it is 5:00 a.m. here at cnbc global headquarters. i'm dominic chuin for frank holland. here's your "five@5." cut on the table. jay powell with the policy shift in the fall. >> we can begin to dial back the policy restriction. i believe a rate cut could be on the table in the september meeting. investors cheering what they believe is a certain interest-rate cut two months ago

with gains to wrap up the month of july and some question why the fed is waiting at all. >> i think they should have cut today. i expect the fed will cut rates in line with what the market is predicting. if i had to take an under/over, i think the fed will cut rates more than the market thinks. i think we have 150-basis points of cuts coming, but certainly by a year from now. and bucking the trend. shares of meta platform surging on signs the a.i. spending is paying off. mark zuckerberg laying out loftier goals for the quarters ahead. >> we are on track to achieve our goal of being the most used a.i. assistant by the end of this year. that's a pretty big deal. plus, chip stocks taking a hit again on a pair of mixed reports from two industry bellwethers. later on, oil adding to yesterday's sizeable gains as

the middle east is on edge. it's thursday, august 1st, 2024. you're watching "worldwide exchange" right here on cnbc. ♪ good morning and welcome to "worldwide exchange." thanks for being with us on this thursday morning. let's kickoff the hour with the check on the first trading day of august and a check of u.s. equity futures. right now, we are seeing a bit of a pullback in some of the dow futures losing momentum. we're actually in the red 34 points. the s&p 500 is implied higher by 3 points. the nasdaq up 18 points. very much a wait-and-see after a big day, a volatile day yesterday, and month of stocks with the s&p and nasdaq close out july with the best day in more than two years.

you can see the major averages in july more modest. the russell 2000 up 10%. all this as jay powell closed july with a bang. stopping short of an exinterest rate cut in september. we'll have more on that story in a moment. you can see the benchmark ten-year note yield getting very close to the 4% big figure mark. the u.s. two-year note yield at 4.28%. the 30-year long bond a hair above 4.32%. and oil prices yesterday with gains as investors are continuing to weigh rising middle east risks and tensions and iran's next move following the assassinations of two key hamas and hezbollah leaders.

west texas intermediate prices at $78.50. ice brent crude is $80.80. it's not just the fed moving markets. meta platforms is surging in the pre-market. they are up 7% after beating second quarter expectations. reporting 22% revenue growth to more than $39 billion. net income jumping 73% to more than $14.4 billion thanks to higher advertising spending on facebook and instagram. meta is attributing this surge to the massive spend. then arm holdings are sinking after raising profit forecasts which is raising concerns on investors. it did beat on the revenue and profit side, but ceo says the

company is seeing weakness in the markets. haas will join "squawk on the street" later on this morning. and qualcomm with the fiscal q3 beat. smartphone sales rose over a year ago. expecting a better than spexpecd fourth quarter outlook. to our other top story and fed chair jay powell saying an interest rate cut could come as soon as september if the u.s. economy follows its current path. central bank keeping rates unchanged and saying the risks to employment are now on par with those of rising prices. balanced. in his press conference, powell pushing the message further while being careful not to lock the fed into any move should future economic data disappoint.

>> we have made no decisions about future meetings, that includes the september meeting. the broad sense of the economy is the economy is moving closer to reduce the policy rate. the question will be whether the totality of the data and evolving outlook and balance of risks are consistent with rising confidence of inflation and maintaining a solid labor market. if that is met, the reduction of policy could be met in saccept september. >> let's talk more about this and the market reaction with lizzie evans. she joins us on the cnbc news line. lizzie, this was a widely expected outcome with the rate policy, but do you feel as though now the market's certainty of the interest rate

cut in september is going to come to fruition and how markets move from here? what is priced in? >> good morning, dom. certainly a september rate cut is on the table. what i think we heard from the commentary you shared is a slightly more optimistic tone. what we know from the fed is that they are data driven, not data point driven. dom, we still have seven weeks until the next fmoc meeting. a lot can happen between now and then. the market is having a positive reaction to the commentary. >> we saw that yesterday, li lizzie, with the surge in stocks. it was a banner surge in stocks for the month overall. there was a rally to the other parts of the stock market with the smaller-cap stocks. is this something we can continue and more so, if the fed

