anticipated. guidance raised by a lot of companies. we are in the thick of earnings season we want to take one more look at where the treasury market stands. looks like the ten-year is at 3.9% two-year just below 4.9. we'll be back here tomorrow. make sure you join us for that right now it's time for "squawk on the street. ♪ good tuesday morning everybody. welcome to "squawk on the street." i'm david faber. that's jim cramer. he thinks he's on espn it's actually cnbc >> you are such a bad guy. >> carl has the morning off which, of course, he can already tell let's get a look at futures this morning. of course, you heard rebecca talk about it. dow, it looks like it may open down, but the nasdaq is one of the keys

that does appear to be set for a higher open. roadmap this morning starts with blue-chip earnings we have a parade of names such as 3m, ge, verizon we'll talk danaher -- gm, of course, speaking of that, we got an exclusive that will be with gm ceo mary berra. the company raised full-year guidance and increased cost cutting as well. quote, we were wrong morgan stanley's mark wilson saying -- >> what page is that >> page five >> mostly we hear we were right. it doesn't matter. at the same time he did admit he was wrong. he didn't eat crow he kind of ate sparrow >> all right we'll talk about mr. wilson. let's get to the earnings because it is a busy day, jim. i'll go where you want at some point during the show we'll obviously get to spotify

and gm and verizon and danaher and raytheon as well. >> i was going to go ge versus raytheon. >> let's start there, wherever you want. >> we finally got a quarter that you and i expected from culpa -- >> a long time ago so many challenges obviously power being a key one. he started to take the company apart as we knew eventually they would. health care trades as its own. >> -- >> it's an aviation company. >> yes here is what happened. remember how they make their money. it's a range of late mod else. you sell the engines, then 75% of the revenue share is maintenance. they're on fire. a huge number of engines growth is much better-than-expected david, here is the real surprise, onshore wind, very strong that's the spinoff next. >> that's coming in early '24, off the power generation

business. >> -- you can't buy the stock until you had a split off from very nova. the stock has run 25 points. it is a fabulous story there were remarkable increases and he's doing amazingly well. the only area that was soft was natural gas turbins. believe it or not, nuclear is going to be an issue >> renewable energy orders they say 8.3 billion. this is from the press release meanwhile, the stock has had a historic run, still down some 65 from the all-time highs we will remember back in 2000 when it had one of the, if not the highest market value of any company and traded at i think 45 times earnings there's no denying this move

>> i want to go over for a second what looks like the opposite ge competes directly with raytheon on engines, pratt and whitney. david, there's a weak haul of engines that raytheon made david, it's disturb ing because it looks like the airlines will have a lot of their engines on -- >> let's tell people the news. by the way, jim, they also said they were going to provide additional details during the earnings call. we're trying to get that the news itself from raytheon is the following. they anticipate a significant -- i should say unrelated to second quarter results, pratt and whitney has determined that a rare condition in powder metal used to manufacture certain

engine parts will require accelerated fleet inspection this does not impact engines currently being produced however, they do anticipate a significant portion of the pw-1100jm engine fleet that powers the 320 will require accelerated removaltion and inspections within the next 9-12 months 200 accelerator removals by september of this year. >> less than 1% of the engines however, 1200 of the 3,000 will be out of commission right now if you're one of the major airlines, you hate -- >> the 320, that's the airbus, right? >> yeah. but i'm say ing. >> greg hayes owned it people are saying, wait a second, maybe the free cash flow will be diminished dramatically, which it will be david, if you look forward, the

orders are quite great before you say, you know what? i've had it with this company. 13% order growth which is fantastic. >> again, we wanted to monitor the kauchlt greg hayes, frequent guest with us, although not this morning -- >> no, but -- >> -- resulting in a rare condition of powdered metal. they'll reduce cash flow expectations by half a billion >> maybe call him up you want to do that? >> we can try. >> we'll do it >> we can try. >> what is this? saquon we'll do. >> we're back to espn now? we've got earnings this morning. we have a lot to talk about. >> i didn't have to out you that

you were texting with -- it's okay oh, you never bother me about my texting during the show. >> you text about your dog. >> no, i don't i talk about trying to get news. >> can we talk about taiwan semi >> yes -- no why would we talk about taiwan semi when we have an entire list of earnings to get to? >> because you care greatly. adding $2.9 billion, but it's a packing plant for nvidia and amd. >> we've got to get through these earnings we went through raytheon we've gone through ge a bit. want to hit verizon? >> i want to take the other side of what could be a lot of people saying verizon is bad. they did $1.21 versus $1.16. but 324,000 home internet

wireless people looking for 267,000 home internet significance, home internet versus hand set. >> yeah. they added 384,000 fixed wireless access. a broadband product. that's 5g in the home. it's using wireless to get your -- >> negative for comcast -- >> and t-mobile has been very aggressive as we pointed out as well yes, it's a competitive threat to the likes of our current company comcast as well as charter. that being said, as we know, charter and comcast have been extremely competitive in the wireless industry. verizon's addition, though very, very modest of 8,000 post paid phone subscribers actually was better than had been anticipated. >> right >> you are seeing a bit of a rebound in the stock zblb do you think it's a false rebound i say that because do you think there's a possibility that by the end of the day verizon's

stock reverses as we hear other things in the call and we can do people a favor who are quick drawing it and saying this is the opportunity at verizon maybe there are issues we don't know. >> the stock had been pressured more recently by the cable concern. they have fewer than at&t, and then continued competition listen, big picture, you still talk about a company that's having negative revenues 3.5% revenue decline year-over-year adjusted ebitda was up 8.3%. wireless service growth was decent at 3.8% again, a bit of a positive response they are three times levered there is a belief they'll be cutting capx to some extent. maybe they're able to cut down on debt and churn was low

>> deutsche bank saying -- they're sticking by it and not talking that much about this it's important to keep into in front. they're, of course, talking about the 3 billion of peacock and whether peacock spends. >> we'll keep an eye on the broadband net additions. on the subject of lead cables listen to ceo of verizon talking about potential liability on the conference call. >> the likelihood of exposure to looed from lead sheath cables and doesn't run into individual homes or apartments, it's generally in locations that minimize the potential for public contact. >> so maybe that's defusing -- >> nobody involved with anything involved with groundwater or possible contamination has been

able to avoid litigation >> let's hit 3m. give me your take on 3m, jim >> i think mike roman is putting this behind him and instead has become an earnings story >> talking about pfas and the water con time nation, the $10 billion settlement they've reached. >> it's not every single entity suing them however, for the first time roman was able to tell a very positive story about growth. i think one of the problems with mass tort litigation is that every company that has told you that it's nothing including the fabled mention on page 63 of groundwater when roman took over every company that said don't worry about it seems to be out of sync with the plaintiff's bar saying let's find an aggrieved individual in some town who can sue them the fact there's little contact with individuals has meant absolutely nothing how much contact was there with

the individual in pfas roman did deliver the earnings it will be a battle royale between those who like that and the revenues. >> from the call on segment trends, mike roman, ceo, saying played out as expected we saw strength in automotive, both automotive and after market, excluding disposable respirators. >> -- >> -- also up slightly and continues to be impacted by lower post covid-related demand, notably bio pharma >> clean beat, david 3m is up. we'll have marry barra joining us shortly let's hit gm they did raise full year earnings guidance. some concern you were raising before we went on about free cash flow. >> free cash flow did not hit goldman's number, actually did not hit by a mile.

