like to provide relationship advice in the context of the market >> blah. >> i like it greg and julie, i want to thank you both have a great weekend hope you don't get stuck sitting next to the one person >> all right, folks, that does it for us today. one thing i want to tell you is read the story about cocaine sharks shark week never fails to disappoint check it out >> even sharks >> right now it's time for "squawk on the street. ♪ good friday morning, everybody, welcome to "squawk on the street," i'm david faber along with sara eisen and mike santoli. we're live from post nine at the new york stock exchange. let's give you a look at futures as we get ready to start trading for the final day of this week you can see set-up for yet again a move higher, and our road map does start with well, overall, technology stocks bouncing back. this after the nasdaq did suffer

what was its worst day since march. plus, speaking of big tech, top a.i. companies like microsoft, meta, and amazon set to meet with the biden administration later today after signing a white house pledge over a.i. risks. and amex shares falling in the premarket. we're going to go through the numbers. let's start with the markets, of course, after what was a selloff yesterday at least in technology, although, again, you did have other indexes a bit higher nice to be able to turn to mike santoli at this time in the morning and just sort of give us a sense as to what you're watching, what you're thinking about as this week ends. and i wonder, given we're only a little bit through earnings season, but we're getting there, i guess. >> absolutely. >> are multiples higher because earnings really have not been? >> multiples definitely have run higher the whole, really, market recovery this year has mostly been about rebuilding the valuations because earnings, even though they've stabilized

in terms of forecast and results, they haven't started to grow again but i think that yesterday was interesting as an excuse for people to skim a bit off the biggest nasdaq stocks with the netflix and tesla, you know, kind of mixed results and so therefore, i do think that, along with the fact that pretty much everybody has been on this theme of saying, you know, what more can the very largest nasdaq stocks do for us in the short-term therefore, market needs to broaden out. the market has been broadening out. we have seen better performance by the average stock and some laggard groups like pharma and the financials also, there is this looming rebalancing of the nasdaq 100 index that's happening at the end of the day today most of the mechanical impact, almost all of it, registered on day one a week ago, monday, and the nasdaq 100 relative to the equal weight, you see there, it's been about two percentage

points outperformance by the equal weight since that day, so that, to me, shows you that we know that the weights of the very largest stocks have to come down by the way, the qqq etf, which follows this, maybe a couple of others that index to the nasdaq 100, it's like $300 billion. the stocks that are having their market caps reduced are $10 trillion collectively. so, you know, dollar for dollar, doesn't matter, but if it creates an excuse for people to say, these stocks are outgrowing the market, i mean, essentially, then it could continue in that fashion. >> you summed it up. the jpmorgan trading note this morning said, you know, as it relates to yesterday's 2% selloff, was it the nasdaq rebalance, the 44% run-up year to date, disappointing earnings, rising yields? yes. all of the above, right? we had a bad day the question is, do you read into it that a broader correction is coming after what has been a really big win streak led by tech? >> i mean, there's obviously a pullback waiting for us

somewhere. i think we have been building toward a level of calm and complacency and technical -- >> there's been a lot more enthusiasm in this earnings season >> absolutely. >> and i do wonder at what point we're going to start to question whether it's been justified based on the question i asked you at the beginning, which is, multiples clearly seem to be moving somewhat higher and of course as we talked so many times, whether it's nvidia, microsoft, or meta, but once you get beyond a handful of names, is it going to actually show up in the numbers, this enthusiasm around, for example, generative a.i., which is going to play out over a long period of time >> if you're complaining about the concentration of the market and complaining about valuation, you're complaining about the same thing the concentration of the very largest stocks is kind of driving up the multiple. the other piece of this, and this is something that b of a has been pointing out for a couple of months, the market's acting the way it does when earnings trough, which means you

rally, it broadens out, and you get a valuation rebuild. people keep saying, the whole rally this year is multiple expansion. exactly. the first move in a bull market is always valuation expansion. >> and she expects it to continue, this note just out from today >> exactly she does expect it to continue i think that's the bull case that means if we keep broadening and sharing the wealth, then it will support the index, but it probably doesn't keep it going up at this kind of a pace, and to your point about sentiment getting better, we have to keep that on the screens in terms of whether people are getting overexcited. i did see a good matrix out of credit suisse today of what still seems supportive, what seems like it might be a headwind, and things like speculation in options, individual stock options, are getting overheated individual investor mood is brightening by the surveys, although i would argue flows into equity funds have not yet g getting to that red alert type level of excitement.

>> i think there's the retail frenzy, which is back a little bit. the meme stocks doing well, the serious move we saw yesterday. but just in general on earnings -- >> it may have been more short squeeze than technically related to this rebalancing. that was crazy that 42% move in sirius. >> as it relates to earnings, though, one theme, and potential headwind that people have been looking out for is this idea that, yes, we're in a disinflationary environment now so that could potentially hurt margins and performance of some companies. we've seen that overseas with volvo and electrolux there are questions about ford reducing pricing on the f-150. a little bit of netflix in that and whether that's a big enough theme, mike, to suggest that maybe earnings have not troughed >> yeah, or at least maybe the estimates for latter half of this year and next year are still too high which often is the case a year ahead. almost always is the case, as a matter of fact

i do think it's definitely relevant in some pockets, and i think it's also keeping a lot of companies from getting aggressive on guidance they're no longer trying to build in and assume better pricing. i do have to step back one second and laugh because the pattern of this year has been whatever good thing the market seizes upon, immediately becomes a bear story inflation's coming down. markets like that. but be careful what it does to earnings we got a debt ceiling deal we didn't default on the debt, but be careful, treasury's going to have sell a lot of debt i think that's almost a healthy instinct people have of not assuming things are going to be great, and we keep riding that pattern for now. that being said, we're getting aggressive in terms of valuation. i don't think valuation's number one, two, or three are the reasons you should like this market >> when it comes to deflation, sara, longer term, i mean, i'm sure you hear it i do as well the impact of generative a.i. and what that's going to mean,

not near term, not this quarter or next, but over the next -- >> five, ten-year story. >> yeah, over the next three to five years even, because this is moving fairly quickly. it comes up all the time, even in ceo conversations what jobs might i be able to replace at some point with this technology everybody's trying to understand the power of it and how it can be used. i don't know how you quantify that over a long period of time. >> nobody's able to do that yet, but obviously, if you're able to save money and productivity and all of that, that ultimately is deflationary, also deals with a tight labor market that we have been having, but the problem now is the opposite. it's that we just have risen, and it's hard to get workers you're not really factoring in the a.i. story in terms of the deflation or even the disinflation story because it's just not there yet although, comments like arvin krishna a few months ago at ibm saying they're able to replace a

lot of the back office functionality, what did he say, 30% of it with a.i.? it's pretty striking and if he said that out loud, you know other companies and they're advising and consulting with other companies to be doing that as well clearly, a profound effect that nobody fully understands >> without a doubt it comes up in my world, for example. how many junior bankers are we going to be able to replace one day, those who do nothing but produce decks and models at this point? that said, of course, i'm not -- h how do you make senior bankers if you have no junior bankers to start with >> to me, where i come down on it r it shows you that the disinflationary effect of technology that we have enjoyed for decades has not been repealed, perhaps, which is different than what people were saying two years ago where you had, you know, global supply chains maxed out, structural labor shortages, this idea that we could have the risk of '70s

style chronic inflation and big outbursts. we still could, who knows? but i think it does push against that idea to some degree >> right now, the inflection point is more about the spending for compute power to actually create these generative models that may one day bring this disinflation >> the more immediate question, and for industry groups like semiconductors, the debate is, is it enough to push against the downturn that we're expecting in the end market and the cycle that you would normally see in semiconductors right now i think tsmc poured a little bit of cold water on that yesterday, which is why at the we saw the stock down, but for a stock like nvidia or amd, sure, when you're exposed, you're not getting the weakness you would see in this period of the economic cycle as far as the overall market, it's a little bit treading water into next week, which is such a heavy catalyst week. now that we're on friday, we ge 168 s&p 500 companies reporting next week. we've got the fed meeting, which we all expect a hike, but we

