good morning, everybody. welcome to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with mike santoli and robert frank. joe and andrew are off today. we've got some huge news out there. those big earnings reports from last night. definitely having an impact on this morning's market action. as we mentioned salesforce helping the dow this morning. u.s. equity future showing the dow up by about 200 points in the premarket. and nasdaq up by 78. guys this is not what we anticipated. we didn't think we'd be coming in this morning talking about salesforce and the impact it was having because nvidia was expected to be the big mover. if you look back over the last seven quarters the move has been

12% or 13% either to upside or down youd. >> actually nvidia firming up in reaction. >> yeah. >> we'll get to the details of it, but it seems like it's serving as a clearing event for the market and we're fixated on it. and sales, salesforce, obviously a relief, it's had a tough run in the stocks. so it all makes sense. the big picture story seems to not have changed. i think that's what investors are laying back. we've just churned through so many scenarios with nvidia leading into the numbers. the stock traded between 99 and 130 in the last month. a lot of people had a chance to express positive or negative views. the other takeaway, the street has a fix on the business now. it's not massive multibillion dollar revenue beats or anything like that. it's coming in closer to expectations but also that means, you know, the growth rates are decelerating. >> coming down 0%.

josh brown, i heard him talking yesterday, maybe in the 3:00 hour, he was making really good points about how it's so unusual, when you see a company with that size market cap, you don't expect big swings like that. maturity generally comes when you have big moves like that. maybe we'll get to that point a little more. >> we will eventually. options were handicapping at 10%. it did move to 8. that's one of those what ifs on the stock side because the stock has traded so wildly. again, it's moderating into a manageable growth base. >> it still reminds you how concentrated this market is. this is a stock that accounted for a quarter of the gains in the s&p 500. i think a lot of people were google searching gpo mass and process mods last night, that manufacturing glitch they had to do to improve yields. so there's just so much hyper

micro focus on detail because people are used to this expectation. >> exactly, the guidance raise was impressive, but a smaller margin relative to the street. >> such a -- >> you just look at the street notes, it's beat consensus fell short of expectations. that's literally what it's saying. it's expectation saying sure, that's consensus. >> nvidia shares down by 1.6%. if you're checking out the treasury market, yields down once again ten-year at 3.82. the two-year at 3.86. those yields pretty close. gold prices, we've been watching gold $25 an hour. 25.56 today. >> several tech stocks on the move as we were saying we will start with the details on

nvidia. the anticipation building all day, all week. the chipmaker released numbers 4:20 p.m. yesterday afternoon. here are highlights, profits and sales both topping expectations, exceeding consensus revenue. grew by 122%. topping $40 billion. and gross margins edged up slightly. the company stronger than expected guidance for the current quarter and announced a share buyback. and blackwell, the company expects several billions in revenue in blackwell in the fourth quarter. ceo jensen huang on the call last night. >> data center went modern full speed waccelerated and hopper remains strong and blackwell is incredible. >> when the numbers first hit, the stock trailing off right now in negative territory but down

only 1.6%. year to date, in vidia up 150%. the market cap dipping below 3 trillion briefly, but i think right now, we're probably right back around that $3 trillion mark. so, huge numbers we're dealing with here. and just for scaling purposes, two years ago, 26 or $27 billion in total annual revenue, okay? this year, it's $125 billion. so $100 billion incremental revenue in two years. you mentioned, people are going to have to adjust their timing. maybe more moderation in the fourth quarter. i think the takeaway is, it's fine. >> some people are saying if it weren't for the blackwell delay, you would see numbers right in line. >> still in acceleration. another big report getting

overshadowed by nvidia, salesforce, beat the estimate, raising the output, ceo marc benioff telling mad money, it's still all about a.i. >> we're just in an incredible new environment. and i think the technology is like nothing i've ever seen before. and every company understands, because they're using these new a.i. models at home and personally, but now we can really show had you they're going to get value for their companies. >> salesforce also saying its cfo amy weaver will be stepping down but will remain in her position until a successor is found. good news there. >> yeah. i think the dow this morning, 92 points on the upside to the dow futures this morning, coming from salesforce, thank you, george. we'll keep an eye on that, by

5.25%. the buy now pay later company reported a smaller than expected loss of 14 cents compared to estimates of 51 cents of a share loss. revenue also topped expectations by more than $50 million. the of affirm's ceo said that the company expects to generate an operating profit by the fourth quarter of fiscal 2025. that stock was down more than 30% for the year heading into the results. now, it's -- year to date, it's down 21%. you can see right now, it's up 22% on these results. and the big question on this one has been the economy. will a consumer be able to hang in there will they be able to pay back the debt. >> absolutely. and also the capital markets positions. they kind of sell off the loans, so far it's better -- >> repackaging -- yeah. shares the crowdstrike moving lower. reports stronger than expected second quarter earnings of seven

cents. crowdstrike cut revenue and earnings forecast after the subscription revenue would be hit for a total of $60 million for the duration of the year after incentives that the company is offering to customers following that i.t. outage. we'll have more on crowdstrike from the i.t. outage later this hour and shares off by 2%. this is an interesting story, another valuation jumped for openai. cnbc reports that they're in talks to raise new funding. the new chatgpt valuedat $100 billion. up three times from a year ago. and investing a billion dollars in microsoft, openai's biggest backer is also participating in the round. hop

openai and microsoft have not commented. they had seen some share sales by employees a few months ago at 110 billion, so, not entirely a surprise. but at some point, you had to figure this sort of nonprofit/profit structure is going to change, given the valuation and how much more money they're taking in. thrive capital investors will want to see, you know, some kind of long-term structural change. >> right. >> so they know their profits are safe in the long term. >> the microsoft position in there. it's sort of unclear. you're going to investments alongside, microsoft, ohm a.i., kind of just servicing back to microsoft products. so it's tricky how they're going to handle this. >> and microsoft now has so many frenemies in this space. they're kind of hedging their bet, look, we've got openai, we're also doing our own thing with former a.i. people and working with other companies.

so it's an interesting ecosystem because no one knows who the winners are going to be and what the valuations are going to be a year from now. >> and the other issue, you have the worry about what regulators will do. and the worry, i say, from the companies that are look fog forecast off of this. and the investors looking to profit off of this. probably telling part of the reason that microsoft would step down and give back the board seats that they kind of demanded when a.i. went through its crisis period last year. and came back to see what happened with these things. they had to give back the board seat because you had regulators looking at it at no longer the structure. >> ant the antitrust issue, emerging now, california assembly passing that. we're going to talk about that later. but that's also, you know, going to change some of the competitive dynamics because the newer firms they like this because it sort of hurts the leaders right now. both on the antitrust and what governments, both federal and

state level does, fast-moving changes. >> we should also mention that warren buffett is now in the trillion dollar club. berkshire hathaway reaching that market milestone during yesterday's trading. and this comes just before buffett's 94th birthday. that's coming up the 31st of this month. the stock has added 28% so far this year. this has been pretty phenomenal. because every other company, the other six companies in the trillion dollar club are mega cap companies. this is the first older company to be able to do it. there are so few conglomerates around today. this is the first conglomerate allowed to do it. >> what a birthday present. a trillion dollar company. still rewarding quality, in other words, great balance sheets and reliable earnings. trillion dollars, you know, $300 billion of is public stock

portfolio. of which 275 is cash. >> right. >> yeah. >> there's plenty there. >> yeah. >> and of course, it's been pretty aggressive. >> it's birthday -- it's the 30th -- it's tomorrow, right? >> yeah, tomorrow. trimming back the apple and bank of america shares doing a lot of pruning. >> and there are are lots of questions about why, more than $270 billion in cash they're holding at this point. that's a huge amount, obviously has the market has gotten bigger it's not as miffive that you would have assumed. that's a lot of money. people suspect that he thinks there's a downturn in the economy on what might happen down the road with potential tax changes. there's lots of things to look at this. joe was saying yesterday, i thought it was interesting and insi insightful, looking at this thinking when i've 95 or 96, i'm going to be -- >> yeah. also the ability to maneuver --

also, we know he doesn't see great compelling value. we know that piece. >> right. >> i also think, there's no need to have a 12% or 14% position in bank of america. but i think he just wants to reduce the outside bets within the portfolio and create room to operate for himself or whomever. this is a really huge cushion within the company for whatever the next move might be. >> that's true. all right. when we come back, we're going to talk about nvidia's broader impact on the markets and the anticipation for some results that had some attending an earnings watch party. that's next. "squawk box" will be back in just a moment. it will take billions of solar panels to power the world today. aes is making scale like that closer to a reality. introducing maximo, our new ai-enabled solar robot,

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when you buy one unlimited line. plus, get up to $800 off google pixel 9 phones. switch today! all right. welcome back to "squawk box." the anticipation for nvidia's results had one bar in new york city actually holding a watch party. cnbc producer jasmine lewis is at a bar called storehouse in manhattan's flat iron district. so drinks around earnings around 4:20 p.m. eastern time yesterday, happy hour, and got to watch. we see them doing cheers. i don't know if they were cheering for the stock to fall or go up. >> i think it was money journalists with what i've read about it, but they were watching the right channels. we like that. >> we do. >> it seemed even the organizers -- a bit of tongue in cheek -- >> yeah, yeah.

