will, in sectors that have been beaten up, then i would agree with mona. i think it's going to be harder to do in the shorter term. >> thank you, jj courtney reagan, thank you >> great to see you. >> what time was your alarm clock set for? >> 3-something >> that's hideous. >> join us tomorrow. set your alarm clocks. "squawk on the street" begins right now. ♪ good wednesday morning, welcome to squawk"squawk on the street" i'm carl quintanilla with jim cramer at the new york stock exchange first full trading session of the second half and futures are weak on disappointing pmis around the world our road map begins with the global macro soft china data reviving growth concerns futures are slipping, investors awaiting tea leaves from the fed

minutes. plus, trouble for twitter, meta's facebook prepping arrival app launches as soon as tomorrow and goldman upgrading netflix as the streaming giant regains some momentum in content creation let's begin with the markets. what a treat it is to have you back, jim, because this second half playbook is important >> well, thank you, and it's great to be back i was able to go vacation with my daughters in iceland. i had a lot of time to think about the market, and what i realized is that this whole nonsense of that it was only just -- well, there you go one of my happiest moments i submitted ahead of everybody else there this whole concept of what went up give me a break. that was a 50-pound stone that i couldn't lift. it tells you how strong you are. >> this looks like serious reflection time. >> oh my god, yeah, there was looking for shipwrecks these are good ones. i came back and i thought one thing. who the heck cares what went up?

stocks went up and if you were just possessed by the fed, you were a gasbag and you just simply could not make any money if you were possessed pi how ch china was coming back, you missed everything. if you thought about a.i. and u.s. dominance and what is dominating, you made a killing, and i think we have to get away from those who don't look at stocks and don't look at a.i for instance, chatgpt, it took over in november, and it was a major reason why we had an incredible number of calls that went up, and if we -- we got to get more realistic about what's happening in the economy, which is that the inverted yield curve was possessed by people who turned out to be ill-advised and of no value. >> yes >> and you say that, and they keep saying, well, then, don't worry. we'll be correct but you know what? they lost. game over. game ended >> does the game end

>> game ended. i mean, you either made money in the first half or you went home. i mean, it was like the double header, and they were shut out twice, the first quarter and the second quarter, but they refused to admit it, and their arrogance in refusing to admit it is surprising and suboptimal. >> you sound kind of like renaissance macro this morning, whose general take is the bears are going to capitulate, even if it's little by little, and those rising forecasts are going to create a bed for the second half >> i don't think they can capitulate they're so intellectually dih dishonest to begin with. they think they won. these are trillion dollar stocks, and so what? their arrogance and insistence that they are going to be right, well, you know what? that reminds me of 1987. there was a stock market crash and all the analysts got negative, and they kept saying, we're going to be right, we're going to revisit 1,400 and they were wrong. now, the good news is they all

got fired in the end, and they went into other businesses you know, i remember a lot of these guys came out and were pumper loafer. >> how can you be so intransigent if the clients are d disappointed don't they turn on bears who have been wrong? >> no, they tend to be able to -- the institutions are busy saying to the individuals, look, it wasn't worth doing. there was a great book that was written about bill parcells called "no medals for trying," and what he said is that there are triers and there are winners. these people who are bears, they were triers, okay? but there's no medals for trying no medals, meaning they've got no return for people now, over time, the brain-dead people who stayed with them will pull their money out am i being at all facetious? no it's time to call these people out. they are people whom i call the

tens and the twos. they have been buried by cindy homer who wrote a book about inside the yield curve, which is worse than a book called "tris tram shandy. they're still looking at the yield curve, saying it's the end of the world in the meantime, i got a catalyst watching lennar and polte home they stand for pickleball. >> thank you, ubs. >> thank god i got a lot of pens >> what does that mean for your position in the next six months? >> well, look, the one thing that is of concern for me is that we're coming in too hot into earnings season, so that means you start off with

jpmorgan, but we have these stress tests, and they are okay, but bank of america wasn't so hot. you go in, and those companies could be -- they could be laggards, and i think that's unfortunate because they start talking, and that could cause a bummer, to use a technical term. >> we go through that all the time financials start the season out cold >> just like, you know, everyone's kind of saying, oh, look, i guess you got to get long and that means -- there was more coming in, retail money coming in, thank you, brett collin, then we have had in some time, and that makes me feel like, oh now? now you come in? well, you're going to get, you know, you're going to get marie antoinette coming in here, let them eat cake and then guillotine i think they should stay on the sidelines. i'm telling members of the club, we've had a run, let's do some selling.

to come in now is to say, i don't need to wait for a pullback, there won't be one, and that's when you get a pullback, and then mike wilson will come out and say, listen, i'm right. you know how the eagles won the super bowl don't you tell me the chiefs won. don't you dare you are wrong. and don't even say the term super bowl because you can't you're not allowed to. my friends at the nfl don't let you use that term. you have to call it the big game >> the big game? >> yeah. okay >> well, we'll watch that. of course, it's huge implications for the back half of the year. you have signs of a faltering recovery in china that jim mentions >> it's been poison. >> pmi urged by more than three points there's a ton of china news this morning. >> well, look, the only company that did well in china was nike, and where did that get them? they have too much inventory by the way, i want to start taking out nike. i have a piece i'm working on

john donahoe is the ceo. and he's like tool and dye in a tech company he comes in there with tech and he says, like, the first 42 words are about how great he is and how great the company is boom they disappointed. and that's sometimes who you got to do is own it. you got to say, you know what? we didn't do as well as we should have. but those words of humility are completely missing from that conference call, and i think it's time for the humility that we know from buck told us, you can't do that. >> yeah. it really didn't move to the downside as much as some prior quarters >> it was a horrendous quarter, made by difficult by how great they said it was >> we did, on friday, we did look quizzically at the freight costs, s zbg&a, some of the thi that other companies have managed to address >> given the fact that they have all of the brands that everybody wants, why didn't they make more money? i mean, you know, they did have a down year over year, and i

think that, again, humility says you start with that. you don't start with, like, otherworldly notions on how well you're doing i find when you're doing poorly, one of the great things is you should say, we didn't do as well as we'd like that's what you get in any high level of sports. you have a manager, a coach who would say, we didn't do as well as we'd like but no they won >> well, their china numbers came in a little bit ahead >> that is what they -- and then they have the for china, by china. yeah, the chinese love it, and they had that great holiday. but again, you need to win in the world, and china almost everybody is losing. >> the services number is definitely weak. we got more news this morning about potential export controls on some things you need to make chips, and then of course, the treasury secretary, yellen, is expected to visit beijing tomorrow >> that will be disappointing.