don't know the signal that powell is going to send about september and the future we get an ecb meeting and a bank of japan meeting >> one would expect sara eisen is going to have quite a week, except i don't know that's going to be the case >> i'm here monday and tuesday don't worry. i'll set it up for you so you can take the ball. >> please. >> taking off on fed day >> you just met with all of them how can you not be here when they all speak >> i'll be there in spirit if you need -- >> will you call in? >> the bottom line is, when i spoke to them a few weeks ago, the message hasn't changed that much, even though we've gotten some data that has pushed back against the hawkishness on the inflation front because we're still expecting hikes, and bank of japan, there was some excitement that they maybe -- not excitement but anticipation that they would change the yield curve control, sort of go a little bit toward the tightening mode and reports overnight threw cold water on that idea, and now the

dollar yen is taking off again and they're keeping their dovish stance, even though we got a japanese inflation report overnight, 15th month in a row they're above their target they are really starting to see inflation. it's a good thing for their economy. >> very different from china, where they're starting to see signs of the opposite. >> and more moves in china overnight. i don't know if you guys have been following this to try to stimulate. they're loosening rules to incen incentivize auto buying and electronic buying. what we've gotten so far is piecemeal, and investors are anticipating and not impressed, frankly, something bigger. there's a polit bureau meeting at the end of july there's anticipation they'll do a broader stimulus package >> let's get to american express shares they're moving lower in the premarket. i've noticed some creep up a bit. this despite reporting record quarterly results. credit card spending, all-time

high revenues were a bit below. the company says they continue to build reserves for potential credit card defaults, although on the q&a and the call, in terms of seeing signs of stabilization, gives us confidence, is looking at what's actually happened in our business in the first quarter. you know, they generally seem to be fairly positive in their commentary from the cfo, strong growth in travel and entertainment spending across geographies, sara. but again, the stock is looking down a little over 2 p.5%. >> record quarter for restaurant reservations they own resy. they called out millennial and gen z customer as the fastest growing members of the card base, with 21% up in the quarter. all positive commentary, but the bottom line beat was driven by tax, wasn't it >> i think that's part of the issue. piper saying, if you adjust for a lower tax rate in the past quarter, really wasn't as much of a beat, cif any, on operating

the other piece of it is slowing volumes across their network you know, of course, amex operates a network for its card holders as well, and just a general softness on the revenue line, which people are going to price a little bit -- even though the macro inputs, as you say, all look pretty good, has outperformed all the other credit card and consumer lending companies, so it's got a little bit of a cushion there >> it's almost the commentary here matters more, and so far, everything i'm reading is bullish, and they're talking about delinquencies heading flat during the quarter, which is important. >> although guidance was basically still more or less steady as she goes >> they reiterated >> yeah. >> all right, we got a lot more coming for you on this friday in late july. president biden is set to meese with major a.i. companies. we're talking about microsoft, google, and amazon, for example. they're going to be talking about managing the risk surrounding generative a.i let's give you another look at futures. we get ready to trade here, 15 minutes from now and still looking for a higher open for

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president biden set to hold a meeting at the white house with top a.i. companies or at least companies that are building a.i that includes microsoft, google, amazon, for example. his administration says it has secured commitments from those companies to manage the risks that are posed by this technology eamon javers joins us. he has the latest for us >> this is early days, but the

white house says president biden will be convening executives from seven major technology companies at the white house today to announce that the administration has secured voluntary commitments from these companies to help move toward what they're calling safe, secure, and transparent development of a.i. technology the white house says these commitments from the companies include internal and external security testing of a.i. systems before release, sharing information across industry, and with governments, civil society and academia, investing in safeguards to protect proprietary and unreleased model weights, facilitating third party discovery and reporting of vulnerabilities in their a.i. systems, and this is the one i think a lot of people will notice in the real world developing robust technical mechanisms to ensure users know what content is being generated by a.i., such as a watermarking system the tension here, of course, is that the white house wants to ensure the safety of a.i. technology

they also got to make sure that all these innovations are made inside the united states that's going to require some delicate balancing of priorities between the government and the corporate sector the companies represented at today's meeting are amazon, google, meta, microsoft, anthropic, inflection, and openai we also expect to see president biden making remarks on a.i. to outline this agreement later today. it's expected in the roosevelt room at 1:30 things tend to slide in the white house schedule-wise so we'll see where they land but we do expect to see the president on a.i. later on today, guys back to you. >> you know, eamon, certainly a lot of concern about the power of these tools and the effect they're going to have on the upcoming election, for example is that, do you think, a subject of some conversation in the room as well? >> i think it will be a subject of conversation, and that watermarking idea is one of the ideas they're kicking around to try to get at that how can users tell that things have been generated by a.i. versus what's real if there's a water dmmark on it

you can instantly click and see if the image is real or not. this is difficult stuff for the white house to deal with because, of course, the president is running for re-election, and they're going to be sensitive to any criticism, and his opponents will be watching for anything that the white house does that could be seen as in any way putting their thumb on the scale politically to benefit biden and the democrats. so, this is going to be a tough one for them to thread, and it's going to be highly, highly scrutinized, you can bet, that republicans are going to be on the lookout for anything they see coming out of this white house that feels to them like this is the white house trying to suppress any kind of conservative speech, any kind of republican endorsements, anything like that it's just a very sensitive area, as you can imagine >> but i think that the fact that it's a pledge shows you that the real action has to come from congress, right what is the likelihood of anything happening there are there bills? are there leaders on this issue? >> yeah, look, there's a lot of conversation there are a lot of ideas, a lot

of people want to do a lot of things the question is whether this congress, as divided as it is, is going to be able to produce anything useful before an election year. you know, i would be skeptical of that. i've been kicking around this town a long time major signature pieces of legislation like that don't feel like they're coming out of this congress but we'll see. you're right this is voluntary. there's no force of law behind this this is a very early effort at regulation here, but there's no agency back-up there's no legal back-up here. this is just the companies promising the white house that this is what they're going to do >> well, eamon, we'll be watching and listening for further reporting on the outcome of the meeting today thank you, eamon javers, in d.c. worth noting as well, "the journal" story about one of the founders of google who's said to be back in the office three to four days a week working on gemini, which is their long-awaited a.i. model. we've talked a lot about how alphabet, perhaps, had the lead

for so long with deep mind and then seemingly lost it very quickly to microsoft and openai when it comes to this generative phase of a.i >> although it does seem as if the market is less urgently concerned that there's going to be a quick erosion of the search franchise, just based on how the stock has acted. i don't think it's gotten the benefit like microsoft has of these initiatives, but you're right. it still remains to be seen if they can regain that status. >> remember in may when jim breyer told us, they're at war, and satya's a warrior. they all need to be acting like that when i saw that headline, it reminded me of that. >> certainly when it comes to consumer data, google has an awful lot of it between gmail, maps, search, youtube, go on from there coming up, we're going to talk about the ftc withdrawing its in-house trial that's its alj process that was aimed at trying to stop the microsoft-activision deal. we'll give you the details of that one more look at futures

we have an opening bell about seven minutes from you don't go anywhere.

back in march, we had a lot of concern about a number of regional banks moving into april, but that's starting to decline, that concern. as you can see, comerica reported numbers that are being well received. stock up 6%, leading the s&p gainers. opening bell, five minutes from now. stay with us

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we're watching very carefully what's happening with the volume, and we have a mixed kind of market out there generally speaking, our volume's been holding up on the merchandise side we've been growing merchandise business, so we're watching the volumes very carefully >> that was csx's ceo on the

earnings call for the company. that took place last night quarterly revenue did come in below the expectations again, and the analysts who follow the company -- he's going to join us, by the way, in the next hour revenue was $3.7 billion that was down 3% year over year. lower fuel prices, reduced supplemental revenue, a decline in export coal benchmark prices and a decrease in intermodal volumes, mike, offsetting effects of volume growth, or sara >> yeah, you know, it sort of goes against what the market's been trying to warm up to, which is this idea of, we're sort of a little more in the clear, on the goods economy, and obviously, the transport's made a new high as a group it's been a relatively sturdy stock in the last year or so, so it's not as if it feels necessarily a big change to the overall story. but i think it blunts a little bit of the enthusiasm.