>> -- they knew it was going to be immediately seen as oh, no, this is in excess of hype and excitement. >> and hopefully, sold some drinks. >> but it is a moment in time, though. i've never seen an earnings report watch party. even if it was small. the fact that it mhappened just tells us about this nvidia excitement. >> when you have an attachment to the company. the ceo is being known as the visionary. >> yeah. >> and a little bit of elevation of him as the -- >> the ftx of yesterday, what do you think of the pressure of the stock market results on your results and he said i wasn't aware until you mentioned. we do what we do is the right way to think about it. >> it is. so now nvidia has reported those results, let's talk about the possible impacts on the mark. hank smith is investor

strategist at haverford trust. hank, were you at the watch party? >> it's interesting, i believe "the wall street journal" commented because there were no major sporting events going, particularly nfl football, this was the best event in town. >> so you were listening closely, what did you take away, obviously strong numbers across the board. but maybe expectations that were impossibly high if you look across the street? >> yeah, but they exceeded expectations both on the top line and the bottom line. and, look, when you're growing as fast as they are, younitpick. o o overall, a very strong earnings report. and the current chip hopper is still seeing strong demand. and you're only a quarter or two away from the next generation,

blackwell, coming. so that's just a sign of how important this company to the buildout of a.i. across the entire tech industry. >> why do you think the staock s off? it's not off by a lot, 2.5%? >> well, you have to be look, don't forget, earlier this month, had it a 25% drawdown from a high in june of 140. it got down to 100, or 101, it's since recovered a little bit. so you're going to expect volatility in a name like this. and, actually, some -- a downdraft, we looked at that pretty positively. because we'll add to the stock with downdrafts. >> downdrafts of even 2.5%? i think that's the question for investors who already own this stock, what would you tell them to do?

for investorss who don't own ths stock and are thinking about jumping in? >>yeah, that's a huge challenge. if you don't own the stock, if you have the patience for that kind of drawdown, you're right, 2.5% isn't enough, that's just noise. but, again, earlier this month, you had a 25% of drawdown. and you just have to have discipline, to wait, be patient, take advantage of that, knowing that the fundamental story remains very, very strong. sure there will be some deceleration in growth over the next several years, there would have to be when you're that large of a company. but the company is impact. and as marc benioff said, we're in the very early stages of this a.i. boon. >> jensen huang speaking yesterday looked like he was really trying to point to the idea that data centers -- that their data center business has more diverse customers than

people think. people look at it and think it's just the hyper scalers. he said they're only 35% of the business, but then he went on to say in an interview i was listen to, 55% of customers that aren't hyperscalers, i don't know where that gets you, 33%. his point is it's not just the hyperscalers. how important is that to investors? >> well, i think it's a very important point. and look, i'm not sure there's an industry, a sector out there, that ultimately won't benefit from a.i., including our sector. the money management business. and so, look, we're at the beginning, the infancy, we're not in the eighth or ninth inning. we're in the second or third inning. >> right. >> of, you know, secular trend. >> i think that's probably true, but there aren't a lot of companies that have the deep pockets that can afford to pay these sort of premiums. so, i think the question

becomes, while a.i. might benefit everyone, and you can think of places like hospitals and drug kcompanies and all kins of places that would benefit from this, which of them are able to pay that sort of premium? and how far do prices have to come to down? hospitals, some of them operating on 1% margins. >> well, that's true. but other -- you know, a lot of businesses that -- you know, in the financial sector, you look at, you know, top ten, top 20 companies. look at what jpmorgan is spending on technology over the past several years. it's just massive. and the number of employees they have that are engineers and techn technologists, it is massive. so, you know, your point, to some of the lower margin businesses, it is a good point. but i still believe they'll find the money to invest in a.i. >> hank, when you're looking at

the ranges, what would be a price you'd buy in at? a price that would make you think, okay, this is getting a little rich? because we do see that big trading range? >> yeah, look, i think if you got down into the low 100% in that area, i think that would be an excellent buying opportunity. and, you know, you mentioned volatility earlier. it wasn't too long ago in the first nine months of 2022 that this stock sold off over 70%. now, i'm not suggesting you're going to have that kind of downdraft anytime in the near future. all i'm saying is, you can have volatility in companies that have great pass in terms of revenue. we saw that back in the 1990s, during that decade with the cisco systems which had annual

downdrafts between 20 and 30% and yet the company performed extremely well on a fundamental basis. >> hank, thanks for waking up and joining our watch party. good to see you. >> good to be with you. coming up, are employers finally getting an upper hand on wages. we have a look at new data. and will the real estate luxury market remain hot in the fall? we're going to check ionn some $100 million homes and more when "squawk box" returns.

employers may be done overpaying for workers. "the wall street journal" citing analysis for millions of job

postings on ziprecruiter.com showing pay for many white collar positions actually shrank last year and manufacturing and other blue collar sectors are down. job seekers seeing roles that once offered salaries between $175,000 and $200,000 a year ago now being offered for tens of thousands of dollars less. they're offering them lower paying contracts. interesting that foot locker is moving its headquarters from new york to st. pete. going to save costs. >> it's the softening labor market people have been looking for. nvidia not the only stocks, crowdstrike shares moving forward with investors on the globe i.t. outage. and after the break, a look at yesterday's s&p 500 winners and

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good morning, everybody. and welcome back to "squawk box." we're live from the nasdaq market site in times square. and the futures this morning are looking up. we're talking about the dow taking gains of more than 200 points, right now by about 215. not because of nvidia, but because of what we saw with salesforce. we'll talk about that, s&p up 14 points, nasdaq, 55. crowdstrike shares on the move following results the first after last month's i.t. outage giving a wake up call. >> a company not named nvidia. they did beat expectations, of course, this is the first earnings report since that massive outage back in july. and we got the details on the impact on the company.

crowdstrike said it caused a 2 cents per share. and earnings per quarter including the one we're in right now. the stock initially rose, but negative when ceo george kurtz talked about how crowdstrike is thinking about integration with windows to prevent another window. as for results they were beat, as i said but those comparisons do not include the i.t. outage impact. and crowdstrike is cutting the four-year fiscal year guidance, likely due to the revenue outages. and the ceo said to expect headwinds to last the next year. crowdstrike a bunch of other security firms, governmental officials all meet at microsoft headquarters to talk out the next steps of this. we've still got the delta thing

lingering over this. >> did they comment on the delta or -- >> no, it was mostly analysts saying what are you doing to prevent this? >> nobody asked them that? >> not specifically. it's mostly how are you guying with customers. what was interesting how defense of defensethe ceo got. and instead of saying what are they argue, and that rattled people. the stock was up nearly 4% and went down 2. >> are analysts not asking about the delta situation because they don't think it has a chance of succeeding? >> i have no idea. i think it's going to get settled. >> even if settled, it's a dollar number. >> it's not just delta. delta is the most prominent one, there's so many. >> that's to me, either with settlement or -- >> yeah. >> if you settle you're going to -- >> they haven't said anything about that. and they did a lot of hyping and

talking up their big developer's conference and things like that. it was really the weird answer. the first answer on the call that just totally reversed the stock because, it's unclear -- by the way, he's going to be on with jim cramer in about 12 hours. >> 30 million subscription, that's a couple -- 3%. >> exactly. >> it's not nothing but it's a drag. >> they do a billion-ish a quarter. it's not an asset company. and they're so well respected. until this incident, they're one of the best in town. and this damaged their reputation. >> and he's seen as the best person. >> to be clear, he did apologize. another apology, i can't even count how many times we've heard them apologize, we own it, et cetera et cetera, it was just that quirky answer that screwed things up. >> thank you. coming up, the luxury real estate market had a scorching

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the luxury real estate market looking to extend the summer gains into the fall. s sales of $100 million homes on track to double. sales of homes up 13%. wealthy buyers usually pay all cash so they're not as sensitive to the interest rates but will confidence hold up through the election and potential slowdown. joining us, the ceo of best for the best. great to see you.

>> good morning. >> you're in a lot of markets, primarily the northeast and florida. what's it feel like right now? >> you know, it feels better than last year. last year was the weakest housing market since 1995. everybody was talking about a recession, inflation is still not where it needed to be. rates were up, i think they hit almost 8%. it feels much better right now than it did last year. because inflation is down. we didn't enter a recession. and there's more optimism. you know, there's more certainty. the stock market is doing well, which is why luxury sales are improving. i think something like 4,000 sales over $5 million happened in 2024, so obviously, consumer sentiment is much better than it was. >> it's so much better than it was, when people think about real estate, they think about broader market and interest rating. i always tell people that upper end is really focused on the stock market when it comes to confidence levels? >> that's right. because it's cash, paying $100

million. people aren't thinking about their rate. they're thinking about what's going on in the economy, globally, what's happening and that gives people the security to buy. >> there was a report out this week showing there are six cities in the u.s. wealthier area concentrating, aspen, san francisco, malibu, new york, miami, palm beach. >> right. that's where the big sales were. a lot of them. >> so, when you look at new york, florida. how do you see, as we head into the fall, the florida season kind of picks up, how do you see that dynamic of people moving from the northeast to florida? has it slowed down? there's talk of florida being weak, maybe oversupplies? how do you see the comparison of both markets? >> you know, i think it's been a bit of a shift, people moved to florida, palm beach during the pandemic. back and forth. big companies have set up in palm beach. so it's a mixture. people are coming back to new york. so i think it's going to be a decent market. the challenge in florida, places like palm beach, has really been

one of inventory. >> yeah. >> there's just not enough on the market. and whatever comes on the market, people buy it. new york is doing pretty well. it's steady. we're feeling well about the market in general. there's optimism out there which we didn't have in a while. >> betss, how important is the election there are people nervous around the edge? >> yes, there's less uncertainty because both of these candidates have been in the white house one way or another, you can kind of feel what they're going to govern like. i think people are not as stressed as they were. it basically feels less stressful than it did before. so, it's always a little bit of a concern but i think, you know, the wars that are going on creates a little bit of stress, obviously. but when the economy is doing well. the stock market, inflation is down. we may get a cut in september, according to chairman powell, you know, i don't want to get ahead of myself, but i'm feeling much better today than i did a year ago. >> and when you look at prices,

you say people are feeling confidence. is it a good time to buy in new york right now? we saw prices come down 3% in the second quarter. that finally led to some deals. do you think prices in new york are going to continue to come down and is it a time to buy? >> i think the market is there to serve you, not obstruct you. that depends on your circumstances and there's tons of opportunities. if you find a home that works for you, negotiate, get a good deal. you can lock in a decent rate. i think rates are hovering around 6.5%. and they may go down further. it's always gay good thing for-f it woshgts for you. >> if the stock market is -- >> and the stock market, except for that blip in japan. i'm optimistic. >> bess, thanks for joining us. make sure you subscribe to where the wealthy are spending their money and buying real estate.

your weekly guide to high net investor "inside wealth" go to cnbc/inside wealth or scan the qr code. when we come back, a key house district is worried about potential action to reduce the size of the government. that could be determined by who wins the white house in november. we've got that story when "squawk box" returns. what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

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republicans have proposed trimming the size of the government and former president trump is proposing even deeper cuts if elected. but those cut cosmin losing a key seat in the house. emily wilkins joins us right now. she's got more on that story.

hi, emily. >> reporter: hey, becky, well, i'm here today in stafford, virginia, where this parking lot is filling up with federal workers who live here and then take the bus or carpool up to d.c. government employees and contractors are a key part of the comeconomy here, but a new n from former president trump would move 100,000 employees away from d.c. and that could cost the state of virginia about $28 billion according do one estimate. the proposal is facing a pushback from a number of trump's own party. derek anderson running for congress here. both the gop and democrats are targeting this house seat which will be key to who controls the chamber next year. anderson cold cnbc in a statement that he would oppose any legislation that could lead to national security, and hurt jobs in the district, regardless of where that comes from. going door to door to talk to

voters, democratic candidate eugene vindman hears from a lot of workers who heard about trump's plan. >> it would be devastating to this area, first of all, fundamentally unfair but devastating to this area because you're talking about thousands, tens of thousands of pretty well-paying thousands, tens of thousands of pretty well paying jobs. it would be horrible. >> whoever controls the house next year will have a big say in government funding and whether or not the federal workforce expands or shrinks. guys? >> you know, emily, that's always the issue, though, right? it sounds like a good idea to cut until the people who are going to get cut find out about it and come through. it is why governments tend to not shut -- or close or -- why government spending tends to not get put down. this seems like it is going to be a battle we're going to see again and again. >> it absolutely could be. this isn't certainly the first time you heard a proposal from congress about cuts, but the

fact is that it is harder to do to actually eliminate some of these jobs and some of these agencies. i think one of the interesting things to keep an eye on is that trump isn't proposing a cut so much as a move, a move away from the d.c., virginia, maryland area to other areas of the country that would take a number of logistics. but his idea is to take some employees, move them elsewhere. we'll see what congress does with that. >> for sure. emily, thanks so much. coming up, steve liesman is going to help solve a puzzle in the bond market. but, first, a.i. safety, california taking action with a controversial new bill that is dividing the tech and political wel mmits. 'ltalk to facebook's former chief privacy officer about the future of a.i. "squawk box" is coming right back.