i do worry about that. >> even though adjusted automotive free cash is -- >> ebitda was 3.2 billion compared to goldman's 4 billion. they did the street number far more important we can talk about with phil, better the g mfrmts number does the less likely the strike will be back shawn fane who is the head of uaw, cut from a different cloth from the previous uaw heads. >> meaning what? >> he uses terms like billionaires making too much money, fat cats. you haven't heard that kind of language in a long time from the uaw as opposed to profit sharing. >> you think it leads to a higher likelihood that it leads to a strike? >> right the better you do, as shawn fane said, listen, i don't think it should be shared with wall street he uses terms, david, that

really resound to me like 1930s labor. >> gm was looking up as we have seen, it has turned lower. >> yeah. i gave you the ebitda number i think it's disappointing >> we'll get a lot from mary barra. >> you gave me short solicit on unilever you had to go about some deal reached by a football player. >> that's what you were texting about. seconds to go and you're worried about saquon still to come -- jim did find this on page six of morgan stanley's longtime market bearer -- >> page five. >> in which he said we were wrong. maybe that's the story later we'll have an exclusive with mary barra of gm. more "squawk on the street" straight ahead

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broader markets still in rally mode the dow riding an 11-day win streak s&p and nasdaq would be on pace for what would be the fifth positive month for those indexes in a row morgan stanley's longtime bearish strategist mike wilson saying, quote, we were wrong 2023 has been a story of higher valuations than we expected amid

falling inflation and cost cutting. jim, we have talked in the past about how hard it is for a strategist to get it right twice. mr. wilson, of course, is due plenty of praise for being bearish and correct for quite a period of time during that significant falloff in the market, but he didn't change it's always difficult, and you and i have seen plenty of these through the years to get a call right twice. >> i've made fun of him repeatedly with the dennis the menace references with regard to mr. wilson i will say he's not in the bull camp most of this note is about how he was right and then he just says we were wrong. the words "we were wrong" are not used in our business, typically because his boss would say i'm not paying this guy x to be wrong also, because it's very hard to eat crow if you're going to eat crow, do it on page five of a very long note that said, david, why he was

wrong i think he actually gives a correct analysis he's talking about the inflation switch, deflation and the companies are doing better i think the real story with what's happened is we broadened out and he was hoping we weren't. we were the magnificent seven and then in the past few weeks we had retail and wham mart doing well, retail doing well, health care doing well he was banking on the magnificent seven taking us down to some sort of abyss. it didn't happen it's a broader rally he spends a lot of time talking about inflation and deflation. i think you raised the key issue. when you've hit a home run on the short side, it's so hard to say, okay, everything i said that is bad is now going good ahead of a fed meeting he did say, look, what i said about inflation didn't really pan out. what i said about earnings didn't really pan out. so i have to be more negative.

yet, the rest of the note is about how he's going to be right eventually he did not join the bull camp. >> no. he didn't change his position. he said i've been wrong so far when it comes to the broader market, we're moving through earnings season now. multiples are going higher because the earnings are fine. multiples are going higher to his point, the valuation in this market is higher even with obviously interest rates at levels we haven't seen in a generation >> i think the problem that he ran -- eludes it he missed the 3m ge problem, big companies doing quite well regardless of the fed. he missed the fact that housing continued to do well look at pulte and sherwin williams today he missed the idea that you could conceivably have six companies well ensconced in the trillion and another about to be

a trillion he didn't understand the technology had changed generative ai is behind everything from the meta upgrade today to, frankly, a belief that may be -- i spoke with jonathan kantor last night, assistant attorney general for antitrust, that's not going away. >> no. >> the sherman act. >> after the bell we get both microsoft and alphabet and we're going to get a lot of conversation, as you might expect about generative ai for most of those companies. >> yes, incredibly so. nvidia obviously not today generative ai is about something that mike wilson did not understand. >> to be fair, that was a tough one to see coming. >> it was. >> after the break we'll get jim's "mad dash. opening bell 8 1/2 4i7b utz from now. don't go anywhere.

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s&p lagers, we discussed the pratt and whitney problem that eighth i don't know is facing right now, resulting in an almost 9% de klein i want to get to danaher and thermo fisher which often follows. that kind of rounds out some of our big losers so far as we take a look this morning. we're back right after this.

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let's get to "mad dash." going through the list of earnings that's where we want to focus. danaher, revenue down 7.5% year-over-year, operating cash flow 1.9 billion one of the great wealth creators

over a period of time other than more recently, that you can see has not been the case. that's a rarity for mitch rales and danaher. >> the way my club works, if i mention something on air -- i was going to tell you we were going to buy this is the third cut. it is the deepest. what matters the most is on the call they said basically we are at the bottom. remember, they are heavily levered to biotech orders. we're starting to see bye oh tech ipos. >> we'll buy when we're allowed to

why? we believe and waited for danaher to say, they refused and it might be. this has reflected poorly. larry culp, a danaher guy that had run the company, and thermo fisher is suffering primarily because it's in the same business it has not reported earnings. >> no. remember, we had a -- >> you go back and look at the performance of this company's stock price. it's been unbelievable >> what bothers me about what people don't understand, if you have a boom in ipos which i think there could be -- [ applause ]

>> they have a royal boost of numbers, and then come down. i'm a believer in rales and that's why we're going to buy -- >> all right -- [ bell chiming ] [ cheers and applause ] >> a recent listing. still happening. >> spacs are hanging around. >> you have to go to my friend michael over at jpmorgan about the incredible losses that people have with spacs it says a sucker is born every minute got to be very careful. >> one name we haven't gotten to yet this morning is spotify.