>> it gets noisy at this time of the morning, sara. >> opening bell. two, one, there you go take a look at the realtime exchange more green on that board than what we saw. here at the big board, vtex celebrating its second listing anniversary with the nasdaq. toy maker mattel celebrating the th theatrical release of "barbie. you saw the movie recently >> it was a blast. i laughed out loud many times. it is a funny movie. and if you're like me, and barbie has played a very special role in your life for a very large portion of your life, possibly until it was inappropriate to still play with barbie, then you have to go see it >> when you go home to your childhood home, are there still barbies in the room?

>> there are barbies and barbie dream houses i have two boys that have no interest in it, and we're saving it for hopefully one of the eisens have a girl >> have a girl >> it's not going to be me or someone that's interested in barbie >> got it. yeah all right. >> but no. so far, no takers. look, i think what's interesting is that even though there's a strike, which a lot of the analysts thought was going to be very negative for the box office, between "barbie" and -- you saw "opp"oppenheimer" this weekend. there's a thing going on where people are going to see both this weekend the millennials. that's the trend >> it will be an interesting jolt to the box office, but i think there's a little bit that's sad, which is the novelty of having two large studio movies in one weekend, which used to be just a weekend in the summer i've been trying to figure out which direction it's going to run. i think "oppenheimer" is going to benefit initially from people who otherwise wouldn't have seen

it but want to do both, like the "barbie" audience is saying, let's do it as a stunt >> to sara's point, the larger question continues to be the strike not just the writers who have been on strike for some time but joined by the actors it's been a week now since that strike began what the impact is going to be over time. short-term, not that much. longer term, very significant. and perhaps on box office with this bit of a reemergence of movies it could be nipped in the bud if you don't have anything by next spring or summer that's available. >> sure. >> for viewing not to mention, of course, streaming services, which will also rely on an enormous amount of content that may not be made, although netflix not getting hit as hard. >> it seems like a short-term positive for investors who have been looking for some discipline when it comes to these production budgets we talked to ben silverman yesterday, and he was saying, look, it's a good excuse for a lot of these content companies to pull back >> it does >> on spending in the near term,

and longer term, they'll be hit by lack of a pipeline. >> a lot of the conversation, of course, does come back to a.i., interestingly enough, from what we've been talking about this morning and from the last few months, generative a.i., how that may threaten certain parts of the ecosystem in hollywood and what they want to do with it not to mention the change in the model that has resulted in far fewer residual payments because things don't go into reruns anymore. it's not "friends" and "seinfeld" world anymore where when you make a hit show, you can live off it for a long time. >> the stream of ongoing revenue isn't quite there. it's almost like the oil industry overinvests in producing the commodity. then, because there's free money, people have a perception of insatiable demand, and then you get a little bit of a market correction, and do the industries like oil companies say, we're going to be rewarded for capital discipline down the road and underproduction, rather than producing the same amount, and will consumers say, we're

okay with less in terms of new, fresh content? it's a test. i don't know which way it's going to roll. >> speaking of a test, the market's opening strong here, and it's notable after we saw this move yesterday. we're up 1% now for the week on the s&p 500 on this friday, and the nasdaq's higher for the week as well, even though we saw yesterday, which was the worst day, a more than 2% slide since back in march. it's being driven by technology today and consumer discretionary and energy there was some thought yesterday where the defensives were leaving. uh-oh, is that a re-emergence of the recession trade or the defensive trade? it's not really a ton of follow-through on that today >> tesla shares are up a bit after a significant decline yesterday on earnings. however, netflix, no rebound yet. the stock is not down sharply at all, but nonetheless, not a bounce after what was what -- i don't know where we ended the day on that name, mike, but down 8, 9%, something like that >> absolutely. not surprising to me that tesla's the one that there's going to be that conditioned

dip-buying response. the farther you get from the actual report of numbers of what the business is doing, the better the stock seems to do, because it trades on everything else so, it is interesting. i mean, i think, sara, that jpmorgan note you mentioned predicted there would be a dip buy instinct in the big nasdaq stocks after yesterday e did want to mention, we're kind of at this point where everyone seems to think the market is probably done enough in the short-term, but people still feel, and the market still behaves as if they're underexposed to the market so, if i look across the sort of control panel of, should i start to worry yet should i start to put on the fasten seat belt sign? the leadership of the market, as you say, sara, is pretty comforting in the sense of cyclical leadership. you have had, of course, this ability of the market to kind of get overbought and stay that way. that's a good thing. credit, very firm, sort of working along with the bull case yields have calmed down, and the market seems to think it has a handle on this pace of whatever

the fed might do from here so, it doesn't mean everything's great. it means that we're in a comfort spot for the moment. >> we get another big inflation read next week on friday with the pce report and we'll get an early august, the next cpi report overall, and even though there are risks with margins and disinflation, overall, the market has embraced the lower inflation numbers and the fact that the fed is near the end of the road on hiking rates, and that's been the primary bull thesis as growth holds up and unemployment does not spike. you know, as far as other movers and what they say about the overall environment, you mentioned csx and the transports i was watching night swift, the big trucking company obviously, difficult quarter because we know that the trucking industry has been in its own recession, and the profit plummeted, revenue dropped 21%. it was weak. it got a downgrade today but there were some glimmers of hope and just in the executive comments from david jackson, the ceo of knight-swift, he did say

what's been hurting the company lately has been this destocking of excess inventories following a sharp build-up in 2022 and that he did say, we are not late innings of an inventory destocking and expect to see a normalization of imports and seasonality in coming months so, that could be a good sign, perhaps why the stock is up 2.25%, even though they slashed guidance and had really rough numbers. >> didn't he also say their earlier guidance essentially relied on what their customers were telling them? and the customers did not have a good handle on what the trends were going to be >> absolutely. also mentioned the freight recession should be coming to an end, so again, some signs of hope, much like we saw from the banks and the investment banking world, that they're seeing green shoots and there's some reason for optimism here. potentially why the financials had such a good week, and it wasn't just the big banks. it was the regional banks too, up more than 9%. >> we saw comerica lead in the s&p gainers before we started trading. we recoll

we should take a look at comerica to your point, they are doing quite well in the marketplace. second quarter results, comerica says, were strong. the earnings number per share was $2.01. you see it, not up as much as it had been record average loans, second highest quarter of noninterest income in history. of course, the concern has been, given what we saw at svb and signature and first republic, that deposits would be hard to hold on to, and that would essentially mitigate their desire to lend money or even be in a position to do so >> so, the best performers week to date in the financial space, zion is up 22% keycorp, up 17%, and charles schwab, up 15% those were at the center of the worries about contagion during march because of the mismatch and of course, you know, the assets and liabilities, because of concerns over deposit outflows when schwab reported the stabilization in deposits and the good news this week in the stock went up 12%, mike, we

talked to walt that was a relief moment for the sector and for the stock >> in general, the regionals have returned to deposit growth, and i think the bigger picture is the stocks were so blasted and kind of kept in the penalty box for a period of time at very low valuations, even as the rest of the market started to get comfortable with the soft landing idea, so they've come together a little bit. the regional bank index as a whole traded down to about 80% of book value, and it's rebounded to somewhere close to book value it's a discount to where it's typically traded, but that makes some sense truist still looks on the cheaper side versus book value, so you have these wrinkles in between, but i think general comfort at the credit path along with deposits not flying out the door, stocks were too low. now, though, regional bank index is up 35% off the lows and it has to start to show through in more clarity on the longer term earnings picture and we're not going to have bad surprises.

