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 map begins with the

markets. traders watching corporate results, goldman with a revenue beat plus the ftc and the department of justice announced the long-awaited new guidelines on how those enforcers will go about enforcing merger law meantime, microsoft-activision, they extend their deal until october. we'll have more on that. how about carvana shares surging? the company reaching a deal to cut its debt by more than a billion dollars. let's get to goldman joining the bank earnings parade, lot to dig in here, jim, including return on equity, which may be the -- among the lowest in the group. >> there are some specifics that actually drove it down, including the green sky issue. i would say the ultimate issue with goldman-sachs is they're not as bullish as morgan stanley was about the green shoots, even though they have a deal, a pharmacy -- by the way, it's a cosmetic deal out of israel that's profitable. and they think that's a

harbinger. they're seeing good ipo pipeline, and let's not forget, if they go wealth management, the margins are going to be much higher i regard the quarter -- the stock went up big yesterday. >> you have to regard this quarter as a one-off, don't you? >> it's a one-off. >> return on tangible equities is horrible. >> they're getting out of a lot of stuff >> green sky, that was $670 million >> not positive. it's not a positive. suboptimal >> it is suboptimal. so, you're not concerned overall? >> no, because i keep seeing -- now, we're going to have -- there's some new merger guidelines >> well, we're going to get to that but i mean, an annualized return on equities still only running at 7.8%. >> i think they can have a higher one i think that they have made a commitment with green sky. i think that everything is for sale it's difficult to sell the apple deal they have because apple has to go along with it. that matters

they have real estate they have to get rid of, but the fact is, they're going back to their roots, and the roots is a profitable business. you have ipo you have m&a they'll have wealth management you'll have some fixed income trading. very possible. so, that's all happening but that's why the stock is up we can't forget, this group has moved dramatically goldman moved with morgan stanley. i don't know if anyone listened to gorman yesterday, but that was a happy days are here again interview in terms of the cadence. >> he did say, got to have a plan, as deals become available. kre up 4% yesterday, got some attention. got an upgrade at schwab today or at least jpmorgan adding it to the focus list. >> the sky was not falling everything that sqchwab told us, which is that they have this bank business that's not that important, came true they were totally straightforward. i think we have had an amazing run in banks, including banks like pnc that didn't do that well very positive action

david, i don't want to go by the action what i see is i need to know ipos i think they're better i need to know m&a i think they're worse. >> you think -- what do you think about m&a? >> worse >> worse no, i hear the opposite. >> you do? >> yeah, i think it's going to be better. >> i think that's wishful. >> no. i don't think so i'll go with me on m&a versus you. >> you'll go with you? >> no offense. >> always bet on yourself. >> that's really interesting >> i'm going to bet on what i hear and who i speak to. >> well, i was going to bet on myself, and then it turns out that "jeopardy!" took care of it >> that was -- we're going to get to that. i hope we have a clip. >> i read the department of justice's -- >> i want to show this >> in the a block? >> it leads into a market conversation >> my head will be so big i can't get through the door >> "jeopardy!" last night, my partner right here was a clue. take a listen >> abbreviated 800 >> answer there is the daily double you can move into a tie for the lead, david. >> you only live once. true daily double.

>> here's your clue in an abbreviated category f.a.n.g., coined in 2017 by jim cramer, to denote five top tech companies at the time. >> what is facebook, apple, amazon, netflix, and google? >> you got all five. you're tied for the lead >> well, there you go. >> well done, david. >> magnificent seven is on tonight. it will be much easier i will say, can i just say that when you look at how this group has done, every day you come in and there's something new. every day, and netflix will be great, and we all know netflix will be great. >> we do when it reports earnings >> it doesn't matter they're going to say it's great. amazon -- come on. >> you know if netflix reports a sub-number -- >> they -- oh, you're going to now get into a mode which is actually -- >> it does tend to move a lot

after earnings one way or another. >> there's winners and losers this year. you want a real loser? disney real winner? netflix. netflix has -- they have all the capital in the world they can go anywhere to develop great product. david, they can tell a positive story. >> the real discussion is netflix, the split between what the buy side and the sell side think about subs, right? we've seen some cautious commentary, evercore >> there has been, but if you look at the action in faang, amazon web services is not confirming to me that the fourth quarter is going to be a pivot and aws is going to be good for amazon no one's confirmed that to me. alphabet, no one's confirming they have great chatgpt like we saw, unbelievable, with microsoft, with copilot. >> that was something. that move in the stock based on the $30 a month -- >> that's unbelievable billions >> yeah. a lot of billions. 6% on a 2.5 -- i don't know

where the market is. >> it moved the needle >> that moves the needle >> i'm going to take it. >> that moves the needle when you got a $2.5 trillion and it goes to $2.6 trillion on that >> that was the most significant piece of news yesterday, and i don't want to lose sight of that, because we're all trying to figure out whether a.i. is going to make anybody any money. >> that's not microsoft, by the way. guys >> i tried that. no one bought into mana. it didn't work didn't have any resonance. not like the magnificent seven >> if you look at the top eight, jim, you're looking at a third of the s&p the concentration remains pretty elevated here. >> the concentration has been joyous, fabulous even enterprise software campaigns are doing well mongodb is up every day. service now reported blowout yesterday. no, it hasn't reported yet what i'm saying, david, is we are in a mode, salesforce, they

announced their einstein chat formation. david, i'm taking numbers up >> okay. but i still want to come back to this idea that regardless of what netflix says, you think the stock is going to continue to g up that seems a bit of hyperbole. >> what i'm saying is that this notion of a couple of stocks that we have found a reason to like them no matter what is a new thing. >> but they're going to have to give you more of a reason to like it after the close, aren't they >> yeah. yeah i don't know i mean, it all started with nvidia it started with nvidia with just the -- when cathie wood shouold it no >> masa sold nvidia. wishes he hadn't done that mr. a.i. himself they owned a lot of nvidia at softbank and sold it all years ago. >> it was another check box a.i. the people who are supposed to know tech best bailed on the

nvidia, and nvidia is the reason why microsoft can -- that product is based totally on nvidia meta's products are based on nvidia when you see what salesforce is doing, it's based on nvidia. service now. cadence. it's a lot of companies. >> right >> i don't want to be all over the map. i'm just saying that you have a couple of charmed stocks here. >> you do. >> all i'm saying is that they're charmed. >> until they're not >> right, but right now -- >> what changes? what is the -- what changes the sentiment? >> i think that historically, what's changed it is not that one of them disappoints. it's that we get inflation data that says it doesn't matter. but you know, we got uk inflation data this morning. it's great we ran a feed out of uk this morning, a really terrific one, the 5:00 a.m., and they are just cheering a level of inflation that's laughable in this country. our inflation is so fabulous in

this country >> well, i mean, it's all relative, but when you're under 8% year on year for the first time in a year, you're going to celebrate it how about canada yesterday >> yeah. doing okay i'm thinking about what they did with their defense budget, which was terrible >> why i didn't see that. >> well, the defense budget in a time when we're fin a land war, inside ukraine, they're focused on diversity i think diversity is important >> you're talking about canada now? >> yeah, but i think they should be focused on boosting their nato percentage. >> i think they should be focused on putting out the darn fire >> unlikely to happen until october at the earliest. >> well, we can go there >> i just -- i mean, every day, we see signs of it here. >> it is -- it's -- this group bottom, the group that we're talking about, when we feel inflation peaked, it's more of a macro play, okay >> all right >> what? no >> no what i said, all right. >> it's more of a may jassy com,

do you know anything of course we're doing badly. do you want that apple, tim cook comes out and says, we stopped selling the 14. >> it's all been a hallucination, they could say. >> it's based on interest rates. when interest rates peaked, everyone fell. enterprise software, you want to go mongodb i'll go toe-to-toe with you. these companies, has anyone noticed these companies have all doubled? david? mongodb. >> mongodb >> it's on fire. >> all i ever think about is "blazing saddles" when you say mongo to me. i'm sorry. i can't help it. >> do you know if you were running "jeopardy!" all the questions would be about aaron rodgers. >> by the way, that should have

