good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site intimes square i'm becky quick along with andrew ross sorkin joe is out today we're here we're holding down the fort. let's take a look at equities. once again we've got green arrows across the board. dow up by 40 points, nasdaq by 27 and dow is up that's the longest winning streak since 2021. one dow component doing most of the heavy lifting there. microsoft, that stock surging to a record-high after announcing pricing for its new ai

subscription service better than what they were anticipating that's a stock that's been on a tear all year up 51% to date treasury yields have been lower than they have been recently, the 10-year yielding 7.6%, the 2-year well below 5% the 10-year well below 4% and this is part of what we've seen as we got some of the economic data. >> new news out early this morning. the federal trade commission and the us have it is department releasing new merger guidance, saying they want to clarify their aggressive approach. under the new guidelines they will use 13 criteria to value the so-called horizontal mergers and vertical mergers in which the same -- i just did vertical and -- i don't know if i went in the right direction. those criteria include these

principles, and i think for a lot of folks in corporate america, this is going to be significant. mergers should not significantly impact highly concentrated markets. eliminating substantial come petition between firms, increasing the risk of coordination eliminating a potential entrant and substantially lessening concentration by creating a firm that controls products and services it's a new update for guidance for 2020 and for 2010 from horizontal mergers we're going to have both of the ftc chairs lina khan and a.j. jonathan kanter. both are going to join us at 8:30 eastern time in a very important conversation about what this all means. it should be said this is a document that's put out for comment. it's not official, and it's not the law.

it's really a way of anchoring, almost -- some might describe it as a political document. the trump administration put one out. it started in 1968 there was a new version put out in 1982. what it does -- and this document has evolved over the years. when i say an anchoring technique, in a way it sort of anchors this group to this view of the world and then if another administration comes along. >> this is just their impression or regulator's impression of what they think the law is and go about trying to enforce it. >> right. >> look. last week they lost a couple of major battles in court, the ftc did, in their battle to try and say microsoft couldn't take over activision blizzard. does this document recognize that or -- >> no, i don't think this changes that approach. >> they didn't take any -- it didn't take any wind out of their sales to lose those cases

in court is this pretty strident? >> it seems like it hasn't it's targeted around technology and platform companies that has not found ways to work with or the traditional ways have not been the way this administration's wanted to approach it. i'm not sure how far -- i think they look and say look at the airline deal that didn't happen. i think they look at a number of deals that did get blocked and they look at some of the others and say that's not success, and i think that's -- they're looking at this probably in a way that perhaps some of the people in the business may not be. >> yeah. i would say on the one hand it may be useful as a tool for companies to try to figure out what regularities are thinking on the other hand it's probably so restrictive they're not going to appreciate it anyway. >> the question is -- to me there's two impacts. one, if your company looks at this and there's a change of

behavior, you say, you know what i'm actually going to challenge this i don't think it's right that could be one approach the other thing is does it change the conversation in the same way that, you know, elizabeth warren changed the conversation around taxes and wealth and all of these things that we might not have a wealth tax today, but, boy, did it change things. in a way that's what documents like this do both on the left and the right, depending on how they sort of, as i say, anchor how they educate judges, how it educates lawyers. >> makes companies think about what they're about to do, would it pass the legal test even if you could win in the courts, you know you could be challenged by regulators by the way, yesterday, i don't know if you heard james gorman at morgan stanley, he thinks we've bottomed out in the m & a market that that's going to be something that improves in the

second half of the year. i wonder if it puts another chill. >> i don't know. i mean, look, i was talking to a bunch of ceos who were talking about this decision. the decision being the ftc -- the ftc loss related to microsoft's activision, does that give you some kind of renewed confidence or mojo to go do a deal. i don't know i think there's an emotional element to it, but i think there's also a recognition you're likely going to court if you're going to do a big deal like that. >> and it's going to take a lot longer. >> it's going to cost more and it's going cost more in terms of focus of your executives that this is going to be what they're going to deal with and na might be a deterrent too. another big story too. at&t says it does not intend to immediately remove legacy lead-wrapped cables at lake

tahoe. they hit a low earlier this week on concerns of a raise by a "wall street journal" report at&t and other telecom companies left toxic cables on poles, underwater, underground, and in the air. at&t believes it's in the public's interest in place for now and allow further analysis less than 10% of the cable in the national system is lead-clad and caret sized "the wall street journal's" investigation they said based on our repeated testings of these cables data and methods we have made publicly available, we have serious concerns with the journal's testing and reliance of reporting at&t is poring tests and making in-person sites as well. it's not just at&t it's the cable industry at large.

verizon hit an earlier 13-week low as well, but at&t has the legacy, ma bell cable thing, is they would be the biggest one in any of these issues. this is a long and complicated article and hai think they were forced to respond. they were downgraded there was a worry of potential liability that would come with any of this and there's remediation costs. the numbers they've tossed around is like $60 billion to remove all of the cables at&t thinks the number is much smaller because of the small portion of the network that is inv involved they say less than 200,000, and two-thirds is buried in concrete one third is in the aerial and water and it's a much lower

exposure it's not just remediation, it's going to be the potential there if you knew it was leeching out, what would it mean for anybody affected by it they raised serious questions about the independent study that the journal says it had. they say there was background that this was paid for by environmental groups it was -- the research was done by a firm related to one of those environmental groups, but i think this is going to play out. >> it's not $60 billion. it's 10% of that that's their number? >> less than 10% $60 billion is what other people have thrown out. they say 10% of the miles that they have out there, 2 million miles of cable so 10% of that is what they're talking about. >> are we talking 60 billion, 6 billion -- >> i don't know. they're trying to put numbers around it.

any time they have these issues, they're questioning whether it's the right idea to take these out. some arrive lines where you're getting things like 911 calls on it it's a complex story if you think of 3m and johnson & johnson, i think that's why people have real concerns. people are trying to get their arms around it citigroup earlier this week cut their rating on it to neutral from a buy they cut their price target from 16 to 22 if you look at the stock action, it's well below. >> what are we seeing? >> $14 right now anyway this is going to be a story that continues to play out. we'll watch it trying to get access to any of the people involved on either side we'll also tell you about tesla, which is reporting after the close and is expected to post record revenue phil lebeau has the latest on this phil, good morning. >> we'll talk with them this afternoon. we'll larmly be focused one area

as far as investors and wall street is concerned, we'll talk gross margins. as you mentioned, record revenue is expected, topping $24.4 billion. there you see the eps of 82 cents a share. the auto margins, growth margins, now the estimate is under 17%. for a long time it was between 17.3% and 17.5%. look at the margin squeeze tesla has undergone in the last year in q3 of 2022. the gross margins with almost 28%. as they've had a number of issues including the expensive ramping up of production around the world and the price kicks, that has squeezed the margins, that's going to be the number that moves the stock immediately after it comes out if it's in the 15s or lower 16s, do now be surprised if you see shares of tesla come under pressure by the way forecast you take a look at the company's annual

deliveries, the guidance that the company has given for this year is 1.8 million, but in crease i will when you talk with analysts and others, almost everybody says, look, i wouldn't be surprised if they deliver 1.85, 1.9 million. the consensus is for 1.84 million vehicles i don't think elon musk and his executive team will raise guidance today that's likely to happen after the third quart fehr they raise guidance this year the earnings call at 5:30 is the final thing you should focus on separate from the numbers, because when elon muff success on the call, when he's asked about price cuts, competition, ramping up production, adding another vehicle at a future production site, let's say, in mexico, all of that will be what moves the stock

hey, phil, here's a sort of strange question to ask. you know, when apple reports its earnings, oftentimes what you see is this sort of big run-up to the earnings report and then a bit of a fall-off right after. for tesla -- and i was going back to look -- it often seems like the opposite. am i wrong >> no, you're not wrong. we have seen that happen in fact, more than once, we've had people say, look, the stock has gone up. i don't know, 25, 30, 40% in the month prior to the report coming out. it's due to sell off a little bit. and then something comes out whether it's a particular figure, whether it was automotive gross margins, whether it was something else within the report and it gains momentum even more, is that possible tonightin, andrew keep in mind, i think the stock this year is up 130%

it's had a heck of a run, even by tesla's standards this year so is it possible we see it hit 300? yes. if they come in with better than expected auto motive gross margins, remember, this is considered the trough. they're expected to accelerate in the third and fourth quarter and into next year as they ramp production, the economies of scale, they bring down their battery production costs even more that's the expectation that is out there. >> phil, we appreciate it. we'll be seeing you all day, and i know tomorrow morning as well. thanks so much when we come become on the other side of this, everything we need to know ahead of the opening bell, what's on the move this morning plus johnson & johnson suing the biden administration over drug pricing. more on. that you're watching "squawk box," and this is cnbc ok a work. earn onekeycash. shake some hands. do not forget to laugh. [laughing] book a get-away-from-work trip.