>> in advance of that, eunice yoon is live from the chinese capital. >> everything that you have been talking about is the backdrop of secretary yellen's visit here. the poor economy, the pmi figures, as well as the challenging prospects for a lot of u.s. companies wanting to do business with china and the possibility that the u.s. could be imposing more export controls now, secretary yellen, as carl had mentioned, the going to be arriving on thursday over the next four days, she is going to be meeting with chinese officials, including her chinese counterpart, and members of the u.s. business community. now, there is no expectation at this point that she's going to have a sitdown with president xi jinping. her trip comes just weeks after secretary of state antony blinken was here her visit is seen as part of a greater effort by the biden administration to try to reboot and restore these flailing

dialogue or conversations with the chinese. there's been very little communication between the two sides from about a year ago, especially after then-house speaker nancy pelosi had visited taiwan, angering beijing so far, all the indications are that the chinese are very happy to have secretary yellen here. one of the concerns is that they want to have the focus of conversations to be on the economy, that data that you guys were mentioning is one of the reasons why it really showed that the economy here is petering out secondarily, it looks as though the chinese are increasingly alarmed by washington as well as its allies and other advanced economies really kwcoordinatingo derisking from china in other words, weaning themselves off, especially on supply chains from china, so the expectation is that the chinese policymakers are really going to be lobbying with secretary yellen to try to change that,

and she's really seen as somebody who's very sympathetic to that cause. she's been widely quoted here in the state press as saying that decoupling, which the chinese see as more or less the same as derisking, as disastrous for the relationship and for the global economy, so this, though, comes as -- as you guys were just mentioning, on monday, the chinese had announced export curves on two metals that are used in evs and semiconductors and so that's seen as a bit counterproductive if you think that secretary yellen could be a sympathetic ear and potentially go home back to d.c. and try to change minds >> well, eunice, let's deal with what i think could be happening here we don't want war with the chinese, so we send over high-level people. but for the first time that i can recall, we have what they

want, which are chips that allow you to -- well, graphics cards that allow you to do artificial intelligence and we don't really -- we have been working so hard to source away from china, i know we haven't been able to totally get away with it yet there's still some residual, but what can they do to get the chips that they want and don't we realize at what point that all they want to do is take over taiwan so the discussion doesn't involve what nvidia says? >> they definitely want to make sure that taiwan is seen as part of china, but in terms of the chips, i mean, it's a very difficult one for the chinese. we're already seeing that chinese companies have been trying to use work-arounds to get their hands on the chips, either through the black market or using cloud computing in order to try to work around these controls

but yeah, it's very hard, because the chinese, unlike the u.s., don't really have as much leverage as, perhaps, they would like to think, because for example, these export controls, we see that they're trying to send a message that china, too, can impose export controls on the ingredients that would be used in these chips, but at the same time, there is concern that this effort for the chinese could backfire, because those components, gallium as well as germanium, are not so rare, and in fact, it could end up doing what we've seen in the past, which is other countries then investing more in the mining of those materials, and then shrinking, eventually, beijing's market share of those particular minerals >> indeed. nxp on the tape right now saying it's examining whether those curbs on gallium and germanium

will affect its business eunice, thanks talk to you soon when we come back, a twist in the battle between zuckerberg and elon musk. meta preparing to take on twitter with this new app that may launch tomorrow. take a look at the premarket lot of calls to get to, including netflix, coin, amd and microsoft. don't go away. inkorswim® by td e is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

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to challenge elon musk's twitter with a new app called threads. the launch is expected to take place as early as tomorrow it comes after twitter spent the holiday period trying to explain why it limited the number of posts that users can read on its platform jim, you can use, apparently, your own instagram handle. it's not going to roll out in europe right away. >> it's obvious that this could be the kinder, gentler twitter twitter is a cesspool. we all know it twitter has been devalued. i saw linda from nbc saying some party line position that will let her keep her job with increasingly erratic elon musk look, i think that when i look at what the new facebook insta's done, it's made it so you don't have the kind of hate that goes on if you can extend that, then people will go back to twitter i think twitter may have 300-plus million people, but those are 300-plus million people who are dissatisfied. doesn't mean they won't post

does mean they can't look at the comments, and when this thing started, you could look at the comments, and you could go to people who said nice things. that is a province of instagram now. like, when i had great posts, when i was in iceland, my kids said, look, you can put them on instagram, but if you put them on twitter, we're going to go home, because you're so hated on twitter. and you're a liability on twitter. that's not unusual it costs nothing to hate hate is just, you know, the free speech for hate is protected the first amendment allows people to do anything, including say that you should be assassinated, which i question whether that was meant by the founding fathers i don't think they thought of twitter. in that, i am being facetious, but i say, game, set, match, zuckerberg he has really learned his lesson he really understands that it does matter, that you want to be committed to the community and facebook is a very -- instagram is a really terrific product, and twitter is awful, and my

kids were saying, why are you posting on twitter i said, it's free. they said, that's great. the worst things in life are free >> does that mean you're going to migrate are you going to move your content delivery to threads? >> i'll put some twitter in just because i like -- i'm a masochist who doesn't mind being hated but that's been the way of most of my life since fourth grade when mrs. toric made fun of me. not good my father heard about it and said, she's right. it was a contentious relationship with pops around '79. i think musk had yacorino, who graduated from penn state. i happen to like the nittany lions. my partner, jeff marks, went there. once you leave the organization, i don't have the same level of -- i play for comcast, okay and if you leave comcast for another place, then i don't like you as much. that's just the way i am

>> all right >> now, the comcast people in philadelphia may say, you know, we're not like that. but they're from philly too. okay they're from philly. when someone leaves philly to play for another team, let's just say, who were they? >> there have been some high-profile examples of that. and have done pretty well, to be honest, yeah you'll give me that? >> eh. i don't know yesterday, nola killed elfin look, they left. i wish her good luck because i'm a kind person, but you know what if you play for comcast and then went somewhere else, well, send me a -- let's just -- i'm not going to use jim fisk's term i wish you good luck, but i play for comcast, period, end of story. and those who act like they don't, there's other networks. >> we're going to see when threads -- if we get this launch tomorrow cramer's "mad dash" coming up after the break.

ticking one more look at the premarket here opening bell coming up

transport's going to be a big story there today. you see u.p.s. on the list of laggards as the teamsters say the company has walked away from talks. company denies that. we will get auto sales numbers there's news on the uaw big three. night swift warning on q2. don't forget, you can catch us any time, ywreju lteanhe, stisn to and follow the "squawk on the street: opening bell" podcast.