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california lawmakers have passed a controversial a.i. safety bill, sb-1047, and it now waits signoff from governor gavin newsom. the legislation aims to mitigate the risks of the technology being used by bad actors, but it has divided the tech and political community, many of whom argue it will stifle innovation. joining us now, chris kelly, founder of kelly investment and general counsel at facebook and a meta shareholder. great to have you on this. from the topdown level, what is the bill aiming to do in terms of trying to perhaps constrain the development of a.i. or at least steer it in a particular direction and practically speaking what do you think its impact would be? >> it is aiming to do a good thing, which is to force companies to be aggressive in looking at the safety implications of the implementation of artificial

intelligence. and it -- the problem is that it goes about it in a way that has a sort of two-lighted trigger for when it is more onerous requirements apply, and that overall it has to have a broader approach to allowing for innovation. it is both sort of too broad and too narrow in a number of different ways. it doesn't touch on all of the issues that need to be addressed over time. it is underinclusive in that way. and then it is overinclusive in that it is triggered by the power of compute power and spending levels on this a.i. which could not -- could miss a lot of things that could be potentially dangerous. what we need is an approach that has, you know, a really practical, thoughtful way to encourage companies to be more transparent about their

development processes, and this bill in particular advantages closed source artificial intelligence and open source projects could be, you know, really adversely affected by it. >> in what way does it privilege closed source? assigns responsibility and liability? >> exactly. exactly. and the potential of liability for open source projects where there might not be any control at all on the part of the companies is a particular worry. that's something that's been highlighted by speaker pelosi, by zoe lofgren, who, you know, people who are very sophisticated with technology regulators on the federal level. >> obviously there has been -- from the very beginning, and even before a.i. was a practical thing, the concerns about this could be a runaway problem, it could overtake various -- >> the sky net problem. >> right. >> so, i mean, part of this even is sort of like you have to be able to kind of, you know, kill it, shut it down, that kind of

thing. elon musk, of course, has been vocal about this for a long time. is it not worthy of some legislative action to try to address that. >> some kind of legislative action but not something that has an underinclusive trigger and might miss some important things and overinclusive in that it has this kind of hard, you know, compute power base trigger and spend base triggers that, you know, other companies that are trying to be responsible need to go beyond in terms of their development. this is an area where we need to -- a light touch in regulation to assure that the companies can develop the most responsible approaches to this. and to those who say that the industry has been irresponsible in a number of these ways, that i think you're seeing much more transparency, particularly in open source projects, and, again, the disadvantaging of those by potentially assigning

liability for actions that the companies have absolutely no control over is a particularly worrisome feature of thisbill. >> and, chris, there is an interesting split when you look at the competitors here, anthropic and other companies saying, elon musk saying we support this. sam altman at openai saying they oppose it. he would like federal legislation. i don't know that's just a copout. but do you think the states, california being first, should be doing anything -- should they wait on the federal and do you see any sign we will get federal legislation? which should we have in an ideal world? >> ideally, of course, federal legislation is better here, to have 50 different potential, you know, regimes to comply with is a troublesome thing for any company, expensive thing for any company. and when you have one that is tweaked a little bit differently from the others, california has been able to lead here on security breach legislation, which i was very involved with

in passing originally, and ideally you need a federal standard more than anything else. the administrations, the biden/harris administration's executive order on this began to outline what federal regulation might look like and it had some of the same problems to be perfectly frank in terms of being over and underinclusive. but, doing this at the federal level is definitely preferable than doing it at the state level. >> do we know if newsom is going to sign it or what the betting odds are at this point? >> i haven't gotten a read on that yet. i haven't talked with the governor, the senior staff personally about it at this point. it is going to be hotly debated. that's for sure. >> all right, chris, certainly will. we'll talk to you again about it soon. thank you very much. >> thank you very much. have a great day. >> robert, you ever think about a column called "to be frank." >> or "frankly speaking." >> yeah. a lot of them. >> though, often, when somebody says to be frank, they're not

about to tell the truth. >> i'm always frank. i'm always frank. >> no offense, but -- >> that's the same thing. it is 7:00 a.m. on the east coast. you are watching "squawk box" right here on cnbc. i'm becky quick with mike santoli and robert frank. joe and andrew are off today. among our top stories this morning, openai is in talks to raise funding that could value the startup at more than $100 billion. sources telling cnbc thrive capital is leading this round and will invest a billion dollars in the chatgpt parent. "the wall street journal" says that microsoft, which is openai's biggest backer, is also participating in the round. openai, microsoft and thrive capital have not commented. atlanta fed president raphael bostic says it may be time for the central bank to start cutting rates, citing cooling conditions in the inflation and rising unemployment. but bostic, a voting member of the fomc, cautions he wants to see next week's monthly jobs report and the two other

inflation reports before the fed's next policy meeting before making a move that puts a lot of pressure on this jobs report. yelp filing an antitrust lawsuit against google, after a judge ruled the search giant is a monopoly. yelp alleges google is abusing its dominance. google says yelp's claims aren't new and similar allegations were thrown out years ago. checking the futures, setup for relatively modest gains, 8 points higher on the s&p 500 after a bit of a down day yesterday. the dow indicated higher by a bit over 200. that's a little over half a percent thanks to a couple components. let's get to contessa brewer with a look at this morning's premarket movers. >> good morning to you. salesforce shares are on the move after earnings and revenue beat expectations. the company raised guidance and announced its cfo amy weaver

will step down. we're seeing shares up 5.5% in the early morning trade. in an interview, marc benioff said he's thrilled about using a.i. in agent force to improve customer service. he had a lot to say about a.i. and the way it is going to be used by its customers. nvidia down by 4%. we have seen a lot of movement. i want to focus on what we saw last night. see when earnings happened at 4:00 p.m., you saw this big dropoff, down 7%, shares moving lower during the call and we saw improvement overnight. the company beat on essentially every metric, but the street just wanted this blockbuster beat and so there we have seen shares recovering this morning, down by about 2.5%, now off again by 4.5% as it stands now. we'll keep our eye on it through the day. you can be sure. move over nvidia. citi is now naming apple its top a.i. pick based in large part on

anticipated demand for a.i. phones. citi points to research that indicates gen a.i. phones will grow at 78% compound annual growth rate from 2023 to 2028 and citi says, look, the developer feedback over even the photo editing improvements will create demand for the iphone 16, that's expected to unveil at apple's its glow time event. shares up this morning, mike. >> analysts trying to get ahead of that, a couple of weeks out. thank you, contessa. uncertainty over the pace and timing of federal rate cuts, fed rate cuts and the direction of the economy has bond strategists puzzled right now. our senior economics reporter steve liesman joins us. he's got more on this front and, steve, we were just talking about raphael bostic's comments, which make our next few data points pretty interesting and exciting. >> yeah, you have to watch even at 8:30 the jobless claims

coming out. get out your party hats. the 210 spread, it is this close to the 0 line right now and bond strategists are worrying if this is a possible return to what you would call normalcy where the yields of the ten-year is higher than the two-year, the way things ought to be. look at 210, when the fed was beginning its rate hikes, the longest inversion since 1977. the spread made a run at 0 earlier this month and is trying to turn it around. it is minus 3, minus .03. that's quite remarkable, between the 2 and the 10. bond market strategists are puzzling over whether the curve goes positive and how. one idea the low yields could be in for the 10-year. they studied past rate cycles and finds when the economy is not going into recession, the

10-year yield bottoms before or around the first rate hike. he tells me it is not unusual for the market to price in the rate cutting cycle either before or within a couple of days of the first rate cut. john canada tells me he thinks there is more room for rates to go lower. he says as long as the inflation outlook continues to improve, then i think there is room for the 10-year to move lower here. that's under a soft landing scenario. if there is a recession, well, both agree rates could move lower throughout the spectrum. that gets to the question of how this market is priced when it comes to the fed. is 200 basis points now built of rate cuts over the next year too aggressive? rick reeder tells me it is. i sold a lot of front end because nine cuts through next year is the outside of what you're going to get. like a lot of strategists i spoke with, reeder likes the belly of the curve, the 3-year, 5-year, 7-year. all of it points to what becky was saying, the importance of the economic outcome and what

the fed does. a soft landing gives you one set of yields. a recession, all bets are off, means everything could go lower. becky? >> you know, steve, it gets right to the heart of basically everything we talk about in terms of past cycles and the tendenciesyies of what happens. you have the camp that says, you know, you're in trouble once the curve disinverts and goes back into a positive slope because that's opibeen the precursor to recessions. you have a flattening and resteepening whether it went below 0 or not. it is getting technical. the point being there is no real kind of conclusion you can draw very high conviction unless you have a sense of whether the economy is going to keep growing or not. >> i think that's right. but, you know, mike, i take a step back from this and i'm interested in your thoughts on this, which is, to me, this all underscores, why do we talk about soft landing or recession? all the time? it must be sort of maddening to our viewers out there.

and the reason is because there are trillions in the balance here of these outcomes when it comes to how the bond market is priced, what the spread is between the 2 and the 10 and across the curve. not to mention, by the way, which i can't get to this idea that there is a lot of supply, but what has been fascinating is how much people are taking down the long end. you know, in my talks with rick, he says, hey, there is a lot of demand on the long end and not a lot of -- when you take out what the fed has taken down and the pension funds which they will not get rid of their ten-year or 20-year bonds or 30-year bonds, there is not a lot of float out there. that has kept that depressed. are we there yet? have we done everything we're going to do on the short end and that's how you get the inversion, another discussion for another day about whether this is all good for banks. >> yes. because it didn't really work on the way up when rates were going

higher and all the rest. lots of quirks to this cycle. thanks a lot. >> thanks. >> all right, coming up, more on the markets, plus, we're going to talk the u.s. chip independence and the push to get companies to keep manufacturing here with the man who helped implement the chips act, ronnie chatterji. we'll be right back. ( ♪♪ ) morgan stanley is partnering with the women's tennis association to remove boundaries... ( ♪♪ ) because this game is for everyone.