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johnson & johnson is suing the biden administration over medicare's new powers to slash drug prices turned inflation reduction act. the company joins merck and bristol squires squib and aushs the any goesh united nations violate the first and fifth amendments the centers for medicare and medicaid services will look at which drugs were listed with

prices taking effect in 2026 the drug manufacturers then face an october deadline to sign agreements to participate in these negotiations johnson & johnson shares up by 24 cents. quarterly results continue to come in in optimism over soft landing increases. for more on the markets and earnings, i want to bring in chief investment officer, good morning to you we've been on a nice little run. some say you've got to ride the run. the train's left the station, stay on the train, others say the train is way past the station. where are we >> the train has left the station. the s&p is out almost 20% year to date, but the question is always what's happening next and i think from here the character of the market really changes, right? for the first half of the year it's been the big 7 show that can't last forever. we have to see the market broadening out

typically when we see a rally in a concentrated part of the market -- >> it's been like this for the last -- the faang stock, whatever it was, it was always such a huge concentration on the market and it was during the pandemic it's what moved us down, up, and down again and that's what seems to be moving us up again. >> there have been periods for sure it's not unusual to have a handful of names driving the market what's unique is the smaller number of names and the extraordinary difference between what's happened to them and the broader market the big seven that almost doubled. 20% sounds good, but that differential is really enormous. mathematically speaking you can't have that continue forever. we've started to see it shift a little bit if you look at the market from end of today to today, it's outperforming the nasdaq a little bit it's not a lot

it's enough to say we've definitively changed here, but it feels like the sector performance is broadening out. >> you think the rest of the market is catching up? it's not a case of the high flyers to come back to earth in any sort of way? this is going to continue to push forward >> i think it's a little bit of bought it will be particularly interesting now that we're heading into the earnings season the p.e. is up 40% year to date. that's a lot of optimism built into not just the very narrow set of names but across the sector there could be a coming back down to earth for some of those names, so it's got to be a combination of both. >> under your scenario, you would rotate out of some of those seven names and roll into drn. >> small caps. >> you'd byuy an index? >> russell 2000? >> yeah, russell 2000. playing the index is a great way

to get exposure. even within the s&p if you start to see sectors outside of technologies like industrials for instance, there we've seen manufacturing has been left for dead for a long time pes are down so far this year. we might be seeing a bottoming in some of those pmis. there you could see good opportunities and yut sued the u.s. the valuation differential between s&p 500 and aoife is the highest it's been ten years. you're taking a bit of a risk outside the u.s. as well. >> how about bonds >> very interesting. a lot of people were saying why do i own these at all. with that you have extraordinary volatility that got baked into the names. that's a pretty interesting time to get into the market so essentially we're going to start to see the yield curve normalize and with that you'll find good opportunities with fixed income. >> like? >> the middle part of the curve. high yield we probably wouldn't

be getting too far into because we do think there's some sort of credit risk out there. the belly of the cover should benefit should it start to normalize. >> appreciate it. when we come back, google limiting access to some employees. we've got the latest daietls on that "squawk box" will be right back.

google is looking at launching a program that of restricts internet access for some employees over cyber

attacks. the desktops will be limbed to enter nall web-based sights like drive and gmail. 8,000 authors signing letter calling on companies to not use their work to train a.i. systems without their permission or compensation some of the writers including james patterson, suzanne collins and susan atwood say systems that repeat without credit or compensation is a problem. >> it's an interesting one if somebody goes off and writes a book or article, in their mind they may have read 50 books and they probably paid for those books once in each case. but if a.i. read the books once and can make millions and

millions of books, it changes the whole dynamic. is that a copy wright issue or something we've never contemplated before? >> for newspapers, too, if you allow the bots to come in and scrape all of your information and take all of that and give it to everybody else for free, how do you make money on subscriptions? that's the same thing the writers or arthers worry about it's investigate a lot of people scared. >> i think long-term the only news that ee going to have great value is immediate news, within five, ten, 20 minutes. invariably if you break the news, you start seeing other writers rewrite the news and that's allowed in the sort of fair use doctrine of all this works and you can even quote a quote from "the new york times" or "wall street journal" for example.

the "associated press" is now allowing open a.i. to scrape its archive. they have a deal to do that. but if you think about everything in their archive, it's not just their own work what's in there is all of the fair use that was allowed that they pulled from cnbc and all sorts of other places and it creates a have interesting almost existential question. >> it's been a problem for a long time. if there's a mistake reported, it used to be corrected. once a mistake is made, it's been copied. i know people who have gotten misquoted who say there's been an error and it gets picked up you look at how that's adjustable or not in a.i in a new a.i. world that we're all just living in. coming up, the chip world

that china is pushing bag on we'll bring you the latest on that story next. later, will the feds stick to the soft landing? that's the question. mohamed el erian will join us next as we head to the break, a look at yesterday's s&p 500 winners and losers >> announcer: winners and losers is sponsored by state street global advisers. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

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welcome back to "squawk box. all chipmakers on the table. they're raising concerns over potential new concerns on chip sales with china and would undermine the u.s. leadership in the industry what does that mean? i want to bring in our next guest, awe thr of chip war chris misser by the way, for folks who have not read this book, you must it's almost like essential

reading in this space. chris, good morning to you. >> thanks for having me. how much did this meeting really matter and if you were advising the president, what you would be telling him policy would be. >> the u.s. is trying to strike a very elegant balance on the one hand it wants to keep tightening controls on the access to cutting chips, especially the types of chips that are used to train and enhance business also china's a critically key ma market the u.s. is trying to take it away that doesn't necessarily hit the sales of the firms it's a tough balance to be struck i think all of the ceos that have been visiting washington also realize what's at stake for

the u.s. as well as in economic terms. >> chris, let me ask you that's what i was going to ask you is about the companies themselves what do they really want which is to say, they want to sell more chips. some are not as perilous as the administration believes. >> they've got a responsibility to shareholders to sell as many chips as they can within the boundaries of the law, but i think they also understand that tightening restrictions is the -- outweigh the political trend heading into washington. so in that context, they want to make sure restrictions are tightened in a way that current competitors don't hurt them. they're just as tough on chinese firms as other u.s. firms. they've done a relatively good

job at making sure restrictions aren't written in a way that hurt u.s. firms. >> are you of the view china needs to get -- there's this issue of a circular sale some chips are being sold to other countries where they resell them and resell them again into china. >> there's no doubt that some smuggle is going on, and i think the commerce department which is enforcing the restrictions has been bulking up it's capabilities, that's a huge stay of chips it's unlikely to provide china the capabilities it needs and wants to import. >> how far behind or far ahead do you think china is relative

to us when it comes to chip manufacturing or how it take since we relee on taiwan so much we've seen over the pap culle on mochbts. but the reality is their rate of progress is no faster than tsmc. as long as they keep racing ahead and they're the firm that produces chip capability, they're going to stay ahead of the chinese. right now the chinese are really struggling to make any progress. >> is there anybody else we should be focused on we always talk about taiwan's semiconductor, but is there anybody who thinks you have a real chance of matching what you're doing in the next couple

of years >> the other two are samsung and one in south korea they're trying to keep up. i think there's always a chance that tsmc could splip erp. this is as they transition from a type of transit ter to an entirely new infrastructure. there's going to be a possibility for a catch-up. >> chris t book is called "chip war. as i said forecast you're interested in this topic, go out and do it. thank you so much. >> thank you. still to come this morning, following the money. which gop candidates are leading the 2024 money race. we're going to get into that topic next

later we'll dewith adele freeman. you can get squawk pod on any podcast and listen any time. we'll be right back.

let's talk politics with punch

bull's jake sherman. let's talk about what a lot of people are trying to figure out and that's how the republican race is going to really firm up the race for president, who's going to get the nomination. we've been looking for a long time at donald trump kind of pulling ahead in the polls and now you've got the membership i think people were surprised what they saw with die shim. he's going to have to find new donors because a lot of them have maxed out it looks like that campaign has take an real retooling at this point. he's going to be doing things a little differently how does that impact things? those two are far and away the leaders as to who might be in an ele election. >> reporter: we could say we

don't like polls or they don't like how they turn out trump is far and away in the lead, period that's number one. number two, desantis did race a lot of mown. it could auger problems for him in the future. i would say this in addition to all of that, these candidates are all going to have ample none because the money that they raise, which is hard dollars that candidates spend is only one sliver of the story in that super pacs could raise limited amounts of money we saw tim scott put $40 million on tv, the largest buy so far of the cycle, which just serves to highlight the fact that there is unlimited money that will back a

candidate. i just think at this point and based on the people i talked to, the reaction to the legal news trump had yesterday, republicans, especially elected republicans are not backing off on him at all, and he's by and far the leader in the case. >> when is it too late to make a move >> if you're not in the race now and you're not raising money and raising your name i.d. if you're a lesser known candidate, you're probably a little bit too late we have january, february, the two big early state contests for the gop. that's where it really starts to firm up with someone like a desantis or tim scott would have to have a really impressive showing. to be honest, if you're not in the race right now raising money -- remember, there's a lot of money involved, but donors get locked up quickly and they put their money where they they they

can win. people are doing that already. if people are out there thing there's going to be a dark horse candidate that will get in the race and shank things up, they've got to do it now or in the next couple of months? >> if you're polling at 50% a and another at 40%, that's a difficult run. if trump has four indictments, there's an argument to be made there could be some massive blowup that shakes up the race, i just don't see it. you see the graphic that's so instructive. donald trump is happy. he's williaming people to the race bus he's going to

consolidate his report that's good for him. >> what happens next do you see any of that work out. >> there are guidelines, right there are benchlines i can't imagine something like will hurd or asa hutchinson or% f francis suarez of miami. he said thousand of dollars. maybe they would make it the way to raise money think a lot of folks drop out right before iowa or when iowa comes. >> what are the odds, do you think -- sth a domination or is

there sop chance he'd going to droppings out. 6 he's going to be in the race, the nominee, the highest poll getter at this point if you listen to polls. he's the sitting democratic incumbent president and a big record robert f. kennedy, obviously a fringe candidate i get asked a lot about the third-party candidates third-party candidates have a difficult, difficult time. very difficult to get on the ballot joe manchin could win. it will be very difficult, but i don't think he would want to geten in o the race. i think joe biden is going to run and all signs based on this run and all signs based on this pointing he's going to t rich, velvety coo be. the