been me asking that question what can i tell you? life's not fair always you got to live with it. >> schadenfreude there >> i was proud of you. there. >> you look so great how many years ago was that? >> i think that was three years ago. >> was it really >> at this point >> you crushed it. what would you have used would you have made mine a daily double >> i would have known -- i would have put real feeling into that question, that answer, when i read it. >> that's what i wanted to hear. >> real feeling. >> that's what i wanted to hear. i wanted some camaraderie because i was thinking this is just another day where you're going to tear me down. >> no, i only tear you down to build you back up again. come on. >> do you? >> yeah. >> build me up next block. >> carl, we got so much to cover. >> we'll get to calls on cisco, at&t of course, ftc, d.o.j., a lot more on microsoft activision futures steady after the dow's seven-day win streak, and that

looks to continue this morning "squawk on the street" is back aine.in mut what if buildings could tell you how they could be more efficient? i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights. what if we use ai-driven insights to pinpoint inefficiency? yep. and act on it. saving energy, money... ... and emissions. yup. that's a big one. now you've built something better for everyone. that's the sustainability solution ibm and a global real estate company created. what will you create? ibm. let's create.

let's move on to regulation, certainly regulation of mergers in the digital age the morning, the federal trade commission and department of justice are out with a draft update of their merger guidelines both agencies say 13 of them explain how they identify potentially, well, illegal mergers, and they're aimed at protecting competition, they say, in the modern economy

one of the guidelines is "when a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform or to replace a platform." here's jonathan kanter on "squawk box" explaining ha that means. >> 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 and that's why we've constructed these guidelines, to build around the same precedents that courts are applying. to us, that is the best way to be faithful to the law >> of course, the question continues to be, you can bring the guidelines, you can say you're being faithful to the law, jim, but it doesn't mean that a court and a judge are not going to see the law in a different way, and we certainly saw that in the case of the ftc

vs. microsoft where that was completely thrown out by judge corley, and even the ninth district was unwilling to give them a stay. >> to be fair, bobby kotick has been saying this all along >> yes >> now, david, page 18 and 28 of this document are rather extraordinary. this is the document from lina khan and assistant attorney general kanter number seven, mergers should not entrench or extend a dominant position i cannot think of a single merger that's ever been done in our history of our nation that did not try to entrench or extend a dominant position page 28, mergers should not otherwise substantially lessen competition. i can't think of one that could lessen competition the reason is, i don't think that they think that vertical acquisitions are any better than horizontal that's the big change. we have historically, in this country, felt that vertical acquisitions should be blessed this is the end of the vertical

acquisition blessing that's what i think is the big news here. >> i think that's an important point. i think it's something the ftc, we know, and the doj have already been focused on in terms of the actions they brought or even when it comes to the second requests for information and things of that nature. so, yeah, and that would be. they don't see it, as you point out, when two competitors in the same area are getting together, that has been a concern. but here, we're talking about -- this companies that nothing to do withwhat you do in your business, and yet they believe that it would. >> right but this is -- this wasn't discussed enough i think this is a very 21st century way to look the a mergers. and you go back to the google deal where google bought double click. that was vertical. and yet it turned out to be horizontal once you got into the development of the web so, this is a very sophisticated analysis of what can happen, why you need to block vertical deals. >> the other issue is, i mean, a lot's been made of the pace with

which this administration is getting federal judges approved, and will there be a point at which some element of judiciary begins to agree with this sort of policy framework? >> i think that there's a possibility that everything could be looked through a prism of -- let's take the cloud, okay we didn't really know the cloud before so, suddenly, we have the cloud. chatgpt. when you don't know what those can ultimately look like, you should veto, because you don't know whether, in the end, these are going to be used to be able to come upwith a monopoly that you never dreamed of what's most interesting is that it would block amazon. it would block everything that amazon -- >> sorry, do you -- does this undo any of the notion we got a couple weeks ago that there was more clarity on m&a regulation >> now there's total clarity don't bring any deals. >>really >> just forget about it. >> this explains why you and david see a split. >> right, and what they ought to do -- most of the advisors say, listen, there's an 80% chance it will pass. they should now say there's a 20% chance

if i were advising m&a -- >> it's designed to chill things, as is everything they've been doing so far. it's designed to keep companies from moving. that said, companies are now starting to move regardless, jim. and they are going to do things. and they are going to be unafraid, i think, to some extent, of taking them on if they have to >> microsoft showed you they may not have any clothes >> that's right. >> the seminal case is the assistant attorney general's case against alphabet. what that says is, look, you never thought that what they have been buying would turn out to be creating the monopoly in advertising. but when they put them all together, they have one. and that should never have been blessed. >> guys, real quick on microsoft activision, we did get an extension on the merger agreement until the middle of october. the expectation is they're going to get this done as soon as the next 45 days in the uk if, in fact, it goes past august 29th, the reverse termination fee increases by half a billion,

and if it goes another month after that, it increases by -- or even less, another 15 days -- it goes up to $4.5 billion that is the reverse break fee. they do get 99 cents, activision, to pay you can see what's going on there. it's all about that. bobby kotick is going to join me next hour right here at the new york stock exchange. >> i tried to promote that twice during this block, and you wouldn't take the bait >> he's coming down. he's on his way. >> it was the biggest win of anybody, this guest. twice, i've tried to give you -- >> we'll talk about the quarter, the decisions he's made to extend the agreement and the consideration he got for doing that >> it will be very big everybody was asking, what's going to happen? and you have it. congratulations. >> thank you >> it's good >> it's all right. we'll take it. >> there's a lot of people on the move this morning. >> lot of moving parts >> holy cow. >> we got other things, potentially, we can't even tell you about. >> i've got stuff that will blow

your socks off >> it's a secret take a lathe pook tremarket "squawk on the street" is back in a moment. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative

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goldman's desk says some of the most pronounced flows yesterday were covering beaten-up telecom like verizon and at&t in the leader position this morning premarket. got a bunch of news on some of this lead sheathe cable, another downgrade from argus don't forget, you can catch us any time, anywhere, just listen to andolw flothe sq"squawk on e street: opening bell" podcast.

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here we got two and a half minutes before we get to an opening bell the next 30 minutes are going to be jam packed. >> when lilly came out with alzheimer's, everyone got very excited, and then may came out with monjaurno for weight and diabetes, and people went nuts vertex has done remarkable things, but they have a non-opioid pain innovation you know that the holy grail would be a way to be able to stop pain without addiction. we do not have that right now. >> no. >> vertex may have it. david, i can't tell you how much this is worth, but some say it's worth more than $5 billion i think that's conservative. this would be the holy grail of medical. >> let's not forget there's a company that said its opioid did not promote addiction and that was a lie. >> they were liars >> yes >> and there's a -- "dope sick"

unveiled that, and purdue is disgraced, and i'm so glad their name has been taken down from every place that i have ever been to of any renown in the northeast, including my alma mater. >> sadly, we still have a crisis in our country when it comes to fentanyl, 300 people dying every day. >> that's why i think this is important. if they have it, it's never been found. maybe there's some long-term hope for people with tremendous pain i pass it on as being something that in this news flow is going to be overlooked and shouldn't be it's terrific if it's true so, you see that i know so much news -- >> by the way, this is a $92 billion company, jim quietly, it's bigger than citi >> what they've done for cystic fibrosis is incredible i told you citi was irrelevant >> it's as big as at&t, which we will get to in a moment. stock is going to be up.