does hypothetically lower cuts? >> i think the small-cap rotation has legs and there is still more room to run. dom, what i think is important is we cannot look at the sector level or style level or index level monolithically. there are 1,800 companies in the russell 2000. not only are those out performing the russell 2000, the unprofitable are negative on a relative basis. now is the time to lean into higher qualities. i do think that the september rate cut gives small caps legs. however, it does take time for interest rate cuts to work their way into earnings. >> lizzie, we would be remiss if we didn't ask you what is the

top of your list with investments and stocks and sectors are the highest. >> dom, you can use the volatility to buy names you want to own. microsoft is a great example this week down 8% after they reported with weaker cloud data. overall, very strong fourth quarter fiscal numbers. i think mega cap tech continues to lead the way and use the volatility to enter in at a lower price point for names you want to own for the long term. >> lizzie evans, thank you very much. see you soon. >> thank you, dom. >> for more on the trading day ahead, head to cnbc.com/pro for exclusive insights and analysis. we've got a lot more to come on "worldwide exchange," including the one word that investors need to know today, but first, more on the meta monster quarter and investors are brushing off the plan for the massive a.i. spending. plus, back to the fed.

mark plays out the risks to the portfolio if powell and the economy fail to cut in september. and later on, middle east tensions surging oil prices and the looming risks for the reason and the consumer prices here at home. we have a very busy hour when "worldwide exchange" returns after this commercial break. energy fuels, a leading american uranium producer, is ramping up production to supply expanding nuclear markets and diversifying into rare earth elements, key

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time for the big money movers. meta platform moving on the beat. revenue playing a major part growing by 22%. twice that of ad rival alphabet which fell short on youtube ad sales this week. investors taking the cap ex in stride after surges 33% in the past through months. meta guiding those costs will increase in the months ahead. ceo mark zuckerberg telling investors last night that the a.i. investment will eventually payoff. >> i think the things that will drive the most results in '25 and '26 are actually the first category of things i talked about in my comments which are the ways that a.i. is shaping the existing products. so, the ways it is improving recommendations and helping people find better content as well as making the advertising experience more effective. there is a lot of upside there.

>> so, joining me now is melissa at visible alpha and sarah kuntz. thank you very much for being here. melissa, let's start with you about the take aways, the key ones for you, from meta platforms. it was a lot better than the reaction from alphabet and the likes of others. >> indeed. thank you. it was certainly an interesting quarter. it was a solid one as well. we saw both slight beats on both the revenue line and the operating profit line. in terms of the cap ex, cap ex actually came in a little bit lower than initial expectations by the s&p consensus and looking forward, that cap ex will remain within the range of data initially given.

at the higher end of it. they didn't increase cap ex significantly for the rest of the year. i think the cap ex spend will come next year, but i think the way that the cfo described it is it will remain disciplined and in line with how sales growth is trending. i think net-net was a positive. >> sarah, what was the biggest difference in your mind between what was said from meta platforms and mark zuckerberg about their future plans, a.i. trajectory and what not, with what we heard from sundar pichai and alphabet given what they are going to do with a.i. and had spending they will make and why the dichotomy and difference in reaction? >> those are very different companies. you have to remember that none of these companies are particularly new to a.i., but alphabet in particular has been in this space for so long.

they bought deep mine. they wrote the original white pa paper which has driven the a.i. craze. the thing that was interesting to me is that we know that mark zuckerberg likes to spend money. we all remember the meta's first days. when the street likes what he's buying, they are more generous about it than the metaverse where they didn't believe him and we saw that in the stock price. >> if you exclude tesla, all of the magnificent seven members have surpassed earnings estimates so far this quarter, but the stocks reacted duf differently. i'll go to you, sarah, what are your expectations with apple and amazon when they clreport after the close today? >> i'm a bit worried that apple is over-hyping its a.i. phone where they are letting

developers take a look. the reality is it is already an a.i. phone. what do you think siri is or the slide shows that pop up all the time? the reality is it will be incremental changes with the phone later this year which will disappoint the street a bit. i think the sales, new device sales of iphone which is a hughes account of revenue is not that strong. the funny thing here is these are all good problems for apple. they already have a.i. on the phone. it doesn't feel different. they are already selling devices that work and you don't need a new one. remember when you used to get water on your phone and have to drop it in rice? those days are over. the reality is they don't have that. they are already doing a good job. the street doesn't want to know what they already did, but what they will do looking forward. i'm not sure that it will be the best quarter ever for apple. >> melissa, that's the apple side of things and view from sarah. melissa, the other big a.i.