shares of affirm soaring after its quarterly results. the buy now, pay later company reported a smaller than expected loss of 14 cents. the street had been looking for a loss of 51 cents a share. revenue also beat expectations by more than $50 million. affirm's ceo said that the

company expects to generate an operating profit by the fourth quarter of fiscal 2025. that stock is up by 19% this morning. it is still down, though, 23.5% for the year to date. for more on markets, let's bring in martha norton. thank you for joining us. so, what do you make of the setup from nvidia last night, and how markets are reacting this morning, where should investor goes from here? >> yeah, it is really interesting. there is no question that the reaction around nvidia with nvidia beating expectations in most cases is more sentiment driven than it is fundamental driven. we have a stock like this, and really a movement like this, with a.i., where there is so much enthusiasm behind it, it is really not much surprise that when results aren't picture perfect, there is going to be a bit of volatility around it.

i think that's more of a sentiment thing than a fundamental thing. the larger question surrounding a.i. that relates to transferring this capex spend that we're seeing into actual revenue and efficiency gains, that question is something that the market is going to have to grapple with for quite some time. >> it is almost kind of just a sigh of relief, yeah, okay, they didn't beat wildly on the upside, we know the basic thesis about a.i. is still in tact. what do you think the next big question for investors will be over the next few weeks, now that we have gotten over the nvidia hurdle? >> right, well, i think with nvidia behind us, i think all eyes go to jobs. the fed and chairman powell made it very clear that demand has shifted. we moved our eyes from inflation and in fact really declaring that that battle had been won and turning focus on to the labor market. i think as we start to see the jobs numbers come through, in september, i think that's where the focus is and that's really

where our expectations are going to be established for what the fed does later in the month. >> yeah. and along with jobs, a lot of focus on consumers and recent consumer names reporting like foot locker. where do you see the consumer right now? and what are we learning from the earnings report on the ground about which types of consumers were struggling right now and where we could see some strength? >> it is interesting with what we see with retail earnings in that results in large part mirrored a broader earnings season that was largely positive. but it is almost boiler plate xhen taher commentary and talking about an uncertain future, a consumer who is more discerning, more value oriented and seeing some bifur bifurcation, something folks have been talking about for some time talking about the lower income and upper income. i think this idea of discernment of a consumer who is more under pressure, a lot of folks are pointing to the idea that excess

savings we received from the pandemic have largely been used up. i think this idea that the consumer is going to face a little bit more pressure and a little bit more in the epicenter of concern is something that markets will continue to think about. >> and, related to that, you know, the market as a whole, if you look at the s&p 500, it had a strong comeback from the pullback of 10% correction that we had culminating a few weeks ago. the composition of the gains has been a little bit different. semiconductors are still 15% below the highs, even with the s&p with about 1% of its highs. it has been a little more defensive, rate sensitive names working. do you see that as a potential longer term leadership shift, things like healthcare working or do you feel like that's just a passing phase? >> you know, it strikes me that a lot of s&p, the 493 stocks have something that those stocks don't have and that's the valuation on their side. while we have the magnificent

seven type, nvidia and friends, at high valuations and then you have the rest of the market that is really trading at kind of fair value, i think we're, you know, well positioned to see that area reduced. i think the excite thing about the rest of the market is that you have cyclical and defensive stocks at reasonable prices. i think these two areas can do well in different kind of economic outcomes. you have areas like small stocks that can do very well or in a soft landing narrative and fed cuts on our side, and then you have areas like healthcare or consumer staples that tend to be those defensive go-tos. those can be great places to hide should we see markets that -- and the economy disappoint a bit more. it is great that investors really introduce optionality into the portfolio and position for a range of market environments. >> all right, thanks so much for joining us. we appreciate it. good to see you. >> good to see you. all right, up next, from nvidia's rise to intel's

troubles. the man behind the implementation of the chips act joins us to talk about the sector and recent project funding. and later, former president trump and vice president harris laying out tax plans with trillions of dollars on the line. we'll do a deep dive into both. "squawk box" will be right back. da announcer: time now for toy's aflac trivia question. what year did the honda civic what year did the honda civic debut?lped pay for medical expenses, groceries, rent. it really helped close that gap. (whisper) go, go, go! (group) yay! go aflac! go duck! get help with expenses health insurance doesn't cover. the answer when "squawk box" returns. find an agent. get a quote at aflac.com. wish we had aflac on our team. you can! while i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. upwork is half the cost of our old recruiter and they have top-tier talent and everything from pr to project management

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shares of best buy jumping after the consumer electronics store topped earnings and revenue estimates. earnings coming in at $1.34 a share, 18 cents better than estimates. that comes on ref new of $9.29 billion, also topping expectations. best buy is raising its earnings guidance for the full year. shares of crowdstrike moving lower this morning. the cybersecurity company reported stronger than expected second quarter earnings of 7 cents, excluding a two cent hit from last month's i.t. outage. they cut forecasts after disclosing that subscription revenues would be hit by a total of $60 million for the duration of the year as a result of incentives the company is offering customers following that i.t. outage. shares off by 2%. nvidia shares lower in the premarket. that's coming despite beating market expectations which remain sky high for this company. the stock as a result too, it is off slightly. for a broad look at the chips

sector, including intel's recent struggles, we want to bring in ronnie chatterji, the former white house chips coordinator who oversaw the implementing of the chips and science act. he's now a professor at duke university's business school. thank you for being with us today. why don't we start off with nvidia, what you think this tells us about a.i., and the demand for a.i. and the promise. >> i think despite what is happening in the premarket, we're seeing really strong continued demand for a.i. infrastructure. hyperscalers are spending tens of billions of dollars in capital expenditures building on infrastructure to support a.i. and most of the hyperscalers are worried about underinvesting, not overinvesting. while nvidia or no other company can overcome the great expectations, we're strong still in the a.i. space, continuing to see a lot of tailwind in that area going forward. >> and yet we have intel, which doesn't have the a.i. chips that are so in demand at this point.

that stock dropped by 25% earlier this month when the company came out with disappointing earnings that shocked the street. they'll be laying off 15% of their workforce. how does this happen to a company that just received $8.5 billion from the u.s. government in grants and another $11 billion in loans to try and make sure that it is doing things like keeping us ahead in national security and creating jobs? >> well, for intel, that money has not been allocated yet. they have preliminary award and they have to earn it with milestones on construction, technology and product road maps. and i say, look, intel is trying to catch up in the a.i. space. they're ramping up production of a.i. chips and that's what hit margins this past quarter. from the u.s. perspective, they made a diversified bet with the program. when we set this thing up, we realized we couldn't bet on a single company or single technology. that's why you see five different companies in the most advanced technologies all investing in the united states of america.

so, that diversified bet is going to protect american taxpayers, regard less of the fortunes of the individual company. >> people are asking what happens if intel gets smashed and goes away. would the u.s. government allow it or will you pour more money into this company? >> well, for me, i can't engage that hypothetical not being in the u.s. government anymore. look at some of the programs and the support that already has been announced. tsmc is building arizona ad advanced nodes, samsung building in texas, micron, you have skhynix on the packaging side. you're seeing investments across the board. you can't make your government policy depend on a certain company. >> this chips act was passed two years ago now. and it is now larger than the latest rollout of chinese funding and yet it has been so slow to try and see any of the buildout of fabs. is that because we have been

slow at acting -- enacting this? is this part of the plan? is it because it is so hard to build some of the fabs? why do you see us getting to the point where you think the chips act has accomplished what we set out to do? >> i think we're on our way. two years from the bill, we have been asking $30 billion has already been announced in terms of preliminary allocations. why is it preliminary? we have to make sure that the companies are hanging their milestone so they can build what they say they're going to build. for a complicated project like this, supporting that construction that will take years, equipment that is complicated and market that is cyclical, this pace is on track. we look at the chinese efforts, this is the third round of their so-called big fund and it hasn't necessarily delivered the kinds of gains on most advanced technologies you would have expected. i feel like we're in a good place. a lot of difficult challenges to unwind. but i still think we're in a good place given two years since the bill was passed. >> why do you think we're going to do it better? >> i think if you look at the

record, we have all five of the companies on most advanced technologies, both in dram and logic building here in the united states. no other economy in the world can say that. you look at that picture, we have the best chance to succeed in what the chip ecosystem is going to be five or ten years from now. when we did this program, we didn't think about how big a.i. was going to become and we imagine where the united states would be not making a single chip to power a.i. in the united states. we're going to make sure now we have over a quarter of the most advanced chips in the decade maybe here in the united states. i think we're on track, a lot of challenges and we should get confident, but i think we're on track. >> going back to your point you mentioned intel hasn't received this $8.5 billion yet they have to earn it through certain benchmarks. if they don't, what happens to that money? does it get returned to taxpayers? does it get redistributed to other chipmakers you talked about? what is your guess? >> yeah. i think first we don't have sort of public confirmation on, well, specific milestones. i imagine construction

milestones, product and technology road maps, and the company, any company doesn't hit those milestones and the taxpayer dollars will be clawed back, or if they're not allocated yet, distributed to other companies, as part of a program, i think it is about achieving the goals of the program and so if you could do that by investing other places, that's what's going to happen. we haven't seen that yet. we have to wait to see how intel performs going forward to see what is going to happen and there has been over 15 big awards, we have to watch all these companies that are in progress. >> a big part of the reason that this was able to pass congress is the concern of our complete dependence on taiwan or all of the chips manufacturing at this point. how long do you think it will take until we can say we're not so dependent on taiwan? national security issues? >> i think you'll see the money start flowing very, very soon. but to build the fabs and the capacity, let's say in the most advanced nodes, the ones that

drive training and inference, that's going to take a couple of years to produce at scale. the fact that we're building these things in the u.s. and tsmc, samsung and others are building in the u.s., that sends a powerful signal in terms of the balance of power in microelectronics. it will be a little bit before we can build these chips at scale. that's a business reality. the fact we're starting and we have the biggest companies in the game, that's a really important signal to the rest of the world. >> thank you. >> thank you. all right, coming up, game stop going retro. details after the break. taking a look at the futures. there we go. up across the board. dow jones up 250. s&p up 11.