futures have been climbing through the morning. we mentioned housing starts with a miss the two-year got down to 4.7% or so ten-year, 3.73%, adding a little more fuel to the bullish narrative as this rally continues. >> we need more homes. we need more homes >> let's get to the opening bell at the big board, it's physicians realty trust, celebrating its 20th listing anniversary. former governor of wisconsin doing the honors at the nasdaq, it is beauty company, oddity, celebrating its ipo today. >> oddity is very important because that's part of the repertoire of what goldman-sachs says could be the green shoots profitable company profitable company israeli company. >> yeah. >> and i suspect it will be like cava, very well received this is the beginning. the real green shoots are not

m&a, although i know that people are gearing up to m&a. i think the green shoots are ipo. i like to bring, you know, we run an investment club and i talk about the good ones, which is terrific. i want to talk about a bad one i invested for the club in johnson & johnson. i believed them when they told me that the legal cases they had, they have a leg up on i believed them that they felt they had a leg up onn an $18 million case in alameda. let's say i was ill advised to believe it they lost. when i talked to plaintiffs' lawyers, they were laughing at me for thinking that j&j had any case at all. this is what i talked about yesterday, which is the notion of the truth being abstraction they lost, i think it's going to hurt them and their ability to bundle cases and pay off the plaintiffs they would disagree with that. they've disagreed with everything i've said why? because they're hopeful. and i think that there is no place for hope when it comes to the plaintiffs bar and finding

things that might have killed people >> yeah. >> and david, that's why i bring up at&t. >> i know. j&j shares are down less than 1% right now, but to your point, the stock has done nothing for quite some time. it's down 8% this year >> how about awful >> there's a look at at&t. if you haven't seen it, the company basically responding in a voluminous filing in the eastern district of california, u.s. district court there, where they were dealing with litigation having to do with these lead-wrapped cables. and there's a number of different developments first of all, they claim "the journal's" reporting depends on environmental testing commissioned by "the journal." they say the sampling was not performed by disinterested, objective experts but by individuals with clear agendas and conflicts of interest, some, they say, even the same individuals who prompted the plaintiff in this particular case they were going to remediate some cables around lake tahoe, i

believe it was they're choosing not to. they're going to keep them in the ground and see what the impact is and try and figure out the environmental impact they go on from there, jim, in an -- in addition to the filing, talking about, well, not just their issues they have, they say, with the "journal's" reporting and their failure to disclose, relying on testing they say was funded by advocacy organizations. ju "journal," by the way, denies that in their own story, that story right there. and then we're starting to get to some estimates. jpmorgan's out analysis of removal costs for these lead-clad pipes. aerial/underwater cables could be 2 to $4 billion underground, that adds another 4.5 to $9 billion. it could get up there in terms of potential cost, but they're quantifying the costs at at&t. verizon, doing the same.

much smaller footprint for verizon. remember, it's at&t that has by far the largest single footprint, given its predecessor companies. and there you can see. nice move in both stocks, higher they have been punished of late. but jim, you raised j&j as perhaps analogous and one reason why these stocks have been down so much, despite really what, frankly, is a lack of any significant information in terms of understanding their liability or even the environmental degradation that is coming along with these lead-clad cables. >> you're absolutely right and i want to make this really important point. everything you said was true and it doesn't matter. it just doesn't matter they can sit there and tell you that the liability is this, the liability is that. look at these cases that are being brought. gorsky came on "mad money" and said, there is no asbestos in town $8.9 billion later they offer,

in addition to how many billions they paid, and they're still saying the same song and dance and i went and stupidly believed them >> okay. i get it >> i went to law school to get stupid i'm a little upset >> do you still own j&j in your investment club? >> i admitted to owning j&j. i admitted to being -- >> what makes you sell something? you're allowed to do that, aren't you >> yes i believe j&j is a great american company i believe they'll see through this >> okay. >> i am just saying that they need to be a little bit more realistic in what they say because i am telling them that they have a judge that they -- if they don't get this deal, this $18.9 billion settlement, they got a judge that it goes to and they will lose there because the judge is against this. what i'm saying is that when you have to -- this is my point. when you're -- you have a great company, and it's in the hands of a court, the courts are not

favorable to rich american companies who claim that they have -- that they could be hurt very badly they're not. look at 3m look what happened my dad worked for 3m he sold scotch tape. he'd be rolling over in his grave about this stuff >> i was just thinking about 3m, j&j, tee, old blue chip names that we used to talk about, widows and orphans, high dividend yields. >> we talked about doing that for "mad money." what do the widows and orphans do with the rise in at&t i think j&j has a better balance sheet. it has a aaa balance sheet, but i think that people have to recognize that once the plaintiffs bar senses a win, if they can get a win, they can recruit clients. david, do you remember round-up? >> yes, of course i do of course i do led to one of the worst deals of all time, monsanto's sale. >> j&j, i stick with it. it's up -- this is not what

matters. they have to win in this giant bankruptcy case. what i'm saying is that a lot of the plaintiffs bar already came out today and said, if you can get $18 million for someone where it's not that great a case, then don't be part of this giant settlement that j&j has offered. j&j's not going to say that. they're going to say, listen, it's fine. >> monsanto sold to baer we've got so many things to hit. >> i'm sorry i was a little agitated there. you raised the point, why shouldn't i have sold it the answer is i still believe in j&j, but i think that you're -- i'm listening to you and i think you offer a very good perspective that's all >> all right, thank you. all right. real quick programming note, because we've talked a lot about these merger guidelines. lina khan, the chair of the ftc, will be joining us in the next hour on "squawk on the street," looking forward to having her. as jonathan kanter obviously already appeared on cnbc earlier on "squawk box," squdiscussing

these new merger guidelines. we've got to hit carvana stock had been up as much as 40%, now up 22%. they essentially restructured a lot of their debt, and they have reduced their cash interest expense significantly as a result of that you've got apollo, one of the larger creditors there that's agreed to this, so they reduced their total outstanding debt by $1.2 billion they retire about 80% of their notes that were due in '25 and '27. they lower their interest expense by $400 million. and all unsecured notes as a result now are being exchanged for new first lien debt that's secured by carvana assets, and everybody loves it remember, we had this company close to death a number of times. they have pulled themselves out. they are no longer in even mostly dead. they're quite alive, jim >> not only are they quite alive, and just to flesh this story out, i have mr. garcia on

tonight because i think this is a rather remarkable thing that he has done. ernie garcia, this company was over, and if you look at where the stock traded, it traded at $3 in december what happened here is that the meme people seized it, and they took it higher there's 43% short, okay? so, people are betting -- this is gamestop number two, except for garcia actually took advantage. 35 million shares. >> there's a new share -- that's the key thing. >> new sheriff >> there's a notes exchange, and that reduces the indebtedness overall, which obviously has the effect as well of reducing their interest expense, which is a big drain on the company >> which means, per car. it hurt them $200,000 per car. that is going to be phased out and the model might work again >> how's the core business doing? >> better than expected. >> okay. >> what i like about this is that this is a company that

basically looked at the -- looked down the gun barrel, stayed in the game, did the deal with apolo, managed to put out some of the higher debt, and then david, comes out smelling like a rose because now the shorts have to cover on the $35 million because the short cases went away. by the way, they are humble. this is not like the old garcia where he would be talking about the vending machines like it's soda no they are humble and they are smart. >> worth mentioning, apolo's here because they were obviously a significant part of this restructuring, and apolo itself is a stock, all-time high. >> can you believe that? >> stock's up 56%, talking about a $47 billion market value now on apolo these alternative asset managers are such a huge player in our capital markets these days >> here's what i would say about these guys they all own pieces of paper they all own companies that can come public, and that is why i'm so bullish about goldman-sachs, and bullish about morgan