oriented player that has so many other things going on these days is amazon and its a-l-e-x-a because i don't want to setoff people's devices at home. what about a.i.? >> it should be an exciting quarter. everyone has been talking about a.i. and aws and whether or not they will continue to see increased margins. right now, we're expecting 32.2% margin in that particular business, but the more exciting story is probably around the retail business. the retail business has never really generated much of a margin and that business has been increasingly getting more profitable coming into this quarter where we are expecting 5.9% operating margin. it is expected to get to just over 10% this year. so, it will be really interesting to see if that

trajectory is maintained. >> all right. melissa on tto and sarah kunst, thank you very much. see you later on. still ahead on "worldwide exchange," forget inflation and jay powell. why they may have to develop a political policy playbook ahead of the 2024 election. we have krishna guha from evercore here after this break. we are lineage, the guardians, connectors, movers, and shepherds of the world's food supply chain. we are delivering innovative solutions to build stronger infrastructure and move food more efficiently and sustainably because we believe food should get to you anywhere in the world exactly the way it was meant to. the journey of food fuels the human adventure. that's why to lineage: food is everything. (gentle music fades)

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now to a developing story in the middle east. thousands of irans and the s supreme loweredeader gathered f funeral of ismail haniyeh. iranian authorities say the attack is under investigation. while on a visit to mongolia today, antony blinken appealed for countries to quote/unquote, make the right choices in the days ahead. he did not mention israel or hamas. oil prices are rising today while brent rose 2.5%. joining me now is the head of geopolitics at energy aspects.

richard, this is a not surprising outcome for oil prices, but oil prices, despite geopolitical tensions have remained in a tight range. can you take us through why that is? >> that's certainly true if you look at the oil market as a whole, we have a situation where demand growth hasn't been great and inventories have been relatively comfortable on crude oil products through the year. we are starting to see draws now during the peak summer season. we haven't had a bullish picture so prices have remained in a range and apart from the pressure of political tension. we have seen a lot of events and tensions this year, but not a lot of actual supply losses. >> if that's the case, what exactly then do investors have to watch out for with regard to

risks to the upside or down side in oil if it's not going to be something like an increasingly escalating geopolitical situation in the middle east? >> i think the very short-term will have to look closely at what is happening in the middle east. we are waiting for iran and the axis of resistance response to israel. it is likely to be some kind of strike or attack potentially within the next few days or over the weekend. if that does get out of hand and we, on our base case, don't think it will, unless it escalates to the point of supply, the risk petrremium to e in the coming weeks. we will watch the situation in venezuela after the elections there and the disputes and more generally how much do inventories draw over the summer. >> richard, how much are

supplies at risk with all those tensions? you mentioned this idea, this notion, that we have a dynamic economically speaking around the world, that could put perhaps a cap on the crude oil prices. what is the stability of prices around the world and can it be effected by the situations in venezuela and the middle east? >> at the moment, the risks are not too high. the situation would have to escalate a lot in the middle east. if, for instance, iranian attack on israel prompted a counter strike, israel might target iranian oil. any loss or reduction in that could be felt in the market. similarly, venezuela's production has been able to increase because of sanctions relief and loose enforcement. a dramatic situation there means a downside in supply.

even in those scenarios, the fact that opec plus has a lot of spare capacity will provide something of a buffer. there is much less of a upside potential from pure geopolitics than we have seen over the last few years. >> all right, richard bronze with the state of oil. thank you very much. see you soon. coming up on the show, mark zandi makes the case why the fed must cut in september and the rfk risk to your markets and your money. if you haven't done so, follow our podcast on spotify or apple dcofhoicpoast ce. we'll be right back.