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welcome back to "squawk box. netflix set to report earnings today. investors are anticipating how much the streamer is prepared for the hollywood strike and the password crackdown joining us to talk about it michael nathanson, founding partner and senior research analyst. good morning to you. what are you expecting, and what are you looking for, my friend >> well, we're expecting a big quarter out of these guys. they had prepared to expect a lot of churn and it looks like

it hasn't been the case. they've been very gentle about it i think we're expecting the u.s. to post net growth this quarter. and a lot of us at the beginning of may and june expected negative subscriber growth i think it's a real change in sentiment. i think if you add a story that will be really positive, the strike plays to their advantage. i have not been a netflix bull, but the setup for this quarter, the next 12 months, is incredibly strong. >> is that on a relative basis to the other media companies, or is that just pound for pound given where they are >> it's a good question. i think relative, clearly, right? you had bob iger on air last week i've never heard him sound so bearish. our investor base is looking for ideas in media there are very few to feel good about. i think more broadly when we look at other big cap tech stocks, this one has run more

than it probably should. our investors are looking for media and telecom. this is the one to own it's relative in my mind, but, again, the narrative is so strong in the next 12 months that it's a momentum driven stock that will keep moving. >> is this a game, michael, where you just have to outrun the tiger and relatively winning is a good thing, or is this a game when you get into the writers strike that everybody could suffer if consumer habits change and consumers find something else to do with their time >> again, that's a great question i think the risk would be for linear networks, not cnbc, the risk is that people change behaviors about how they watch traditional broadcasts i think when netflix has had a no one else has is that international production of content. we've said it's a lot like automobile unions. if you experience troubles in car manufacturing, international

cars would take their place. netflix has such an advantage in their scale of global production i see them taking share much like the pandemic. so i think the problem here for the strikers, it's going to create -- it's going to make netflix stronger and their competitors weaker which doesn't help them in the long run. >> michael, let's talk about the calendar there is a big question about how long -- and barry diller made this point on "face the nation" over the weekend, this vicious cycle that could start when does it start there's a view among meeting executives right now, up through labor day at least, everybody feels quite fine about things. the question is, are they fine if you get to thanksgiving without new production and what that looks like into 2024? does it create an environment where subscribers really do start to peel off some of these services and, therefore, you have less income coming in the door you want to use for that new production how do you see the timing of this play out? right now some of these folks

think it's to their benefit actually >> very big cash flow numbers. hoorah for cash flow i think you get to labor day without the strikes being settled, and i get really worried, worried about the actual slate and the talent to promote their slate, new shows on streaming, ex-netflix, you get to thanksgiving, that would be -- >> what's the deal both sides are feeling extreme pressure what's a deal look like? they seem they are so far apart right now. >> becky, i've been saying it's like class warfare the unions see the wealth generated by the executives in the industry and they're really angry about that and i think it's really emotional, right i would say to your question by labor day you need to come to

the table. the settlement has to be the creators get paid more for streaming, streaming residuals and royalties, you have to get paid more, more for international. the business ex-netflix is so unprofitable that it's just another cost for these companies to bear. so the problem is this is a strike over real issues even though there's a lot of emotion, there are real issues here there's not a pot of gold in media companies' closets where they can easily pay the talent, at the same time they have to do it because the models are changing so much the directors settle pretty quickly. i think the problem here you have so many union members who are angry and not working that they're going to dig in for a while. they really are. it's very worrying for me as an analyst, i'm sure for you. this goes past labor day, it's a real problem for these companies. >> michael, we appreciate your time this morning. we'll be watching the netflix numbers, as i know you will be thanks >> thanks.

coming up, mohamed el-erian and his take on the recent market rally and the fed's next challenge. goldman sachs out with earnings in the next hour. we will bring you those numbers as soon as they cross. by the way, check out shares of carvana, up 2% after reporting two weeks eay,rl a gain of $2. dom chu will have that story next

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good morning stock futures rise after the dow posts its seventh straight session, the longest winning streak since 2021. on tap this hour, quarterly results from goldman sachs we will bring you those numbers and the market reaction. plus, a preview of tesla results which are out after the bell today. how will price cuts impact their bottom line? that question and much more on the stock's ride higher as the second hour of "squawk box" begins right now

good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site it's just the two of us. i'm andrew ross sorkin along with becky quick this morning. u.s. equity futures this hour, we're going to bring you a whole bunch of earnings in just a moment the dow right now looks like it would open up 60 points higher the s&p 500 up about four points and then there's the treasuries. let's show you yields right now, the ten-year note. the two year 4.719 the federal trade commission and the justice department releasing new merger guidance. the agencies want to clarify their more aggressive approach to antitrust enforcement of corporate consolidation. under the new guidelines the ftc and doj will use 13 criteria to evaluate both so-called horizontal mergers -- >> i know, we were doing this and this -- it's like the vogue. which way is it? >> and then the vertical

mergers, i guess it goes this way, companies in the same supply chain merge those criteria include these principles mergers should not significantly increase concentration in highly concentrated markets eliminate competition between firms. increase risk of coordination. substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete. the new language is an update to guidance set in 2020 for vertical mergers and 2010 for horizontal mergers we'll have both ftc chair lina khan and ag jonathan kanter joining us this is just kind of their interpretation and their explanation to anybody who wants to put a merger together what they're going to be watching >> to their credit, unlike some of the past documents they cite a lot of court language. for those who are looking at this saying, ah this is just

their opinion. it has no basis in fact. it has a lot of basis in fact. whether those, quote, rulings another judge will decide to reference are the way to go is going to be the big question and i think of those 13 sort of points, which ones -- especially the ones on platforms and how a company would impact a supplier, there's some sort of -- it used to be all we looked at was size of market and does this affect the customer and that was the only real metric this is a whole laundry list and the question is whether a judge or judges -- by the way, whether the supreme court would look at this fondly or not we'll see. >> if anything else, it's a warning to people. if you're going to bring a merger, be prepared. >> we'll take you to court >> be prepared >> and we talked about they won a couple cases but lost a number of very high-profile cases

does this change the calculus for bringing these types of cases? and i don't know we'll see. we'll talk to them all about it. i want to talk to dom chu right now. he has a look at this morning's premarket movers dom? >> andrew, becky, let's kick things off with our morning movers on the tech side of things, speaking of big mergers and everything else. tech is in focus these days. we have an analyst call over at jpmorgan, shares of cisco, qualcomm, hp inc an overweight rating to a neutral. they cited a limited further downside on business or enterprise i.t. spending, a cheaper valuation for cisco shares they've added both qualcomm and hp inc. to their list of best ideas. up about 1%. cisco up around 2% on that bit of news. checking on shares of goldman sachs which we are eagerly anticipating just about moving between gains and losses up

about a quarter of a percent right now. five minutes ago down 0.1% the investment bank reports earnings later on this morning, cap off the big bank season. a lot of attention being paid here since we saw all those big banks yesterday, and chief rival morgan stanley surge in trading better than expected results, driving that trade look for any commentary in banking and deal making akin to what james gorman said yesterday with regard to maybe seeing a trough in terms of deal making goldman sachs up a quarter of a percent. and carvana, a name we haven't talked about all that much, but carvana is surging right now, up 13%, 14% by the way, this is well off its premarket high so far. it announced it had reached a deal with some of its bondholders to reduce the used car retailer's total debt outstanding by over $1.2 billion. the company, by the way, reporting a net loss of $105 million, smaller than analysts