if we look at shares of spotify and the broader market with the nasdaq being the only of the major averages in the green. 7.5% by many measures, it was a very strong quarter trying to look through my notes, a very strong quarter. >> all-time high -- >> second quarter to date for net additions. they did guide to slower sub growth, jim, in part due to the fact that they have added so many subs in this reported quarter, and, therefore, they're expecting that things are going to get a bit weaker in terms of growth also, they may not have been saying this, but price increase. that sometimes can have the effect of slowing subscribers. >> the bulls are going to hope this is netflix from a quarter ago. but where did that get them?

the problem is twofold one is the forecast. when you look at -- most of the great tech companies pivoted for profitability. service now which pivoted to profit they were never really bad i think they'll have a huge upside exposed if you decided it's continuing to go for growth and not go for earnings. >> they don't earn money they had an operating loss -- >> i want nxp which had internet of things -- >> margins 24.1%, down 27 basis points. >> -- margins are up look, we're in a very brutal market for instance, the magnificent seven all pivoted. >> they are spending to grow and are still growing. >> that was last year's thesis

we wanted to see earnings. okay you had to see earnings. you had f-5, ge has earnings, sherwin williams had earnings, 3m had earnings. >> all right podcast, they cut costs at spotify as well. >> not their day. >> whose day is it >> larry culpa pulled it together onshore wind no one is talking about that that is the place where they made the money by the way, one of the best performers all time is a company kaud cadence which makes the casing for nvidia and a bunch of other companies and they disappointed

>> cadence you're talking about, we moved on from ge. >> our viewers like that. >> they do you think they follow you? i can barely follow you? continue on cadence. it missed why? >> cadence did not deliver the upside that everybody is used to, but the next quarter is going to be terrific what i'm trying to do is provide situations where i think a market has a stock wrong spotify, the market has it right because they didn't pivot towards profitability. cadence the market has it wrong because the next quarter is going to be good ge is up 6 let's not forget, i continue to be focused on alphabet not sure they had the cloud growth and very concerned about what jonathan kantor said last night on "mad money," an ongoing

gase of mon opinion laos companies are regarded as bad actors i had a clip i did for cnbc.com which very pointedly says you better care. >> i want to hit a couple of things in my old world of m anda amazon still trying to buy this company irobot ftc still giving it a hard look. antitrust continues to be a question there that said, they lowered what they're willing to pay it had been 61 a share, now 51.75. amazon is the buyer but its stock isn't going to renext anything having to do with this deal we've reached an amended agreement with amazon that reflects the new debt is what the chairman and ceo of irobot had to say they're taking on new financing they

they >> -- how about adobe buying -- full-scale review over in europe figma, that's a $20 billion acquisition. adobe has been a remarkable stop and will continue to do so the $20 billion for figma may turn out to be a good buy. >> real quick. i want to come back to the coverage of amc. i failed to discuss this because i hadn't read everything the judge is going to eventually approve this it would appear that that's more likely than not. that's why the shares are well down from the more than $8.00 when we initially got the ruling judge certain accepted the release which resolves and eliminates the underlying cause of a recent rejection of the settlement namely that would allow them to basically raise new equity by issuing these

units or converting them to common she suggests she remains on track to approve the settlement. a final resolution could take some time. jim, i did want to put that out there because in the -- world there are plenty of people playing that given the big moves that could take place in both those securities. >> i agree what i felt really important for people was it was one of the most confused rulings i've come across both the plaintiffs and the defense agree. they had this case and the judge basically threw it out which is ridiculous i think adam aron and -- this was a show that was put on. there were 3,000 memesters that sent submissions into the court. hello. >> the feature of the morning is turning out to be raytheon rtx shares down 13%. >> i said thing is something --

>> after the company reported earnings it is not earnings impacting stock this morning it is that it is concluded condition in present rare instances in powdered metal produced from approximately the fourth quarter of 2015 into the third quarter of 2021. >> 1200 of the original 3,000 planes are going to be on recall if you had a narrow body you thought was going to take off today, maybe not. >> pratt anticipates by mid september, approximately -- will be removed for enhanced inspection they anticipate another thousand will need to be removed from the operating fleet for this inspection within the next 9-12 months. >> -- you're not going to make your numbers. >> i'd like to ask phil lebeau about that he's going to bring us mary

barra. >> greg hayes owned it -- by the way, defense was better which i thought was good. >> we've done very well in terms of getting through my list. >> we haven't done jack. >> sorry we haven't done jack i thought we did well. >> coinbase -- >> it's earnings day we're all about earnings what have you got over there >> sherwin williams, pulte home like horton didn't react well to the good number. people saying, listen, maybe mike wilson is right still to come, an exclusive with gm ceo mary barra let's give you a quick look at the bond market this morning as well checking out how treasuries are faring what have we got i know we've hit some ten-year healed near a high of 3.916. you can see where we are in the two-year, 4.887.

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let's squeeze in a quick tease for mad money before we get to mary barra in a moment. >> are you worried about alzheimer's? >> i'm worried in general about it. >> if you want the soon to be eli lilly drug, you'll have to prove you may have the possibility of having alzheimer's. you want to find out if your relatives have it and you need an mri brain scan to see if you have plaque buildup. you're not going to be able to get that incredibly expensive

drug unless you have plaque buildup. >> the way to find it is through the machines they make i love it. >> numbers are good. >> not bad numbers >> -- >> can i sneak in nvidia for ten seconds. taiwan semi -- >> after the break we'll have an exclusive with gm ceo mary attoa. th sck is actually down. we'll get a read on the earnings we're back in two.

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general motors reporting second year guidance that rose phil lebeau will dig into the numbers with mary barra. >> mary, you heard david set it up well. monster numbers for the second quarter, raising your guidance for the full year, but the stock is selling off right now, and i think in part because people are wondering about the additional cost cuts you guys are putting in place as well as pullback on capital expenditures and the question of whether or not you're hitting perhaps a bit of a rough patch over the next year or so as you may be slow to ramp up evs

what do you see to the narrative that seems to be circulating a little bit out there >> if you look at our ev ramp-up, we said 50,000 the first half of this year, 100,000 in the second and cumulatively 400,000 by the middle of next year we're still on track to do that. the reception we're seeing from the products, especially now with the lyric starting to get more into customers' hands, and that will ramp dramatically through the end of the year as will the hummer. he looked back to see how do we be more cost effective and demonstrate cost discipline across all areas of the business and how do we make the capital we're investing do more. we still intend to cover 90% of segments in especially evs we pretty much do that today, by 2030 we're on track to our plan we'll keep executing and making sure we earn customers because we've got the right products. >> mary, you guys announced