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we are coming up on 5:29 a.m. in new york. there's a lot on deck. wall street closing out a volatile july marked by the growing rotation out of technology stocks. futures right now are modestly in the green. jay powell and the fed suggesting an interest rate cut could be as soon as september. moody's mark zandi is standing by with the failure to follow through could prove damaging. and powell and company not only walking an economic tigh tightrope. the fed marking a 2024 election

and the second trump presidency could mean for the path forward. it is thursday, august 1st, 2024. you are watching "worldwide exchange" here on cnbc. ♪ welcome back to "worldwide exchange." i'm dominic chu in for frank holland. let's pick up the half hour with the first trading day of august. futures are slightly mixed. the dow implied lower by 11 points. s&p up by 9. the nasdaq up by 48. we're taking a look at the biggest pre-market gain evergainers for the nasdaq 100. meta on top much that beat with the ad sales surge. meta pouring billions in the a.i. endeavors warning investors the costs will rise in the months ahead.

m meta up 7%. and majors are closing out the day in the month in years. now taking a look abst the acti overseas. you can see the nikkei in japan was off 2.5%. the hang seng and hong kong up .25. same for the shanghai composico. we await the bank of england rate decision. the cac 40 is off by a similar amount. the ftse 100 is up .25%. italy is down 1%. the euro stoxx 600 is off .50%. to the federal reserve and when it may begin cutting

interest rates following the conclusion of the latest policy meeting yesterday where it once again held rates steady. recent economic data suggests inflation is moving closer toward its 2% target with unemployment rising back above 4%. chairman jay powell suggesting he and his colleagues do not want to act too late when it comes to a rate cut suggesting action could come in the month of september. >> we know that reducing policy rates too soon could result in a reversal on inflation. at the same time, reversing too little too late could unwind economic and employment. if we were to see inflation moving down quickly or more or less in line with expectations, growth remains, let's say, reasonably strong and the labor market remains, you know, consistent with the current

condition, then i would think that a rate cut could be on the table at the september meeting. >> it's a tough line to walk. let's bring in mark zandi over at moody's analytics. we just heard jay powell in that sound bite there. let's talk a little bit about, mark, what is going to happen with the economy that will make it so it is a certainty for a september interest rate cut like the markets are currently pretty much predicting? >> dom, if the job market continues to throttle back as it has in recent months, i think that would be consistent with the fed following through on the september rate cut. we will get a data point tomorrow for the month of july. the july employment report that comes in at expectation which is 150,000 or 200,000 payroll gain, that is consistent with the job market throttling back.

wage growth continues to moderate. we showed continued moderation and we continue to see that in the average hourly earnings data. that is consistent with the labor market that's throttling back. i think that's the key to the fed following through on the september rate cut. we have to see job market continue to cool off here. >> the dovish aspect -- the dovish connotation of what was said yesterday, is what investors are focused on this morning. the balance of the rising risk of inflation again to the softening economy. you mentioned the signs of the softening economy. how difficult is it for the fed to do what it has to do in the coming months if the scarf inflscars of inflation are still there? >> i think the inflation data is right where the fed needs it to be. in fact, dom, i think we're

already there. if you look at the consumer expend ex expenditures, and look at homeowners and rent, in trying to judge where monetary policy should be. we're at 1.5%. we have been at 1.5% or certainly below 2% for more than a year. i think all of the trend lines here look pretty good. i think the odds are very high that inflation is going to cooperate. of course, we could get a surprise. there is data up and down all around on the month-to-month basis. i feel good about the inflation outlook. i would be and i think investors at this point would also be very surprised if we don't get the inflation numbers and job numbers consistent with the rate cut come september. >> mark, you are not the only one who says this. let's bring in another voice in the conversation. it is jeff gundlach.

he gives a take of what we should have seen out of the fed yesterday. >> i think they should have cut today, quite frankly. what difference does it make six or eight weeks? >> they should have cut. that's the take from jeff gundlach. should the fed have cut and if not, why? >> i think there has been a strong case for rate cutting for quite some time. you know, the economy is resilient and strong and fine. it is navigating through. why take the risk? i think the fed has already achieved its so-called dual mandate. the job market has cooled off significantly. inflation, as i argued and properly measured, at the fed target or beyond the fed target. you have to ask yourself the question we achieved our goals

and why a 5.5% fund rate target? i know there is the equilibrium rate with the strength of growth is higher, but it is not 5.5%. why take the chance? there are signs of stress. the case for rate cuts have been in place for quite some time. i would have been cutting well before the meeting yesterday. having said that, we will make our way through without a problem without something breaking in the economy. having said that, if they don't cut in september, that could be an issue. >> all right. mark zandi, the entire yield curve is moving lower. thank you very much, sir. see you soon. >> sure. coming up on the show, shares of one former cathie wood rdvorite stock are getting hit