expected on revenues of $2.97 billion. gross profits per unit jumped 94% over the same period last year adjusted profit margin pretax, something called ebitda, was better than some expectations, some say the best in the company's history. carvana up big, well off its premarket highs. remember, this is a stock that has been tanked over the course of many periods here and a good amount of short interest going into this. we'll see whether or not things even out in the premarket trade. the last i checked before i got on here, becky, it was up 30% or 40%. now it's up about 15%. it's jumping around quite a bit, becky. >> a lot of -- nice pun that you worked in, tanked, so to speak >> you've been paying attention. >> always thinking, dom. >> i try >> dom, thank you. we'll check back in with you in a little bit our next guest says markets are being propelled by the relief over what has not happened despite some residual

uncertainty out there. for more on that and the soft landing narrative, we want to bring in mohamed el-erian from allianz and president of queens college at cambridge university. mohamed, no news is good news, basically? >> we've had news and it's been good news in the sense that it has fueled the soft landing narrative. and this soft landing narrative has coincided with money on the sideline so the two things together lead to something you want to be part of you don't want to be pushing against. that is the tactical view for the next few weeks beyond that we're going to go back to the issue of inflation, will the fed overdo it, and can the economy and nonbank institutions navigate the cumulative impact of the rate hikes. i would not get in the way of this rally and is being fueled by domestic factors but as we

see today by international factors as well. bank of america has their july global fund manager survey out this morning i was surprised to see that, according to them, that sentiment still is pretty bearish be out there they said 60% of investors expect weaker global growth. higher levels of commodities and that the fear factor is still greater than greed that's a recipe if you get good earnings numbers to bring some of those people back into the market >> yes, absolutely that's why the technicals are favorable is because you've got people who stayed out of this market and now are being pulled in by a very strong soft landing narrative. soft landing narratives are wonderful because you can get higher stock and bond prices, so they bring people in across the board and out of short-term cash because what's also happening on short-term cash is that yield are coming down sharply.

so you have both the push and pull factor. and i don't expect this to change anytime soon. when we get towards the end of the summer, to jackson hole, it will get a lot more interesting. >> mohamed, what could be a catalyst people still waiting for something to happen potentially in the fall. how likely do you think that is if a soft landing is much more likely what's taken out here? is the fed potentially getting to the point where they're going to stop hiking rates and maybe that leads to a little competition in the markets >> that's the hope the market clearly thinks we'll get one more rate hike next week and that's it and the next move will be a cut the fed is not there yet we will be listening very carefully to what chair powell says about the forward guidance. what could get in the way? a few things one is a fed that overtightens

that could get in the way. two is inflation proves to be sticky there's a number flying totally below the radar screen, which is what happened to core inflation in the eurozone that went up rather than come down. the inflation dynamics are worth keeping an eye on. don't underestimate the cumulative effects of the rate hikes especially on the highly levered sectors. so these things are to watch that's why you want to be risk on, strategically keep an open mind and keep on revisiting these three factors. >> what would make you change your mind, say, okay, forget it, risk off >> oh, it would make me change my mind if the fed comes out, for example, and says i don't care about what's happening. i'm still going to do at least two more hikes and the market will not like that at all.

that's one possibility the other possibility is some sort of small accident among the nonbank financial institutions we know commercial real estate is under pressure. today we're getting earnings from the regional banks and the deposits are coming back the bad news for them is that funding costs are going up significantly. we have to keep an eye on these things but, as i say, you should not get in the way of a rally driven both by technicals and a narrative had a has been embraced by traders. >> mohamed, did the real estate, you somehow go away? did we forget about it are we wearing blinders? only several months ago were we talking about real estate being a problem for small and regional banks. when you think about some of the cities struggling, and it will rear its ugly head people thought end of '23 into '24, that's when you start to

see the trickles of it or is it that as rates come down, assuming they do and other things get better, that it can be mitigated >> so lower rates mitigate the problem but don't eliminate it the issue is they're slow moving so some people feel it's watching paint dry i don't like that analogy. i like another one since we're in the summertime, you're on the beach, you have a sand mound and you keep on adding sand on top nothing happens for a while. you have to be careful that it doesn't suddenly change shape. the refinancing real estate happens over time over the next 12 months. it's not a dramatic move but something to keep on the radar screen >> good to see you >> thank you, becky and andrew the nasdaq just reporting

results, earnings coming in 71 cents a share, 5 cents better than estimates $925 million we're going to speak to the ceo of nasdaq, adena friedman, big tech and so much more. we are awaiting goldman sachs. "squawk box" coming right back this is american infrastructure. megawatts of power, rails and open road, and essential services of every kind. all running on countless invisible networks, making it a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends the systems running america's infrastructure. for these services. for the 336 million of us living here. ♪

welcome back to "squawk. for a look at the ipo landscape, more about the markets and everything else, nasdaq ceo and chair adena friedman just had to walk downstairs basically. >> i did it's an easy commute >> let's talk about these numbers but let's talk about the sentiment. we've been on an upward trajectory a lot of companies coming in better than expected what's happening >> we're proud to demonstrate the strength of our platform, that we were able to perform the way we have in a very dynamic environment. 4% top line revenue growth 6% in our solutions businesses, and we've seen our index business return to growth after a couple of challenging quarters 19% growth in that business. we continue to show great demand for services but also i'm really

proud of the team. they stay focused on providing great service to the clients and that shows up in the numbers >> what do you make of this run and tech since the nasdaq is considered a big tech exchange >> i think, first of all, we can agree that technology is an unstoppable force and that definitely shows up in how technology is being used, expansion of technology. new technologies are coming on the scene and all of that manifests itself in a growth index like the nasdaq 100 and that has had a great recovery this year. what we call light green shoots starting to show up in the ipo market in terms of investors realizing it's time to put risk capital back to work, show they can underwrite new listings. >> risk or risk capital, you used some recently now that you've talked to a lot of shareholders after this deal

people thinking this is an expensive transaction. >> as i said the last time i was here, we paid an appropriate price for the asset. they have over 50% margin and when you unpack that more, 98% of their revenues. we're providing a supplement to give them more insight to show they continue to land new clients, upsell their clients. this is a long term conviction we've made to help our banks and clients solve their biggest operational challenges across risk management, regulatory reporting and we also have anti-fin crime

we help them navigate. >> do you feel things have shifted with their view of this? i talked to an analyst who said the truth is if you want to buy a good asset, it will cost you some money you should lean into that idea >> i think you have to recognize that great companies will get a premium valuation in any environment. that's an important thing to recognize. we're making a decision for a long-term benefit to our top clients and shareholders they have structural tail winds that are underpinning the business, new regulations coming out. we saw the fed announced last week, in europe we have basel and other regulations. we have the complexities and the correlations of the capital markets around the world they help them simplify the complex environment.

our anti-crime business is running nicely because they use ai, advanced algorithms and rout out criminals. that is one of the most important things we can do in the financial system right now >> adena, yesterday james gorman from morgan stanley said he thinks the mergers and acquisition environment is starting to bottom out, trading is starting to bottom out and there is some upside potential maybe the beginning part of next year what do you think from what you're hearing and seeing from ceos >> i've been hearing that people are starting to realize the interest rate is one we have to start to get used to when you think about that, that means you can understand your cost of capital and, therefore, then you can underwrite risk or new opportunities and then

investors realized they've been on the sidelines and haven't had conviction it's time for them to put their capital back to work and ipos should start to come out we call them light green shoots, really interesting and exciting companies coming this fall probably much moreactivity going into the first and second quarter of next year >> what's the distinction? they need the capital now? >> no. i think it's the really strong companies that have high profitability, high growth, a really great story will be able to come out and demonstrate that investors have good demand for them then you see more companies say it's really an exciting time to come out let's make sure we work on it. we've been talking -- we have about 150 companies in the pipeline to go public. when we've been talking to them, there are few that are ready to go out in the fall there are a lot of them looking for the first half of next year.