stanley. these private equity companies have not brought public a lot of what they own. >> they come up in so many different ways, including if iger does move ahead and sell abc, for example these guys own a bunch of media assets >> i just threw out something. >> i'll throw out lots of stuff. what do you want to talk we got vmware getting approved by the cma >> that was very important >> that stock is up sharply as well remember, the cma, the uk regulator we've talked about for the last i don't know how long when it comes to activision's availability to be sold to microsoft, the cma was reviewing broadcom's acquisition of vmware they said okay maybe microsoft helped them there a little bit >> shouldn't be down that's a great situation >> still have the ftc to go here still have china it's possible the ftc might sue. lina khan, who will join us later, i doubt will have much to

say about that, but maybe we'll ask. it's not done yet. not done yet but certainly a positive sign for vmware holders, including michael dell. >> right, right. david, we have not talked about constellation yet. and i think that this is a deal where, by the way, bill, the excellent ceo of constellation, has come about and made it so that they have added two board members, two very smart board members, added by elliot group they want more direction they want a little bit more financial discipline, and they want money spent on the brands that are doing well. there's been some money frittered away on canopy that was very unfortunate. that was a previous group. once the two classes flattened into one, there was elliot, and i have got to tell you, there's so much upside this is -- i just trashed myself for j&j to the point where i'm wearing a hair suit, okay? burlap i usually garden this weekend, throwing the burlap on

this is a really terrific deal because these are -- this is a company, a beer company, in desperate need, i think, for direction. on whether to spend the money on victoria, whether they should put their money on pacifico, the beer that 27 to 30-year-olds want do you double on modelo, try to get into convenience stores with corona extra >> what do you make with elliot's involvement here? >> they recognize the capital is outstanding and it's been frittered away >> this has also come up occasionally as, given again, one class of stock, would they ever sell it that goes back to our larger discussion about mergers and how difficult certain things can be. this was a huge beneficiary of antitrust action >> they got the modelo franchise and the corona franchise when the bud deal was done. i think when you look at the merger guidelines, the opportunity of constellation brands mergen with anyone other

than my mezcal group -- >> i could put a deal together i got some friends >> i know you've got big friends. >> i got big friends they'll write big checks for you. >> he talks to the who's who i talk to the, you know -- >> you talk to the what's what i talk to the who's who. >> next thing you know, you'll be riding your motorcycle in lake como year round, jim. we'll miss you >> or i can ride my motorcycle in silicon valley and be jensen huang 2. >> in terms of broader market, we did get another increase. credit suisse goes to 4,700, year-end goldman cut their recession odds this week. atlanta is looking at q4 what is in the way >> the only thing in the way would be some sort of shock. i hate to use that black swan stuff. that's all these really smart people that don't make you any

money. i find them to be invaluable for nothing, but i think that if inflation were to go the other way, i think that you would see a lot of these companies reverse. i don't see any of the majors. i don't see a service now doing badly. i think that salesforce is having a great quarter could amazon disappoint us not this quarter, because it goes to next quarter alphabet's put together pretty cogent group of chatgpt assets it's a nice time, david. it's just a nice time. it's nice. >> it's nice to be nice to the nice >> look at this today. do you know that we had a scare in the managed care companies? it was all led by when united health said they might have a higher medical loss ratio than humana put out a report saying they could too this was that moment when pickleball -- it's absurd -- pickleball was spiking >> the move in united health up another 2.5%.

>> elevance today said it's not a problem. so, this is a group that's come back from the dead so, i find these -- don't forget the industrials are doing incredibly well, and they're going to benefit from all the infrastructure money look at caterpillar, which bears were saying in 2006, was about to really have one of its nine lives short. and here it is up. they're sold out for everything involving infrastructure everything's i-95 in philadelphia as far as i'm concerned. >> we haven't mentioned cisco, upgrade from jpmorgan. it's had trouble getting above $52. >> people feel they have not benefitted as much and the melanox acquisition that nvidia put together boxed them out. but i think the chuck robbins telling a good story, there's a lot of business to go around >> the lead story in "the journal," tech stocks are rising manically, spilling into meme stocks, the cryptoverse is enjoying a resurgence, the market looks like it did in 2021

right before stocks entered a deep slump that's "the journal's" lead story this morning >> aren't they just a little ray of sunshine? you know, look, if your job is to keep people out and not allow them to make money, "the journal" has been very consistent, and i think consistency is a remarkable hobgoblin. >> it was a different stage of the rate cycle and the inflation cycle for sure >> these stocks all turned their direction when we realized that inflation had peaked that's all it is they were going down, and they -- most of these companies pivoted toward making money, the tech companies, where what they cared about was great growth and it's been a remarkable transformation i want to poke a hole in it. i thought goldman might be a great place to poke a hole it didn't allow you. i didn't think that gorman in his swan song would come out and say, things are really bottoming, but they did. you're getting good commentary from seasoned business people. i want to be as negative as "the journal.

>> isn't a lot going to depend tonight on tesla, whether it's a.i. cybertruck, deliveries, margins, and what musk says about macro. he has not been a constructive macro voice. >> i agree with you. he's a wild card he's in sell mode when it comes to this cybertruck and he's very bullish. what are they going to do, say he doesn't know what he's doing? i backed ford, and what happened same day i backed ford, ford cuts price cuts price i

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>> let's get to jim with stop trading. >> what could destroy or bring down this market? i'm sitting here reading yesterday jb hunt's conference call and the numbers aren't good. shelley simpson, the president, says we are in a freight recession, so i say, there goes jb hunt. so, the difficulty i have is, if you throw everything you would normally short a stock on, buyers come in. this was not a good jb hunt call. they miss the numbers. they are a huge freight company. the problem here is even when they are bad, people want to buy. so, a green shoots market.

if you are negative on the market, it's very discouraging. >> yeah, imagine if we didn't get these new shares. >> what does jp hunt have to say to take their stock down? there wasn't anything on the call that was positive. it was really disaster. three firms upgraded. tonight i've got carvana, classic case of so bad it's good, and i think ernie is going to tell a very good story and, barbie! the barbie movie. they only make money cash they make very little off of the actual movie where they make money off the ancillary but eight years ago when he took over, he told me he would eventually get in the moviemaking business because that's what he's in and, bingo, barbie. >> barbie. what a show. i got to 1/10 of what i wanted

to get to. >> not done yet though. big hour on top. lina khan , bobby kotick, 4573 new high for the ye. ar don't go away.

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>> good wednesday morning and welcome to another hour of squawk on the street. i am sara eisen with david faber. this afternoon two massive interviews including lina khan following the ftc and doj's guidelines on brand-new mergers and acquisitions. in the latest from microsoft and blizzard from the man himself, bobby kotick. take a look at stocks in the early action. we are up almost half a percent on the s&p 500. gains on the week now one of the half percent for the snp. today, action being led for utilities and real estate.

earnings continue to fuel the action. the only two sectors lower our information technology and materials. the nasdaq is up a third percent. here are three big movers we are watching. look at shares of carvana this morning. the online auto retailer announcing a new deal to reduce total debt outstanding by $1.2 billion and saying they are going to sell $1 billion in shares to shore up capital and restructure operations. up 35%. under pressure, the ceo warning of a cautious consumer on the call saying they expect a slower recovery than the straight expects. and finally we hit goldman sachs. earnings for share, mrs. estimates, stock is a little bit higher and this was kind of a messy quarter for goldman and i think the ceo, david solomon, in an interview on the show, did

a good job telegraphing the messiness. they are dealing with legacy bounce issues and unloading the consumer business. the green sky deal. and of course, the real estate issues with commercial real estate and others that he actually had warned about. if you strip out some of those items, the performance is actually fine. at the our oe which is the industry -- how you measure it. 9.2%. if you take out some of those ugly, messy items and that's higher than what morgan stanley reported yesterday. >> still 4% on a headline basis. second-worst quarter since solomon became ceo. worst nonpandemic quarter in seven years, but they do say even when investment banking performing at the lowest level, in almost a decade, they feel pretty good about capital markets. feel pretty good about headcount. don't seem to be taking major action on headcount other than