"squawk box" will be right back.

a new game plan for game stop. the retail cher struggled to adapt to the shift to digital is betting on old school. shares are up 9% this year.

far, far below. >> you look at the old electronics becoming collectibles, christie's now is selling steve jobs the first apple one computer he built in 1970s with steve wozniak. paul allen bought it, he was able to get that computer and it is now being sold, the estimate is between 500 and $800,000. it is going to be sold in the next two weeks. so, you know, i think these atari consoles not at that level, but there is just so much nostalgia for these early electronics and games that it really has become a collectible. >> the story behind it, though, is really amazing. we were talking about it off camera, paul allen was able to get access to it because it was left behind. >> one of the first times that steve jobs was fired, there was a culture of technology where whatever is on your desk people could take it. so, his apple one computer he built was sitting at some sort of low level employee got it,

and paul allen found out, co-founder of microsoft, found out during his lifetime it was for sale and he bought it when paul allen passed away, became part of his estate, his estate is selling it. it is probably the most expensive pc as a collectible ever sold. >> a computer with the computing power of a tiny -- >> of a calculator. >> yeah, exactly. >> all right. sticking with video games, red burn atlantic initiating coverage of take two interactive with a buy rating and $195 price target. redburn says take two's launch of its grand theft auto six will be transformationable and could help triple operating income over the next few years. when we come back, unpacking tax plans, we will debate both candidates' plans or what we know about their plans so far after the break. and then does id'sarngnvia enis spell trouble for the a.i. trade? right now the stock is down by

4%. 4%. jon fortt will join us to weigh? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen in. "squawk box" will be right back. the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

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all right, our next two guests will help us unpack kamala harris' $5 trillion tax

plan, which includes an increase at the highest marginal rate for the top 1% to 39.6%, increasing the tax on capital gains to be same as ordinary income and as becky loves to point out, unrealized gains for taxpayers with wealth greater than $100 million and raising that corporate rate to 28%. joining us now to unpack it all, talk about what it means for high earners and companies, wendy edleburg with brookings economic studies and director of the hamilton project and scott lincecum, the cato institute vice president for general economics. thank you for joining us. scott, i'll start with you. there was the pen wharton study got a lot of attention this week, but they did not include vice president harris' revenue raisers there. and i wonder when you factor that in, what impact could her plan have on the deficit? >> right, well, when you include some of the things that she's proposed recently, whether that's not taxing tipped income,

expanding the child tax credit, and then some of the other things we heard from senator schumer about removing the salt cap, it seems the penn numbers need to be rerun because i think there is going to be a lot less tax revenue than we think and combined with the spending it will be a much bigger deficit number. >> and, wendy, when you look at the trump side a lot of points made about this would, you know, add somewhere between $4 trillion and $5 trillion to the deficit depending whether you score it dynamically or just score it on its own. what do you think on the republican side of their plan versus what vice president harris is talking about as it relates to the deficit? >> as it relates to the deficit, i think harris administration would be far more committed to a responsible fiscal trajectory. and far more committed to making our tax code more progressive. you didn't talk about tariffs. i think implementing a 10%

across the board tariff on all imported goods would not only raise precious little revenue because it would incredibly disrupt where firms are trying to source their imports from, but it could also potentially reduce economic growth, which would have its own negative effects on revenues. so, broadly speaking, i think that harris plan would leave a lot more money around to be invested in the private sector where it can be productive. >> and, scott, what about that? what has been surprising to me and becky and i were talking about this earlier is that on the republican side, you have very little discussion about cutting government, cutting government costs. but everything that we have heard from the trump campaign as it relates to taxes are about basically giving tax cuts, more tax cuts to companies, more tax cuts to people, exempting tip wages, et cetera, and aside from some big notion that maybe tariffs can pay for some of it, that's not part of the tax plan because it doesn't go through

congress, what did the pay fors on the republican side or are they just going to accept whatever trillions of dollars is going to add to the deficit, just by extending these tax cuts and perhaps adding more? is that acceptable? >> i don't think so. this is -- in the olden days, the republican party paired tax cuts with spending reform as well. and particularly at the big drivers of our spending and our debt problem, being entitlements. medicare and social security and the rest. these days you look at the gop platform on medicare and social security, there is no details -- >> so they don't really -- do they just not -- they have been talking about the deficit for at least a year, if not more. do they really just not care about it or will they care once they get in office? >> i think -- i'm hoping it is more of the latter. we are getting in that silly season, where there is not a lot of substance, but i would certainly hope for more and i would just agree with wendy that the tariffs stuff ain't going to

cut it. it would not only be a huge tax on consumers. it is not going to touch the amount of revenue that we would need to replace in the income tax or hit the spending targets we need to balance the budget. >> and, wendy, you know, going back to your point about vice president harris, i was a little surprised that if she is trying to appeal to moderates, she's trying to be a centrist here, she basically just -- maybe they just don't have time given where we are in the campaign season, but just lifting that white house budget and essentially her saying, look, i don't have much of a tax plan, but i endorse the proposals in the 2024, 2025 white house budget, which included things like taxing unrealized gains, things like bringing the capital gains tax to the highest ever in history. why would she do that if she is trying to appeal to moderates and even to business that may see her as a safe alternative? >> i think she has two broad goals. first, raising more revenue to leave more money available for

private investment. and fund our spending priorities. second is to do more to tax the corporate sector and higher income people. which i completely get as a priority. we need to make our tax system more progressive, given how incredibly unequal income is in this country. pretax and transfer. and as far as money that we're raising from the corporate sector, we're raising maybe half as much from the corporate sector as the, you know, other developed countries. so, broadly speaking, i think her goals are in the right place. there is lots of ways that we can think about doing more to tax higher income, higher wealth people. stepped up debt is just completely absurd and just -- but we're going to have a robust tax debate about the best way to do this. i think what she's doing is laying her priorities on the table. >> yeah. i agree. i just -- i think you're

absolutely right. we talked, you just closed some of the loopholes as opposed to doing something radically different from anything we have ever done, which is taxing unrealized gains, which exposes her to so much criticism and makes americans afraid that they're going to start doing that with their houses, with their small businesses, with restaurants. i just think it opens up a whole can of worms that had she been more selective about her tax proposals she could have avoided maybe. >> well, keep in mind, for anybody lucky enough to own their home, we're all paying property taxes. this idea that you don't have a system that takes wealth -- >> you know what, can i just say, when you pay property taxes, it is based on your house's assessment. if your property is assessed at a lower rate, your property rates would go down. i think a lot of people are asking would you be able to take losses on some of these, you know, undone capital gains at that point too? would you agree with that?

>> absolutely. i think the irs -- >> if my unrealized -- if i had unrealized losses, i would be okay with writing that off too? >> i think the irs has a long history of assessing people's wealth, particularly at death. and so, you know, we -- >> i'm sorry, i think we're confused here. i'm talking about unrealized losses. if we're going to tax unrealized gains, can i write off unrealized losss? >> yes. this should be part of the debate. when we assess your total wealth, that should account for both where you've done well and where you've done poorly. i don't think you would only -- you would only want to look at one side of the ledger. that doesn't make sense to me. >> they'll be sending multibillion dollar checks to elon usk. >> you're talking about things being refundable. no, these are not refundable. taxing -- losses have --

>> tax things i don't have and not give it back when the stock goes down. >> no, no. >> apply the credit. >> wendy, scott, thank you for joining us. we appreciate it. all right, when we come back, jon fortt has been looking at the a.i. trade and whether nvidia results could spell trouble. that's next. and later, former maryland and later, former maryland governor and u.s. senate to quit the kibble and feed their dogs fresh food from the farmer's dog. candidate larry hogan will be our guest. we'll be right back. precisely portioned for your dog's needs. it's an idea whose time has come. ♪♪

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value it provides. i'm not saying the a.i. story isn't real. it is. a good portion of the spending is driven by the wrong acronym, fomo, fear of missing out, instead of roi. meta ceo mark zuckerberg had massive spending on a.i. revenu. most companies are not meta. meta can justify buying nvidia hardware to drive engagement from billions of users and plan to rent the compute to llama or cloud customers later, but demand for even generationally significant infrastructure tends to take a breather on the way up. sun servers and cisco riders sold like hot cakes until they didn't. seemed like a no-brainer four years ago before demands for goods slowed. you see what's happening with electric cars. nvidia will be fine in the long term. the beat tells us easy times for other a.i. name, over. >> okay, but nvidia's ceo jensen

huang said great hurnreturn on investment and named names. >> well, becky, "on the other hand," what a.i. trade? super micro was at six-month lows before nvidia earnings even came out. snowflake's taken a beating after earnings last week. cp 3a off the 52 week high by more than a third and software names in general floundering. six months ago here arguing can nvidia stock stay dominant. nvidia as a stratospheric $74 a share. saying nvidia is in trouble now is when folks said apple hit $1 trillion in market cap six years, now a victim of the law of large numbers. can't get to $2 trillion without inventing another iphone-sized hit. now at $3.5 trillion and about to see the iphone 16 in a couple weeks.

practically speaking no a.i. trade yet. this is like when zynga and yelp got a boost early days of mobile. the apps and components really mattered. if anything, this week's nvidia earnings report should give investors confidence that over the next two years, true innovators in a.i. software separating themselves from the pack showing big guys aren't the only ones who can figure this stuff out. >> poke one holes? >> all holes. >> super micro down hindenburg accused they feel of accounting irregularities. fell 20% quickly on all of those issues. >> it was down a lot even before. >> it was down before. >> like 1,200 a share a while back. >> which do you really believe? which one of your arguments? >> well, i feel like i want to believe the first one, but i actually kind of believe the second one because that's -- >> still not incapable, nvidia has a certain exceptionlism to

the now. percentage of overall hardware capex spend nvidia is consuming in this segment. similar to, like, ibm at the peak of mainframes and cisco at peak of the networking booming. at some point you wonder if the whole market fills out and diversifies? >> i remember covering apple 15, 20 years ago. more like 15, maybe, on the way up. thinking, how many -- how many ipods would they have to sell to justify -- it's like, an impossible number of ipods. it wasn't an impossible number. didn't see the iphone coming. you have to look at what this enables people to do. speaking of -- it's late august, which means were she a birthday. >> thought it was your birthday. it's not. >> it is not my birthday. well, you know, back in 2020, joe kernen was, i'm sure, hoping for for more years and we got it. fourth birthday of "on the other hand." >> congratulations. >> thank you. yeah. it's not the fourth birthday yet. still new.

the "on the other hand" newsletter. just over a year old. give you the qr code on the screen. there it is. or type in cnbc.com/otoh for the full text of both of these arguments. >> it's like a child. fells like it hasn't been four years yet it's grown up so well. >> almost kindergarten age. >> yes. send it off to school. >> 90 more years as old as warren buffett tomorrow. >> coming up, talking technicals and the move in the market this morning. check out futures now. check them out. >> i think the dow is still -- >> dow's up -- still leading across the board. we'll be right back.