>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. >> time for cramer's "mad dash" as we count down to the opening bell >> you can put up the chart of nvidia or lennar they're the same, except for

lennar is the home builder and nvidia is the most important chip company in the world. citi has a terrific catalyst watch on, which says the large builders are doing better than the small buildsers, and new home sales are gaining on existing, especially a year over year comparison, very good i would also add that the fed's increases have failed, because it didn't raise the long end the long end is still very -- mortgages are still very cheap, historically many, many are brought with cash, but there's a scarcity, and these guys built far fewer than they should we need to have two million built in order to, you know, make a dent. we're, like, three quarters of that, and lennar is the biggest beneficiary, because they really know how to build a home wow. they've always been -- stuart miller, executive chairman, really the dean of the group, very, very impressive. but they also have great things. pulte, terrific quarter.

and then toll, which was standout, but the average home, a million bucks. america is a rich country. go overseas. you will not believe the amount of wealth that they think the average person has now, i think we're bifurcated and these homes are of the province of wealthy, but wow, they're killing it >> yeah. you're saying about going overseas is what you can afford more overseas than you think >> no, no, they don't -- overseas thinks there's one class of people in this country. what they don't realize is there's a second class where this would be a dream unfulfilled. if you tell them that we are a dickensian world, they don't believe it because they only see the traveling people there was a denver flight to reykjavík that was, like, we're overbooked and whatever. everywhere you go, royal caribbean, norwegian cruise, delta, american, we're filled, because we are traveling like

there's no tomorrow. >> yeah. that's one thing that rates really can't move is your appetite to travel >> no, and that's because we didn't get a lot of money in, and we have a huge amount of money coming from infrastructure you see these articles periodically, battling factories everywhere a lot of this is the success of the commerce secretary, raimondo, which is basically, before we got through all this, she's one of the last people -- no, she's the only person in the administration that actually understands business the other people understand foreign policy she knows how to hurt china. >> well, there's talk now or some expectation that she may also follow yellen in going to china at some point. >> if she goes to china, she would be, here's the way it's going to be. we don't need you. we're not selling prell anymore, we're not selling diapers or soft drinks. we are selling the things you

need to have your military take over taiwan, and it's not going to happen. >> there's a look at the open. at the big board, finea celebrating a spinoff and at the nasdaq, vci global your point about the fed is good because these minutes hopefully will help us understand what kind of deal might have gotten cut between the hawks and the doves last time. >> i'm looking for confusion i'm looking for an inability to have a consensus made in the case of powell say, well, if woe don't have consensus, let's wait until a consensus develops powell, chronically underestimate. by the way, the bears have said what a dunce he is they want him to sit in the corner to me, he's done so much we have to drop this hard landing/soft landing we're not in a plane, people that is another era. we had a hard landing in '29 we had a hard landing in 2007, but we're not in a plane we're just doing fine. the plane analogy has to be

thrown away. it has no bearing. it's a false premise that the bears have locked us into. >> well, that depends on what happens with, certainly, some of the labor data we're going to get beginning this week, right >> there's a lot of money. i mean, i think that we have -- when i say that we have a slowdown, we have a -- trillions of dollars coming at us in the beginning of 2024. maybe the jobs aren't necessarily conducive to what we're -- people being laid off now, but the people who are being laid off now are equally white-collar and slowdown blue-collar, and i think that that's just not necessarily going to bring prices down, but it could bring wages -- wage growth down. we have tremendous immigration we never talk about it anymore >> we try. >> we have had immigration more than the last five years >> yeah. >> now, yes, we remember at a time -- a strange time and a sad time where immigrants had to hide unless they'd be deported

you don't read about that anymore, so i think that what's happened is that we're in better shape than people realize, but if we drop the plane analogy, believe me, i've been trying to come up with a better analogy. i could do train, but that's so boring but i just think that it's created a world where all we do is they of hard or soft, but if we're not in a plane, it don't matter >> that's true jpmorgan today, they do talk about hard landing risk in the uk where they're now eyeing 7% rates. >> they're in a plane over there. >> yeah. >> that's a runaway plane. they can't control the plane see, a hard landing means you can't control the plane. i've been on a hard landing. i've been where they foamed it and we had to do the chute and stuff. >> you went down the slide >> yeah, and then it was never written about. i wanted to talk about it. they said, that's okay what was interesting is it has zero to do with what happens in our life we come in here and try to

figure that out, but that's, again, from people who do not want to get their hands dirty with individual stocks i have also come back with guns blazing. there are people who look at the fed and the yield curve, and they are the people who have kept you out of nvidia meanwhile, i met my friend, scott, new friend, who does enterprises, entertainment enterprises all over the world, who said, i saved his company, which was unbelievable, because i identify many -- identified some good stocks, and then he wanted to know whether my dog was really named nvidia, and i said, listen, he was named everest, but if you call him nvidia and you have a steak in your hand, he might as well be jensen huang's doppelganger, the ceo of nvidia. >> speaking of keeping you out of stocks, go aldman today on netflix finally removes their sell to neutral, from $230 to $400 management, they say, executing better than they thought industry competition, more mute. they do mention, since they added a sell last june, stocks

up 135%. >> that's one of those pieces that they're saying, maybe jim and carl won't look at it. maybe if we put it out early enough and they haven't seen it, and so far, 9:34, they were thinking, maybe we got away with it but now heads hanging low and they're going to get a haircut and they're done >> not the only ones, by the way. today, northland, we don't talk about them a lot, they upgrade amd to outperform. >> that's helpful too. >> i knew you would love that one as well. maybe they wait for vacation weeks to do this stuff >> that's when you do it, try to make it oblivious. look, if i were them, i would have downgraded on the fourth of july you know, let the fireworks obscure it when you make these stupid calls, and there are smart calls and not smart calls, you do have to eat crow, and i appreciate the fact that these guys came out. but what happens is -- and i saw this with carvana. you lower your price target at this point where you really did think it was just going to fail

or that it was just done, and now you got to take it back up, and it's just embarrassing, and having worked at goldman and made bad calls and made bad calls on tv, and i always admit that, you know, you don't -- you feel awful, but you get it over with, and you try to make as many good -- not every game is perfect. >> yeah. jim, you worried about the transports here? we haven't mentioned u.p.s. teamsters yet or the night swift guidance >> no, because i think that the teamsters -- this is, again, when you have to look through the index and you're not supposed to but that's meaningless in the new world if u.p.s. goes on strike, fedex won't make it up rails have been bad forever. could we lose the airlines no, because this is the long on money, short on time covid changed people's minds in a secular way, because they usually -- they knew -- had family members or close associates who passed away, and realized that life was a little more fragile

it takes a little while to get that out of your head. right now, we're still going places we want to go overseas because we feel like we'll never see it if we don't do it now, and it's something that is not shared with the economists who are so busy looking at the -- at where the ten-year is. by the way, see, let me just be full force on this i remember being transfixed about treasurys when i got to goldman because i didn't understand their import. but what's happened subsequently is they're the only import so, the question is, do they want to get their hands dirty and figure out what the h-200 does and artificial intelligence do they want to understand generative or is it just easier, in their false intellectual way, to look at a chart, like if we look in stocks, and say, this is what matters? because it hasn't mattered maybe they have to start rethinking their playbook. it hasn't mattered for a long time >> well, you, next business cycle, will you trust the yield

curve as a tell? or is that broken? >> the yield curve was very wrong in 29, 31. a lot of people got it wrong and they don't remember because they were driven out of business. it's remarkable to study '29 into '31, and i did some of that when i was away. everyone made the wrong call because the yield curve, and subsequently, we look at them as fools, except for john mainered keynes, and find ourselves thinking, how could we make the same mistake the answer is, no one's around from '31, '32, but it just didn't predict things and i think that's where we are. it didn't predict the run in adobe. it didn't predict the run in marvell tech obviously, didn't predict the run in amazon, alphabet, apple, you know, there was a call on monday about how apple -- i read this it was very funny. they're cutting back vision pro. >> i did see that report >> okay, so, i got news for