>> we wondered about that many times in terms of long-term earnings power of these banks, given what seemed to be a shift in the business model to some extent we mentioned sirius xm radio very briefly at the top of the show let's come back to it because about 2:30 yesterday, the stock had a move that was really unprecedented. you can see it there 42%, the stock was up. not on anything having to do with fundamentals. it was essentially a short squeeze. mike, you've mentioned, of course, the rebalancing of the nasdaq index >> yes >> which seemed to have contributed to this. options activity as well, and then you had a lot of people who were short this stock in relation to what is the tracking stock of its majority owner, liberty. that stock trades under lsxma/k. i know it gets confusing but there's always been a differential, and there are those who are short sirius and long the tracker, with the idea they're going to get closer to parity

given that move yesterday in the short squeeze that resulted from perhaps this index addition as well, that's never been higher it's a 61% discount to the net asset value if you buy that tracker for what they actually own and what it's tracking kind of shocking we did get one downgrade today from evercore, one i've seen, where they're saying, listen, this has nothing to do with fundamentals we got to downgrade the stock. >> it's an extreme example of the effect of this index rebalance along with a general short squeeze that's been going on hedge funds have been on the run on the short leg of their portfolios, just because the marke market's been rolling for a few months the fact that it's a low float, in the nasdaq 100, a very small weighting in the nasdaq 100, and what's going to happen with this rebalance is they're going to take money out of the biggest holdings and distribute it across the rest, and that, therefore, it just was spring loaded to kind of get way detached from the tracking >> but we've seen other meme stocks move. you don't think it's related to that >> not really. >> this retail frenzy?

>> not in this particular -- you absolutely have seen the index move >> other than the fact it had a large short position and was potentially prey, so to speak, but i don't think the -- the move was not created as a result of the reddit boards or anything like that. >> sirius is a little bit removed from the days of when it used to fly on, you know -- >> i always like to point us, it's a $27 billion market value. >> it's a decent size company and a low stock price. a lot of the things that would make it a meme stock i think i remember when it became a meme stock when howard stern originally went to satellite radio, am i right about that that's a long, long time ago at this point >> but again, we had jennifer here, the ceo, not long ago. the fundamentals are fine, but nothing to justify that move did want to come back to a story i've been following closely here, which is microsoft, activision versus the u.s. government in the form of the federal trade commission earlier this week, we had ftc chair lina khan join us, you may recall, of course, it's only a week and a half or so ago. two weeks. the ftc lost an important case

trying to stop this deal, get an injunction to stop it, and i did -- and the news overnight is that they've decided to not pursue this administrative law judge process that seemed to still be moving forward. and essentially, now, seem to be listening to the courts. i did ask lina khan, chair khan, about their plan there, having been beaten in court and what the plan was for the alj process. take a listen to her answer. >> 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 warrant appeal, and 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 instances where it has, sometimes quite successfully, it's always because we believe that 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. >> and interesting coincidence, i had bobby kotick almost directly after he's the ceo of activision we did an interview as well, and i did ask him, well, take a listen to what i asked him and his answer regarding the ftc >> she doesn't seem to be backing off in terms of wanting that administrative law judge proceeding does that surprise you >> it does surprise me i think at this point, you know, they've seen what the courts have said. they know the facts. they know the law. it seems like probably prioritizing other things is a -- is the best opportunity for the ftc. >> kotick got what he had asked for there. so, they do back off of course, the key here continues to be the continued negotiations between microsoft and the cma in the uk, trying to get approval for a deal that has now been extended to october 18th in terms of the termination

of the agreement between the parties. >> the other piece of it, assuming it happens, activision comes out of the s&p today, jpmorgan downgraded blackstone shares. they're saying fund-raising is going to slow down, the stock has run a fair bit, it's hard to keep growing quickly, et cetera, but also that the stock has run up a lot because of this constant speculation that blackstone will enter the s&p 500 and if you have something like activision coming out, it would go in there. i don't think that should be an ongoing reason to own the stock. it's run a bit but because blockackstone is a y big market cap that's outside the index, that was the thought. blackstone is down almost 2% this morning >> it didn't respond well to earnings yet, which were essentially in line. that trillion dollar, an aum milestone, though. as you point out, jpmorgan says blackstone is harder to grow at a trillion thanks for that great insight. >> there you go.

i'm just glad they didn't say the law of large numbers, because that's not what it means. >> as you remind us. >> i'm sorry >> do you want to remind our viewers again? >> no, i just want to remind them that it's not base effects. >> but it is harder to grow once you get a trillion dollars i'm sure blackstone would take issue with that. we have a news alert from washington, d.c. let's get back to eamon javers with that. >> sara, two powerful house republican committee chairmen, the chairmen of the new china committee and the chairman of the house ways and means committee have sent a letter to the ceo of ford motor company, james farley they're demanding documents and communications relating to ford's deal with catl, the chinese battery company, to build a factory here in the united states. a couple of interesting points from this letter to ford they're demanding a copy of the licensing agreement between ford and catl in english and in chinese. they're demanding all documents and communications exchanged between ford and catl, referring

to licensing agreement mhere and all documents and communications between the biden administration and ford about this deal very skeptical about ford's promises here in terms of the number of jobs that this deal with the chinese company will create in the united states. they say, "you have suggested that the deal will create at least 2,500 jobs in the united states however, we have learned that several hundred of the jobs will be given to catl employees from the prc, people's republic of china, who will be in charge of setting up and maintaining equipment, and prc employees will be at this plant until 2038." they're also raising questions in that letter, guys, about catl's relationship to the uyghur forced labor problem in xinjiang province. they're suggesting that there was some sort of a back-door deal here to look as if catl was divesting from one of the entities related to that problem, but in fact, there was an effort to continue business there. so, we'll wait and see what ford has to say we'll reach out to them shortly for this comment, but this is an

investigation now from the house china committee and house ways and means committee, two very powerful committees chaired by republicans on capitol hill. back to you guys >> thank you, eamon javers before we head to a break, let's give a quick report on the bond market take a look at how treasurys are faring this morning. yields, you ask? yes. 4.839% on the two-year and you can see two is over ten at 3.823%. that's over a hundred basis points, right? i got my math right. >> that's a recessionary signal, some might say >> is it >> in the future >> eventually, maybe >> with no clock >> eventually, maybe, but right after this, we'll be back. what do you see on the horizon? uncertainty? or opportunity.

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travelers are starting to show resistance to higher prices. seema moody here with more we've sort of been waiting and monitoring this for a while. what do you see? >> it matters because the travel economy has been so strong, so hot for so long, but as they point out this morning, vacation demand in the u.s. is starting to soften. we saw that play out in june and all signs point to a similar story in july. one of the reasons is consumer preferences are shifting, more americans wanting to go abroad this summer, specifically europe with data from costar showing outbound travel well above 2019 levels that is putting pressure on u.s. resorts, where prices have come down significantly in popular destinations like maui, miami, florida keys, the jersey shore it's one of the reasons hotel real estate investment trusts with exposure like diamond rock hospitality, park hotels have under performed the s&p this year john gortss, ceo of pebblebrook,

a hotel reit telling me across his portfolio, average daily resort rates are down 30% from 2022 levels, but still up about 70% from 2019. they're holding on to that cushion. asset brands like marriott, hilton, hyatt, have seen stock prices climb by 20% or more this year stifel expects second quarter earnings to come in line but past the second quarter he warns a deteriorating macro economic backdrop will cause the drop group to under perform and earnings kick off in earnest next week. hilton on wednesday, wyndham and royal caribbean on thursday. if there is one chart that the travel industry is watching very closely, it is marriott, the largest hotel operator versus airbnb, the largest home rental operator last year, marriott led by a mile and this year you're seeing the opposite with airbnb guys up 74% versus marriott up 30% and the big question is, as we

continue to the second half of this year if that will change. if you look across vacation rentals, they're coming down at a faster pace than hotels. >> a value indicator toward airbnb. >> looking for value absolutely. when you look across, you can find those properties a lot easier when it comes to airbnb versus hotels. >> seema, thank you. seema mody. >> stocks up 0.2%. nasdaq calls are strong. we're back right after this. [phone: starting route.] technology helps us navigate to work. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.]