>> what do you make of the concentration of this market in terms of the success we've seen has come from what we're calling the big seven? >> as you saw a change related to those companies the index is properly diversified it was really concentrated you're starting to see that dissipate, more of the performance coming into more of the companies. >> what's the change in the index? >> we're going to do a reweighting of the index -- >> the nasdaq 100? >> it's a rules based index and the rule is that 5% of the market cap index can't represent more than 50% of aum or the components can't represent more than 50% of the aum. and so that rule means we cap certain companies. >> the seven that we're thinking of >> i have an esg question for

you. given the supreme court ruling as it relates to discrimination at universities, the harvard case, a question mark how that will impact companies that created quotas for boards, managements or other things. you put in place a disclosure requirement, not a requirement per se in terms of how many people need to be diverse background, but the disclosure was a push to get people to do that how do you think that decision will impact the business world and how have you thought about it >> i think, first of all, that decision is not direct ly relevant to the disclosure rule. it's a marketplace solution for disclosure and transparency to investors. generally when we've been talking i think they realize that they should be examining programs in light of what we saw

with the squoupreme court how do i economy to foster that inclusive environment and bring into the organization but in a way consistent with the new standard set create that environment within the nasdaq >> i've heard it, what are they saying to you? >> how do we want to examine that and talk to your lawyer >> don't you think lawsuits are about to come? >> i think we have to recognize the supreme court decisions do make changes and you have to evaluate programs in light of the changes. >> adena friedman, great to see you. thanks still to come this morning new housing data just out. we will bring you those numbers.

plus, we have goldman sachs on deck the results and the instant reaction as soon as it hits. also, what investors can expect when tesla reports after the bell tonight we will preview those numbers. >> announcer: time now for today's aflac trivia question. who was the president of sag-aftra during the fe-ekivwe actors strike of 1959? look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at aflac.com

>> announcer: now the answer to today's aflac trivia question. who was the president of sag-aftra during the five-week actors' strike of 1959 the answer -- ronald reagan. welcome back to "squawk box. goldman sachs numbers are out. slumped 58% year over year and missed analyst expectations. 308 per share. the street was expecting 318 despite sharp revisions downward in recent weeks the miss was

largely due to a higher tax rate than the street had been modeling net revenue of $10.9 billion, beating estimates but lower from the same quarter last year due broadly to industry wide capital markets on the balance sheet from commercial real estate and other investments investment banking fees declined advisory revenue down 46% due to the lack of completed mergers. increased quarter over quarter fixed income, currencies and commodities declined 26% from a tough comp last year and equities slightly higher asset and wealth management also down during the quarter just about 4%, primarily driven by weaker results in equity and debt investment. the firm is in the process of narrowing businesses and off loading on balance sheet investments to make asset and

wealth management less capital intensive. it marked down investments by more than a billion dollars during the quarter stemming from commercial real estate and the online lender in march of last year was effectively written down to zero, $677 million in the quarter. it was sold at a profit of $154 million. a hit to net earnings is higher than total net earnings goldman reported in the entire quarter >> leslie, the stock has moved higher on the fuse expectations had come down earlier. what are you looking for on the call later today >> well, they talked about the pipeline filling back up that's extremely critical for goldman. there were no mergers, very few

mergers that closed during the second quarter, any kind of pickup, so-called green shoots as we've heard on the calls this week would be encouraging for them they have all these charges they're taking against the backdrop of a very weak environment, it's a tough quarter for them but i think the prospect of the deal environment, the prospect of capital markets improving will be encouraging as you get the bad stuff out of the way today and look ahead to the future the latest read on mortgage demand also out this morning refinance demand was the story last week after mortgage rates came off their recent highs. the average rate on the 30-year for conforming loan balance decreased last week to 6.87%

from 7.07. lower rates pushed home buyers to call their lenders, applications jumped 7% for the week still 32% lower year over year fell 1% for the week and 21% lower a week ago exacerbated by falling supply and rising home prices again prices cooled off for much of last year. they are re-accelerating to low demand still hanging in the high 6% range on the 30-year fixed markets and investors are investing and trying to game the federal reserve's next move. >> adena friedman was just here talking about how business leaders she's talking to, ceos and others, are realizing they

have to adjust to this new higher interest rate environment and figure out ways to do business do homeowners go through that same process, or is it different because you can say i'm just not going to move, i'm not going to do things? okay, i really do want to move but i will bite the bullet and do x, y or z >> i think we haven't seen it yet for homeowners they're still not ready to move and trade the 3% rate for the 7% rate we are seeing the new normal in home buyers. we heard from the ceo of compass saying he believes 7% for buyers is that new normal people are getting used to it and figuring out what they can afford at that rate and are willing to buy it's those homeowners who aren't adjusting and aren't getting ready to sell. >> diana, thank you. >> okay. still to come, a first on cnbc

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welcome back, everybody. for more reaction to goldman's results and the strength of the broader market, we want to bring in chairman and ceo kari firestone, a cnbc contributor. kari, what did you think of these numbers? >> i think they were around as expected goldman has not been a great stock and people know the investment banking environment is difficult the backlog is up. trading was flat disappointing to me asset management was down from the first quarter and the market has continued to rise. they haven't talked yet or i haven't -- i looked at the release. i didn't go through enough detail to know what's going on there. of course they closed markets, more or less, the consumer product business that really wasn't working and are trying to get back to basics, but the

basics haven't picked up, meaning the deal business, the ipo, the secondary market business has not come back but there's a good chance that it will because you can't have a market this strong without people looking to raise money and go public. >> your thoughts recently have been schwab will be a beneficiary of higher interest rates. do you like the stock? >> yeah, we own the stock and we like the stock we don't own goldman or any of the other large banks. schwab is a company that got caught up or caught down in the whole catastrophe in march with sill done valley bank and people associated it with those for some reason, maybe it original nalted in san francisco even though it's now a texas company. schwab has continued to grow assets there was a certain amount of cash sorting where clients began to look for a higher rate of

interest for their cash. that process is almost completed and the company said on the call they believe their net interest merchant will expand beginning next year. we saw the assets grow the ameritrade deal is now complete and they're doing the final transition of companies from the platform to the schwab platform and, of course, better markets are good for these companies and higher interest rates overall are positive for schwab we think earnings could be as much as $6 in 2025 that's a $90 stock and still there's plenty of room even with the move of 12% after the earnings so we like it. >> kari, did you say you don't own goldman sachs? we just had its disclosures up on the screen that said the firm does own goldman sachs did we mess that up? >> yes, you did. >> so what would it take to convince to you buy goldman or any of the other big banks if you don't like any of them at

this point >> it's funny, we found places in the financial sector to participate. goldman sachs is the sort of stock that perhaps maybe shouldn't have gone public these businesses are very volatile they have really driven that company's earnings goldman has not been as strong in asset management. they really node a very robust ipo environment and ipos just have been dead over the last year that we think would help i pulled for the stock i think david solomon is a good guy, but it's a tough racket right now. >> tough business. kari, thank you. good to see you. kari firestone >> nice to see you thanks, becky. coming up, tesla set to

report after the bell. what investors can expect and find out how recent price cuts could impact the ev maker's boomintt le.

welcome back to "squawk box. tesla set to report earnings

today after the bell the stock is on a run so far this year, up nearly 140%. take a look at that stock. joining us right now is "wall street journal" reporter and cnbc reporter. tim, good morning to you as we just mentioned the stock has been on quite the run. historically we've had -- you look at apple earlier, on times you see the stock run into an earnings report and then sometimes it drops off a little bit after that this is almost like the opposite of that in terms of how tesla seems to operate >> yeah, but really it will be about the call and elon starts talking to analyst this is evening, it's about his enthusiasm this is a sentiment story and has he convinced the market he's optimistic about the second half. there's a lot of hope among some investors that the company has hit the bottom for price cuts, that the margin hit is going to be in the rear-view mirror and going forward they will see some upside especially with the

launch of their new pickup truck, the cyber truck, later this quarter lots of excitement about that and the potential for making money off of that. >> how much do you think the cyber truck will help on the bottom line, and what kind of margin do we think is on that vehicle? >> well, i don't think this year you're going to see a lot of help because of all the indications are it will be a slow ramp to get to volume as we know historically tesla really struggles with launching new vehicles it's a very messy kind of public process. that's ahead of us perhaps some of the uncertainty that the market might see in the months to come but next year when volume production likely will be achieved, it's not conceivable that it's going to be a million unit vehicle at this point i don't think i've heard anybody think it's going to be a huge blockbuster. that said, in the u.s. pickup trucks are really like luxury vehicles, fueling the likes of ford and general motors' profits over the years and tesla getting in there, there's some

potential. >> in terms of crazy upside, you never know what elon will say, what he will be optimistic about when it comes to robo taxes, to self-driving and the like. is there any expectation in your mind of something that will come as a curveball in a good way or bad way? >> those are the things he likes to talk about because that's talking his swim lane, if you will that's what enthuses and excites his fans when you look at the stock price, traditional automotive people would scratch their head. they don't understand the valuations we've talked about that many times before but a lot of what's built in there is the hope and the excitement for that future in the automobile, the future of tesla, whether it's electric cars, robo taxis, humanoid robots they're betting on this kind of vision of elon that he's selling and that has really rewarded him in recent years. >> can you, by the way, speak to this news report yesterday, the

settlement tesla's board members made with shareholders, $735 million they're effectively giving back to shareholders after accusations that it was basically an inside job? >> another kind of example of the board maybe having less risk tolerance than elon, we've seen elon in the past willing to go to court, before a judge and jury on things he feels strongly about, where the board maybe is willing to go a traditional route and do these settlements it's the latest example perhaps of kind of the question about the board and how they're reining him in or the oversight. there have been criticisms over the years that it's the elon musk show. >> our show has to go as well. it's great to see yo tugu,hoh. we'll be back after this thanks