you'll be putting in manual battery module assembly stations at a number of your facilities because of a problem with one of your suppliers when it comes to the battery platform i know you're targeting 100,000 evs produced in the second half of this year, but that has to be a headwind >> well, clearly we're disappointed that the module assembly -- the actual assembly line for that has not been on time, and that is causing us issues we're doing both automated lines and manual lines the manual lines are something that we'll be using in many places, especially as we bring more and more plants up with ev capacity we're also bringing ought maeted lines in well. we're doing both to not only deal with the situation we're in now but to make sure we stay ahead of module production on

our way to a million evs in north america by 2025. >> mary, good morning, jim cramer good to see you as always. >> good to see you. >> there is an uaw president shawn fane, using language i haven't heard in 30 years. i think the recommendation that he has from his -- that he feels his rank and file want is for really kind of retaliation against multiple years of the uaw work to make it so everybody wins is the rhetoric just rhetoric or is there going to be a strike, mary >> well, we're doing everything possible, jim, to make sure we're getting to the table, which discussions have started with the uaw, we get to the real issues we want to do the right thing for our employees. if you think about our manufacturing employees specifically, what they've done over the last several years of getting back to our assembly plants following safety protocols through covid and the strong demand for our products,

they're responding to that as well, we think we can find an agreement for the right things for our employees and allows gm to remain competitive. that's what we're going to work on we're having those conversations. in my mind we can get to something that meets everyone's needs without a strike there's two parties involved that's the path that we're on and the mission that we're moving forward with. >> one of the things that is disturbing, is the uaw leadership was at the white house for greeting senior staff and position at the west wing. it's almost as if we have a nun president who agrees with mr. fain, the unions haven't gotten a good deal here >> well, we're very proud of the, you know, the compensation package that we have for our manufacturing employees. we think it is -- is very strong there's always aspects of it

that we can look to improve and, again, while we're maintaining our competitiveness. we're trying to make sure that all parties involved and people with interest understand where we are, have the facts we can get to an agreement without a strike and that's what we're going to work hard to do. >> mary, it's phil again on your ev cadence of new models you have the silverado going into production, the chevy blazer, the equinox and the bolt which you announced today. do you believe that lower end of the market, sub-40,000 as far as an ev, is that the growth target or the growth area in terms of ev adoption in this country? >> absolutely. and when you put that in hand with charging because what we need to do is win consumers that only own one vehicle and that are price sensitive. by having not only the equinox, the ev, in that space, as well as the chevrolet bolt that is

just really strong from a consumer perspective, that gives us the ability to offer some choice in that space, at two different price points, at the lower end, and with everything we've done from a charging perspective, allows customers to choose an ev because they can have it as their vehicle for everything, especially with robust charging network. >> you've been to china in the last couple months and you have a huge business there. and yet, everybody is looking at the incredibly competitive market when it comes to electric vehicles there the price cutting that is going on there do you see that ending any time soon, or do you think this is a case where we're going to see the chinese automakers continue to be extremely aggressive when it comes to cutting prices >> well, you know, we need to compete in that market we have very strong, low-cost products coming out of our joint venture. from a affordability perspective with the higher ends of buick

and cadillac, they're making sure we have the right price points an vehicles to compete. my expectation is, it's going to remain a very competitive market when you look at the fact that there's over 100 new chinese domestic ev automakers, there's only 50% capacity utilization right now, i think at some point it's got to sort, but in the meantime we expect and we're going to, you know, be in that market and look to compete and win based on our products and on the fact that we can be efficient. >> here in the u.s., interests for auto loans remain very high relative to where they were a year ago, and yet, look, your average transaction price is $52,000 for the second quarter, essentially, for your new vehicles and demand remains strong are you a little bit surprised at the resiliency of the consumer here in the u.s.? >> well, i think it's not only the resiliency of the consumer, but i also think it's our specific product portfolio when you look at the high end what we have from full-sized trucks with the premium models,

the off-road models, i think we're showing very strong because people want to buy our full sized trucks and suvs we can't make enough of them the mid sized truck the colorado and canyon are doing well and consumers are leaning toward some of the higher content, higher vehicles. but i'm extremely proud of the chevy trax which is doing very, very well. it's affordable, it's a great vehicle. i've driven it the technology on it, the safety fierce so we're at both ends of the market i think doing very well because we have products people want to buy. >> mary, one last question you're going to be inducted into the automotive hall of fame i believe in the next couple months here. you've been running general motors for almost ten years. you certainly still have the energy and the desire, know that from talking with you, but how much longer do you expect to be in charge of general motors before you say it's time to transition to new leadership >> well, the board makes that decision, not me as you said, i think this is

some of the most exciting moments in this industry and a very, very long time when i look at the product portfolio i've been working with the team on for several years now, is just coming into the marketplace, not to mention crews, with the strong points that kyle made during our earnings call of the growth we're seeing the vehicles are safe, we're there, we're now i mean, they are an a.i. ml company. i think we just have incredible opportunity. i don't plan to go anywhere. i'm very much looking forward to all of this technology unfolding and people understanding the true value of general motors. >> and we look forward to talking to you in the future, many more times. mary barra, general motors, ceo, joining us from the company's headquarters mary, thank you very much. david, i'll send it back to you on a day where, look, the numbers for the second quarter for gm, unbelievable i mean the demand there is for their internal combustion engine vehicles but the market right now is pushing shares lower on

the concerns about cost cuts and ev ramp up. >> yeah. don't forget the strike. >> and the strike. >> you're not going to go anywhere. >> no. >> we have another story in your beats we're going to be following this morning, we have been, as you know, which is this significant decline in shares of raytheon. >> phil has the beat on this. >> the airlines are down as well greg hayes is going to join us we're happy to hear that greg will be joining us momentarily to discuss this pratt and whitney engine issue going to bring a lot of assessments of these engines and enhance the inspections. for the airlines as well all of which are down by the way. stock price wise jim is going to hang around for that we're back after this.