performance related measures, so, maybe not quite the echo of morgan stanley beat for beat but some of it. >> the outlook is so key and if you're talking about green shoots in the investment world which we heard from james gorman yesterday and some of the other banks have been talking about it, goldman sachs and i expect he will hear solomon talk about that in this hour. they are a huge beneficiary of that and deals are starting to percolate end-of-the-year. >> david's commentary to date has not been particularly optimistic, i would argue. >> on the economy. >> on the economy, broadly, and even specific to the business of goldman sachs. they were a leader in m&a advisory. we talk so often about a lack of ipos and we started to see an opening in that window but generally he has not been as positive as others on the economy. even his own economist has been more positive on the chance of a recession. >> which he talked about a few

weeks ago with me. solomon. he said they've been right so maybe we can get away with the soft landing here. but the comments coming in on the caller that specific to investment banking, and we are hearing it as a theme, they are starting to see some action that, i don't know, bottom is a strong word but that there is some light at the end of the tunnel. >> i'm hearing that too from the practitioners i speak to. you never know, given the regulatory environment, we are going to get a lot more on that when we speak to ftc lina khan shortly. but there is hope right now. and that is helped by the stock market. you've got s&p up almost 20%. number one on the list of things that gets people to do stuff and gets ceos to think about doing things is confidence and your confidence goes up. >> it's so true. and the retail investor is really piling in here. we got the latest results from

the american investor survey which basically gives a snapshot of how retail traders are feeling. a chart of the gold bear spread. the difference between those expecting the market to go up and those expecting it to go out and it's been up and that's the longest streak since 2021. the cautionary side as well as retail starts to pile up and people get more enthusiastic and bullish on the markets, that tends to be when there is a pullback but you can see the participation is there and we talked to the ceo of schwab about this yesterday when he joined up with us off earnings. here is how he describes sentiment. >> what's interesting about june is even as this cash realigning fell to the lowest level it's been in many months, part of it was because clients are now moving back into the equity market so that's a good ing. it's not simply clients moving money into something in cash to base higher yields.

they are back in the markets and we saw in the aggregate for the second quarter, buys work 20% higher than cells. our clients were showing some optimism. >> 20% higher than cells on buys. it jibes with the sentiment surveys were showing and with what we talk about every day here. >> with the first peak since march for schwab, j.p. morgan today adds to the focus list. they go to a 95 implies 44% upside but to your point, the round hill mimi etf, 52 week high today, and small caps performing the s&p today. >> the bulls wanted it to even out. i think the regional bank's offering reassurance across the board is also helpful because there's always some comments about the state the bank is in.

we will talk to citizens bank later in the hour, but also a quote on the economy from synchrony financial. take your pick here, but overall it's been okay. here's what i picked out. i think the consumer is still strong, they are still spending, savings are coming down a bit but they are till trending above 2020 levels. that's good, so everything we are seeing on the consumer is still pretty positive. with that said, we are still operating cautiously. >> i do have some relief in the uk today as we finally got down first time in a year. 79 prior 87. a dramatic improvement but nowhere near what the u.s. and canada have been putting together. a sigh of relief. >> a huge sigh of relief. the expectation was more like 8.2. so, there is some celebration of lower inflation there. but clearly bank of england still got work to do. >> i want to get to some news

we've been following this morning that involves the federal trade commission and the department of justice's antitrust division. they released a long-awaited draft guidelines on how they view enforcing merger law. joining us from the white house is ftc lina khan. good to have you this morning. we were joined on cnbc earlier by john at the doj but let's start off with what are essentially 13 guidelines. your agencies have been delivering the so-called guidelines since 1968. what distinguishes this latest version from the others we've seen? >> it's so great to be here with you. as you noted, the agencies have issued guidelines since 1968. of course, our markets and our economy has changed significantly since then. it's been long-standing practice for the antitrust division and the federal trade commission to periodically issue up dates and revisions to the guidelines to make sure they are fully up-to

date and reflecting the reality of how businesses are pursuing mergers and competing in today's economy as well as the most up-to-date state of the law. >> and what is the process from here? specific to how does this actually impact the law and the way it's going to be viewed by the judges who ultimately decide whether when you bring a case the ftc is correct or when they say, as was the case in microsoft, when they say, we don't believe you. >> these guidelines reflect the law. if you look through the document you will see a lot of footnotes to appellate court decisions and supreme court decisions. we read through every litigated merger decision that resulted in a decision from the federal court of appeals and the supreme court, so this document is designed to make sure everybody is on notice about what the state of the law is and right now we put out these draft guidelines. we will be collecting public

comment for 60 days. we are eager for public input. we got 5000 comments when we initially set off on this and we look very closely at that input and we will be eager for additional comments as we look to move forward. >> how long is that period of public comment and when can we expect these to be put in effect? >> it's 60 days so, at that point we will take stock of the input we received and remain open-minded about what things would look like after then but there is a clear need to be revising the guidelines, to make sure they are fully addressing the realities of digital markets and the realities of how firms are pursuing m&a in the current environment and we will be keen to get that input. >> obviously important for regulators to reflect the current reality but something that's difficult to do is predict what's coming him a particularly in an economy as dynamic as our own.

what gives you confidence that the guidelines are putting out won't be outdated as a result of changes in the market that seem to occur so quickly? >> i think it's absolutely true that enforcers need to be reviewing the guidelines with an eye to the way in which businesses are pursuing m&a and the ways in which our economy is actually functioning. we are confident that we've got a lot of input and these guidelines are really addressing some of the key issues we are seeing across markets. congress asked us to enforce the merger laws and that is a predicted exercise. as a result the inquiry we undertake is a risk assessment. we are assessing the risk that a merger may lessen competition or create a monopoly and that is what congress has instructed us to do. >> my colleague, jim cramer, was talking about having read the doj guidelines along with your own, that it seemed to him that vertical mergers under this administration or under these guidelines is something that is for boat, so to speak.

what is the view overall of vertical mergers which have not received the same level of scrutiny is horizontal deals. >> we look at every case on a fact by fact basis and look at specific cases. there is precedent on the books talking about non-horizontal mergers so we looked very closely at that when putting together these guidelines, we noted that historically the courts have recognized a few ways in which vertical mergers can be lessening competition, including by giving a company key control over critical inputs that its rivals depend upon, but that's just one way. there are a set of other ways that these types of mergers can risk lessening competition and the 13 guidelines are intended to lay that all out very clearly. >> in the eu, there is a

willingness to accept behavioral remedies for vertical deal. there's a sense that the ftc will not accept that. is that the case or are there situations where you would accept a behavioral remedy and if not, why not? >> we consider every matter on a case-by-case basis. our obligation is to preserve competition and make sure that mergers are not unlawfully lessening competition. if parties are putting before us remedies or potential packages that they claim would do that, we look at that very closely, but at the end of the day, our job is to protect the public and we need to make sure that the public is not bearing the risk of a failed remedy. so we look at history, we try to make sure we are understanding how previous remedies have worked out to make sure that our approach is fully protecting the public. >> do you have the resources for increased merger reviews at the same time that litigation is rising? >> another change that we recently proposed was updating

the information that merging parties have to provide us when they are proposing a merger and the goal is to make sure that our agency is able to conduct these investigations much more efficiently and much more effectively, so we don't have to waste time going back and forth getting information that the parties already have on day one and that we need in order to be able to make our assessment about whether a deal does or does not raise concerns. so i'm hopeful that proposed change, if finalized, will also ensure that we are able to pursue investigations efficiently and effectively, even given limited resources. >> there are threats of budget cuts so i'm wondering what the resource allocation looks like and what internally the ftc looks like after you've had some significant losses, including the microsoft activision one. >> we are bringing cases, when we think there is a law