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the house select committee on china leadership will hold a trade debate later today the moderators of that debate join us this morning china select committee chairman mike gallagher and, congressman, worries about china come front and center that seems to be the number one issue that both sides of the aisle agree on

congressman gallagher, we'll start with you >> our economic relationship with china is incredibly frustrate and how we decouple and derisk is a profound question it's my observation that a lot of times in congress we don't have real debates. we have people reading talking points to a camera or to an empty house chamber where nobody is listening >> we noticed, too >> if we structured so each team has a democrat and republican on it, we're looking forward to ideas here >> and having to do with trades and spying, they've worked it

out? >> a lot of people are asking how did we get to this point we have such a huge trade disparity with china they import more than we export. how do we stop them engaging in cyber theft or economic owcoercn and doing things that make it harder for us to compete >> and how do we improve on personal protective equipment, active fpharmaceutical ingredients. unfortunately all of that has been outsourced and it's a big problem for our country. >> i'm glad you bring up the ideas of pharmaceuticals being

sourced specifically in china. i was talking to a few people about the idea we know this is a problem, we learned it firsthand in the pandemic. how quickly, congressman, do you think we can address these issues and i'm glad to hear you focused on it. >> i think that mike and i will be recommending this has part of a set of bipartisan measures that we'll try to transform into legislation. i think a lot of people here in congress on both sides of the aisle recognize something has to be done to onshore some of these products and diversify supply chains as we were talking about, there needs to be some incentives probably to bring some of this manufacturing back to america. that being said, a lot of diversification is already happening in the private sector even without government involvement. where that's happening, that's great, but for other types of

issues, whether it's the refining of critical minerals or having ev batteries built here, we're probably going to need to continue with incentives >> the idea of even having these debates and holding these things is probably pretty provocative to china i'm sure they're not pleased about the idea of talking about separation they've made it very clear they don't like a lot of the language around it, that that really gets to the heart of themfeeling they're being attacked we are not on the part where we can stand on our own two feet, we're very much linked how do you this in a way that recognizes it's going to be years our economies so closely linked and recognize these are the two largest economies on the planet and what happens between us has pretty huge impacts around the world >> i think they need to think of it as a short-term sprint.

there are things we must to do reduce the economic leverage in a war. and there are things in terms of a long-term marathon onshoring in certain industries is part of that. with you there's a lot we can do in congress. one thing we can recommend is how we put sensible guardrails on outbound capital flows to china so we aren't inadvertently supporting our own destruction we can tease out whether it should be sector specific or country specific i think it's a mix of short-term things we need to do with alacrity and a recognition that you can't selectively decouple without simultaneously growing closer with certain other countries within the free world.

>> if this is a debate, i take it you have people who have both opinions, that china is a huge concern we node to do something about and maybe others who look at it on the other side and say, well, there are things we still need from each other is this a fair assumption there will be people from both sides >> yes, i think that's right we have to do this in a way where we don't do harm to our economy but as you might have recognized earlier, the chinese economy is in big trouble right now. youth unemployment is like 22%, the real estate market is tanking. both has slowed to a crawl so this is the time where they should probably decide to play by global trade rules and engage with other countries and perhaps there is an opportunity where their current situation might

materialize and it's a better behavior but until then, we have to make sure we protect ourselves and onshore what we need to onshore and friend shore other items as well >> gentlemen, thank you both we'll be watching later today. >> coming up, a big hour ahead a check on goldman sachs and other big movers this morning and the fcc chair lina khan and jonathan kanter will be joining us with new merger guidelines being taken notice of.

young lady who was, mid 30s, couple of kids, recently went through a divorce. she had a lot of questions when she came in. i watched my mother go through being a single mom. at the end of the day, my mom raised three children, including myself. and so once the client knew that she was heard. we were able to help her move forward. your client won't care how much you know until they know how much you care.

♪ lien. coming up, lina khan the final hour of "squawk box" begins right now

good morning welcome back to "squawk box" here on cnbc i'm becky quick along with andrew sorkin. at this hour it looks like we are still seeing green arrows across the board, maybe more modest gains than we saw this morning but the dow up by 32, the nasdaq up by 23. in the treasury market, we're still looking at yields below what we have seen in recent weeks, 2-year above 4.73%. we want to bring in mike

santoli. >> yesterday was another day that we had a nice quiet move at the open seems like you have just this very sort of patient momentum intra day led by the market. yesterday banks bouncing the issue is maybe we're getting a little stretched in the short term within a very durable trend. the 2-year is only about 5 or 6% below that all-time high from january of last year the pullbacks have been more shallow, briefer that's the mark of a stronger trend. on the other hand, it does set us up probably for some give back to come and this is kind of a steady move a steep but not dramatic angle as the bear market rallies move

and made a new one-year high yesterday and likewise 7% below it's early '22 peak. it's obviously not driven by those big nasdaq stocks. it's broader, more inclusive and also an international component of this index as well because of all the non-index listings another bullish impulse to say this is not just an extremely narrow rally on the other hand, take a look at apple and microsoft compared to just an equal weighted version of the technology sector this is over two years i point this out just to highlight how microsoft and apple have been virtually the same stock in terms of the pattern. obviously there's a little bit of differences in terms of performance. but just the shape of it shows you something different is going on with the two very largest

stocks in the index. people are buying them not just because of particular things going on in their business, even though we love a.i. and apple is the highest quality balance sheet in the world and all the rest of it but it just shows you there's a mechanical preference, at least up until now for the very largest stocks, active mutual fund managers literally can't own a full weighting of these stocks because the rules prohibit them because they wouldn't be diversified enough all of this looks like we maybe need a rest but it not showing signs about it yet >> we talked about this earlier, the changes and rules they'll have for the nasdaq. you can't have five, six, seven stocks >> you can't have that on the

nasdaq 100 if all of them together are more than 48%, you have to knock them back down. that's what's going to happen this week. >> thank you. >> let's talk banks and bank earnings leslie picker joins us with the wrap up and the call ahead >> andrew, there's no other way to dice it, a tough quarter for goldman, a miss on the bottom line and that the mid line that slump from last year goldman derives a large proportion of revenue from these areas and therefore feeling the brunt of the lack of activity. and then the firm took some charges during the quarter as it looks to pivot away from consumer businesses, offload some legacy on balance sheet items. the mark downs largely encompass

leadership exposure where particularly prices have slumped for recent months. and there was a $654 million charge and annualized equity just about 4% in the quarter. many of these challenges were widely telegraphed before today's result but the key question for investors will be what does the future look like the banking backlog increased quarter over quarter what's the prospect of that turning into real revenue and when andrew >> to that end, do you think

we're going to get a real answer to that this morning on the call >> i would hope so in terms of a real number, probably not but in terms of how that pipeline is filling up, whether they do see green shoots, are they talking to more people. we heard james gorman yesterday say he thinks the bottom in investment banks about four to six weeks ago. are they see r seeing that tone ality shift. it takes a while when they clothes. so we're talking about at least a year, 18 months that are currently in discussion and are pipelined from actually being booked as revenue. that said, investors want to see some sort of a sign of green chutes out there >> and joining us is gerard.

good morning to you. this report this morning i could describe as mixed. you may have a different view, i'm cure white house put in the context of all the bank reports we've seen in the last week and a half >> i think your observation is correct. it's certainly mixed there's sot good trading there again, expectations, the revenue for the industries as well as equity trading has been affected by market conditions and on the investment banking front, here, too, the numbers for the industry and the markets in general were weaker than what we saw of course last year but again against expectations,

the equity egg and of course goldman had a number of one-time items which make the numbers a little more confusing but it's the green 'utilities you guys talked about is the real story "unconfuse me," it's a great little line. goldman sachs at $336 a share. fair price what do do you >> if you have a pos and p if we really see the fed reaching the terminal rate for fed funds by september and we have a soft landing, the investment business is likely to improve over the next four months and that means goldman is a pure play and very

attractive at these prices, if you believe that's what's going to happen. >> do you believe that's going to happen. >> it's a good question. we're looking at what the feds are going to say in july and jackson hole that will give us the information. >> as value goes, what bank has the best possibility to run? >> i was would say jpmorgan and goldmans for a large investment bank and then on the regional bank set you can look at a u.s. th

there. >> the impact on smaller and regional banks, is that over now? have we forgotten about that are we putting blinders on what's happened here >> no, it's a good question. i would say the conversation has shifted meaningfully from what we saw in the spring of course with the bank failures and the deposit flight to more now focused on credit quality and commercial real estate and that was a clear pattern with all the big banks and regionals is, as you know, the office market is certainly the weak spot when it comes to credit and commercial real estate and that's not likely to change any time soon however, other parts of the credit portfolios for these banks are remarkably very strong so within the commercial real estate area, it's office and mostly urban and/or big cities

with the challenge >> i want to thank you for joining us as we sort through the numbers and try to figure out what comes next. appreciate it. >> you're very welcome thank you. >> well, i can tell you what comes next, at least on this show when we return, a new bill to ban stock ownership about to be unveiled on capitol hill >> plus, a can't-miss joint interview with the federal trade commission chair lina khan and jonathan kanter. how they'll be enforcing law very important to business this is cnbc new projects means new project managers. you need to hire. i need indeed.