oppenheimer is magnificent. the new york times calls it staggering. it's utterly enthralling and one of the best movies of the century. welcome back to "squawk on the street." rick santelli live with breaking news first day of a two-day fed meeting. consumer confidence for the month of july expected up to be

around 112 our last look since january of 22 it is improving to 117 in order to be a higher number than 117, i have to go all the way back to july of '21. let's call that two years. solid number present situation, 160 in the rearview mirror. 155.3. 160. have to go back three years to march of 2020 to find a higher number and what lies ahead in the form of expectations, 88.3 that's the best level since january of '22 these are robust numbers now let's look at richmond fed for the month of july and realize that we've had six consecutive month over month numbers. now we have seven. minus 9. close to expectations. the worst negative number we've had in the series was minus 16 and that was in february of '23

of this year now if we look at the service side of the equation, richmond fed business conditions, we're expecting a number around minus 9. minus 8. that follows a negative revision from minus 12 to minus 14. minus 8 is the 17th consecutive negative month on the service side 17, now in a row why is that important? service side is what's the fed's watching most closely. i don't really want richmond fed to have negative service side. it does go a long way if the rest of the country moved in that direction sara, back to you. >> rick, thank you rick santelli. good tuesday morning welcome to another hour of "squawk on the street. i'm sara eisen with david faber and jim cramer, with us ahead of a special guest in a moment. we're live for you as always from post nine of the new york stock exchange carl has the morning off stocks, s&p 500 holds its gain a small one today. it's being driven by technology

communication services and health care and discretionary. dow is negative thanks to boeing, mcdonald's, travelers. industrials and financials are lagging today. we've got a lot to talk about when it comes to earnings. i always like to pull out, and jim, the macro takeaways what we're learning about the environment, especially from the industrials which are so important and have been sold off lately we're going to talk to raytheon in a moment. the quote i pulled out in the overall environment from the ceo greg hayes on the call global commercial air traffic remains on track with our projections for very robust summer travel season driven by incredibly strong consumer demand this dynamic is reporting strength in the aftermarket and growth across the globe with revenue passenger kilometers tracking at 29% of 2019 levels other issues to talk about with raytheon, but i thought it was a strong statement at least on the consumer we know the consumer is prioritizing travel where the action is. >> what we're going to talk to

mr. hayes about momentarily is the issue with pratt & whitney that's going to result in taking a lot of engines out of service for some period of time. c contrast that and back to industrials with ge which had a strong quarter, the stock is off of its highs but up nicely this morning and in part, powered not just by aviation, but wind. >> wind. looks like it's better onshore, not offshore. one thing is funny, if you look at the ge building, stares at the gillette side. the reason i like this allah gory, ge makes its money on the maintenance and repair of engines. 70%. it's going to be extraordinary because planes are being used and used flip side. it looks like they won't all be in use because of raytheon and what david talked about with pratt & whitney and why all the airline stocks are down. >> selling off today boeing biggest drag right now on the dow.

we did get other signalsp on the consumer which you know i'm always looking at. unilever, kimberly clark raised guidance these are staples which do well in good times and bad. the commentary is pretty good. here's unilever from the call on the u.s. market which we pay close attention to it continues to grow while inflation eases. however, sentiment is dropping and consumers are starting to show signs of caution. private label growth has picked up across the market but in ice cream and in dressings in this context unilever delivered 6.7% growth balanced between price and volume growth. lower inflation, moderating inflation, except for ice cream, and more cautious consumer. >> they're claiming they're going to get a lot of price and they don't have a lot of inflation. that's true. it's up to 7% which is terrific. i point out that walmart today in a big upgrade by piper is saying point blank the trade down is real the great value brand is doing well we are at the crux of what i

think is going to be a battle royal for procter & gamble when they report on the 28th. where do you think it comes out? price or have they been beaten by great value >> how it's been going, we saw this from kimberly, they're continuing to get price but warning that there are some shifts in the consumer it's nothing like the great financial crisis where everybody traded down to private label not seeing that at all. >> when you go into a walmart, it's really incredible how they push the great value and they are the same i've sampled everything. i don't want to get too far afield with what's going on with raytheon, but i think the crux of what's going on right now, unilever bucked the trade down because of good brands but the trade down is here and the price between -- between walmart and another company you cover well kroger is dramatic. >> you got to it we didn't get to it in our hour, but you managed to hit it here i wouldn't let him talk about unilever i don't know why. >> it happens overnight. he doesn't care about overnight. >> one thing we did talk about a

lot in the last hour, of course, is the significant slump in shares of raytheon they're at a nine-month low. the reason is not earnings the reason is a disclosure of an issue with powder metal for the pratt & whitney engines. let's bring phil lebeau back, and he is joined by raytheon ceo greg hayes. >> thank you let's bring in greg. let's not waste more time. greg, david set this up. what is the issue in layman's terms with the gear turbo fan engines in question and the powder contam najtss you're doing the inspections for. >> phil, i really need to maybe put this in perspective. back in 2020, three years ago, we had an incident on the v-2500 engine, the engine that powers the a-320 before the gtf as a result there was a turbin disk failure we did an investigation and determined based on that investigation that the powdered metal that was used to form the

disks had a contaminant in it. as a result of that, we began a process of inspecting the v-2500 fleet as well as the gtf fleet across all of our programs we've inspected about 3,000 disks, turbin disks and based upon what we have seen recently there's been a concern we need to inspect the fleet more rapidly. so again, we've inspected all the v-2500s. we're going to have to pull in about 200 gtf engines, the a-320 fleet, pull in about 200 and do an inspection, we expect a very small fallout rate, once we get done we have to inspect another 1,000 next year. this is simply a manufacturing

quality issue with the powered metal we use to form the disks it's a problem for the airline operators and it's going to cause some disruption for the airlines, but it is not going to be a major, major financial impact beyond the initial impact that we're going to see as we work with the airlines to compensate them for the disruption and tool up to do all of these enhanced inspections. two-part question. this is not an immediate flight of safety issue, correct this is an issue where you want to correct as soon as possible but not like the airlines have to shut these planes down, right now, correct the second part of this is, you mentioned that this is going to be expensive on the conference call how expensive will this be for rtx? >> so let's go to the first issue flight safety. obviously, flight safety is our number one priority, number one priority of every airline out

there of every oem this is a quality escape where we are based upon our safety risk assessment, doing some proactive inspection to make sure these anomalies that happened in the powder metal don't propagate in terms of ending up in a failure of the disk we're going to pull these the quickly, take a look, we expect a small fallout rate to the extent that there is a disk that needs replaced we'll do that and get it back in service. in terms of the financial -- >> sorry. >> go ahead. it's david i thought you were done. sorry. >> i was going to talk about the financial impact estimated about a $500 million cash flow impact this year and that is to -- due a number of things we have to increase the shock capacity to do the inspections 13 overhaul, and wear 're goingo add six more we're going to have to put

vertical assets in place to replace engines as we pull them. and we're going to have to try and work with the airlines to compensate them for some of the costs associated with this that's the first $500 million. i can't tell you today what the ultimate financial impact is, but if you think about it, pratt is a $23 billion business. rtx is or 73, $74 billion business this is not a major financial impact over the next couple years. obviously, the reaction of the market has been pretty dra cone yan, but this is not a major impact. >> greg, it's david. you'd mentioned, though, that you had been conducting these inspections, i thought, for some time, and that you made a decision to accelerate i'm curious as to why or what you saw that was behind that decision to accelerate >> we have been inspecting since we had the failure back in 2020, we've done about 3,000