them since i talked about vision pro. when they're ready with vision pro, we're all going to get one, because you can't all get ticket to taylor swift for $2,000, but you can be in the front row. i mean, you know, not everybody can afford a taylor swift, but they want to see taylor swift, who makes $13 million a concert, so let's extend that so we can go tallahassee and, you know, birmingham >> yeah. >> i lived in tallahassee for the people who hate tallahassee. >> you're bullish on this product answering the craving for experiences. >> i think that those who haven't tried it or haven't been taught how to use it better start realizing that if you like global football -- thank you, john donahoe, for that new term -- you're going to want to see it via this, because the number of angles you can see -- it's not like a viewmaster, people >> that's a deep track >> i just find that people -- it's very easy to say that the numbers will be cut if you

haven't seen it. i do want to point out that if you look at the -- where apple is and all the people who did these channel checks, i have to question, is -- there's an existential crisis they should be having. what they should be thinking is, do i belong in the business? are there other things i can do that are, you know, maybe i hear that, you know, one of the things that's great about our country is there's a host of jobs that are available to white-collar people, but to have made that call to get out of apple at $120, i was doing a piece that talked about someone who said that you should get out of apple at $8, and he still has a job. now, it's because he's pe personable and a great writer, and that's all i'm going to say about him. i'm a kind man i'm a good man "apocalypse now. >> i'm glad you mentioned amazon founded today in 1994. >> get out >> yes, july 5th

gl bloomberg with this piece on hollywood spend. >> when you criticize jassy on spend, they don't come back and tell you that you're wrong they come back and tell you, we're going to take action, and then they do i think jassy is saying, listen, i finally got my arms around it. i've got a great cfo, and i am going to find where we're spending too much. i'm going to kill projects that's one of the reasons the stock is so good jassy is a vicious competitor. i find him funny, by the way he's a humorous competitor he's not like zuckerberg, who's not humorous he's just not. he's not a -- you know, he's not a world championship funny man >> yeah, yeah. there's also this "journal" piece about the united states preparing to block china's use of microsoft cloud products, aws. >> there's gina raimondo again she looks at where they can get the edge over us, and she says,

we're not going to have it >> she's aon the tape this week saying, please stop decoupling >> she says, we just gave billions of dollars in handouts to tech companies, and you're not allowed to sell it to china. get serious. you lost that market if it's by china, for china, which is the nike way, the apple way, the starbucks way, that's going to have some gravitas, but if you're over there and making things that she doesn't want you to sell them, then you're not going to sell them and i think that gina raimondo -- historically, the commerce secretary is a person whosh shakes a lot of hands, smiles a lot, and basically repr represents us in really important parties, and i'm not talking about the communist party. i'm talking about blowout parties and metropolitan, you know, big met gala, which i'm never invited to and never will be >> she has reinvented the job, you could argue. >> she's taking it very

seriously, and she's being taken seriously by a president who doesn't know the difference between a stock and a bond >> he probably wouldn't mind you saying that, by the way. >> he'd be happy he wants to present himself as a labor guy. not to diminish that he's handed it off to a brilliant person i mean, one of the aggregate th great things that eisenhower did, he didn't understand a lot of things, and it's noted if you road the bios. president biden -- no one knew whether he was a democrat or a republican until he diceclared. president biden has a first-rate mind for business, which is raimondo why not give her the ball? she's brilliant. she's come through with the plan to be able to put factories up, became the leader in hydrogen, by the way we're going to lead in charging. we're going to lead in evs and in return, china gets all the diapers they want, because they don't even have -- their

birthrate is probably the lowest in the world hey, by the way, john ellis quoting nick, a classmate of mine who does great demographic work, says you can measure the strength of a regime by whether people still have children, because it shows you whether they have hope, and china's birthrate is ridiculously low because they have no hope. >> yeah. and not to mention youth unemployment and huge 20% -- >> they do these things like we're lowering whatever and doing this they have to give the eighth army, whatever, what they want, but we blocked them. they're back making destroyers as if it's the 1942 period >> i'm glad you mentioned evs. tesla is extending the rally deliveries this week were good jonas and morgan stanley with this note about market share for tesla may be higher for longer because either other legacy oems aren't coming to market with the models we expected >> i think a lot of people, when i was at ford, probably were

surprised at his sales, which were remarkable. no doubt about it. there is a love. people are very worried about one thing. they're worried -- in that business they're worried that one day you'll wake up and california will say, okay, we're going ev by 202330, and california did ta for catalytic converter for pollution, and washington failed to block california, so i think that california is the lynchpin here about what they'll really do they're kind of a one-fifth of the country, but yeah, i thought the sales were remarkable. look, i think musk is great. i'm just saying that he bought twitter and that was kind after an afterthought. so, if he had made any attempt to try to make it so we would read our comments again or get in contact with people, it would be very different. but what he has done is perpetuate the level of hate that his previous ceo would tell

you is crushing them >> right speaking of autos, there's a story that the white house is putting gene sperling now in charge of making this uaw cycle -- negotiation cycle go as smoothly as possible, jim. that's in september. >> yeah, gino is okay. i worked with him when he was on kudlow and cramer. the goal is to make it so there's no big strike. i know that the new uaw leader is very much of a 19 -- the old days but for the leadership people feel got co-opted by the government, and this new union -- this making talks about p p plutocracy and they've cashiered everyone in the name of supporting billionaires. he's using rhetoric, that if you go back, you'll see a lot of -- communists who were very much involved with unions used this language, which is very strange.

i mean, he won a -- he won a very contested vote, and it's entirely possible that the guy wants to really just make it so that there's profit sharing between us, who own ford, and they, who feel like that the workers own the means of production now, the workers and the means of production, for those who are -- my seven communist courses at harvard, had to mention harvard, because i'm a jerk, and the answer is, trotsky, not lenin, trotsky believed the workers should own the means of production, and that's what the uaw believes, they just don't realize it no one wants to come out with trotsky. >> sounds like you're expecting rocky talks. >> i think it's terrible, because we've got a union that truly believes that what's good at ford and gm -- what's good for gm used to be good for the

country, according to engine wilson but these guys say, listen, it's our time it's time for the union to make money. and does that mean that they get 10% sweetener or does it mean they get a lot more equity it will be up to gene sperling to help jim farley at ford, because i think the union is fractious and unruly, and given to something that makes it so as my travel trust owns the stock, into the biggest risk you have not the f-150 competitor the lamborghini that musk is making for pickup, and you just won't -- the average small business will not buy a lamborghini in order to be able to -- >> as farley told you just the other day. >> the lamborghini has got a really great suv 400 gs i think it's overpriced but not if you're rich >> what's the line i make cars for real people who do real work >> my wife took that lamborghini

out, went 180 on the streets, didn't get a ticket. when you go to a test drive, here's what they do. here's the keys. don't go over 180. okay >> bring it back without a scratch. >> yeah. >> let's take a look at the markets on this wednesday morning. dow opening down about 150 or so don't forget, you can get in on the cnbc investing club with jim. use the qr code on your screen, takes you right there. as for data today, factory orders and durables coming up in about ten minutes. williams, this afternoon, fo many, c minutes at 2:00 p.m. there's a look at the yield complex which has been split for most of the morning. don't go away.