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♪♪ [inner monologue] in this gig... you get comfortable being uncomfortable. ♪♪ the enemy is always adapting... deepfake: hey handsome. ♪♪ [inner monologue] ...always iterating. ♪♪ welcome back. time for the big money movers. shares of carvana surging thanks to a 30% increase in car sales. the company now expecting to hit record adjusted earnings of at least $1 billion this year. carvana will ever $1 billion of stock. teledoc shares sinking on

the second quarter loss falling by 2% dragged down by sales. the company is a former favorite of cathie wood's ark fund. it called for low-to-mid single digit growth. and cshell will buy back $3 billion of shares and highlighting significant improvements in costs, capital discipline and performance. barclays buying back shares of $950 million and raising full year net interest income target. shares of rolls royce reinstating the dividend and heightened forecast. coming up on the show, what every investor needs to know today and krishna guha lays out

what a second term for president donald trump means for the rate cuts and the economy. that conversation coming up after this. (♪♪) sofi is helping me get my money right to achieve my ambitions. plus i'm investing in my game. sofi can help fund all your ambitions. (♪♪) no matter how ambitious. bank with sofi to score a higher apy and an epic welcome bonus.

turning back now to the federal reserve and chairman jay powell walking a fine line between keeps price gains at bay and avoiding an all-out recession. aside from inflation and employment, there is another factor the fed should price in the path forward. one contingent on the 2024

election. the return of donald trump to the white house. so says evercore vice chair krishna guha. he is out with a piece in "the financial times" with the "fed dilemma on trump." krishna joins us now. what exactly is the dilemma the fed faces? >> the dilemma here is the world next year and the economy may look different on the trump presidency versus a harris presidency. now, the fed's existing economic outlook and published rate plans in the sep really offer a reasonable approximation of what the world might look like under a harris presidency,

particularly if as many assume. harris would be constrained by the senate. not able to do big public spending programs. it probably does not provide a very good proxy from what the world might look like under a second trump presidency because president trump would represent policy discontinuity. big changes from the biden administration. across these like tariffs and immigration policy and fiscal policy and energy and regulation. so that dilemma for the fed is you have quite two different scenarios up ahead next year. how do you factor that into your thinking about policy? >> that's are all hypotheticals. we don't yet know what it will look like. we have to handicap things and i'm sure your clients are asking the same things. what does the fed, in your mind, look like under a second trump

presidency? how would it change hypothetically, if it were to come to fruition? >> so, first up, there is obviously the questions as to how president trump and a second term would deal with the fed. concerns, as you know, in places about pressure on fed independence. i'm more focused at this juncture in thinking of the different mix of economic shocks that the fed would have to deal with under a trump presidency. powell said the fed is not going to prejudge all of these things right now. we'll wait and see who wins and what policies are actually implemented. i think it is likely that if president trump were elected and implemented the full suite of his policies, these would tend to be reflationary overall.

pushing nominal growth and pushing inflation higher. this would be the fed would not cut interest rates as much next year as it would under a disinflationary policy mix with harris constrained by a republican senate. >> is there any world, krishna, where we would see some fundamental change from the statutory perspective about what the role of the fed is in the u.s. banking financial system and economy? that seems like a very nuclear type option. >> yeah. i think there's been a lot of discussion around these issues. i think on the regulatory side, some of the recent supreme court rulings have raised some serious questions as to the extent federal authorities and other regulators around certain areas of banking regulation. in core monetary policy,

obviously, to change the role of the fed would require a change to the federal reserve act. now, i would assess that that remains pretty unlikely even under a scenario in which there is a republican clean sweep in november, which is, of course, very far from guaranteed if we look at the polls. i do think there is still a number of traditional, if you like, country-club republican senators in particular, who really would not want to tamper with fed independence. understanding that an independent fed is best able to run monday tore re monetary pol for the public other than the person occupying the white house. >> krishna guha, thank you. see you soon, sir. >> anytime. thank you.

coming up on the show, mega cap technology not dead yet. what our next guest says takes to breathe life back into that group again. if you haven't done so, please follow our podcast. you can check us out on apple or spotify or youpoasr dct app of choice. we'll be right back.