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good friday morning. welcome to another hour of "squawk on the street. i'm sara eisen with david faber live for you as always at post nine of the new york stock exchange carl has the morning off stocks opened up strongly, and we've faded a little bit from the early momentum, but remain higher with the s&p up 0.2%. what's leading us right now. it's gotten more defensive utilities and health care are the top performing sectors technology is still up the nasdaq is still higher by a quarter of 1%. you've seen weakness in energy,

communication services, industrials, financials red and so are materials overall, still tracking for nice gains on the week for the s&p up 0.8% the nasdaq, though, has just gone negative for the week 30 minutes into the trading session. here are three big movers we're watching american express, is under pressure down 5%, beating earnings estimates, revenue missing. more on what it says about the consumer in a moment we're watching shares of siriusxm david mentioned this earlier falling double digits after a giant rally yesterday. some on the street the moves are tied to a short squeeze that drove things higher and that nasdaq rebalancing as we were talking about that's coming after the close. finally, csx, the railroad shares in the red after result there's. we're going to break don't numbers with the ceo later this hour david, the amex plunge is note worthy because of the commentary coming out of the conference

call in the last hour or so has been bullish on restaurant spending, on travel spending, on millennial and gen-z spending. play a little bit of what the cfo is saying. >> we have seen stabilization across geographies, at a level that i would suggest is actually consistent with being in a pretty low growth economy. what we're hearing is with the kind of volume growth that you see this quarter, which we think has stabilized, which we think will continue, that is consistent with both the guidance we've provided for this year as well as with our longer term growth aspirations. i would point out at some point the economy is likely to get stronger, but, even with the economy in its current kind of low growth state, the volume growth that we're seeing now allows us to achieve what we have been committing to for six quarters >> some folks zeroing in on the

volume and revenue miss there, that they set aside a lot more money for provisions of credit losses, of course, and the earnings beat comes from a tax rate a favorable tax rate. having said that, though, they do talk about the strong growth and the fact that economy is getting better and they still see, you know, low growth economy with consumer spending in the affluent area, a lot of people see amex as a proxy for. >> largely in line wait lot of commentary we've gotten from the larger financial institutions so far, which has generally been positive on the strength of the consumer and not pointing to an imminent recession in any way. >> we heard that from a lot of banks this quarter capital one shares are higher this morning after a beat last night. we put together actually a good string of sound from some of the ceos, executives we've heard both on the show and during earnings. here's what they're saying about the recession potentially and the consumer. >> i think the odds of a

recession were low and if it happened, i felt likely to be relatively shallow and short sounds like it's not that big a deal where technically we have a recession. what matters is if you have a deep recession that changes the unemployment outlook and that's not happening. >> credit is in really good position for the consumer, so i think folks have certainly have plentiful employment opportunities and so the job market underpins the consumer and 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. >> you may have seen consumers down trading in more traditional stable categories. in our consumer health space, our kenvue portfolio we don't see the dynamics happening. >> highlights of the week on "squawk on the street. they were all positive. >> a lot more than that, although i would say bobby

kotick was a little less certain in terms of talking about interest rates and expecting perhaps there would be impact on buyers of his gains of activision but you're right, it's been positive the last one was kenvue talking about not seeing the trade down from some of their higher end skin care products i guess and things of that nature. >> right their brand, they dot brands, new tro gena and tylenol if things are tough out there, we saw this during the great financial crisis, consumers trade down to private label and want to save money haven't heard that much from p&g and we watch it. so far they're getting strong prooigz power and demand and that's overall a good thing. i think the bottom line with the consumer is, as long as jobs remain healthy and available and wages continue higher, that is a tail wind that pushes against

the higher rates and doom and gloom of the economy a chart out of apollo showed we made it, pretty colorful for you. >> thank you. >> always colors are the different incomes and all of them, doesn't matter which, you can see wage growth is still elevated and on one hand that's a challenge for the fed because they worry about the wage price spiral, but on the other, it shows why the consumer has remained pretty resilient. on the downside, you know, higher rates can bite and we're watching things like delinquencies and job market cooling off and that sort of thing, and then the other thing we don't talk about that much, david, but the impact of higher rates on companies, everyone you heard from, those are really big, strong companies and they're not affected as much as smaller companies by the higher financing costs, by bankruptcies there is a little bit of a winners and losers, not a little, probably a big between winners and losers as a

result of these higher rates it's a blunter instrument for some of these smaller companies. >> without a doubt. >> we talk to on cnbc -- >> smaller companies with higher risk profiles on their credit side that have to refinance, not even talking about commercial real estate office space where we know there's an issue in terms of refinancing to your point, junk rated companies and what they're going to be facing when they have to reup. >> it's a little bit of the big get bigger and strong get stronger and we see that in housing with supply and hotels with the low supply and that's why a lot of these companies are feeling good ultimately the banks also worth talking about. you heard from gorman there. we have fresh results out of regionals this morning they're lower now, but ending what's been a big and mostly positive week for the financials leslie picker has been tracking the action and joins us with more what were the highlights >>ing by a week indeed

regional banks, the kre up, despite the declines you're seeing today earnings season is helping breathe a sigh of relief into these stocks the three banks that reported this morning are in the red today, the positive set surrounding the subsector comes from deposits that largely stabilized quarter over quarter. you can expect a little bit of outflow in q2 because consumers draw down tax to pay taxes but nothing that would indicate a mass exodus. a tension turning from the balance sheet to the bottom line because the cost of keeping those deposits is ticking higher and that's cutting into the margin of profitability from collecting interest on loans while paying out depositors a metric known as it net interest margin it's clear the shift is tilting towards higher cost places like cds and ceo commentary has suggested that those trends will continue so far the competition from even higher yielding places like money market funds and online banks has yet to pose a real

existential threat to these regionals. the results indicate the all clear from the march and april bank crises, but if there's anything the spring turmoil showed us, bank runs can happen quickly so it may be too soon to wave the mission accomplished flag, since banks are still hold something underwater securities and that cre office space. >> thank you leslie picker. >> the banks, the kre on pace for what would be its best week since january 2021 joining us raymond james analyst david long given the numbers we've seen, let me ask you what leslie just raised, is it an all-clear sign for investors when it comes to regionals? >> look, i believe the all clear from a failure perspective, we're getting close to that. when you look at the banks that failed, you were able top analyze them six to nine months ago and say that they had holes

in their assets that were underwater that would eliminate their capital if they had to mark all their assets to assets. we've been through 130 banks in the raymond james franchise and several other larger banks and we don't get to that conclusion with any other banks if you mark all of their assets to market. they still have capital. i think we're clear there, but i'm not going to bet the house on it. >> what about the larger issue, the earnings power of many of these banks, given facing higher deposit costs, the risk of deposit flight what have we learned from what we've seen from the quarterly numbers in terms of answering that question? >> sure. well deposit competition was very intense in the second quarter and particularly in june, when a lot of banks were looking at or facing quarter end, he show an increase in deposits for the quarter so the