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take a look at rivian again today. word they're rolling out some amazon vans in the eu, davidson

ups to neutral gone from 13 to 20 in about a week this is the first peak above the 200 day since it went public in iornt021. anmpta day for autos as the dow is down 113. don't go away.

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let's get to stop trading with jim. >> we're realizing that robinhood didn't make the mistakes as other brokers but still attracts a lot of young people and this morning piper takes the price target up 10 to 11 i want to urge people to recognize, younger people have not fore saken the market they just went to robinhood that's not stopped it's impressive how younger people are in the market. they don't want to hear about the fed. they want ideas and if there is any longevity to us and people who comment on the market, they should go -- they have to start doing work i have on holdings on tonight. and paychecks. i'm going to schlep over to williamsbeurg where on is openin a new store.

the people who study the fives and tens are lazy even as they call us people are not intellectual so it's time to see who's lazy and who's doing the best. >> not to say you think there's no place for economists in this world? >> it's not the fact it's a factor. to make it the factor is minimizing what people want at robinhood. what we do is address what they want it doesn't mean we're positive or negative but if we give them the idea what they need to look at is the 20 year, that's fine as one of the reasons they may make a mistake but tell them that's all that matter, that's saying to them, don't go near this and then they're just, they're in chains. and as angle said, people aren't a sack of potatoes

i never liked angles other than marty. >> that's a good one see you on "mad money" dow chipping away at early morning losses, down 120 don't go away.

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good wednesday morning welcome to another hour of "squawk on the street. david and sara have the morning off. full first trading session of the second half. dow down about 130 with data on deck in a minute >> we'll get to that but first 30 minutes into the trading section. three movers, netflix headed highers as goldman sachs upgrades to neutral, by $170 to $400 per share citing positive operating momentum you can see the shares are up 1% right now. and watching shares of moderna, signing a deal with chinese officials to research, develop and manufacture mrna drugs in that country. and coin base up more than 100% year-to-date but under

pressure today as piper sandler downgrades the stock to neutral. those shares are down 2.5, 3% carl let's get to dominic chu with the latest. >> we have carl morgan coming out, u.s. made factory orders coming out for the month up .3%. that comes in below expectations the consent was for.8% gain versus the month of april. in april it was about .4% as well so we are seeing a slight reaction there as you break things down, factory orders if you exclude the transportation side of the economy down half of 1% versus the month. you are looking at a consensus of down just about .6% if you strip out the defense spending side of things, may factory orders gained .8% versus april it was an expectation of a

drop of .6% overall. one more thing to key in on, it's the durable side of things versus non-durables. on the durable side of the equation we saw a u.s.-made revision to 1.8% of a gain from a 1.7% before and nondurable orders down about 1.2% versus april, down about .7 was the expectation there. overall the markets seemed to be taking some of these in stride but it still does indicate a more tepid movement in the economy with factory orders right now. put it in line with what we saw with china overnight with the private sector, private looks at these, it may indicate there's work to be done on the global economic front for right now the u.s. economy appears to be holding tight. >> the china economy weak, weak since january. coming here, on monday where you

have prices paid down in the low 40s. >> the manufacturing side still is not coming around in terms of showing too much of a convincing bottoming process. interestingly enough, industrial stocks been very strong feeding off a lot of other dynamics. has been aerospace and defense transports have been on the stronger side. but it's the sloppy give and take data flow out of the manufacturing side its a clearly been about services spending, some consumer cyclical housing spending firing well, jobs good the other side of the equation is pulling against it you see the treasury yield is up a bit in the last several weeks, kind of moderating right now as we get choppy numbers. >> particularly aerospace, commercial aerospace you talk about transportation look at the transports under pressure, ups down 2%.

you have the teamsters union saying that ups has, quote, walked away from negotiations over the new contract. ups saying no, not necessarily the teamsters have stopped negotiating despite historic offers this morning the pexpectations there despite the strike authorization that fedex is going to take market share the last time we saw a strike at ups, 1997, it was detrimental, very destructive temporarily to freight flows across north america. this is one to strap your seat belts on and pay attention to. but it's important for a macro perspective too because it speaks to, as we await the fed minutes, the possibility of a s spiral when you see the unions moving towards strike

yes, the growth has moderated a little but still moving higher right now. ups is a key example but you have the uaw in labor negotiations right now with the big three auto makers in detroit. you have in southern california what is apparently the largest hospitality industry strike in the history of that industry as well so this is one to watch in terms of what the broader macro effects could be as we continue to see a tight labor market and see inflation remaining sticky and high. >> wages have hung around those higher levels, face to face feeds into the fed story let's bring in steve liesman with his take ahead of the fed minutes, and a big week for data. >> markets hoping the fed minutes can shed light on the decision last time to not hike but forecast two more hikes this year and bracing for a job finding that they keep believing is going to slow but keeps

defying expectations futures markets almost fully priced in with a 25 basis points hike in july they have raised the chance of a second hike in the fall to around 38% for november. but below 50 so there is skepticism about the second hike two thirds of the members forecast that second hike and hoped the minutes can provide clarity on how held bent they are or if there's a sense they can be dissuaded by slowing payroll fwgrowth 240,000 to 339 in may. but the unemployment rate is seen dipping to 36 to 37 home base may provide data saying small businesses are seeing a big pickup in activity though not quite at the same level levels as prior years, owners are relying on existing employees working more to meet demand and keep this in mind, wall street forecasts have undershot

the reality of the strong jobs market according to our own research, the jobs consensus has been below the government report for 13 straight months the past two years, wall street forecast 2.6 million fewer jobs than actually created. so maybe june is the month the job market weakens but the fed forecast suggests they don't think they've done enough yet to, among other things, cool the hot jobs market. let's bring in economist andrew hollenhurst we have the labor market strength today, stock market wealth built up, inflation numbers are down but far from target where does that leave us with the market the fed is comfortable pricing in quarter points every several weeks but can that continue? >> that's the question are we in the fine tuning period

when the fed is trying to figure out, 25 more, 50 more? i don't think that's a huge impact on the macro economy, the markets. the question is the tight labor market, the rebound in housing seeing signs that maybe the fed is going to have to push further. i don't think we'll get a lot out of the minutes today but that's the story we're looking for. >> what does the fed have to do? they have to achieve their inflation target but there's been comfort building on wall street that it didn't mean they were targeting some certain unemployment level they need to lift it to or they have to really tighten financial conditions a lot more from here and get markets lower? >> if you think about the ten year treasury yield, it actually peaked in the fall of last year so there's a sense in which financial conditions were max mali tight some months ago and now the fed is watching the economy trying to see if there's enough organic slowing in the economy. maybe there will be and that's

what we're watching the data to find out now. >> i want to pick on something you said why has wall street gotten it so wrong for so long in terms of the monthly jobs report? >> it's a good question. i will say, morgan, adding up the miss was easier than explaining the miss. and i think the issue is this, one is that they think that we're out of workers so where are workers coming from to fill it we find workers coming back to the workforce, so that's one two is i believe the cumulative effect of all the rate hikes will slow some sectors of the economy. the trouble we're seeing is two key sectors, housing and autos which should be the most credit sensitive are not showing it by the way, just on that factory orders number. i don't know if you saw it, but the shipments of nondefense factory, the business investment proxy, that was actually up.