violation, we've been thrilled that we've had a whole set of success including with deterrence which we hear a lot from our participants about the deterrent effect and as a law enforcer you always want to be making sure that firms are in clear notice about what could constitute a law violation and are staying far away from that line. we were grateful to receive a budgetary increase last year. that has enabled us to be growing our ranks. we are still hiring and we are grateful for those additional resources and the additional work we will be able to do with them. >> deterrence are important but when you do lose, there's questions specific to microsoft. you lost in the u.s. court. why not drop the action from there? why seek appeal? why are you continuing to follow along with the alj proceeding? earlier, mr. kanner said he believes in our judicial system and will abide by judicial systems. why would you continue given

the court has already been heard from with this action? >> we fully believe in our robust system of judicial review. i won't be able to comment on specific matters but generally, if we get an adverse decision from a district court, we look very closely at it to determine whether we think there were any errors of law or misapplication of law that we think weren't appealed. so those are the types of assessments that we undertake as we make these decisions. there are a whole set of instances in which the ftc has not moved forward with an appeal but in the instances when it has, sometimes quite successfully, it's always because we believed there was a misapplication of the law or further clarification of the law that needs to be done and that's usually what drives those decisions. >> how much is any of your decision-making driven or figures into your decision making? what goes on at the eu or even

the cma? i asked that because there was a lot of back-and-forth that would appear based on a freedom of information request between the ftc and cma involving microsoft and activision. how much does what they do figure into what you think about what you do? >> i was very fortunate to inherit an agency that is seen as a leader globally. during the bush administration, the ftc launched an office of affairs so over a decade the ftc has been entering into cooperation agreements with enforcers around the world where there's been strong support historically from the business community and encouragement from the ftc to be working closely with other enforcers to ensure what some folks call harmonization. that's the state of affairs. the ftc works closely with other enforcers but at the end of the day, we make all of our

determinations based on the facts and based upon u.s. law. we always use our independent judgment when making these enforcement decisions. >> why was there a need to talk to the cma about activision and microsoft? >> there are various cooperation agreements in place. some of them going back to the bush administration, that layout appropriate processes. sometimes it's businesses that want to encourage the ftc to be talking to other enforcers to ensure more streamlined review and more efficient information sharing. this has been a long-standing process. i'm grateful the ftc is viewed as a leader internationally and all credit goes to our terrific staff at the office of international affairs that, for many years, has been insuring that we are sharing our experience and expertise around the world. >> you mentioned your staff. i want to reference a letter from what was then the outgoing commissioner christine wilson. she was very critical of you and of the -- what she said was

dissatisfaction amongst staff. how do you respond when she says your leadership has led to the departures of many experienced personnel, causing notable brain drain and observe the tarnishing of the ftc's reputation and stimulation of efficacy. >> we are fortunate to have extremely talented staff at the ftc who, day after day, are fighting to protect americans from unfair methods of competition or unfair deceptive practices. we work hard to make sure the ftc remains a great place to work. i've been thrilled we've been able to recruit a whole set of new folks. we just launched a new office of technology and got 600 applications within a matter of days from data scientists, and data engineers, who are eager to bring skills and talents to

the ftc. we look forward to continuing to do that type of outreach and engagement and make sure we are fully equipped, in-house, with the skills and talents that we need. >> back to the principles that were announced today, one is mergers should not entrench or extend a dominant this position. some people want to take me back to a decision in 1967 at the supreme court involving a proctor and gamble, where this theory was outlined. give us more sense as to what that means when you say should not entrench or extend a dominant position. >> there is long-standing case law that seeks to ensure that mergers are not being used to entrench dominance in ways that are basically maintaining a monopoly or creating a market where other firms also have to significantly grow in order to be able to compete.

you will see in the document, there is significant citations to case law that really layout what some of those legal tests and legal analysis look like, so we will be faithful to the case law in the books. >> another one that i noted here, a merger when it's a part of series of acquisitions, the agencies may examine the whole series. that seems to apply to private equity which can roll up companies and then combine them. what is your view on that and how aggressive will you be in reviewing transactions that, in the past, did not get a second request, let alone an objection from the ftc? >> these guidelines are agnostic as to particular business model but we wanted to make sure we are being clear eyed about business trends that we've seen in the markets. one trend we have seen is rollup strategies. instances in which a firm will undertake a series of

acquisitions, no single one of which may raise legal concerns but in aggregate, there can be can significant consolidation of a market. we wanted to make sure we put folks on notice that those types of instances can warrant legal scrutiny and concern. we have applied scrutiny recently to those types of rollup strategies. >> you mentioned that the new guidelines require deals to provide new background information and may lengthen the times. i'm wondering how you factor in consumer benefit in that scenario, because any delay or cost could influence the consumer, harm the consumer, or hurt the economy. did you think about that? >> absolutely. congress passed the antitrust laws to promote fair competition and protect the public, including consumers, from unlawful mergers. so that is a northstar that we followed when undertaking this

work. as i noted, the goal of the additional information that we would be seeking is to make sure that we can pursue our investigations more efficiently and more effectively and on the back in the, that can lead to a more treamlined process. >> you've talked in the past about the new way that you are approaching trust is designed to enhance innovation, which you believe may be stifled as a result of the presence of these large platforms. where are we in that effort and how are we going to see it show itself through some of the actions that you've already taken and that you might take in the future? >> a core pillar of america's economic success and the reason that we've been able to be the home of so many breakthrough innovations is the fact that we have promoted free and fair competition and insured the markets are open and if somebody has a good idea and is popular, that they are able to compete on their merits, so we are confident that if we

vigorously and faithfully enforce the antitrust laws that will be best in ensuring that we remain a great home for innovation. >> there are a lot of people that take issue with the positions you've taken, and there is some questions about the morality of the agency run. you are attacked regularly. most people didn't know the name of the ftc chair until you came along. you've taken fairly high profile. how would you deal with that? and how would you characterize morale at an agency people i speak to say is not good? >> we are fortunate to have dedicated, committed, talented public service servants at the ftc who have been totally -- core to the dna of the ftc, because we are charged with enforcing the antitrust and

antimonopoly laws, sometimes we will be going up against entrenched, very well researched interests, and that can provoke certain types of higher, but our northstar is protecting the public, consumers, entrepreneurs and startups. as part of this job i hear regularly from the business community, and what they share with me is that one challenge they face is that all too often, markets are locked up by incumbents. incumbents are engaging in monopolistic or anticompetitive practices in ways that are not allowing them to compete on their merits so we want to make sure we are taking that input very seriously and that informs our work as well. >> what if you keep losing? you lost in microsoft activision. you may lose in amgen horizon. what if the ftc keeps losing in court?

what will that do in terms of your approach? >> i've been grateful we've been able to achieve a set of successes including in the courts. shortly after i joined we refile the lawsuit against facebook and last year we survived a motion to dismiss on that including a set of holdings as part of that opinion. they really mark a programmatic step forward. at the end of the day, we bring lawsuits when we determine there is a law violation. we are going to fight hard and put together the best cases we can to explain to the courts why there is a law violation but, ultimately we follow the mandate that congress has given us and seek to faithfully discharge our statutory obligations. >> we certainly appreciate your taking time with us and we will be following the progress of these guidelines closely. thank you. >> thank you for having me. >> thoughts, questions? >> what do you think? your thoughts. you've covered this pretty in- depth.

i know this is a regular occurrence but it does appear that and she's going to get a lot of pushback from republicans, critics, and the business community, that you lose some big ones in court and then you try to change the rules. >> yeah, i think the last question is one of the big ones. if they continue to lose, do they change in some way? it's not going to stop the deal from closing, but the question does become, if you've lost in court you've had your opportunity to present your case and you've lost. why do you persist? she indicated some of the reasons why they choose to. these are significant changes. in many ways they would say they are going back to the pre reagan operation of their respective regulatory agencies. both doj and ftc in terms of approach. it's only over the last 30 years that we've really started

to focus on consumer good and that's trumped everything else and that's where the economic focus was and if you could prove that it's not going to be bad for the consumer, you got your deal done. they have a lot of other things they want to take into consideration. >> the guidelines themselves are actually a function of their loss record in court. the agencies have lost repeatedly in court and these guidelines are a backdoor attempt to change the law and ignore judicial precedent. >> that's how it's going to look. this comes days after she lost the court case. >> later this hour, you're not going to want to miss activision blizzard bobby kotick. he joins me right here at the new york stock exchange. don't go anywhere.