inspections of turbin disks across the fleet and found a small fallout rate one of the things that we found recently is that one of the contaminants that we had identified is actually the cracks are propagating faster than what our safety risk assessment said. so as a result of that, as we take a look at the living model of these parts, we recognize they're not going to have the life that we expected, and so as a result, again, flight safety number one we're going to pull these divgz back, the engines back, inspect the disks to make sure we don't have a problem down the road. >> how long does it take to do an inspection? >> inspection i call it a one shift inspection the hard work is you're going pull the engines off of the aircraft, going to have to shift them back to one of our overall centers, we're going to tear it down, and that process will take a couple weeks the actual inspection itself is

probably a shift, maybe eight hours. if the disk is bad for whatever reason, put a new disk in. we have plenty of capacity there. then you have to reassemble the engine and ship it back out. i'm guessing beginning to end is pro 60 days. >> i believe the faa is not going to be crazy about this judging by what they did to ge what they did to boeing over many years i want to focus on what you're talking about for the airlines, you're going to cut a check to them >> look, you know, to the extent that we caused disruption to the airlines' operation as a result of engine unavailability we have support agreements as part of our maintenance contracts with the airlines so what form that compensation takes will be different for each airline. we recognize this is a big disruption to the airline. we should be clear, too, as it relates to the faa, jim, we have been keeping the faa informed of

this process for the last three years. there's no surprises here. we're going to issue a service bulletin probably next week and expect an air worthiness directive issued in august, but probably -- we don't expect any surprises from the regulators. >> are the airlines watching you right now and discovering this for the first time as the stocks seem to indicate >> we have been talking to the airlines for the last three years to let them know, again, started with the v-2500 and as it's progressed and done inspections, so the acceleration of the inspections is news to the airlines we've been talking to them for the last several days about the impact i think what's important, we pushed the recall date to september 15th so we get by the big summer travel season, the fall is generally a down time for the airlines, and keep in mind that of these inspections or these 1200 inspections over the next 12 to 18 months, a big chunk of those were going to be

engines that were going to come back to the shop for overhaul. it's disruptive, but it's not disruptive to the extent you put 1200 aircraft on the ground. 1200 engines out of a fleet of 3,000 and it's just the a-320 fleet. >> greg, it's phil again the gtf has had some issues when it comes to hot and dusty climates the operation witness hot and dusty climates we're having record heat waves in the southwest, the southeast, good chunk of this country i mean, we all know this is where the world is headed in terms of hotter days more often. does that give you pause in terms of what your expectations are for the gtf life cycles? do they have to be adjusted as you are looking out as to how the engine will perform over time >> phil, it's interesting. think about just heat in general, airplanes don't like to fly in hot days. obviously, it puts stress on the engines. the issue that we have had is not so much heat, as it is,

environmental contamination. when you're operating in places like the middle east, like india, like africa, where you have a lot of pollutants in the air, it is those particles that get caught into the blades and block the cooling holes that is the problem. it's not the heat so much as it is the particulate matter in the atmosphere so right now, i would say i don't see a big issue across the u.s., despite the heat wave or across even europe really, as long as the air is relatively benign, the engine can operate just fine. >> greg, thank you very much for joining us greg hayes, ceo of rtx joining us on a day where we're seeing what stock is doing. we appreciate you joining us david, guys, i'll send it back to you. >> phil, thank you yeah good to get clarity or at least smchz we know. stock came back ever so slightly, jim but it's still a significant down day for rtx

because of this issue. anything you heard of importance >> i think that -- >> helping you understand? >> what people have to understand, everyone is pretty captive. it's not like they can say i know what, we're done with pratt & whitney. we're going to ge. we are really angry. that's not the way the business works. people who think long term it will want to own this stock after we get downgrades tomorrow and number cuts. but when i spoke to greg this morning it took my breath away, even though it's less than 1%, because like, if you look at the airlines, and you look at peak season, you know, he's talking about a few hours, 60 days. >> 60 days. >> geez, this is -- i mean these guys are making money hand over fist or we thought they were and if you're running delta, which has had a great quarter, suddenly you have to say, we have to take numbers down and that's what matters. >> is it that disruptive >> they have to take numbers down a-320. it's everybody narrow body. >> to your point, raytheon raised guidance except for free cash flow which they lowered on

this issue, because of demand in the defense outlook and aviation. >> otherwise fundamentals of the business were strong. >> well, he -- >> they accelerated the inspection program because they start to see that things - >> what boeing has to say. what will boeing say i think in general the reverberations are sharp because it took my breath away i did not know about something that happened many years ago in plant that is coming back to haunt them the idea -- of course it's safety, but i think if you're listening and american airlines saying oh, my god. what flights do we have to cancel >> as my kids would say come on. >> really. >> new expression. come on. >> how are you kids feeling about kroger versus whirlpool or walmart. it's funny when you speak to someone like greg, he's such a straight shooter, that you don't get any that is a ray of

sunshine he went over with me and said we did this, but you've got to know, and spent 20 minutes talking about what was wrong most don't do that. >> who wins? who gets market share out of this >> look, obviously, ge should, but again, these are - >> long short-term assets. >> i want to find out what does it do to boeing? maybe boeing is down and shouldn't be >> i have to go. >> thanks for sticking around. >> thanks for letting me in here. >> my kids say come on when they get an answer they don't like. >> great to talk to your kids. >> they're at a fun stage. jim cramer. >> i just love jim cramer. i don't know. >> i bought every one you can. every one is sold out on amazon prime i brought every one of the i freakin' love you camers i bought every one. >> who makes it? >> jim cramer company. >> jim cramer. >> come on >> come on all right. thank you.

let's turn to the macro outlook, news from the imf, updated the baseline forecast from april saying now first quarter resilience has led to a modest upward revision in its global growth projections, but still remaining concerns about the medium term. imf chief economist joins us now. it's good to see you how encouraged should we be about this improvement in the global growth outlook? >> look, this is a piece of good news, and it's always good when we have a piece of good news we have the slight upward revision in our '23 forecast from 2.8% to 3%. so there's a little bit less of a slowdown from last year. and, you know, we should celebrate that at the same time we shouldn't celebrate too much because, you know, growth remains low by historical standards and more importantly, what we're seeing is we're lose something momentum into the second half of the year and inflation concerns are still there with us. core inflation underlying inflation pressures outside of energy and food remain quite elevated not out of the woods yet.