competition in june, i am hearing competition in july has come off a bit deposit competition is causing that cost of funds to rise pretty substantially as you just stated in the -- earlier in the segment, deposits are moving into higher cost deposits or off of bank balance sheets into treasure securities. from a bank perspective the two headwinds the rising costs moving the funds into cds, costs much more than money markets and noninterest bearing but something we've been talking about for nine months is noninterest bearing deposits when rates are zero got up to be 25, 30% of deposit mixes pre-great financial crisis the number was in the high teens i think a lot of banks have, with their guidance, not had -- had a moment where they can say we're going to go back to that level. most management teams have focused on going back to prepandemic where we were in the mid-20% range in non-interest

bearing deposits as we look forward, we think we're going to go to pre-pandemic levels and some of the banks pregst levels, and bank management teams are finally stoorgt come to that -- starting to come to that realization noninterest rate bearing deposits are declining and we could go back to pre- levels. depositors are demanding more for their cash. >> haven't we heard -- i heard this from walt at schwab on the show that that is tapering off, that there's been a sort of stabilization in that trend, and it's starting to go the other way? >> absolutely. i've heard the same thing. there has been some stabilization there, but most of the banks i'm talking to are still seeing flows even in july out of noninterest rate bearing into interest bearing. that's going to be a headwind for the future this quarter for banks with that

interest margin, it could be the steepest we see this cycle but i'm anxious to see how competition fares out in third quarter. if you look at the second quarter, the regionals, small banks were competing, wells fargo, jpmorgan, we did not hear about them competing for deposits if they come into the marketplace more aggressively on deposit rates we're likely to see a pick up in that competition. >> so david, finally all that being said then, is the kre, for example, fairly valued right now? is the move that's taking place sort of already reflected many of the positives >> i think the determination on that will be in credit and we talked about in the second about the consumer and the commercial side of things the credit will be the ultimate determine nater here we see the inverted yield curve continue negative earnings revision, the uncertainty on credit, and the uncertainty on

exactly where capital ratios will be as the headwinds i think the biggest piece there to determine if the valuation is fair or cheap here, is where credit ends up and we may not know that answer for sure for another six months. >> thank you. >> thank you as we head to break, here's our road map for the rest of the hour the latest on the rails with the ceo of csx, as those shares fall post earnings. >> president biden is convening executives from some of the country's biggest a.i. companies or some of the biggest companies in the country and they're also focused on a.i what investors need to know about that meeting. the dow coming off the longest win streak since 2011. can the gains continue slipped back into positive territory for the second time this morning we'll talk about it with a wells fargo senior economist later this hour. don't go anywhere.

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welcome back to "squawk on the street." look at shares of csx the railroad company under pressure down more than 5% after the company missed revenue expectations for the quarter morgan brennan is now with the ceo to break down the numbers. good morning, morgan. >> good morning. good to be with you guys want to bring in john hinrichs, ceo and president of csx. >> thanks. >> revenue miles to grow, low single digits.

what gives you the confidence to stick with that forecast given it is an uncertain macro environment right now? >> the reason we have confidence our metrics are at all-time highs and we're winning business, share throughout the first half of the year and that grew in the second quarter if you look at our merchandise buying it was up 3% and coal volume up 4% we're seeing growth and that's being driven by and winning shares. >> i want to get into the market share piece of this but first intermodal has been a big drag this is the part of the business for railroads that is focused on containers that have a lot of goods that consumers end up buying from retailers that are containers moved across the country right now. what do you attribute that weakness to and is the expectation that's stabilizing or continues to weakenen >> >> it's about 20% of our revenue and to your point we've

seen a softening in the international side of the intermodal business, things that come from overseas in the ports and then get on rails and make their way to stores. we've been told by customers that's due to destocking and softening in consumer retail demand the domestic intermodal, which is what moves within the country has shown signs of life. every month we saw improvements and in late june improvement growth year over year and domestic intermodal. we're seeing good green chutes there. on the international side we haven't seen that inflection point yet. >> we talk about the possibility of a soft landing. one more macro question for you here, does that feel like an economy slowing down or heading towards a recession? >> doesn't feel like it's heading towards a recession. it's mixed we've seen strength in autos, metals, aggregates, coal, softening in chemicals, paper products and the international business we're talking about it was mixed we were able to grow on our service and able to see that

improvement. i would say it's mixed i wouldn't say that we're headed, you know, what we see or not headed to a recession and the domestic intermodal business showing some improvement really as an optimistic sign. >> joe, it's sara. shouldn't it be a lot better now? we've seen the inflation reduction act and the infrastructure act and the chips act, and all of that, so much money going into building stuff in america and i would think would take a lot of railroad moving and shaking and the industry would be in better shape if we're not going into recession with all that money flowing in >> that's why we're seeing mixed signals, sara. certainly auto production is up significantly. look at aggregates, the infrastructure, minerals and aggregates, crushed stone that goes into making concrete, what we've seen softening are plastics, chemicals and paper products are more retail focus. >> we need to see consumers back in the marketplace for goods and

items like that. maybe we'll see that in the fall when we go back to school. you're right, the investment is happening and you're seeing that in big parts of the economy but not across the board maybe consumers are spending more on service than goods right now. we have to find that out we are seeing some signs of life with the domestic intermodal traffic happening and would like to see that international stuff come back in the second half of the year. >> merchandise volume is up for things like metals and autos which speaks to that too the fact that you have been taking market share, a lot of analysts and folks pointing to your one csx initiative and the fact that you are leading the industry on service metrics. where are you taking that market share from is it from your direct competitor in the east and nor folk southern dealing with its own issues, given that derailment earlier in the year, or from trusts >> it's a little bit of both we are seeing share gains across most segments of our markets

we are hearing from customers based on our service and the confidence they have for our continued focus on that. our service metrics were better than our competition in the first half of the year, so we're seeing rewards from that with our customers. we are work hard with a number of customers looking at new lanes for transformation from truck to rail. we think there's conversion opportunity there and more to come on that i think the most important thing we can do is keep building on our one csx initiatives to bring our employees in and serve our customers better and demonstrate we can provide the predictable and reliable service people need to get more business to rail. >> regulation very much in focus right now. you have the, as i mentioned, the high profile hazmat derailment in east palestine earlier in the year and the merger between canadian pacific and kansas city southern, now cpkc expectations as you see the legislation make its way through

congress what that means for things like safety and competition moving forward >> yeah. we're working very closely with our members of congress in that industry and we are at csx as well we've been cautioning and asking members to take their time to make sure they get the feedback from the ntsb and other regulators on what's happening and make sure we're data driven, make sure we get to improved safety as a result of this i think the industry will be better off when said and done and we will have a bill eventually in congress make its way through. it's important we stay focused on safety. we want the same thing everyone else wants safety in our community and for our employees. cpkc we announced some pretty good partnerships with them. a point in alabama which doesn't happen for our industry, excited about that and the joint venture we're establishing on hydrogen locomotives together the increased competition and development is playing out in the marketplace. >> all right final question for you, ups it's one of the biggest, if not the biggest customers for single

customer for the railroad. we've got that company and the teamsters going back to the negotiating table. deadline july 31st expectations from your standpoint and have you seen any changes in terms of customer behavior ahead of that deadline? >> we haven't seen any changes yet. we are in constant communication with ups they're an important customer of ours they pay for and expect high levels of service, so we're optimistic and hopeful they will find a resolution. we'll see how things play out. having had a lot of labor experience myself these things tend to go down to the wire and we'll watch it carefully and it would be best for everybody if they find a solution. >> thanks for joining us ceo of csx guys >> morgan, thank you for bringing us that interview good to see you back here. >> good to see you too. >> ups, over a week, a little over a week away, 340,000 potentially going on strike. we've just got through the worst of supply chain and inflation.