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>> homebuilders have been on a tear this year. a little pressure this morning on the heels of fresh data. let's get to diana with the latest. >> june housing starts were down. single and multifamily starts fell from may. i want to focus on single- family because that's where we have the critical shortage of homes for sales. single-family starts fell 7% for the month and year over year this after a massive jump in may. builders said in a sentiment report yesterday that they were still getting strong demand due to low resale supply but they

are up against high mortgage rates and material shortages. lumber is getting some chat this morning. prices up 15 1/2% since may in part due to canadian wildfires and slower deliveries of lumber. a big hit to builders already paying more for building materials. permits were slightly higher from may but down year-over- year. builders are being careful as mortgage rates were over 7% at the end of june and have not come down much off of that. builders reported lower expectations for sales over the next six months in a sentiment report and that is due to higher mortgage rates and affordability. current homeowners paying much lower rates. that should continue to benefit the builders but only if they can keep their homes affordable. fewer builders lowering prices but more are trying to add supply on the lower end of the market. we will see if that helps.

>> thank you, diana. after the break, activision blizzard ceo bobby kotick here at the new york stock exchange. don't go anywhere.

>> microsoft and activision extending their merger deadline to october 18th. activision also out with its earnings this morning ahead of estimates. the company did warning about growing concerns surrounding the company in the gaming community. joining me is bobby kotick. >> i'm happy to be here. >> happy to have you. it's been a while since you and i have spoken. let's get to the deal itself. some shareholders are unhappy with accepting $.99 and an additional dividend and higher

termination fee should this deal fall apart after august 29th. what do you tell them as to why these are acceptable terms? >> 98% of our shareholders approve this transaction. our shareholders are overwhelmingly positive about the details of the terms. i think the short extension, we've got significant consideration. i think the termination fee may be one of the largest in history. we've got in improvement and commercial terms, we are paying a $.90 dividend so the shareholders -- my view is, this is a great deal. >> you didn't think you are in a position to potentially extract a little bit more for microsoft? you've already waited. this was announced january 2022. >> we extracted a significant amount of additional value. from my perspective, i think shareholders -- what i've heard is shareholders are overwhelmingly enthusiastic

about this transaction. >> are you? >> i think given how competitive the landscape has become and how difficult it is to attract talent in ai and machine learning that we see as necessary and especially now as we are starting to see the pace of ai and machinery change, this is a great transaction for our shareholders and our company and i'm very excited about it. >> we are waiting for the uk. the dynamic seemed to shift markedly over the last few weeks. what are your expectations when it comes to what is left to do there to get the approval? >> the uk really factored significantly in the evolution of the industry. the bbc had a computer in the early 80s. sinclair was one of the first people to introduce a consumer computer. there is a really exceptional amount of talent in animation, art, and game design. so, i think the uk recognizes

that they have an opportunity to continue to be a leader in the video game industry, and i think we are going to end up seeing a reasonable resolution and hopefully weekly. >> what's quickly? next 45 days? >> i don't see any reason why it shouldn't be able to happen that quickly but it's hard to note. it's government. it's summer. but i think there's a good faith effort to work through some of the opportunities and i think it will come to a quick resolution. >> was there a point at which you were particularly negative given the strong opposition of the cma when they came out with their interim decision? the you thought this was not going to happen? >> i think if you listen to jonathan kanter on the show this morning, he was very thoughtful and recognize that the law matters and that the facts matter and i think what he said was unequivocal.

when they bring these actions, they abide by the law and we've always believed that the law and the facts in our merger were very supportive of the transaction. >> even when it came to the cma? there seem to be less transparency for many of us who didn't know the process as well. >> i can't speak to the process as much is where we are from the outcome perspective. microsoft entered into a long- term agreement with nintendo and sony and i think most of the concerns that were expressed our concerns that are now -- they've all been addressed. >> i'm just curious as to what your expectations are. microsoft is pursuing what has basically been telegraphed as a small and discrete investiture to meet their agreements in the uk. does that have to take place prior to the approval from the cma or do we get this thing called -- which allows for the closure of the deal?

>> i can't comment on the specifics of what the resolution will be. i think the eu was incredibly thoughtful in the way they approach the process. i think they were extremely well informed. and i think one of the reasons is that the video game industry is growing dramatically in europe. i know from our own operations. we have studios in poland, berlin, barcelona and stockholm. there is an enormous amount of opportunity and video games are seen as an opportunity for growth in a market where there has been not a lot of growth. so, in the case of the uk, i can't tell you what the specifics will be, but i think they've come to realize that the remedies that we've proposed are reasonable and i think we will be able to get the deal done quickly. >> perhaps before the reverse break termination fee would even go up. before the end of august. >> i don't want to make a

prediction. >> make a prediction. >> i don't have enough facts. i think there is a good faith effort to actually move quickly. >> what about your future? you are under contract until april of next year. you will stay during what will be the integration assuming this deal does close in the next 45 days. i've committed myself for as long or as little as they need help with integration. i've been doing this for 32 years and i care deeply about the people who work in our company and, so, whatever i can do to ensure the integration goes smoothly, i'm going to do. >> what are you going to do after that? there were a lot of people who thought you would take the expiration of this agreement to say i'm back. that's not the case, clearly. the company you've built, at some point you have to say goodbye to. why are you going to do that?

>> i work for our shareholders and our stockholders and our shareholders voted 90% for this transaction. my responsibility is to ensure the shareholders get the best return for their capital that they can and that's what i've done for 32 years. >> while it doesn't appear that you've been hurt at all by this very long wait period, the quarter was a very strong one. >> it was a strong one. in these merger circumstances you can see people distracted. our teams are focused, motivated, enthusiastic, and continuing to make it great gains and that was reflected in the success. phil is a fantastic guy. it's a big part of why we are so enthusiastic about the transaction. we have tremendous respect for the leadership. he is generally regarded as one of the best ceos in the world. he focuses on things that matter like culture and values and he is just transformed

microsoft in a terrific way. our employees are very excited. >> i mentioned you had a strong quarter. you didn't use guidance though is there a reason why not? >> there's a lot of economic uncertainty and you've heard the feds say they are focused on a 2% inflation rate next year. i think we haven't seen the last of interest rate increases and i think we have a lot of concern about the economy and whether or not people have the ability to pay for software. >> are you seeing signs of it in your business? >> we haven't seen it yet. people say our business is recession proof. i don't think there's any such thing as a recession proof is in this and over the next few years, we have concerns about the economy and increased competition. the best video game companies in the world today are companies in china like 10 sent

and bytedance and we've got nintendo and sony with incredible intellectual property. netflix has now entered the business. there's a lot of competition. >> diablo four seems to be going quite well. >> diablo four is going great. >> has it continued to perform well since its strong launch? >> is doing well and people are excited about that game but it's taken a long time to deliver it. one of the benefits of the microsoft transaction is access to more talent and that's been one of our region real challenges is making sure we have access to the type of talent. >> i know you were here listening to our interview with lina khan and you beat her in court not that long ago. or microsoft did. what were your thoughts listening to her answer questions about some of these new guidelines? >> the little that i heard, i

don't think going back to the 1960s, as a way to think about the 21st century is -- >> they've been upgrading these guidelines since they first appeared in 1968. >> she specifically referred to decisions made in the 60s. my view is, you have to recognize your responsibility and one of those is focused on protecting american workers and american consumers and not unduly burdening businesses that have legitimate opportunities for transactions. i think that is their mission statement. so hopefully they will adhere to that mission and not unduly burden companies that have legitimate opportunities for consolidation and mergers. >> you don't seem to think they are doing that though, do you? >> in our case, we won in the district court. we want again in the district court, we won in the appellate court and we now have to win in

the supreme court. at this point, the law is clear. the decision has been rendered. >> i asked that question and it doesn't seem that she is backing off. does that surprise you? >> it does surprise me. at this point, they've seen what the courts have said. they know the facts. they know the law. it seems like they are probably prioritizing other things and that's the best opportunity for the ftc. >> finally, you mentioned china which doesn't figure that much into the thinking of the ftc in terms of the global market place but what about activision or microsoft activision? in terms of china, you had a jv in the country once, is there a chance that could be re- established or no way? >> we have an operating jv with 10 sent. it has been an incredible relationship. they are an exceptional company. the largest video game company.