that will feed into gdp. i don't know if andrew has a thought on that. even though the orders was revised lower, the shipments on the business investment side were not and the total new orders was not changed so we're not seeing weakness there either the fed has not had the kind of effect on the economy it was hoping to have had by now. >> andrew, do want to get your thoughts on that and also this idea of okay, u.s. manufacturing has been very weak does that portend slowing in the services side of the economy or given the fact that services has been so resilient will we see that positively impact manufacturing at some point? >> we haven't seen the slowing in the economy you would have expected with interest rates rising as much as they had housing is the best example. multiple quarters of contraction but the jobs numbers were positive in most of those months that's the dichotomy we have in a strong labor market and manufacturing. other sections of the economy that have been weaker.

yes, manufacturing has been weaker but we're coming off extremely strong demand for goods. the u.s. consumer is is shifting back towards services away from manufacturing. to steve's point, the fact we're up in some categories, still have residual demand for autos >> i think your year end is still 4,000, right the expectations -- >> yes >> scott said he didn't want to be viewed as overly bearish. is that because of a.i. or a structural story in tech >> that's what we're trying to balance. the big macro story around the fed and interest rates rising. putting that to the side saying this is the end game to the fed, then i think the attention turns back to the longer term structural drivers like a.i. >> what's the most important thing coming out of the fed

minutes later today? we saw the pause, we saw the outlook for potentially two more rate hikes but based on the talking we're getting, maybeif i'm reading into implications what we've been hearing from different fed members maybe there's more divergence between the doves and hawks. >> i think you put your finger on it. how much divergence is there how strong are the doves how strong are the hawks what we're doing reading these documents, we don't it for fun because they're not fun to read, we're constantly recalibrating the reaction function. what are they telling us for policy on the other side of the data we're trying to figure out how much do they want to see the job market slow? how much do they expect the economy to actually slow we've been waiting for this recession for a long time. i think the fed, they don't necessarily have a recession built in

they have very, very low growth and that low growth has yet to appear as you've seen from the surveys you've done, morgan, the forecasters keep forecasting the downturn and then push it ahead into future months so it hasn't happened yet, the question is when that will happen and will it be enough for the fed to bring inflation out of the economy what seems to be happening for me is a rolling recession in different parts of the economy but none of it syncs up to bring growth to a negative. >> mulltiple things have to go badly for the broad economy to have a retreat. >> good point, mike. >> andrew, steve, thank you very much. meta reportedly set to launch the twitter killer app as soon as tomorrow what investors need to know. >> a big rebound for casinos but can the gains continue. watching autos, shares of

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that's what i thought. introducing the next generation 10g network. only from xfinity. welcome back to "squawk on the street." shares of meta hitting a new 52-week high as mark zuckerberg prepares to roll out the rival to twitter >> meta is preparing to launch a new twitter alternative called

threads, it's an offshoot of the instagram app. the app that's set to release tomorrow is already in the app store inviting people to click and automatically update it as soon as it's available threads calls itself a text based conversation app and it appears to look a lot like twitter. it aims to leverage instagram's popularity enabling users to follow the same profiles they follow on instagram and use the instagram handle so you don't have to set up a new profile. the question for meta investors is whether it can quickly scale a new app to draw users and ad dollars from twitter and others to draw a new driver for meta while they cut down on the cost. and the question for twitter is whether the threads launch comes at a time when twitter is vulnerable to threats. after elon musk limited how many tweets users could read on the

heels of concerns of content moderation and questions of how much users want to pay for twitter service. now elon musk and mark zuckerberg have been rival for years but the news that meta was working on this twitter alternative threads that's what inspired the conflict that resulted in musk challenging mark zuckerberg to an actual physical cage match. back to you. >> which we're still awaiting more details or confirmation around i don't know we'll see. in the meantime, julia it's not just meta that's trying to launch a rival and take advantage of the situation and folks that maybe are unhappy on twitter. you had reports that blue sky, backed by twitter cofounder jack dorsey experienced a surge in traffic over the weekend too is this a space getting more crowded right now? >> this is a space where smaller players are getting attention because people are frustrated with twitter or looking for a

twitter twitter alternative when they hit the max tweets >> but there are others, but the advantage that meta has, it has 2 billion users of instagram if you're already on instagram and you can switch over and try a new service, which is a product that could launch with a meaningful user base and a service like this, something like twitter, is just as useful as the people on it. and becomes more valuable the more people posting content on it meta has an incredible advantage in size and scale and the strategic decision to not launch is something you have to sign up for separately, connect with friends, figure out who to follow the fact you can plug in to the existing infrastructure of instagram gives an advantage here >> julia boorstin, thank you

the nasdaq closed out the best half in 40 years. will the rally carry through for the rest of the year our next guest says there's growth potential even if there is a recession let's bring in joanne feeney with her best picks. why do you think there's growth potential? >> it's because the broader economy is constrained by fears of whether the consumer is going to suffer if there's a rise in unemployment these tech companies, particularly the ones that took off in the first half, the superseven as we call them from microsofts down to meta have taken off on longer-term drivers beyond any recession dynamics. the reason for that, we have the new generative a.i. creating possibilities for new apps but also we need the infrastructure, the data centers or chips that

power them to enable the new apps that's real, tangible, growth happening for many years and investors are recognizing they can own these companies that are going to see significant sales in earnings growth for five or ten more years. >> given the fact we've seen big moves in the biggest names tied to or associated with a.i., what do you like? i see your top holdings are broad com, apple and microsoft. >> you want to own the ones that are going to power the a.i. revolution, the picks and shovels, and those three companies are in that space. we think those are solid long term holdings obviously we won't see the same appreciation of nvidia that we've seen in the first half of the year but it has such growth potential in front of it we think you want to continue to own it at a reasonable level roughly in line with the market. but you can look for the companies likely to put this to you, whether it's in tech, the

applications for the a.i. or industrials, a honeywell using smart technology or in technology whether it's a service now that we really like for clients. so you have to look to the applications in addition to the picks and shovels. >> the idea that the market is essentially seizing on these very long-term growth opportunities in the secular winners in tech can certainly be true but the valuation and price you pay can be suboptimal. didn't we learn that when the nasdaq 100 went down 40% in less than a year from the peak? at the peak people are saying these are immune from the economy and rates and can be about long term secular growth stories. >> yeah. so what levelled into that story, right, was the massive increase in interest rates that happened quickly so to your point, those stock prices came down dramatically plus you had an increase, a spike in geopolitical risk with a war in ukraine and then the