>> there's currently a federal reserve meeting going on, first day of two, and we're expecting them to lift interest rates tomorrow are you saying it might not be a good time to end the hike in prices after that? you see inflationary pressures and clearly the environment is improving. would you like to see them keep hiking after tomorrow? >> look, i think that we can all agree that unless there's really bad news on the inflation front we're very unlikely to see the outsized interest rate hikes we've seen in the last year. having said that, i think it would be too premature to ease monetary policy at this point. whether they increase by 25 basis points or stay constant or -- but the important point is it's going to have to remain tight for some time because we have in the u.s., for instance, core inflation is projected at 4.9% for this year and, you know, central bank targets are 2% we're still far away from home here. >> nobody is talking about easing until next year

are you saying the market has it wrong when it comes to cuts starting in march? >> we're saying we're not going to see an easing until some time into next year we might see moderate hikes until then and more if inflation surprises on the upside. we should not discount this. i mean, in fact, when we look at the inflation numbers, headline inflation has been surprising to the downside, but core inflation has been surprising to the upside you know, we are revising our core inflation not just for this year, but for next year as well. next year we're projecting 3.1% for the u.s. that's 0.5 percentage point up. >> yeah. >> it's no easing in sight well into next year. >> yeah. it's not a target and to powell's point a few weeks ago, he doesn't expect to hit target next year. i'm curious, how china factors into your global outlook here. that has been a disappointment so far this year on the economy

side. >> china certainly the rebound has been strong in the first quarter, but there are signs it's losing momentum and a number of data that has been coming in suggests the second half of the year is going to be significantly weaker our projections for china on growth haven't change from april. we're at 5.2% because in part we're anticipating that there might be some of this momentum might not last the big change for china we're seeing downward revision in their inflation numbers, both headline and core inflation are revising downward quite a bit and that's one of the reasons why global inflation is heading down in the -- has been revised down in our new numbers because of china's big downward revision and so that is putting them and their inflation numbers are close to 1% for the year, so that's fairly low. we expect it will pick up some into next year as consumption rebounds and as confidence returns, but probably the chinese authorities will need to

implement some measures to support the economy as well. >> i'm surprised you haven't taken down growth forecasts since your april report, most of wall street has been taking down growth forecasts as the data has disappointed why have you not >> well, we were lower than other for example. in the sense the rest of the forecasters have been aligning more with us than the other way around. >> so you're still at 5.2 and you think they can meet their growth target but they have to stimulate to get there >> at this point we think that's right, yes. >> we got the meeting even overnight and the market rallied on it but doesn't feel like they're taking out a bazooka. >> we're thinking we need to do both on monetary policy with interest rate cuts and also with measures to support on fiscal side to support the households more decisive measures on the property sector to solve this housing units and make sure it doesn't weigh on the confidence and activity going forward. >> my final question is, it's a

pretty rosy report at least relative to expectations so do you believe in the soft landing or as i've been calling it lately the immaculate disinflation where central banks can pull it off and bring inflation all the way down without taking us into a recession. >> it's not too rosy let's remember 3% growth is nothing to brag home about but it is true that -- >> it's not recessionary. >> in the u.s. we see a slow down of growth to 1% next year it's fairly weak it's fairly vulnerable as well a few shocks might knock it off that path, so there's a narrow path to avoid a recession if you want in the u.s. we still think it's doable. >> great to have you here today, fresh off the new report from the imf. as we head to break, our road map for the rest of the hour more on the earnings movers, spotify to verizon we're breaking down the

takeaways. >> what do you do with gm? highlights from mary barra's interview last hour. >> finally, the fed as mentioned kicking off two-day policy meeting. what investors need to know and why evercore says to bet on energy here. big show still ahead dow has gone positive in the last few moments up 13 points. we'll be right back. you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. (vo) it's time to switch to verizon. sadie did. and now she has myplan. learn your way. not theirs. td ameritrade. the first unlimited plan that lets her choose exactly what goes in it. now she gets to pick only the perks

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30% of the s&p 500 reporting

results this week. we got a number of tech names, the biggest, in fact, amongst them at least some alphabet, microsoft, out after the bell and meta results after the bell tomorrow, sara a.i. going to be very important, generative a.i., when it comes to alphabet, when it comes to microsoft, and meta, all certainly going to be focused not just by the company but we'll expect questions from the analysts as well. >> the expectations are high already because these the stock had amazing run-ups so far this year one out from dan ives at wedbush, these are the beneficiaries the alphabets and microsofts, for 2024, a.i. could comprise up to 8 to 10% of overall i.t. budgets versus 1% in 2023. so the ramp is happening. >> the ramp is happening another question, of course, is at what expense? what do you cut back on? a pure 8% increase or do you actually reallocate? which is the case.

>> for everybody else. >> yes. >> it feels like the market is giving permission to spend on a.i., nothing else if you're going to compromise margins on something, maybe a.i. budgets. what will be key to hear from microsoft and alphabet, they are exposed on the macro front, is a.i. offsetting that and in terms of what the companies are doing allocating more or like the semiconductors, is it going to be more cyclical story in the near term? those stocks mixed into earnings >> nvidia shares are up again 2.75%. in part we have sharing news from tsmc, the biggest manufacturer of nvidia designed chips. they'll just, you know, there's a shortage, basically, and so when you want to look for the beneficiary, oftentimes you need nothing more than take a look at nvidia's stock price $1.3 trillion. >> sitting on top of the qqq's

ahead of microsoft and apple today. the biggest gainers on the overall s&p 500 this morning again, the winners today, as david mentioned, are in the information it technology. the chips and materials are having a good day. that sector is up 2% and technology, utilities, energy and communication services are the winners a lot has it to do with earnings 3m up 5% off earnings. we'll be rightac bk. meets bo, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

welcome back to "squawk on the street." i'm leslie picker with your cnbc news update. the biden administration is pushing for better health care coverage for mental health treatment. the white house announced today new regulations that would require insurance companies to study whether customers have equal access to medical and mental health benefits and make adjustments if they find they do not. the rules still need to go through a public comment period. the woman who claimed she was abducted when she stopped to help a wandering toddler in alabama admitted the whole story was a lie.

carlee russell's attorney revealed the 25-year-old was not kidnapped when she vanished this month and apologized on her behalf to the community and everyone who helped search for her. and the design for the paris 2024 olympics and paralympics was unveiled in france today the round torch is symmetrical from top to bottom and has a ripple path that represents the water of the seine river where the opening ceremony will be held next summer back to you. >> leslie, thank you cnbc out with the latest fed survey after a two-day policy meeting. steve liesman joins us steve? >> david, some interesting results. the probability of a recession next year dropping below 50% and respondents think about a real chance of a soft landing for the u.s. economy how are stocks priced if there is a soft landing, overpriced.