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welcome back to "squawk box. right now you're looking at green arrows the s&p up about 2.5 points. new this morning, a bipartisan pair of senators is getting ready to unveil a bill that would ban members of congress and members of the executive branch from owning stock in individual companies. "the wall street journal" says the proposals from kristen

gillibrand and jack hawley would stop ownership in blind trusts lawmakers could be fined at least 10% of the value of prohibited investments if they break those rules. investment branch authorities would have to forfeit profits and be fined at least $10,000. what do they say about spouses would that be allowed for your spouse to own it in the past a lot of them said, yeah, yeah, yeah, i'd be in favor of that but not for spouses. >> i think you can't allow the spouses either >> that's the rub, right >> i don't know what the right answer is here i am so mixed. i want to get the money out of it desperately because i think it hurts the credibility of them frankly and the markets and i want these people, politicians, to want the job. we don't make it so easy to want

the job to begin with. >> and i want politicians who are pretty ensconced in these issues i want them to be intelligent about this >> the whole thing makes it super, super complicated with no good answers >> take a look at carvana shares on news of a debt restructuring agreement. the shares had tanked. let's get a dalyily on that. people didn't know what to expect here. meantime shares of microsoft adding to gains in the premarket, the stock closing at a record yesterday after the company announced pricing for his artificial subscription pilot. it's going to cost an additional

$30 per month. boy, for 30 bucks a month, not a bad deal >> cheap assistant >> whether it's as good as a real assistant question, and big tech we'll have a special interview coming up with the d.o.j.'s jonathan kanter. don't go anywhere, "squawk box" will be right back

welcome back, everybody. shares of trading giant interactive brokers losing ground after they fell short on expectations in the second quarter. shares are up 43% over the past year that well outpaces the broader market joining us with more on the latest numbers and the state of the retail investor is interactive broker founder and chairman thank you for being here what happened that was maybe below what the street had been anticipating what caused some of those lower numbers? >> thank you for having me this quarter is our second quarter in which we topped a billion dollars of net revenues.

unfortunately we were hit by an unexpected expense that took two cents off our earnings >> and that that was because of the federal reserve and electronic messaging is this the crackdown by the sec? >> yes, we are supposed to archive our employee communications but, as you know, the text messages that people use on their apple phone, we cannot archive them. so that was the problem. >> has that been addressed at this point, though it won't be a problem going forward? >> well, all we can do is to yell and scream at our employees to stop texting, right there is no way to really enforce it other than saying if you keep texting you will be fired, you will be penalized i don't know what to do. >> thomas, let's talk through a

little bit of what happened with commission revenue because that number was unchanged from a year ago at $322 million. trading volumes was a little more mixed futures contracts down by about 3% but the thing that caught my attention was stock share volumes down are people not trading stocks as frequently >> that is true on one end the other, ours have always been the big seven stocks people have huge unrealized profits inthem and they are simply not trading them anymore. they don't want to realize the gains. so all the volume switched to options and they just keep

rolling them forward and therefore they don't realize the gains and they hope to realize a continuing profit of taking in premiums as the stocks rise. they repurchase the calls and they have a loss on the calls but they will set a gain on the start-pause and realize the premium. so this is what we're going to, i think, this is what we'll continue to have going forward because the gains are huge and the taxes will be huge and they don't want to realize those taxes -- those gains you. >> think it's that they don't want to pay big taxes so they're not going to sell it it's not necessarily a bullish sign you think they're holding on to these things you they're they don't want to sell it because they don't want to continue to climb >> no, i think they don't want

to sell it -- look, i don't know what they think. they think on the one hand that they are probably going to go further and on the other hand i don't want to realize the gains. >> let me ask you about a couple of things we've heard just in the last 24 hours or so. yesterday, the ceo of schwab that clients have been adding equity exposure and the volume of buy orders is 20% higher than sell orders. he thinks that is showing investors optimism but this morning bank of mark was out with its global fund manager series and said there's still more greed out there where do you kind of come down in this world are. >> well, our cash flow, our

customers' cash flow have been around 30% throughout this period and at this time they are down to 28%. so there is not a significant change but has changed but the cash basically remained the same so cash all together is only up 2% for the quarter and given that we are paying 4.85 -- about 4.58% interest on qualified cash, it's amazing the energy that people have that they keep keeping their money that they get nothing, no interest it's just crazy. that's what it is.

>> but optimism or fear? fear or greed is the bigger issue? >> i would take caution, caution. peep you have to look and say they're growing that debt burden and we'll say collapse is coming >> right thomas, thank you. we appreciate your time. when we come back, we have breaking housing data in a special interview with jonathan kanter way, taylormade, titleist and ping. tour balls from your favorite brands. and the most dapper styles from travismathew and walter hagen to calia and lady hagen. you handsome devil. select the best golf shoes like footjoy, nike and more. and get back on the course with one-hour pick up. look good and play great with gear from dick's sporting goods.

we are just seconds away from the release of the june housing starts report. rick santelli is standing by take it away what you got >> housing starts expected to be 1.48 million, comes in darn close to expectations. 1,434,000. this reverses some of the big strength last month, that 1,631,000 was the last number for may was the highest since april of '22 if we look at the percentages there, a revision coming in. so now 1,631,000 gets downgraded

to 1,559,000, which makes the move down about right around 8% on the start side. now let's switch gears to permits, expected to be 1.5 million, also a bit light with a subtle revision last month that puts that down a little over 3.5%. we see interest rates are looking at that and moving a bit lower. 10-year yields are now down a half a dozen basis points on the session. 2-year note yields are down. weaker data and of course we want to pay very close attention to how this all affects fed percentages. the july meeting is locked and loaded, not the september meeting. >> rick, thank you we'll see you later. the federal trade commission and the anti-trust division

releasing long-awaited drafts on guidelines on how they plan to enforce merger law it outlines 13 principles like mergers should not eliminate substantial competition between firms. it's a water thereto shed document a lot of folks in corporate america are leading. jonathan kanter is with us this morning. unfortunately lina khan who was going to be joining us affected by some weather travel issues like so many across the country. but good morning to you. let's talk about it. what's the intent with putting this document out? >> yeah, thanks. first of all, it's wonderful to be here. thanks for having me the intent of this document is to make sure we are providing transparency to the public about how we enforce the law let me be very clear

the law hasn't changed these guidelines simply plane agency practice and how much we apply it >> how much should folks think of this as a blueprint for how you plan to approach it but not necessarily how the courts plan to approach it >> that's the beauty of how we've constructed these guidelines going back to the merger guidelines which originated in 1968, these are the first guidelines ever to cite cases and we do so extensively because we want to make sure we are bringing cases to courts that reflect the facts but also reflect the law, which is what courts apply when they're looking at our cases >> uniquely, at least historically, most judges looked at a market and said how concentrated is the market going to be and importantly, how is this going to impact consumers those were always sort of the

two basic questions. it looks like in these guidelines you have expanded the aperature at how you look at these things and a smaller company that may have very little power or influence right now might affect a bigger company merged later down the road how do you think about that? >> yes, as dock stated, it is a risk assessment. we're trying to understand the extent the merger will risk competition. courts have said if it reduces substantial competition between competitors or tends it have a monopoly or increase as trend toward concentration so that the only way to compete is to be massive, then those are exactly

the kinds of merges that can violate the clayton act and be subject to legal scrutiny. >> how much of this should be considered a political document? these documents started to be produced back in 1968, reagan in '82 as recently as trump's d.o.j. right before he left have left these documents in place and they have evolved. so little pieces of and little pieces. >> as you noticed the guidelines were starting in '68 but updates. there's a reason for that. the reason is because markets evolve and the law evolves and it important that agency practice evolve to meet the facts in the large where they are. we've gone through painstaking detail to make sure this is no a

and as you read it, you'll see citations to case extensively. and we play that out and then built the guidelines around those legal decisions. the burden is ultimately on ours o hours. courts are looking at court precedence and we are giving. >> you can look at laws, one person sees one thing, another personies another. were you surprised by the rulings going against ftc? >> yeah, i can't comment on any specific case but we have great faith in our court system and

it's there for a reason. we have the burden to bring cases before courts and convince courts that a merger may substantially lessen competition or tend to create a monopoly that's exactly why we've constructed these guidelines to build around the same precedence the courts are applying. that's to me the best way to the compliant with the law >> and let me ask you a question on your willingness to perhaps lose the case to gain ground elsewhere. skadden arps put out a paper saying are the ftc losing anti-trust battles but gaining ground it suggested even in cases where you're losing, there are component parts of these rulings which are going to help you down the line

pi t . >> for example, several courts cannot be prosecuted -- they may have to show in a potential competition merger case that the acquirer had the wherewithal to enter the market, not necessarily that it intended to do so. how much do you think about those issues relative to the case itself? >> yeah. so i'm not familiar with that paper, but let me be very clear. we bring our cases to win. so when we believe the facts and the law support legal action, we bring it to a court and then we give a court or a jury the opportunity to confront the facts and law and rendary decision that's why drives our decision making the department of justice, we are a law enforcement agency and our goal is to enforce the law consistent with the facts and the law. >> how much are these guidelines intended not just to frame how

