eye care grow in the mid single digit. most eye disease is related to age and the world is aging.

and then environmental factors like screen time and we know how much time everyone is in front of a screen. certainly our -- you know, a tail wind in growth in this market. and lastly innovation, when you drive new products and offer consumers and patients real innovation and opportunities to see value in your products it's usually the winning formula. >> 150 million u.s. adults experience frequent or occasional symptoms of dry eye. so how under treated is this condition? >> you see a full range. about 150 million americans with symptoms of dry eye and about 40 million of those that likely need prescription intervention. and so, what's great about our position is we have the full spectrum. we have otc eye drops in blink or bio true and then the two

leading prescription options. and so, to the extent we could drive some of those 40 million in to see an eye care professional and get treated we offer great options. only about a million and a half actually treat today and the remaining, you know, 110 million go to walmart or their drugstore and pick up a blink or bio true eye drop. >> so you're known as a deal maker, everyone remembers allergan and abvie. are there deals to be made? >> yes. it's not the megamergers that i guess i did at lof in the past this is more about incremental innovation. and, you know, we've really beefed up our r&d expertise, business development and we are starting to really now make

innovations and cutting edge leading innovation for significant eye diseases, whether it's back of the eye redness or ocular surface disease as well as continuing to innovate in contact lenses, a strong internal r&d team there and then of course consumer to . >> brent, how reliant are you on medicare and health insurance and i wonder if you see any changes. it's not necessarily the kind of top of mind issue in the election that we've seen historically, but, you know, vice president kamala harris, when she was a candidate, at least, was talking about medicare for all. >> yeah, you know, you're right. and it is important to us. our pharmaceutical business in the u.s. does really you know, as i said, eye disease is a disease of aging. some medicare population really do need innovation in eye care. and, you know, this election really hasn't been about pharma, but what i would say to both candidates is, you know, we have

a national treasury here in the united states, the innovation engine of biotech and the biopharmaceutical industry. and we should figure out how to really move from treating disease to curing it. and the government should support this industry, not villfy it, for the efforts that it's doing in science. >> finally, brent, hope you won't mind the requisite ai question. we've talked to a lot of health companies that are beginning to be able to verbalize the way in which ai place in any kind of routine screening, right, and the public health benefits that stem from that. can you talk a bit about what you've got? >> we have a bunch of ai initiatives. we started in our manufacturing facility. we had a great partner in arena ai, and we've been really improving the yield on our contact lens lines. we're using ai and r&d to screen drug candidates against biological targets. it's really fascinating and it has great promise.

and we just announced we're using ai, a tool we've built in house called glimpse and our pharmaceutical sales team to really refine the messaging and call patterns for the sales representatives. and we expect to roll that out to all of our businesses as we develop it. a lot of really great innovations. in fact, one of the guests on cnbc earlier this morning has done a great job at sanofi and we've been talking and learning from each other, and i'm going to probably deploy some of the technologies he's been using at sanofi over here. we're just investigating it. >> all right. that sounds like one to talk about next time, brent. thank you very much for coming on with an update. appreciate it. >> yeah, thanks for having me, sarah. >> brent saunders. >> well, we'll stay, broadly speaking, in the health care area. you can take a look at shares of merck. no rebound, this after what was the worst day for the stocks since 2021. a lot of investors still trying to figure out exactly what was said there in that conference call yesterday, which really did pressure the stock.

let's get over to angelica peoples. she joined us right after that conference. what more do we know now? >> david, investors are still trying to make sense about that warning, of the significant stepdown in sales of its hpv vaccine gardasil in china. merck has a few theories on what's causing the sudden change, like an anti-bribery push and less focus from its chinese partner. guar gardasil is merck's second biggest drug behind keytruda. i know that four years seems like a long way out, but keytruda makes up almost half of merck's total revenue, so merck needs to reassure its investors that it can fill that $25 billion hole. gardasil is just one piece of that puzzle, but there are two other medicines that we should pay close attention to. these new medicines are winrevair and capvaxive.

c capvaxive is a little bit more of a question mark with consensus at $1.4 billion. that could happen as soon as later this year and we'll watching for that. obesity is another possibility that meck has talked about. they're not shy about saying they want to do a deal in that space, but they haven't made a move yesterday. the ceo is looking to the next generation of drugs. >> everybody still wants an obesity, even with novo and lilly so far ahead. it's sbinteresting, pfizer had what seemed to be a good quarter. but when we heard merck discussing what you did, it turned around as well. it's down again today. are these fears about merck percolating within the overall sector? >> i think what's really interesting about merck, they are in a situation where you have this patent cliff coming in 2028. everybody knows about it, it's

not a secret. and people have been pretty confident that merck can manage this. you've seen a pretty pig difference between merck and company like bristol-myers squibb, which has a lot more questions around it, and how it's going to manage its patent, but i think what you're seeing yesterday with this gardasil news is people are suddenly questioning the second biggest drug, this vaccine. can gardasil continue to deliver, and now maybe there'll be more talk about what else is there? and that's why winrevair and capvaxive are so important and we'll look beyond that to see what else can they do. i think this is really a merck story. >> too early to tell on winrevair. i know it's just launching, right? >> yeah, with this is the first quarter. and that $70 million they reported yesterday did come ahead of expectations, but there were some questions around how good of a beat that really was, because merck was saying that the biggest driver there was distributors stocking the drug versus people actually taking the drug. i saw some of the different commentary from analysts.

some saying, look, it's really early, it's too soon to say this was a bad beat. others saying, look, we're really confident, this is still the early innings. it is early, but one we'll be paying close attention to. >> angelica, thanks. important sector to keep an eye on. angelica peebles today. meantime, shares of uber and lyft moving higher today. the new york city mayor's office has struck a deal with the ride-sharing companies to reign in lockouts and stop onboarding new drivers. in exchange, the city's taxi regulator has agreed to not slap new rules on the companies. uber and lyft have reportedly been locking drivers out of their apps mid-shift to avoid paying them for idle time between rides. there's that, and in addition, uber, david, announcing this partnership with byd outside of the u.s., on evs and autonomous. so they're having to deal with regulators certainly at the municipal and the national -- >> and the state level, as we know, as well. california had an important ruling last week that was favorable to them as well, in terms of how you treat drivers.

the stocks didn't react too much to that at the time. back here, of course, we're keeping a close eye on microsoft shares, which are down about 1.5%, but nvidia after a bad day in the market yesterday is up dramatically. over 10%. that's a very large gain for nvidia, in part because of that huge capex number from microsoft. you heard brent thil earlier on the program talking about his new estimate. they're going to spend $83 billion at microsoft on capex, broadly speaking in the year ahead. 'seay st ning number. our live market coverage continues after this. switch to shopify so you can build it better, scale it faster and sell more. much more. take your

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good wednesday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live at post nine of the new york stock exchange. the july fed decision, what will paul signal to the market about the timeline for future rate cuts. we'll discuss. >> plus, the ceo of teva pharmaceuticals on ruls. the stock doubling in the past year. recent enthusiasm surrounding its generic glp-1 drug here in the u.s. has certainly given a boost to shares. >> we'll look ahead to meta tonight. a specific focus on the company's massive spending