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let's go to the broader market and talk technicals. joining us craig johnson chief technician. good morning. >> thanks for having me on. good morning. >> i guess showing the chart. the s&p 500 along with the 200-day average. had the correction that culminated a few weeks ago. big picture don't want to over think it, uptrend, been an

uptrend, didn't violate anything on the down side. had rotation of leadership and maybe the market's broadened out. what's not to like with the fed going to cut rates? anything you would bring up to say that we should be, i guess, over thinking it beyond that? >> michael, as you look at this market you don't want to over think this market, but there is something we need to take into consideration. the makeup of this market. need to think about large cap versus small cap versus midcap in this market right now. you come back and look at what nvidia did last night. amazing results on the fundamental side. michael, as you know, stocks are made up of two fundamentals and two parts of it. stocks not making highs like seen before. actually you can find better looking finds in the mid cap world that look a lot more constructive. that's the change happening. a market that's broadening out. doesn't have to be led by just the mag seven. >> if it broadens out, this has

been, i think, something that so many have been pining for for so long. makes stock picking easier. people aren't comfortable being hyperconcentrated in a few names, but can the broader indexes manage to hold up if you actually have that transfer? i think back to the early 2000s, similarly concentrated market that did broaden out. well, broadened out in the context of s&p 500 going down by almost half over the course of a couple years even as small caps outperformed? >> absolutely you can see this happen. again, i understand the math of the mag seven, how large they are in terms of market caps. what if we see these companies consolidate sideways? why do they have to go down? they're great companies. they need a break, take a breather. below the surface we can find some of these things like semtek and other good looking companies pick up performance making new highs now? >> and within, say, smaller

stocks. just outside the magnificent seven, talking defensive, economically cyclical? >> fed looking to cut, seems a certain hit at this point in time. we know going back in history financials should definitely outperform. go through look at some of the regional banks, start looking at companies such as cboe or i.c.e. or others, all looking constructive and look like setting themselves up to take another leg higher. that's part of the broadening process we can see. it can be those interest-sensitive names. it can be some of the mid cap techs and some industrials with a reshoring trade continuing to play out. >> great to check in with you. thanks so much. >> thank you. it is 8:00 a.m. on the east coast. you are watching "squawk box" right here on cnbc. i'm becky quick along with mike santoli and robert frank. joe and andrew are off today.

among our top stories this morning, dollar general shares are tumbling after the company missed second quarter profit and sales expectations. same-store sales growth well below estimates and the company said it is cutting its outlook for the full year. citing a financially constrained core consumer. the flip side shares of best buy are higher. earnings and revenue beating street estimates and best buy raising its full year earnings gidon. dollar general, shares off by 25%. best buy shares up by just over 7%. apple appears to be banking on the appeal of a.i. in its next iphones. nikkei arsia reporting telling supplier to compare components from 88 to 90 million phones a 10% jump over last year's phone orders. california lawmakers passing first-of-its kind a.i. safety bill. the measure proving contentious in the golden state. many tech companies don't like

the bill mandating safety testing for advanced a.i. models and require developers to detail how to turn them off. the bill has one more vote to clear before it heads to gov governor gavin newsom's desk. it's uncleaver if the governor would actually sign it. dow jones industrial up 260. and -- nasdaq up a little bit. still, again, big sigh of relief after those nvidia earnings last night. treasuries looking at that yield inversion. coming close between twos and ten. ten at 2.82. closer there. get to contessa brewer with a look at this morning's pre-market movers. >> hi, there. it salesforce sharing moving higher this morning. look at those. a strong beat on earnings and profit for the current quarter, raised guidance. shares up almost 5% in the pre-market. that stock is leading the dow

higher as the the ceo tells jim cr more offerings. and crowdstrike lowering guidance for the full year because of incentives it will offer to repair relationships after its global i.t. outage this summer. shares off 1% in the pre-market. crowdstrike's ceo joining jim cramer tonight on "mad money" to talk about fallout and expectations for the future. a look at berkshire hathaway, again hit that $1 trillion mark and surpassed it. again the only company outside tech to hit that mega mark and sitting on a mountain of cash as well. shares up about 30% year-to-date, and um about three quarters percentage point in early trade. end on okta. bank of america gave okta a

double downgrade to underperform. lower than expected growth, softness in sector overshadowing better than expected quarterly results. those shares on the move this morning, down 12.5% in the extended trade. mike? >> contessa, thank you. move to today's most important stock nvidia. shares lower despite the fact it beat top and bottom line expectations. grew revenue more than 120%, gave solid guidance and announced a $50 billion stock buyback. expectations apparently so high for nvidia it appears anything short of crushing even the most optimistic forecast is seen as at least a mild disappointment. joining us now chris caso, senior analyst. chris, i guess a little bit of noise in terms of the cadence of production for the next generation is processors, you have a little bit of margin compression, perhaps. end of this fiscal year, but anything in the results or the guidance that makes you rethink

the pace of demand or the overall story? >> really doesn't. as you said, expectations high into the report. magnitude of the beat is a little less than seen in so quarters. 2.5% over consensus for guidance. what was clear is that demand is still well ahead of supply. supply is still coming, and that's allowing revenue to grow into the second half of the year. look intonext year or optimism is a new product family blackwell adds a lot of content. what i think they did well on the call is acknowledge some of the chatter out there about some of the changes to the architecture of that product. however, it's still coming out in the fourth quarter of this year and several billion dollars of revenue. that makes people feel good about the next product cycle and the content that comes with that. >> i guess that, you know, if you really want to kind of

broaden out the story, it's really about how many years of this type of urgent demand and buildout are we in for here? it doesn't feel as if -- a capex heavy sector of tech, because it takes such deep pockets to get these facilities built, to keep reinvesting in this area, feels like we'll get to a point not that it's done but the urgent part is done. do we have clearance through fiscal 2026 at this point we are not going to hit that point? >> a good question. really, it comes down to, for how long are the hyper scalers, enterprises, continuing to put capex in place for this. one part of it, you mentioned it in the prior segment. about getting an roi on that. it's early days in a.i. now. not everybody spending is getting an roi but a lot are. from there it's a question of,

when does this kind of get to maturity? the way we approach it, look at data points, keep looking at. one year at a time products cycles. for this product cycle coming up at least, demand is not being fully fulfilled by supply, and supplies coming on, giving room for numbers to go higher. then konnan tent is coming up. one of the things that is now changed in the world of semiconductors. pricing goes up every year now, because it's more expensive to make these chips and you need more transistors to drive that performance. as long as that's happening the stock will continue to work. >> all right. quick, what's your target on the stock as it sits at 121? >> it's a 150 now. outperforming. >> gotcha. chris, appreciate it. >> thank you. coming up, possible $100 billion operation for openai. details on that story next. first, former governor larry hogan joining us to talk election 2024, including those

emerging economic plans from republicans and democrats. stay tuned. you're watching "squawk box" on cnbc.

welcome back to "squawk box." futures now set up first modest upside. s&p 500 a quarter percent higher stuck to this 5600 level for, since beginning of last week. dow up by 270. more than half a percent. salesforce set to pop at the open. a big upside. nasdaq ahead by 47. race are to the open u.s. senate seat in maryland is heating up. former republican governor larry hogan is taking on prince georges county executiveangela o ossalbrooks. former governor hogan joins us this morning and larry, thank you very much for being here this morning. >> thanks for having me. good morning, the reason this is such an important senate race is

because maryland is a very blue state. it hasn't had a republican senator since 1987. president joe biden won the state by over 30 points in 2020, and i think seven of the eight representatives are all democrats, too. you were always a bit of a rn anomaly. republican governor in a blue state. kind of neck and neck a lot of people are surprised? >> going really well. couldn't be more pleased where we are in the race. obviously a very difficult challenge. i became only the second republican re-elected governor in 248 years, to put it in perspective. arguably the bluest state in america, but the people of maryland over eight years know me and they know that i'm kind of a strong independent leader that will stand up and try to bring people together and reach across the aisle and they know that i'm focused on bipartisan common sense solutions. the poll neck and neck, running 32 points ahead of the top of the ticket, which is kro think

anyone's ever done before. we're doing very well with republicans. up 23 points with independents and a big chunk of democrats including 31% of the black vote, which -- a long way to go. we're not -- i'm running like i'm 20 points down but it is a neck and neck race and we're just getting started. after labor day ready to go across the state, continue to talk to voters and try to make the argument that i can be a key swing voice in the senate to try to finally get some people working together to get things done on some of the serious problems that face us. >> there are a lot of questions about that. i know you have, don't have the endorsement of donald trump. had a pretty contentious relationship with him and sure you haven't sought his endorsement in this situation. when you talk about actually trying to get things one, what issues where you think there is bipartisan agreement? things that both sides of the aisle could work on? >> unfortunately not a lot of bipartisan agreement but i think

that it's desperately needed. on the bipartisan infrastructure bill, for example. i was chairman of the national governors association, brought all 50 governors together. pushed the agenda bringing democratic and republican senators and congressmen together. one example of bipartisanship working, but i think probably the next thing, at some point we have to sit down, get some kind of discussion what we do about the increasing debt problem impacting every other thing going on in the country. affordability, inflation, the economy. which everyone's concerned about. i also think we can potentially get a solution to secure the border, and to fix the broken immigration system, but it takes people that are willing to actually sit down and talk to one another instead of just pointing fingers, yelling and blaming each other. what's happening now. a lot of performative politics.

people don't seem to want to solve problems just score political points. i'm going to try to go there be a straight shooter and willing to work with flianybody to get people's work done. >> if elected expected to vote with republicans and look at the tax plan former president trump proposed now it's basically extending those 2017 tax cuts perhaps adding more lowering the corporate rate below the current rate and also exempting tip wages, et cetera. heard a lot about more tax cuts that could add somewherebetwee $4 trillion and $5 trillion to the deficit, but nothing on, or not much, on spending or revenue raises. if as you just mentioned debt is so important, how would you look at tax policy and specifically on how you would raise revenue or where you would cut to at least address some of the deficit right now? >> yeah. a great question. frankly i don't think either of the presidential candidates are

talking about doing anything with the debt. both talking about doing things that are going to make it worse. a lot of it is just making political promises in a campaign. some of which won't actually happen. it won't happen without congress taking action, and, no, i won't always be voting with republicans. i mean, look. i want to extend the small business tax credits, child tax care credits. 35 million small businesses, if we don't extend those tax cuts i think it's going to have tremendous damage to the economy. on the other side, though, some of the policies from harris that are also going to put us in worse shape. just down the road from washington over in our state dmaep capital in annapolis, worst record in state history. $5.1 trillion. cut taxes by $4.7 billion, grew the economy, created more businesses and jobs left with a