you think about it but to be a deterrent of sorts so that you don't go to court in. >> well, the best case scenario is compliance, so we have long encouraged industry to come plight with the law and by being transparent and giving industry the clarification they've been asking for, we are hopeful it will induce greater compliance and mitigate or at least minimize the need for to us to have to go to courts to challenge transactions >> we were just talking about microsoft act vision they've now extended the deadline for close to october 18th back to the guidelines at hand, one of the other major shifts is how you think about what you describe as platform companies, which really is part of a technological revolution this we've seen over the last decade or two how do you think about them

differently than perhaps courts either have historically and maybe you think that at least those prosecuting those deals. dpli think it's undeniable and platforms have become a market reality that exist in health care and energy and finance, among many other industries. so if we're going to be applying the law to the facts on the ground, we have to have a deep understanding of how those markets function platform markets have their own characteristics. there could be competition for a platform, there can be competition on the platform and there can be and those are market realities that don't sometimes neat into cat gorations. so by acknowledging that in the guidelines, using our state of economics and analysis and

applied it is down the middle. >> you said you were watching artificial intelligence very closely. you have project gretzky after wayne gretzky who said you have to skate to where the puck is going. what have you learned in the last several months in terms of a.i. what do you see that concerns you? >> first we've learned that it is moving quickly and it's essential that we understand to learn how these technologies work first and foremost we're beefing up our internal expertise to make sure we have the chance to understand these it can and in the world of data driven technologies, and so it's really

important that we both understand the technologies and also how it can affect future generations of a.i >> we want a dynamic country that you and the administration, it's apolitical, both parties want it. the question is whether there's too much concentration these are the largest companies in 1967 in america and i will tell you that none of them are on the list today. ibm, at&t, eastman kodak, general motors, standard oil, texaco, sears general doesn't exist, general limited, warls farg oh jpmorgan and the like. just reading those lists, does that say to you that we actually

have a kpe, that's 50 years later obviously, or not? >> almost all the companies that you put on that list were at one point subject to anti-trust enforcement. it oxygenates the market, gives money for new firms and technologies to flourish and thrive we want competition, we want disruption, we want innovators, we want them doing it throughout the economy and throughout the country and throughout the world. that's what we're trying to promote. we're not trying to pick winners and losers we want the marketplace to do that >> let me ask you, it specific to the media industry but we have so many executives coming on the broadcast recently that talk about the need for consolidation in that particular space is one that's near and dear of course to our party and there's a question mark about

what happens to a paramount in the world and what happens to a warner brothers discovery at the aim time big tech companies, fosh, have gotten into this and we won't do a deal now because we're not sure what would happen maybe we need to get a different administration that would come in i don't know if a different administration would think about this differently, but how do you think about it >> yeah. so this is an area of the economy that we're monitoring very closely there's a long history of anti-trust enforcement across many administrations in decades. it's important as i talk about understanding these market realities that we understand the shift and how media is consumed,

distributed and how it used to train and i won't comment on anything specific other than to say we are up to date on the latest developments and monitoring this case very carefully and we will be, you know, vigilant in effecting the laws appropriately and ektively. >> when i read to this this morning and started think about it is that what this is designed to do, a scare document to say, hey, this is what we're going to be looking at. am i wrong to think about it that way >> i guess i look at it a little

bit more who is pitably, perhaps. our job is to enforce the law. we simply want to explain a what the law says and make heuer we're bringing cases that reflect the state of the law there are lot thank like entrenching monopoly power trends toward concentration and we're just trying to explain how it works >> jonathan be and i know you've talked a lot to those in the business over the last couple of years as you developed these particular guidelines in. >> who and will it change as a function of the comments that come in? ia, we're open minded so we created a 60-day comment period

because this is such an important document the public feedback has been really valuable to us thus far i would be remiss if i didn't mens that major source of feedback in this document came internally from our own professional staff we spent months with the hard working people on the justice department who were on the ground bringing investigations on a daly basis. i'd also be remiss it i didn't mention the attorney general who is an anti-trust scholar in his own right. he's been a partner in answer paga nesia again >> delighted to be here. thank you so much. >> microsoft and activism and blizzard formally extended

their. from $3 billion to 3.5 billion if that transaction is terminated after august 29th that's when we're supposed to be hearing from u.k. authorities or regulators and it was either the 27th or 29th and then to 4 1/2 billion if that contract is terminated at the end of 2016. agisted earnings coming in at $1.08 per share. revenue and, by the way, those aren't the only rules of engagement on this act vision blizzard enables it to pay one cash difficult end in of up to 99% a share and that looks different we're trying to walk and chew

gum as we're doing new interviews but it also looks like a new xbox arrangement valued for up to $250 million, '2023 and dumb yesterday gives them another thing months to figure things out. >> it's face nating. >> coming up on. >> and the dow continues to work with a particular app. listen any time. we're coming right back.

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welcome back to "squawk box," everybody. here we go with the futures. looks like the dow indicated up by about 14 points s&p futures, up by three right now. the nasdaq, up by 41 of course, we have had a big build. it's been now seven days in a row that the dow has ended higher those gains continuing to add, and we'll keep an eye on it today as we get closer to the opening bell in the meantime, treasurys look like they have been, treasury prices up, yields under a little bit of pressure two-year at 4.72%. energy prices, wti, up by about 0.75% to $76.29 a barrel when we come back, we'll tell you what to watch ahead of

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little bit more than a half hour to go to the opening bell on wall street and joining us to

talk about the recently rallying markets is emily roland, the co-chief investment strategist at john hancock investment management emily, we've been watching earnings come in, and i guess, so far, so good. >> definitely. there's been a relief valve released, i think, as far as earnings go. of course, we've seen the financials come in better than expected definitely benefitting from really good comps on a year over year basis we look at the fed funds rate, which averaged 1.25% in q2 of last year, and in q2 of this year, well north of 5%, so huge benefit there. we also broadly saw improving economic growth in the second quarter with gdp looking to come in positive about 2.5% per the atlanta fed. we've got consumer spending on track, and then we've got the banks benefitting from this deposit flow due to the regional bank issues, so definitely some relief across markets. i think we're seeing the broadening that we have been looking for with financials starting to participate,

regional banks looking like they put in more of a durable low, so certainly some positive developments >> you point out, though, that this is a situation where expectations have been low, the bar has been lowered, you're looking at earnings per share, expected to be down 7.5% from what we had seen before, and you think this is the low bar for earnings expectations for the rest of the year it's going to get tougher from here >> yeah, when we look at analyst estimates, they are pencilling in q2 as a low for the year. q3 is expected to be flat. then, we start to look at positive in the fourth quarter, 8%, and then 13% penciled in for 2024 that would all be fine, except we're looking at valuations that are already reflecting those positive earnings estimates, so the s&p 500's now trading above 19 times forward earnings, and if you look at the returns in thes&p 500 of this year, 16 ou of the 17% that we've gotten is all from multiple expansion, so

we think that those estimates might be a little bit overly optimistic where we see the macroenvironment going we've had a great couple of weeks for the markets, but it might be time to think about rebalancing into some areas that have been left in the dust nobody has had a need for more defensive equities we like areas like health care and utilities as places where the baton could potentially be passed into the back half of the year >> what else what about equities versus bonds? how does that debate or that kind of back-and-forth shape up? which do you like better >> frankly, we see the valuations a lot more compelling on the fixed income side today we talked about the pe ratio, but if you think about the earnings yield on the s&p 500, 5.2%, and meanwhile, we're looking at the yield on investment grade corporate bonds as more elevated than that you're looking at 5.5% there, even shorter term bonds showing elevated yields, so we do think

this is an opportunity to let bonds do more heavy lifting in portfolios i know that's a really tough sell this year, given that we've seen these great returns across stocks, investors are starting to capitulate, they are tired of fighting this market momentum is there. we get that. we want to be invested in the stocks, but we think bonds, from a valuation standpoint, represent a really great entry point today. >> so, you're not calling for a pullback in stocks >> not necessarily look, momentum is a powerful force, becky we know that and again, we're seeing investors starting to join the party here disinflation has been a key reason for that. markets are celebrating that look around. you see it everywhere, whether it's cpi, ppi, you're looking at the biggest declines in used car prices in history over a month over month basis the prices paid components of the survey data. i could go on and on about disinflation in the pipeline and one thing that that's been impacting is currency markets. you've seen a bit of weakness in

the dollar starting to play out as that disinflationary trend gets priced in, and that's been really responsible for a large part of this risk on rally when the dollar weakens, everything goes up, that's a pretty consistent pattern over the past year. as you continue to see that disinflationary trend come in, you could consider -- continue to see markets rally how long does it go? we're not quite sure, but we're wanting to -- >> emily, we got to run. thank you. we appreciate it make sure you join us tomorrow ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange futures look to add a touch more to tuesday's melt-up we head into mega cap tech tonight with tesla yields are lower as housing miss as well. our road mapeg