both of those things are big risk. >> i think this is going to be interesting how the negotiations go, given the fact that -- fedex has put out notifications around this, et cetera. the expectation you're going to see companies like that pick up the market share here in anticipation, shippers worried about the fact that this could result in a strike and p particularly for the biggest customers that need to move goods around, they've already, perhaps, made other plans in anticipation of this what does that mean for ups longer term in terms of commanding pricing in the market. >> can the system -- >> no. it's going to be disruptive one way or the other, but i think longer term, you've seen this with fedex stock versus ups stock outperforming versus ups stock, is the expectation that maybe, perhaps, it changes the market dynamic more broadly, longer term. i don't know we'll see. >> what do we got a week >> yeah. a week and a half. >> august 1 past thanks morgan brennan. still ahead, crypto investors turning away from

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bitcoin known as one of wall street's most volatile assets, not the case recently. kate rooney has more on what has been bitcoin's new and steadier normal kate >> hey, david, good morning. so the world's largest crypto currency is in a multiyear low for price swings some are calling this a period of investor apathy it's traded in a price range of just 4% and it's failing to sustain the upward momentum after the black rock announcement for that bitcoin etf and the application for that etf. analysts at glass note note that inflows have been what they call steady and modest and dubbed it a period of investor ap that this to a hangover fund strat says investors have been moving in the speculative coins and equities away from bitcoin. they highlight selling pressure as well from bitcoin mining companies that tend to be some of the larger holders of bitcoin supply while price stability, guys,

might be a good thing for bitcoin's value, digital gold status and the institutional investors, volatility does tend to attract new buyers and retail money. as far as the bull case going forward, market participants are looking towards something where the new supply of bitcoin will become more constrained and that's set to happen next year holding on to hope that that bitcoin etf i mentioned will bring in a wider investor audience crypto stocks, that is really where the action has been. coinbase up about 50% or so on the month. it it tends to see a lot of short interest as well that's part of the story the sigh of relief on the regulatory the crypto mining names up big the smaller speculative tokens are up double digits as well sara, back to you. >> all right kate, thank you. amazing to see against all odds. switching gears this is a hard turn, to twitter because since march the company has had this policy where it automatically replied to journalist inquiries with a

single poop emoji. it's changing. elon musk tweeting last night that company's auto reply will now be, quote, we will get back to you soon. and it's worth noting as you can see, the change appears to have approval from the ceo linda yaccarino. it's notable because linda yaccarino is there as ceo and there were big questions ability how much she would be able to do she wants to attract advertisers. that's her background. >> she wants to attract well healed advertisers and many more of them. >> is this a kind her, gentler twitter. >> he's replacing the response to journalist poop emoji on that. >> i think it's a notable change and i think it shows that linda yaccarino -- >> is having an impact. >> having an impact. >> the larger one will be whether or not -- listen, i'll go back to the interview from two months ago with musk where he said basically i'm going to say what i want to say, and

oftentimes, that can be something that is not well taken by some advertisers. that becomes more of the question. >> that's a risk, but now at least it's not the company policy to respond to journalists wait poop emoji. that's positive, think >> they still don't have any pr people, which by the way i'm not saying is a bad thing. i still marvel at the fact that -- i marvel at the fact that mr. musk and i set up our interview, the two of us. >> the two of you. >> no corporate communication. there were none. no handlers, nothing it was amaze and refreshing. >> you didn't get the poop emoji. >> now you won't be getting any. no one will be none of us the rest of the journalist community. >> you regular people who can't -- >> right. >> yeah. >> we don't just secure -- >> you talk to everybody and you never get a poop emoji. >> it's true. >> when we come back, more on the markets as the dow becomes

the outperformer for a change trying to extend the longest win streak here since 2017 beating the s&p and nasdaq on the month. wells fargo senior economist joins wusith her take on the action next. we'll be back in a moment. this is american infrastructure, a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends these services for everyone who lives here. ♪ you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description.

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welcome back to "squawk on the street." i'm sylvan na henao. former president trump's criminal trial over his alleged mishandling of classified documents is scheduled to begin next spring. judge cannon announced a trial will begin may 20th of next year trump has pleaded not guilty in the case. twou.s. officials telling

nbc news that u.s. ambassador to china nicolas burns was among those who had their e-mail accounts hacked as part of a recent intelligence gathering campaign the breach was reportedly limited to the ambassador's unclassified account microsoft announced the breach saying the china-based hackers accessed accounts of 25 organizations including some u.s. government agencies legendary singer tony bennett died today the 20 time grammy-award winning groaner had a career spanning 70 years, which included hits like "because of you" and "i left my heart in san francisco" bennett who was diagnosed with alzheimer's held his last public concert at radio city music hall in 2021. he was 96 years old. guys >> thank you. we're just over an hour into the trading day and, of course, it is the last trading day of the week let's get over to bob pisani and see what's on his mind as he takes a look back at what has

been another strong week. >> yeah. it has been. and broadening is really heartening to the bulls here notice what's been going on the last three days. we're opening up and sell into the rally. tend to weaken after the first hour, that's happening again today. this is part of the summer seasonality of valuation issues, but take a look at the sectors today. a little bit of a reversal today. tech is holding up but point out health care and energy have been the winners this week and that is a sign of that broadening out story which has been helpful to the bulls. banks down today a little bit. comerica, has their earnings out, the regional banks have had a tremendous run three problems for the stock market that are evidence it's the seasonality issue mid-july until the end of october is the weakest part of the year for the stock market. august is the third worst month of the year. september is the worst month so you see the back-to-back and the market knows this very well. number two is the problem of

rising bullishness a lot of people have been negative throughout the year and they are less negative and i'll show you numbers on that valuations, almost 20 times forward earnings i mean forward earnings, q3, q4, q1, q2 into next year a tremendously high number right now. these high levels of skepticism we keep talking about, people are out of the market, that's starting to go away a little bit. the sentiment surveys, the aai numbers, a 51% bullish new 52-week high, the highest in a long time. it's normally 37%. 21% are bearish. it's normally 31% and above. this is what i mean. we're seeing this on the professional level on the institutional level as well. bearishness is slowly dissipating as the soft landing is gaining traction. why are we getting this rally nine days in a row in the dow. the broadening out story making everybody so happy we're bullish. the dow is not an industrial index.

it hasn't been in a long time. the leadership since the rally started are banks like goldman, united, amgen, caterpillar and the laggards tech stocks like cisco, microsoft, apple and bogey. that's been very heartening to see. the best case right now guys, the s&p consolidates sideways. maybe the momentum indicators come down the bulls could argue the next phase of the rally with the s&p up 18% on the nasdaq rebalancing, guys, i wouldn't worry about the close too much a lot of people don't understand this thing and you have to sell apple and microsoft dramatically and nvidia at the close because, of course, their weather is reduced in the -- weighting is reduced in the nasdaq 100. it's unlikely you will see big price moves. the indexers are efficient at getting interest on the other side and, sara, there is no rule that says they must sell te close. they must mimic the index and there's ways for them to deal with that even before today. just remember how this game works at the close back to you. >> okay.