$5.5 billion record surplus and took our overall economic performance to number six. biggest economy turnaround in america. it's different in washington, i know. it's harder, being one senator trying to get people to work on things and figure out how we're going to stop spending beyond our means but this is a serious issue that paying interest on this debt, spending more on the interest on the debt than we are on national defense. both parties say they want to do something about balancing the budget but no one ever does. governors are different. i passed the first balanced budget in ten years in my first year and then balanced every year for eight years. so it's going to take really changing the way people think in washington. i agree with most people who feel washington is completely broken. that our entire political system is dysfunctional, and that it's going to take a different approach. there's no magic solution, but trying to actually get straight talk as opposed to political

rhetoric and, you know, developing down, rolling up your sleeves trying to figure out what we're going to do about this. the economy and affordability are number one issues out there on the campaign trail and seems as if both people are not -- both sides are not really addressing this issue. >> kyrsten sinema and joe manchin both leaving the senate. if you are elected to the senate do you see yourself playing that same sort of role? push back hard against your party? >> no question. i believe exactly in that kind of a role. k disappointed my good friends are leaving. co-chairman of both joe manchin and kyrsten sinema involved in that group and mitt romney leaving. where are you going? coming down there to try to help build this con ssensus in the middle problem-solver approach. unfortunately really good people are leaving the senate so fed up with this divisive, angry

politics and broken political system. they just, walking away, and it may seem crazy. sort of running into the burning building, but i know one person can't magically fix things, but if people aren't willing to step up, then we're in real trouble. wish they were still there but i'm going to try to be the exact kind of leader. if they want my vote they have to do what i think is right for my state of maryland and the country. i don't care if the rb republic or democrats. >> thank you. >> thank you. a member of mr. hogan's staff is related to our very own joe kernen. coming up, all about the avalanche oflawsuits facing google. news of a new one from yelp. detailonhat tes tafr the break. stay tuned. huge watching "squawk box" on cnbc.

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the floodgates are opening against google. yelp filing a lawsuit against the search giant. yelp accusing google of using dominance to gain unfair advantage it likely won't be the last company to make that argument. deirdre bosa joins us with the latest. >> the claims aren't new. yelp making them for years as well as others's saying google uses add advantage in search to gain advantage in search services. different, antitrust win against google, that decision giving yelp and potentially other companies a claim google is a monopoly. a declaratory judgment google's conduct violates antitrust laws. google in a statement says similar claims thrown out years ago by the ftc and recently by the judge on the doj's case.

on the other aspects of the decision, which yelp refers, we are appealing and will vigorously defend against the meritless claims. yelp, though, mike just identified, the latest in an avalanche of legal battles google is facing's next week google and doj, submit remty proceedings punishments in that ruling and appear for a status conference. also in september, a second, yes, a second doj lawsuit. this one on ad tech, set to begin. state antitrust lawsuits and of course ongoing eu investigations. all religigulatory pressure, gi pause. alphabet lowest forward pe multiple despite strong core business and a.i. leadership. guys, covering antitrust regulation many years and one thing that i'm usually able to say, doesn't really impact investors. complacent and shrug it off. for the first time sort of in years you're seeing this impact

how investors are valuing these companies. >> doesn't until it does. how specifically does yelp argue google's search hurts them? how does it work in search that's it's been an issue? >> google like many other mega caps, ecosystem, platform. running having 90% of search they can put their own sort of ecosystem products at the top. looking for a local service and yelp says more than half of the searches on mobile are actually with local intent google can put its maps up there, its rating system. or created google finance, put that ahead of our financial remember seitz. >> which rating system do you think is better, more accurate? yelp -- because -- >> such a good question. yelp always for me. how about you? >> whichever has more. one has 500 reviews and the other 4 reviews i'm going with the 500 people what they say. maybe that's where that sort of

scale helps google, because they have more views. people are going to look at them. >> right. think quality is better on yelp, what they argue. google may be easier to find but yelp has better quality and therefore google's a monopoly not giving you the best product in that -- >> bigger picture. even if a lot of direct lawsuits don't result in different practices, google is now disincentivized to underscore its dominance and accentuate exactly the synergies within its model. >> yes. >> from a regulatory perspective. >> the fear may not get a breakup or huge structure changes but to amount to what happened to microsoft late '90s, early 2000s, taking their foot off innovation distracted by all the legal battles. the race, artificial intelligence, genai and in that, those terms google by all means seems to be leading. putting out pixel-powered a.i. phone before even apple. >> founders saying willing to

bet the company on it, in a way. thanks very much. when we come back, breaking economic data. initial jobless ai aclmsre next. stay tuned. we'll be right back. opportunities in the market. k 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

we are a few seconds away from initial jobless claims and a revised second quarter gdp. the jobless claims the market is watching closely based what we heard from raphael bostic yesterday. nasdaq up close to 60. s&p up by about 18. rick santelli is standing by at the cme. hey, rick. >> yes. good morning, becky. initial jobless claims continuing claims hitting the wire. one dozen weeks in a row above 1.8 million. continuing claims first. 1 million 868,000. very close to expect aces. last week was suddenly revised from 1.863 million to 1.855. as i said, 12 consecutive weeks. initial claims, 231,000. very close to expectations. that is 2,000 less than a slightly rerised 233,000. and if you continue to monitor

these claims, it's been a while. 250,000, high-water mark last week in july and they have been on the low side since in the 230s. even had a 228. that was second week of august, and all of these numbers, as becky pointed out, continue to drive the notion that it's still a split decision on exactly how weak the labor market is getting. now, turn towards gdp. a revision to the upside. second quarter, second peak. moves from 2.8 on gdp to 3 %. put a face on that. the last quarter of '23, 3.4. that's where we're comping to on the strength. consumption also upgraded rather dramatically. 2.9% versus 2.3. 2.9 also comps last quarter of 23, when it was 3.3. price index. moves up as well. to 2.5 from 2.3, and that comps to the first quarter of this

year when it was 3.1%. and finally, if we look at the core pce index, quarter over quarter, it's the only metric here that came in on the light side. 2.8 versus 2.9. and, of course, the recent high-water mark 3.7 in first quarter of this year. you see yields moving up on this data. whether it was initial claims or the rather strong revisions on the gdp, and i do point out the price index moved up, or didn't, but much closer to 3%. quickly look at other metrics out there. look at inventories. whole sale inventories built up 0.3 as expected. retail inventories, however, much stronger, up 0.8% and rearview mirror, we have 0.7. nice strength building there. last, not least, on the trade deficit which is a trade balance. the balance is a deficit. well worse than we expected.

look at the number for minus 97, minus 98. minus 102. minus 102.7 billion. that is the worst level going back to may of '22, and it does underscore the notion that the rest of the world, we need to pay very close attention to, because indeed we are definitely consuming a lot more than we are exporting on that trade balance. interest rates really popped up on that. we're at 386 in a ten year up about 3.5 basis points. two-year note yield. now at 388. but prior to that hovering at the lowest level. should have closed around 3.83, 3.84 since may of last year. becky, lots of data lots of market movement. pre-opening equity futures are even doing better on this, nothing wrong with extra points. >> actually 35, 40 points maybe for the dow.

rick, thank you for that la la pa palooza of information. my head's spinning trying to follow the whole thing. stay with us. joining us with more on this new data and what it means for the economy and more specifically for the fed laura rayne. chief economist and our very own steve liesman. steve, what's your take on all of these numbers? >> quickly, so the jobless claims, i fell every week this comes in, in the 230 range. doesn't spike up. we're dodging a bullet here. concern the job market's going to give it up. just doesn't do it. rick is right to point out extent to which we're over 1.8 million on the continuing claims for a while, but i would point out that when we have a recession, at least in the middle of it, it doesn't give you much warning. continuing claims goes to four or six million. not near that level, just up abovalities where we were before, which was 1.7. the consumer here and gdp, just

read you that the current increase in real gdp reflected increase in consumer spending. private inventory investment and non-residential investment, a bit of unsung hero of our, the recent expansion, which is this private investment, which is done reasonably well. and the consumer does not appear, becky, to be giving it up. rick is again right to point out the upward revisions on the inflation numbers. but the one indicator powell follows very closely. core pce ex housing and energy down at a very low 2.3%. i'll leave it there. >> okay. a lot to digest. stay with us. still we want to go through all of this. get to laura and see what she thinks about this too. laura, which of these numbers is the biggest surprise? which is the most important, do you think, in terms trying to determine what the economy's going to do and what the fed's going to do? >> i think of this big, you know, wave of data.

the initial jobless claims. the one that's going to get the most passengeattention because really timely. higher unemployment speaked up alarmed us a couple weeks ago. adds up to incremental slowdown to a very strong pace of growth. i think that's what we're see third quarter. gdp that looks closer to 2% than higher mid-to-numbers. i don't think it's a time to start running around worrying about recession. i think this is what we've been expecting. that we had a lot of momentum. it was unsustainably strong. and it's important to recognize that we have an economy firing on all cylinders. business investment continues to be solid. the consumer can moderate. they should moderate. that's a healthy thing. i think it's too early to get deeply concerned about a crash landing today. >> okay.

so, steve if we had raphael bostic, the atlanta fed president, saying that he thinks things may be slowing down, but really wants to see these next data points, including the initial jobless claims today, before he make as decision about whether to cut next month. that's a lot, because the market is priced in far more aggressive. >> so let's separate that question, becky, if you don't mind, into the near term and the longer or medium term. i think that's the way to think about it. i don't think raphael is somebody -- talked to him in jackson hole. on board with cuts. said to me passive tightening idea is a thing. that is, the fed maintained that high rate of 5.38. inflation has fallen on a real basis, the federal reserve is tighter than it previously was. in fact, goolsbee says tightest the fed has been at least in this cycle. there's reason to cut near term. and i think the story coming out

of jackson hole and from powell's speeches, there is some tolerance around that. it is not necessarily if the job report is strong that would dissuade the fed from easing. i think the story is about supply, if we have the labor force to do so. if the unemployment rate either stays where it is or even declines a little bit or increases a little bit. the fed is still cutting. i think there's tolerance around the inflation numbers for the fed to cut, because what powell told us is, becky, the way i think about this is, we are grading the improvement of inflation over the four years you went to school. not in the last two months. and that four years or at least in this case the drop over the past two years in inflation, has been very notable. very -- unasalable in the sense gone down from 9 down to 2.9 on the cpi number. there's room for the fed to cut, to ease a bit, remain restrictive. so it's not like we're going to

be on the edge of our seat for 01.01 on cpi. >> note the market sensitivity to weekly number on claims. clearly there's an underlying concern softness in the labor market will get away from us and from the fed. powell and others relied it's mostly lab irsupply getting unemployment rate higher and haven't seen a big uptick in layoffs. you have some folks out there saying, that's not the way it usually works. eventually softening labor market becomes a problem. i guess we have to test this week to week and in a with a slower fed easing pace is often the preferable outcome for markets, i guess. it means the economy is hanging in. >> at least at the start of the eason cycle i think that's right. they want to be cautious. i think this is where we have to differentiate between what's good for the market and what's the strength of the underlying