recession risk piled on top of that so that was a trifecta for high valuation stocks we've come to the end of rate increases. clearly seeing far fewer rate increases ahead of us than was behind us. so what was a headwind now becomes neutral and a tailwind as we get into 2024. that's what i think supports the valuations going forward now the valuations driven more by the earning growth story and less by the level influenced by the interest rates that comes out of the story, becomes a tailwind. >> how great is the risk how closely are you watching the dynamic between the u.s. and china? we have treasury secretary yellen headed there to continue to cool tensions potentially over the next couple of days but policies from both countries that continue to perpetuate this tech decoupling, how does this play out >> this is a significant

concern. a lot of us that are following tech closely over the weekend were looking at these announcements. if you remember, china, before the pandemic, back in 2019, also threatened to limit the exports of the rare earth metals the announcement this week are significant for certain areas of the economy, particularly smart phones, automobiles, l.e.d. lights, solar panels there are alternatives to getting the supplies out of china, though. one is getting them out of recycling already used components and that actually has grown over the last few years. so we expect more of that, but short term it could be a risk and china is saying we have a weapon, too, to defend against the u.s. approach to becoming more aggressive on these technology trade issues. so we do expect something to come of the negotiations that are going to be taking place between yellen and china now

that it's pretty clear that china is willing to step in and use its own weapons to keep this trade war from getting out of control. >> semis are on the front lines of the entire dynamic. thanks for joining us. coming up after the break, the street's top picks continue. more on the key casino names you should be watching here and why some are fectiorasng bigger gains ahead. we'll discuss that after a break. don't go away. rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

a big rebound for the casino stocks in the first half, but with can those gains continue? contessa brewer joins us >> casinos are facing tough comps in the second half of 2023, seeing record breaking results with the moment rolling through the first half of this year but analysts say they're just beginning to see softening in high end leisure travel in las vegas, though, international travel and convention business has not fully rebounded from the pandemic lows. plus f1 is expected to result in the best november effort

that could provide steam and then macao this week posted gaming revenue for june, five times higher than last year but still off 40% from 2019. so that leaves room for improvement for mgm, las vegas sands, melco and wynn resorts. flutter is hoping to engage the u.s. customer base when it lists here later this year and now that the i.p.o. freeze seems to be thawing. industry insiders are watching to see if fanatics or other smaller operators go public. and fanatics made a $150 million bid for points bet draft kings entered the fray with a bid that forced fanatics to up the bid to $250 million.

it won the deal but paid more than they ended. draft kings and fan dual are market leaders by far with 60 operators across the u.s. you can be sure that more will be following. >> contessa, when i think about gaming stocks in general, i think about sin stocks which have historically, even in times of economic downturn or recession, tended to do well because people are stressed and they turn to vices when you look at gaming i realize there's a recovery in china, you have services and people spending on stuff like this in the u.s. and that's resilient. even if we see a downturn, would that continue? >> the american gaming association put out results from may and before what we're seeing is, some 23, 24 consecutive months of growth in the gaming industry

that's regionals, that's all the commercial casinos in las vegas. what you've seen is the momentum that has investors wondering when is the other shoe going to drop what we heard in the second earnings calls was there's no shoe coming. not seeing any cracks. when analyzessts say they're seg cr bookings, we're still seeing a lot of demand in the entertainment sector so the answer is maybe. we'll get a peek when we have las vegas sands with the first earnings out that's an indication of asia more than anything else now since they don't have anything left in las vegas. >> leaving las vegas and we know you'll be covering that so closely for us contessa brewer, thank you >> sure. defying odds of a slow down,

find out how gm stacks up this hour a quick programming note as we head to break. don't miss an interview on my show where i sit down with the ceo of drone maker aeroviromment. we'll talk about defense spending, ukraine, tensions with china and more "squawk on the street" back after this you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

the street." i'm silvana henao. a judge ordered the suspect accused of carrying out a deadly mass shooting in philadelphia monday to be held without bail police say he killed five people, including a 15-year-old boy in what they believe was a random rampage authorities say he had multiple guns and a scanner that tracked emergency response radio traffic and was wearing a bullet proof

best and ski mask. smallville actor allison mack has been released from prison early, pleading guilty if for her role in a sex trafficking ring and the world just registered its hottest day since recordkeeping began. scientists warn that the july 4th temperature record was likely to be the first of many in the coming months citing the climate crisis and the el nino phenomenon. let's get to bob and see what's moving, a steady morning so far. >> flattish but the market internals are weak 4 to 1 declining at the open. and the s&p 500 at a new high on monday, can't generate new highs at all big leaders, technology up more than 30%

consumer discretionary strong as we had home builders strong, autos strong and communication services strong as we saw meta with a great move up and saw them at new highs today. health care, defensivesectors still not doing well and banks not really having much interest in rallying. new highs, you think the s&p 500, a new high just recently you get more new highs only 25 of the 26 new york stock exchange, meta is there, but walmart is a familiar new high delta, netflix has been very strong recently. these names we've seen we need more expansion but doesn't seem to be buying enthusiasm outside of small sectors. look at what i think the problem is, certain sectors that have done well, a lot of the public are not participating in here's year-to-date flows. the money is all in bonds, all in cash-like bonds, these are

money market funds look at these numbers. tech sector was up 30% in the first half of the year with outflows, that's strange, folks. energy got no interest value got no interest at all you think there would be more interest, but even in groups like tech not any real interest going out and buying how long are people going to hold the 5% money market funds, when you have nasdaq up more than 30% this year the s&p up 16%, there's your big etf for bonds, agg 2.5% year to date, that's a total return with dividends. so there's discussion about what the second half is going to look like and what kind of catch up trade can people engage in the rsp getting a lot of attention. that's a good way to play the broad market rally, inflation etfs out there, the renaissance capital i.p.o. etf is up 30%

double the ip. and a lot of people think commercial real estate is over done and certain sectors of that can be good for people we'll talk to today sohn at 1:00 p.m. eastern time. the question here can we get more interest in broad equities and broad investing. does not look like investors bought into the big trade in the first half of the year. >> interesting ideas for the next six months. thanks, bob. our next guest sees a 75% chance of a soft landing yesterday yardeni joins us you've been on fire lately, talking about rolling expansions instead of rolling recessions. can you talk about how your views have evolved the last month or two

>> we've been arguing you are in a recession, just happens to be a rolling recession. it's housing, the good sector. it's going to go into real estate but meanwhile depressed areas of the economy are starting to show a bottom, recovery we're seeing it in the housing industry as demand outstrips supply. starting to see i think the good sector, the manufacturing sector, didn't see it in the pmi but the regional pmi so i think there's some evidence that consumers that had kind of pivoted away from goods to serves may be looking for goods again, particularly automobiles where the sales have been surprisingly strong. so it's looks like the rolling recession is evolving into a rolling expansion. >> this morning you look at whether or not there are too many bulls looking at the bull/bear ratio.