great management, right talent, ability to build franchises, and they've been a great partner. the largest market in the world. it has an enormous amount of growth. i think there's no good reason why we shouldn't be continuing to operate in china where there is nothing but opportunity and talent. >> what do you think percentagewise? 99% chance you get this deal done? >> if i could predict i probably wouldn't be making video games. >> really? i don't know about that. i take those comments on the economy seriously as well. it's somewhat surprising. >> i am a worrier by nature but i see a lot of indications of things we've never experienced before. interest rate increases and the deficit -- i don't know how many times in our history the deficit has been substantially greater than gdp and this we

are looking at 50% greater than gdp. these are personal concerns, but i worry about it. >> appreciate your time and thanks for coming down here to the nyse . back over to you. >> we turn now to the banks and goldman sachs in particular. leslie has been listening and joins us with more. >> that conference call just ended about 20 minutes or so ago. the executives sharing color about where they think we are at in the dealmaking cycle and that's helping propel the stock into green today. goldman said its investment banking log increased quarter over quarter. there are a number of structural catalysts that should lead to increased levels of activity. he said they are seeing it begin to pick up in a few spots already, particularly in capital markets. he also said there is more dialogue. >> i can't tell you exactly

what the journey is. i go back and look at other periods where the macroenvironment has created sharp drops in investment banking activity. they tend to last for a year or so and then they start to improve. i think we are starting to see that here. >> more optimistic in prior reports from jane scoreman to citi's james frazier. goldman had a noisy quarter. a number of dynamics weighing on return on equity, which came in at about 4% in q2. the firm took a hit to earnings from right down to its commercial real estate exposure and a prep for potential sale of green sky, the firm's online lender m&a and trading activity notoriously quiet during the quarter, really across the industry but for goldman, investment banking fees declined significantly, advisory revenue down 46% due to the lack of completed mergers within markets, fixed incomes and commodities declined 26% and equities slightly higher

guys >> the stock moved today higher is telling on that outlook and those sort of green shoots in investment banking. leslie, thank. regional banks are also reporting results today. a critical season for the smaller banks as investors and regulators alike focus on their health after several failures earlier this year. citizens financial, the latest to do so, a super regional, bruce van son joins us to break down those numbers and what he's seeing bruce, your stock is up sharply as well. what was your message to investors? overall, the quarter looked okay >> yeah, i think the message was that we're playing really strong defense. and so we grew our dmeposits 3% we paid down wholesale funding we set up a non-core division to run off some less-attractive loans to make room for more attractive loan growths. and then we also then said that we're playing some really interesting, prudent offense so one of the things we did in the quarter was we attracted about 150 people, formerly with

first republic on to our platform, and we fleshed out how that business is going to build and be very attractive for us over the meermdium term. we gave a progress report on how we're doing in new york metro. so i think we had a good mix of strength on defense and also some really exciting initiatives on offense >> -- obviously, the deposit growth was key, and you guys needed that. but at what cost how much more is it costing to get those deposits and what's the outlook there >> so we did pay up a bit to get that, but there's a little trade-off in that. if you pay for deposits, deposits are better quality, long-term funding. and we ran off some wholesale funding, which is also high costs. so i think the -- we took it in stride we said, the number one objective is to grow the z deposits, even if we have to pay up for them. looking forward, assuming that the fed does one more hike and pauses, then we should start to

see those deposit migrations from non-interest bearing into interest-bearing accounts, and also the kind of fraught competition for deposits and pricing. that should start to abate over the second half of the year. >> are you already starting to see that there was such a rush to money markets on the back of these rate hikes >> i think it's starting to slow certainly, the migration out of non-interest bearing we're back to about 23% of our total deposit base being in noninterest bearing. that's where we were fourth quarter of 2019, before we hit the pandemic so that number ran up to around 30 and it's kind of run back down there's no real reason if the fed stops here from that going down further that's pretty key in terms of your overall cost of funds >> so what does the credit picture look like for the consumer, bruce, right now >> credit is in really good position for the consumer, so i think folks hcertainly have

plentiful employment opportunities. so the job market underpins the consumer and they still held on to a fair amount of liquidity that they built up during the pandemic so we don't really see any concerning trends at all in consumer credit. on the corporate side, generally, also, most companies are in reasonably good shape they've navigated this environment okay they took steps in the pandemic to lock in lower cost financing. so, don't see a lot of trouble spots there. the one that we keep coming back to is in commercial real estate, and the general office sector. we did give some details about our exposures there, which i think generally are diverse and pretty good quality. and we now have a reserve of 8% for loan losses against the general office exposure that we do have, which is pretty high by historical standards so we're starting to work to pick through the python, so to

speak. we worked through about 26 loans that had maturity in the second quarter -- or in the first half. so that's about the number we have in the second half. so we're on it we have good people working on that and we're working with borrowers to try to make sure that we get through in reasonable condition >> the specificity is helpful there. so, bruce, even though you say credit is good and the consumer is in decent shape, all banks like yours are being so conservative and we've seen lending standards tightening and we're wondering, how much worse that's going to get as we have seen such extreme tightening from the federal reserve. and as you anticipate new capital rules and new regulations coming through what does that look like >> i think most banks are pulling in a bit and being cautious and part of that is just the economic outlook of, you know, are we going to hit a recession? i think that picture is improving. so, there's, i think, a higher percentage of the soft landing,

the so-called goldilocks scenario is coming back to fore. and so, so we'll see i think we're certainly have the capital strength to lend, the deposits have started to stabilize, so you could see banks start to lean forward again as we enter '24. but i think through the second half of the year, most banks will continue to be cautious and that will also serve the fed's purposes of slowing the economy and bringing down inflation. so i think we're going to be in that mode at least through the end of the year, but things could start to turn in '24 >> it's really interesting to hear that kind of optimism across the board from the banks about the turn in '24. bruce, thank you very much appreciate the color >> bruce van saun of citizen it kind of makes you feel better hearing him talk about the consumer >> comments about lending i thought were very interesting that he just made.

>> so we're going to start doing it more in 2024. banks are being cautious now this is what the fed wants to see, but it's not the kind of credit crunch that a lot of us feared after the failure of a few banks this year. >> yeah. all right, well, with the broad s&p, or at least the s&p -- it's not that broad, it is? only seven stocks, and a few up. it's up, along with the dow and the nasdaq a lot more "squawkn e re" r u raight ahead we planned well for retirement, but i wish we had more cash. you think those two

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good wednesday morning i'm carl quintanilla with sara eisen live at post nine of the new york stock exchange. ahead, he was one of the few strategist calling for a big market rally back at the beginning of the year. now he's saying that we may have hit a bit of a peak. how is he preparing. stifel's chief equity strategist barry bannister is with us >> home builder sentiment rises again in july, red fin's ceo glenn kelman with us this hour with a reality check on the real estate market. later, is the ev revolution just an american phenomenon. are americans just not into electric mark fields coming up. crossing the tape for us this morning, an upbeat surprise citigroup's economic surprise index hitting its highest level in two ears,