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welcome back to "worldwide exchange." time for the "wex wrap-up." shares of meta platform surging in the pre-market. reporting 22% revenue growth to more than $39 billion. net income jumping 73% thanks to higher ad spending onstainstagr. the massive spend will increase more in the months ahead. big ackman pressing the pause on the closed-end fund ipo after lack of investor support forced him to slash the fundraising goal this week. ackman is rethinking the structure of the fund to address investor concerns. 23 and me ceo taking the genetic testing company private.

she is prepared to acquire all of the stock. microsoft's says the a.i. partner openai is part of the competition. in a filing with regulators, microsoft says openai's push into advertising complicates its relationship. arm holdings sinking ahead of the opening bell raising concerns among investors of the growth prospects. arm did beat on the top and bottom lines, but ceo rene haas says they are seeing growth in some markets. we will get initial jobless claims and manufacturing pmi and manufacturing data. earnings from apple and amazon,

in intel, snap and conocophillips. the latest policy decision from the boe with the expectation of the bank's first interest rate cut since 2020. u.s. tariffs increases on evs, batteries and medical devices is set to begin today: lefutures right now are mixed. s&p is up modestly. joining me now is megan shue. she is a cnbc contributor. megan, this is an interesting time in the markets ahead of what is anticipated to be a september rate cut. how do you think investors should be positioned ahead of the almost certainty being priced in? >> dominic, thank you for having me. we are definitely encouraged on the market. we are seeing choppichoppiness,

difficult for mega cap tech. we have an overweight to equities in our portfolio. split between large cap and small cap. i think the september rate cut is very much part of the encouraging story. even more importantly is what we see as an expectation for a 25-basis point rate cut at almost every meeting thereafter for the next year or so. we are looking at a period where the fed is in the position to cut rates into a stabilizing growth environment and that combination of lower rate plus stable or goldilocks growth is encouraging for u.s. equities. >> do you feel, meghan, the inflation story is done? we are not saying mission accomplished yet, but investors feel the story is done and we are looking at certain key

cyclical parts of the market? >> i don't know the inflation story is done, but i do think that what we heard from powell and definitely what we have been seeing in the data is that the risk to the dual mandate, full employment and stable prices are now much more balanced than they have been in the past couple of years. so, you are looking at really not a recipe for reacceleration of inflation. if you look across the components. housing is finally falling in line and we are seeing slower consumer demand. outside of supply side shock which is nothing you can come completely rule out ever, you don't see the mix. we are watching the weakening in the labor market data whether it is job openings or the quits rate falling or the stable

falling employment or wage growth and that inflation story. all of that is coming together to really form an environment where the fed should be able to cut rates, but we're not looking at recessionary conditions. we put a low probability of recession in the next 12 months. >> meghan, let's talk about your word of the day. what is it and why? >> the word of the day is diversify. that is what we do for our clients in terms of long-term investing, but specifically to the market today. we look at the mega cap rally over the last year or so and it was somewhat unloved. investors were looking for any sort of reason why that bubble might pop although they don't think it's a bubble. we see a sharp rotation into small cap. mega cap tech and the a.i. spend story can co-chexists nicely. we think they will continue to spend and that a.i. spend story

will continue. it will take time. investors need to be patient. in the meantime, you really need to be diversified across both asset classes within the u.s. large cap and u.s. small cap equities. diversify is the word. >> meghan shue, thank you very much. see you soon. let's send it over to "squawk box." good morning. the federal reserve paving the way for rate cuts in september, but fed chair jay powell warns of the risk of moving too soon or too late. meta platforms shares are rising. what mark zuckerberg said about the a.i. boost. plus, are thethe u.s. addins medal count. we have the key events to watch today. it is thursday, august 1st, 2024 and "squawk box" begins right now. ♪

good morning. welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin reporting live from the olympic games in paris. melissa lee is at the nasdaq in times square. joe and becky are traveling back home today. melissa, it is nice to siee you. there is so much to talk about in the world of business. i want to talk about the meta earnings in a moment. we want to talk about how busy the past 24 hours have been here in paris. katie ledecky winning gold. i was there in person. it was unbelievable to watch. electric. the 1500-meter freestyle. she was ahead from the very beginning and lapping folks. she is now tied for most overall