i've everyone seen this, maybe the ratio we see now is not as bearish as the inverse is bullish, is that right >> yes we did a study looking at the s&p 500 when the bull/bear ratio was one or less. and that almost always, almost always has turned out to be a very good buy signal when it's below one. we had that at, i think, 0.6 in october of last year and that was one of the reasons that i called that october 12th bottom in late october. sentiment was as bad as it was back in 2009 and surely, in my opinion, things aren't anywhere near as bad as they were back then on the other hand, when you get these iterations of 3 or higher, the market can continue to rally for a while. but it is a caution flag that, you know, the bulls are not alone anymore, there's a lot more bulls and a lot of people are bears. and from a settlement

perspective, it's better to be in an environment where everyone is skeptical and doesn't believe in the bull market the so-called wall of worry. >> in terms of the wall of worry we have evidence that credit is tightening can you have a rolling expansion if that continues? >> you can keep the recovery from being particularly strong but the answer i think is yes. i'm watching the credit numbers as you are, and everybody is, looking for signs of trouble since the banking crisis hit i think the fed responded very well to that banking crisis by setting up a liquidity facility. you know, they got a lot of experience playing whack a mole in 2008, 2009 creating liquidity facilities to avert a complete disaster so they moved quickly with a liquidity facility and that seemed to stabilize the situation well i am watching weekly data on bank loans and that's looking

tough in some areas particularly commercial real estate and it could be because inventories are back in control. consumer credit is at an all-time record high i'm not seeing the tightness that adds up to a credit crunch. >> ed, a lot of this stuff when you throw it together, maybe there is a slow growth or muddle through kind of economy that is supportive of risk assets, you mentioned people are getting more optimistic but not yet necessarily at extremes. i wonder what it means for expected equity returns. on a three-year basis, the s&p has given us 3% annualized already. it's been good in recent years i wonder what you think is left? >> i think from a valuation perspective, the market isn't cheap when you look at the s&p 500 overall. you have the megacap eight

stocks at a 30 forward p.e. but those have turned out to be almost bullet proof. they took a dive but that turned out to be an amazing buy opportunity in the eight stocks so they've done well you take the megacap 8 out of the s&p 500 and you have a forward p.e. of 16 1/2, which isn't cheap, a historic fair value of 15, but still plenty of opportunities, my opinion, in some of the sectors such as infrastructure, infrastructure related, which would be the industrials and i think the financials still a lot of skepticism and concern i think it's going to hang in there well and the financials are going to do fine. >> you've written about inflationary pressures lightening up. do you think the next chapter is really going to be about inflation rolling off, especially given these base -- some of the bulls are counting on dramatic declines

>> yeah. i do but, you know, like the fed, i have to tell you, i wasn't all that pleased with what i saw last week and friday's personal consumption expenditure. the fed is looking at it the way we all are seeing this tremendous disinflation in the goods prices but the services, as we know, has been persistently high, it's been sticky. and we're not saying take a break here i think what is going to bring service inflation down clearly is rent. and that's like a sure thing to the extent that we know that currently inflation rates have come down dramatically and the cpi reflects that with a lag so i think that's going to improve. but there are a lot of things i think pesky services like personal care, veterinarians and things like that where the inflation rate remains elevated and i'd like to see improvement

there before i can enjoy in the super bowls there and say it's going to take a dive there. i think inflation is coming down to 3% by year end. >> to pick up on that thread in terms of the pesky services side, how real is the risk of wage price spiral here you have ups negotiations which seem to be today publically at a stand still. you have a number of other unions moving towards negotiations as well so there does seem to be, amidst the still tight labor market, some potential upward momentum on wages. >> yeah my contrary instincts are coming out now because all of a sudden it seems that everybody agrees maybe we're not going to have a recession after all, at least that's gotten a lot of credibility only a few months ago it was viewed as delusional to think we weren't going to have a

recession. now i think maybe the forecasted recession is off base. but we're not out of the woods yet. still issues out there, and the markets had a great run. i'd like to see the market take the summer off and then come back -- the rally comes back in the fall but the markets aren't going to do anything that i want it to do you know, we could be in a melt up situation in the megacap eight stocks and m some of the tech stocks with the a.i. hype but all in all i think it's a bull market. it's overdue for some mini correction, maybe something like 5% this summer and then i think we proceed to 4,600 on the s&p 500 by the end of the year. >> we are watching all your commentary, ed, closely these days as we always do thanks so much good to see you. >> thank you. still ahead, gm set to release the latest sales figures. we will bring them to you as soon as they cross stay with us

got some new data showing that available office space in new york city touched a record high in the second quarter, pretty interesting numbers here, as you see availability running about 19.7. that's the new cycle high. what's amazing is that at least in midtown, class "a" is still able to get a couple percentage point gains on last year in rent >> it seems like we still have this bifurcated market it's amazing it's three years after offices emptied out, and it's still now working its way into things, leases rolling off and you have the winners and losers here people are spinning it both ways in terms of the overhang of commercial real estate debt and equity exposure, as just the fact that it is relatively kind of slow moving, it's not as if all at once, people are going to want their money back or have to

liquidate some securities attached to it but really leads to a tough fix in terms of usage of buildings and whole neighborhoods getting hollowed out >> bifurcation is kind of the key word, right? it's the class "a. not just in office, but in things inretail and things lik that as well that the newer higher quality commercial real estate is tending to still have a lot of demand and still perform well and stuff that's a little bit older is emptier, not performing as well. that's the area of the market particularly in office where, you know, you're seeing these perspective issues it remains to be seen, and i know a lot was said about that sl green deal for an office tower a couple of weeks ago. it remains to be seen whether that's an inflection point or maybe not. >> or if it's a real valuation there's a lot of studying of those numbers saying that it didn't maybe actually put as high a value on the structure as reported >> that the low transaction count is making it difficult to read the market. still ahead this morning, coming up at 11:00 a.m. eastern, a record-breaking week when it

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wall street firms out with more top picks for the third

quarter, this time out of rbc and btig dom chu has been making his way through the alphabet and joins us with more >> a long way to go, short time to get there so check out these picks from rbc and btig we'll start off with the name deckers outdoor, first of all. take a look at the overall picture. apparel company, teva footwear, it's among the cleanest stocks being called a top pick. $1,600 price target. they like the brand portfolio, strong balance sheet there there's also prologis, big real estate investment trust, warehouse space, other industrial problems. buy rated, $250 target price they like the continued growth in macroecommerce, also the need for geographically strategic locations for fulfillment centers. it's buy-rated striker with a $313 price target. they like some of the bigger tailwinds from a renewed focus on surgeries, bigger profit margins because of medical

procedures ramping pu ing up switching over to rbc, outperform rating, $53 price target they like the outlook for m&a as well as category leadership in key markets. outperform with a $275 price target they like a lot of the potential catalyst for the stock around things like alzheimer's and blood disorder treatments. a lot of names out there, but i'll send things back over to you guys >> dom chu, watching some of the movers today s&p back to $4450 and the nasdaq has gone positive. "squawk on the street" continues after this (christina) with verizon business unlimited, i get 5g, truly unlimited data, and unlimited hotspot data. so, no matter what, i'm running this kitchen.

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good wednesday morning i'm carl quintanilla with melissa lee at post nine of the new york stock exchange. setting the agenda, lori ca calvasina is with us marco papic is with us >> later on former jetblue ceo david neeleman talking some of the significant airline dlecline across the market. >> the third quarter this month of