economy. if the fed eases less, the markets are expecting, because data is strong, that's great news for growth. markets may be a little disappointed. so, you know, i think as we look ahead, the unemployment numbers are going to be most important. shifted focus. inflation to the jobs market now. i think the fed would prefer to go gradually. the good news is they have room to really speed up rate cuts if they need to. it's a better policy stance that the fed is starting from than we've had in 20 year. i'm not trying to be a pollyanna. this is going to be tough to navigate, but there's good news here, and i think we need to keep our eye on the ball. the economy is looking solid. weathered a global slowdown, higher interest rates and against that backdrop there's a lot of underlying growth across the, you know, the middle market. the 200,000 companies in the u.s. that are really driving a third of gdp growth beyond the

market there's a strong economy that's very resilient. >> rick, the markets reaction to this. higher equities, yields a little hige higher, too. because the job picture is intact or more because, hey, this is good news looking at higher equities that inflation is down, too? >> well, you know what? i don't know i agree with any of that. i look at consumption beefing up 0.6% up to 2.9 on a second revision and see a three handle on gdp. i see a jump in the price index from 2.3 to 2.5. and here what i think, okay? there's a two-speed economy. some that aren't doing well. some cooking in grease. look at pre-covid 2018, 2019. remember how much noise the fed made being a couple tenth under 2% inflation and how they cut rates so low basically zero for so long, a couple of tenths,

really were stressful about that, and then went out of their way to make sure we knew that 2% was a target that was carved in granite. now, going the other way, we're not going to be symmetric. what? more than a couple of tenths above that 2% mark, and steve can point to the xxx. take everything out, yes, no inflation, but ultimately the response of positive news making equities and interest rates go up tells me maybe the fed has room to ease but not very much. >> okay. >> rick, pointing out the metric that the fed chair has been following and pointed to us, too. rick, a little of my own reporting with you in a second talking about this idea minus 3 on the 210. my question, do you have your disinversion party hat and kazoos in your pockets now and ready for this to happen and how does it happen? does it happen because the two year falls more? does the ten year go up? what's the thinking there on the

floor about this disinversion, are they as excited as i am about it? >> they believe it's going to be shared by both ends of the yield curve. you're going to see a little more easing back in a short rate like a two-year note. and that the longer data maturities will be holding up a little better, because of debt and a variety of issues, and include less weakness and more strength in the economy. so traders aren't going to take the bet only on twos or tens. they're taking the bet on the steepening curve. this 45 has been a home run for many traders. this will have horse power. i'm looking forward getting back to basis points of steepness area. >> that part of the way, guys, haven't thought about it. mike has. the idea this is interesting for the banking sector, becky. leave it there. positive slow to the yield curve it's a positive result for the economy and lending sector.

>> mike? weigh in? >> something we need to always pay attention to. is the fact that debt and deficit dynamics, this is going to be a dominant issue coming into next year. it's a dominant issue today for the election. i think everybody saw the fed pivot back in november. they assumed rates were going down across the curve. short-term rates may come down. long-term rates may be stuck at a higher level and may be going back to the mid-1990s. that's a piece that markets and especially these long-term sort of hypergrowth equity component of the s&p 500 hasn't int internalized yesterday. >> laura, steve, thank you. the latest eye bs-popping valuation for a.i. the new focus on the next computing giant. heading to break, yoranothe check of sales. salesforce's to be analyst revenue estimates and raising full year profit outlook.

shares up a little over 4%. you're watching "squawk box" on cnbc. stay tuned. depending on the plans available in your area, you may be eligible to get extra benefits with a humana medicare advantage dual-eligible special needs plan. all these plans include a healthy options allowance. a monthly allowance to help pay for eligible groceries, utilities, rent, and over-the-counter items like vitamins, pain relievers, first-aid supplies and more. the healthy options allowance is loaded onto a prepaid card each month. and whatever you don't spend, carries over from each month. other benefits on these plans include free rides to and from your medical appointments. you pay nothing for covered prescriptions, all year long. all plans have dental coverage which includes 2 free cleanings a year, fillings, and a yearly exam. they also

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semtech. sem semtech-of-

welcome back. another check of our stock this morning. nvidia shares, company lowered despite solid second quarter results. the fact nvidia didn't middle east the most optimistic forecast seems to be weighing on the stock an revenue group 122% over the year. a slowdown from the previous three quarters where revenue was basically tripling. so instead of tripling it's now doubling. that's -- street wanted more. >> that's right. openai sky-high valuation could soon jump higher. kate rooney joins us. big numbers bandied about. >> they really are, becky. what i'm hearing. owe a.i. raising billions of

dollars in new capital. i'm told will boost its valuation to $100 billion. this, of course, is according to a source familiar with, the person telling me the venture firm leading the round as drive capital putting in $1 billion into this round. a major step-up in owepenai's valuation. founded by sam altman. up from $29 billion a year earlier. o openai maker of chatgpt. at this point market leader of "wall street journal report"ing details in the latest round. also report microsoft is expected to put in more money. microsoft declined d to comment. stepping back, shows investor confidence in openai's growth. some of that valuation. numbers throwing out really says that they think this is going to see exponential growth and part of the arms race in the valley to raise more cash. really expensive to build the

premiere languages and openai in pole position. staying there requiring a bigger cash pile to develop the new products and better models, guys. >> kate, you know, i guess thrive has a long-time relationship with sam altman and a lot of praise on both sides there. when i look at family offices, the number one investment theme this year, they're all putting money into a.i. so, i would guess that openai would raise even more if they wanted to. how is the company looking at who gets to invest right now and who they want as investment partners? >> that's a great point, robert. these are exclusive funding rounds. it's a massive dollar amount, but getting on the cap table for openai or anthropic for that matter is really competitive out here. it often relies on those personal relationships. sam altman, you mentioned, and then you're competing with the big tech companies. microsoft, one of openai's

biggest backers, but then you have google and amazon and anthropic so you've got to show that not only do you have the cash, you've got something else to offer, whether it's some sort of expertise on tech, personal relationships or cloud computing credits in the form of these big tech backers, so it's fiercely competitive. i talked to a lot of venture capital investors out there who say, they're clamoring get on these deals and they're locked out, because they don't have anything other than cash. it's really a new paradigm you're seeing. >> kate, do we have a sense of what these investors expect in terms of demonetization plans? all the things you would to see for consumer application like this. >> yeah, so, it sort of suspends any of the traditional software investing. the rule of 40 is something that people look for, the growth rate above 40. they look at a.i. companies and say that the growth rate -- this is the optimist point of view but the growth rate is so

exponential, they have to throw that out the window. they have to suspend any traditional standards by which they would value or measure a company and say that a.i. is growing so fast that there is a sort of fomo effect. they've got to get as much cash in there as possible, but if you look at the pure numbers, take $100 billion, that assumes, say, $2 billion is sort of the revenue range that's been reported for openai, you know, 50 times revenue, this company isn't necessarily profitable. they're really running at being the top name here. they're spending a lot. so, the numbers alone sort of bake in an expectation that this could be, you know, a trillion dollar company, which is what some of the optimists are saying out there. again, there are so many roadblocks. they're competing with meta, google, amazon, other private companies here, so it is just the expectations that are baked into $100 billion number are just something we've never seen before. >> kate, thank you. we'll see you soon. >> thanks, becky. all right, up next, a check on some of the morning's key retail results. we'll speak with an analyst on

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spacex launches are on hold

following an accident with the company's falcon 9 ship. a booster rocket tipped over and went up in flames yesterday while landing on a ship in the ocean. as a result, the faa grounded all falcon 9 rockets and ordered an investigation, but the mission still delivered another 21 starlink satellites into orbit. spacex has not confirmed a new launch for the private astronaut flight. two launch times for that mission were cancelederier this week. more retail results this morning showing where consumers are spending and where they're not. among the bigger names reporting, best buy and dollar general. dollar general cratering its -- cut its full-year outlook. on the other hand, best buy raised its earnings guidance. our next guest covers both names. michael, thanks for joining us. >> good morning. >> what did you make, first of all, of dollar general and what the issue there? and i think there's been kind of some oversimplification of the

consumer market where people say, well, there's the lower end, which is struggling and the higher end, which is not, but isn't it more about just value and price to value, no matter what your income level right now? >> there's no doubt that the consumer environment is complicated. if we were to assign some themes or words, the best choice would be purposeful, tenuous, bifurcated, and there is no doubt that value and the value equation is really key. what happened with dollar general is it is serving that low-income consumer that is showing incremental pressure, given all of the -- all the issues that have weighed on that cohort over the last few years. and dollar general is feeling some of that. in turn, its sales are going to be slower than previously expected. it is probably going to make some investments in areas like

price. clearing out excess inventory to deal with that. and that's weighing on the stock today. >> but when you look at the, say, walmart, which is also very price competitive, they seem to be executing better. how much of this is a consumer issue with dollar general, and how much is about execution and strategy? >> i think execution is playing into the various performance of these retailers. i would also keep in mind that retail has always been an extremely competitive sector. there are different trends that are happening at some of these players, though. walmart's being very effective online. dollar general doesn't have an online presence in any meaningful way, so that does go into the relative performance of those retailers, but execution clearly is having an impact on who's performing well and who's not at this point. >> yeah. and what about best buy, and what do you see there going into the school season with regard to laptops, all the things that students need for back to

school? is that going to give them a boost? what's the outlook? >> we like best buy, and we think that the results today validated that best buy is on a stable path forward. what it showed is that it's starting to see some green shoots and certain product categories like laptops, and that's even before the broad rollout of new technologies such as artificial intelligence. what is important here is that the company noted sales in august were flat year over year. that's the first time it reported flat sales in quite some time in the wake of the pandemic, so that stabilization should usher in good performance for the consumer electronics category, in turn, helping best buy as it enters 2025. that's also an important point for the broader retail sector, because this is one of the first categories that's starting to show some recovery from the covid pull-forward of demand.

it's not surprising that the consumer is using these products regularly on a daily basis, and so those items that were purchased in 2020, 2021 now start to need to be replaced, and best buy stands in great position to benefit from that. >> michael, thanks so much. >> thank you very much. all right, folks, that does it for us today. guys, thank you very much for being here. it's been fun. join us tomorrow. right now, it's time for "squawk on the street." ♪ all right, good thursday morning, everybody, welcome to "squawk on the street." i'm david faber. that's jim cramer. we're live from post nine at the new york stock exchange. carl has the morning off. let's give you a quick look at futures. of course, we get started with trading on this thursday in august. you can see we are expecting a higher open. we've got a lot to talk about this morning. >> oh, my. >> and let's get right to it. our road map, well, we'll call it the a.i. trade, of course. nvidia's