good explanation thank you bob. bob pisani let's keep the conversation going. in the words of our next guest, better than expected does not mean all is well joining us now is sara house, wells fargo senior economist what are you concerned about, sara >> i think we're still concerned about just the ongoing squeeze we're going to be seeing on consumers and businesses as we head throughout this year, and the fed is nowhere near looking at a point where they're going to start cutting rates even as you're seeing improvement on inflation, that means you're going to see tightening and we think that's going to put consumers and businesses in a tough position, and maybe prospects for a soft landing have improved, but we think it's going to be a sluggish pace of growth going forward. >> it all makes sense, but it's also the argument that has been used for the last now year and a half, since march 2022 when they started hiking interest rates and against all odds, the consumer has held up really well

and the flounemployment pictures remained strong. >> we're starting to see cracks on both fronts look at the labor market, for example, we have seen hiring onshifts and saw 280,000 jobs added per month, down from 450 a year ago for that same time period we are also seeing other signs like the average workweek come down and i think generally speaking, less catch up hiring to do. when we look at the consumer, consumer spending has been augmented by the excess savings, consumers tapping credit, but those savings are beginning to run dry. we're seeing consumers less willing to access what remaining excess savings exist and, of course, credit has tightened substantially in the consumer space and we're now seeing both revolving and nonrevolving credit growth slow so i think some of the factors that have augmented the spending picture are beginning to dwindle, and that is contributing to that squeeze on consumer spending that we expect

>> what kind of growth numbers do you expect to see into the end of the year and next and are you below consensus because of that view? i think right now consensus has been downbeat, looking for a recession earlier than we are. we think that economy can continue to expand through the second half of this year, but it's going to be at a tepid pace probably gdp growth under 1%, and we're looking for what's likely to be a mild downturn at the start of next year you see pullback in consumer spending, particularly in that durable goods space, and we likely see the unemployment rate begin to rise and contributing to consumers getting more cautious on the spending plant >> you don't hear from consumer companies yet they expect a sharp deter rags and, if anything, we hear and see signs of acceleration recently in

consumer confidence numbers n some of the housing numbers, for instance, and some of -- even the manufacturing, i cited the philly fed yesterday we know manufacturing is hurting, but forward looking indicators showing things are improving. it's hard to reconcile that with what should be happening with the lower rates and employment gains. >> some forward indicators might be, but you're looking at the leading economic index down for the past 15 months and when you look at the hard data, even in terms of the headline improvement in the philly fed, if you look at the details, new orders combined with what's happening, you're looking at deterioration there and we did see industrial production manufacturing decline over the past month i still think that we're looking at a period of pretty sluggish growth, even as we're maybe not seeing things decelerate quite as much as they did in the first half of the year. >> all right

interesting view thanks for coming on to share with us. sara, wells fargo senior economist. appreciate it. all right. as we head to a break, check out the biggest laggards on the s&p for this morning you have inner public there, i would assume that's on numbers omnicom reported this week and that was not pretty either generally, there are concerns about the advertising market in a broad sense, and that stock has had a bad week as well we're ba aerhickft ts. ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪ (man) what if my type 2 diabetes takes over? (woman) what if all i do isn't enough? and relentlessly work with you to make them real. or what if i can do diabetes differently? (avo) now you can with once-weekly mounjaro.

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florida governor and presidential candidate ron desantis announcing that he has asked his state government to launch an inquiry into bud light parent company ab ambev over its partnership with the trans influencer dylan vul mueller vaineny saying, quote, at the end of the day there got to be penalties when you put business aside to focus on your

social agenda at the expense of hardworking people the decline in that stock, of course, which has been -- which was stunning, frankly, occurred more towards the middle and end of may as bud light rapidly lost market share amongst its core customers. desantis, of course, he loves to get involved in the culture wars most prominently with enemy number one still, which, of course, is disney. >> i was wondering what took so long for him and bud light this has been sort of a red hot target for him he's going after it potentially legally on the florida pension fund which owns roughly $50 million of ab ambev's stock out of the 180 or so billion and you have seen, you showed the stock price big under performance relative to constellation and molson coors whose brands have benefitted >> modelo the best selling beer in the country. >> now. >> bud light losing what a had

historically been the top position because of this, wading into the culture wars. interestingly, he would choose to enter this now, given that sort of seemed to have come towards its end, i guess i don't know i guess i'm wrong. >> it might work better for him than disney. disney is more popular, don't you think, with americans than bud light as far as a target on the political campaign, and i'm not sure ab ambev is willing to fight back as much as we've seen bob iger fight back. we haven't really seen anything from that company as far as response the bud light ceo did one interview i saw on cbs and didn't answer any questions about whether they regretted it or would do anything different. >> as for iger, a week ago he and i sat down in sun valley and i did ask him about his continued war or at least fight being brought to them by governor desantis. here's what he had to say. >> it's concerning to me that anyone would encourage a, you

know, a level of intolerance or even hate that, frankly, could even become, you know, dangerous action that could be turned into some dangerous act of some sort. so it's concerning to don't wae specifics except to say it's not our goal to be involved in a culture war. our goal is to continue to tell wonderful stories and have a positive impact on the world you know, we areal preeminent entertainer in the world and we're proud of our track record there. >> that feud continues as well >> i guess he's ready for a fight. desantis taking it to the national stage here. it's going to be really interesting now, this idea of using companies as punching bags in the culture wars. and whether that resonates. in the meantime, let's get over to dom chu who has a sector sort for us, dom we're seeing quite a divergence

here. >> especially when it comes to media stocks the market is generally higher, although we're losing steam as the s&p 500 heads for a weekly gain if it can keep this pace. interpublic, something david mentioned early on, is in negative territory after cutting its annual growth outlook. the marketing giant says tech clients weighed significantly on growth as those companies start to tighten their advertising budgets a bit. it follows a similar downbeat report from omnicom from the past week. both on pace for worst weekly declines since 2020. focus on media companies, advertising. we have more "uasqwk on the street" coming up. more stories coming up

president biden is set to hold a meeting this afternoon with top a.i. focus companies, including microsoft, google, amazon the white house saying it has secured commitments from these companies to manage the risks posed by a.i

of course, exactly what that means, we'll have to wait and see. it is worth noting according to our latest america economic survey, if you are concerned about potential a.i. risks, you're not alone steve liesman joins us with that story. >> david, interesting results. while the tech industry and the stock market, they're welcoming artificial intelligence thug-u enthusiastically, the cnbc economic survey finding widespread discomfort on the part of the public, what we call a.i. anxiety in 2016 when we last asked the question, 36% were comfortable with it and 59% uncomfortable for a net negative rating of minus 23%. today just 27% are comfortable, 69% uncomfortable. so, as more and more in the headlines and our daily lives, the net negative rating is now minus 42%. for almost every question we asked, majorities of every single demographic group expressing a.i. anxiety.

18 to 34, they're more uncomfortable. as you get older here and come down in age -- or come up in age, sorry about that, you get more and more uncomfortable, 78% uncomfortable in the age 65 plus when we asked about public-facing news about a.i., little acceptance. customer service, 66%. medical diagnosis and hate a.i. driving vehicles, 76%. looking at how groups have changed since 2016 professional managers were about even with it now negative in a big way. blue collar workers negative low income and higher income, both are more and more negative on it. what will a.i. do? 21% say it will make their jobs easier 10% say more difficult 18% says it could replace them in their job 49% don't see any effect maybe they're not paying attention. one question raised by these numbers, does the public's a.i. anxiety make it easier for lawmakers to pass regulation

there's a question if the public is right to be concerned or more education that's needed? david, sara? >> you would agree with the fear. >> of course i would, you know that, yes. and so would the people who are creating this. when the very creators of the technology are concerned about it, although not stopping, you do have to sit and wonder where we will ultimately end up. seems to be more, perhaps, about displacing jobs as much as ang zitd, but the longer-term anxiety for humanity. >> we were worried about the internet we've been worried about other -- >> wasn't worried it would end humanity. >> taking our jobs, that sort of thing. by the way, we'll talk about all of this with the commerce secretary gina raimondo after the break on that biden administration meeting with the key leaders in a.i she's representing the white house in those talks this after. don't miss that inrvteiew coming in a few moments "squawk on the street" will be right back

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good friday morning. i'm sara eisen with mike santoli live from the floor of the new york stock exchange. setting the agenda, a.i. leaders meeting at the white house, committing to the safe development of wall street's favorite new technology. u.s. commerce secretary gina raimondo joins