7% say significantly so, 40% say somewhat, just what is it 30% there believe that they are correctly priced at 20%, see them as under priced so this group still believing that stocks are overpriced relative to a soft landing scenario and that's why when we asked them where the s&p is going end the year, not much changed from where we are now. down just a bit before they get to about a 5% or 4.6% increase next year. there is less risk now in stocks we look at the probability of a 10% increase or decrease to get a sense of how much risk is out there and that risk is narrowed. it had been minus 15, the difference between the two, and now minus 8. a sense risks are balanced recession probability has come down because of the perception that less -- there's less systemic risk in the financial system 72% seeing it as above normal in march in the wake of the silicon

valley bank failure that has fallen in june, now below 50%. what might be holding back, respondents more bullish on stocks, even while risks have come down, they remain elevated. recession risks below 50% and the financial risks above normal how high does the fed go and does it create a recession just one more ike. most fed officials see two and some see more than that. we have to solve that problem. >> i wonder, i'm going to throw two factors out there for consideration and how the fed views this so we have a potential looming strike of 340,000 ups employees by august 1st if they can't reach a deal and the fed can say it's not a long-term inflation driver, but could be a short it term one the fact that grain deal is blocked in ukraine by russia russia attacked a port, another

sort of backdoor port in the river. these can affect the inflation outlook and wonder if it's worth discussing >> i think they're 100% worth discussing both of them and the first one certainly. the strikes that are out there, i think they speak to the fed, sara, of a still strong job market i don't believe these union guys would play this brinksmanship if they didn't feel good about the job market out there and their ability to bargain in addition to whatever the issues are regarding wages and pay and what's going on in the work place there i think that's a signal the federal reserve gets and i think the other part, which is the knock on potential effects of what's going on in ukraine and higher food prices, all of it combines to give the fed pause and make them less about the idea of inflation coming down with the possibility that they're going to be as they say, bumps along the way when it

comes to bringing inflation down i think the trajectory is in the right way, going in the right direction, but not a straight line down and the fed is going to be cautious here. i lean more toward thinking there's two hikes in the pipeline rather than one. >> me too. thank you. by the way, that's what they found out in the '70s and i know they've been studying that steve liesman. our next guest expects a rate hike and hawkish tone from jay powell a year-end price target of 4450 for the s&p 500 and joins us now here at post nine. we've surpassed your price target what do you do do you raise it? >> no. for us at this point in the last week or so, we've seen a little bit of a shift in momentum very much first so first quarter earnings season and the second quarter earnings season. stocks did their own thing, they went up on earnings, down on earnings last week when we saw some of the bigger cap tech names have

adverse price reactions you drag the index down for us this is like a rotational environment. we think there's a churn positively speaking to the overall health of the market when you look medium to long term, you see buying financials again in large part to what steve alluded to is that the financial crisis risks have subsided we like that we think there's more of that to come and think there's more buying to come in energy. >> as we just talked about, a risk of two more hikes, maybe more, maybe higher for longer. that's not priced in the market right now. isn't that a downside risk >> i think people are getting comfortable with the fact that rates are going to be elevated for longer and if, in fact, that's not going to be the case, it will be a consequence of a recession. our concern here is that people might be just a little bit too sanquine about the probability of recession we would tend to agree that a soft landing is basically priced

in here, but we think the probability of recession are probably 50%, if not more, thinking about 2024, and that's your downside risk. >> jpmorgan, a negative strategist, says the following and want to get your take, delayed impact of aggressive interest rate hikes, dwindling consumer savings and deeply troubling geopolitical backdrop are poised to spark fresh market declines in volatility where do you stand >> so, you know, again, this is not to downplay the risks that have accumulated over the last year, but the market has basically stood in and taken every one of those and the fact of the matter is, is that when you think about it, a lot of the reason is the same reason we've been obsessing over inflation for the last year and a half, two years, which by the way, we think is likely coming in quicker than the market perceives with those bumps in the road, but the fact is, is

that you created so much money to fight the pandemic in 2020 and 2021 and we were still buying bonds in 2022 that has softened the blow of all of these events it hasn't necessarily preempted the business cycle the business cycle is the business cycle it's just elongated and put the risks probably tilted to 2024. >> what are you comfortable with given we're in earnings season multiples are going up that's where we are right now. so where do you start to say, enough >> so there's no question about it, and a lot of this has been about, a, the fact that the fed essentially backstopped the deposit system in march. think about this, right. the response to that has been to rally the nasdaq 33% in four months that's 100% annualized these things are expensive the long-term future is bright and if you're a long-term

investor you sort of sit here and you appreciate the fact that you're getting north of 5% on your cash. that's the long-term picture if you're worried over invested you trim a little bit, maybe some option hedges, very, very inexpensive. >> i just always go back to the consumer and we got news at the top of the hour, that showed there was a surge in consumer confidence and follows what we've seen from the university of michigan and it's interesting to see an acceleration at this point even if the business cycle is delayed by covid factors. how do you explain what's happening right now? >> actually in a lot of ways, sara, doesn't make a ton of sense and the crazy thing about the last year is even as the economy was doing well, the consumer psychology was so affected by inflation, that the sentiment numbers were depressed. that's starting to end, okay the next question is, is the fed going to be successful in creating a loosening of the job market you will continue spending -

>> do they need to be to get inflation down >> i think they do we're going to find out on friday that the core pce will come in north of 4%, not the new 2% according to the fed. >> you draw a correlation between the move up in the nasdaq and the fed's ability to fight the mini banking crisis we had in march what about a.i.? isn't that what's behind this? not necessarily backstopping some of the banks? >> it certainly is a large part. the whole year, you came into the start of the year with growth stocks record oversold and then had that huge rally in january which told you sort of gave you hints of what was to come and then, essentially, a.i., which we are firm believers in, in terms of the ability particularly given the fact that global population, china in particular, is decline org will decline later this century, it's going to be transformative, but -- >> productivity wise. >> productivity wise. >> but the question is, is when you think ability the stocks,

have they run ahead? what we saw last week is they may have run ahead we're going to find out more this afternoon >> ulian, thank you. >> thank you. >> good summary of everything happening from evercore isi. >> gm and spotify in the red, after results of both names out. we talk to mary barra early. spotify it's sort of future guide in terms of subgrowth seems to be pressuring that stock, amongst other things, because they did have quite ro ssciostngubriptn additions. "squawk on the street" is right back

gm shares under pressure following the latest quarterly results and did raise its full year profit guidance thanks to cost cuts and investments it's making in what will be fewer new products and the company in the midst of negotiating new labor agreements in hopes of avoiding a strike that could take place

later this year. here's what mary barra had to say about that. >> we're very proud of the compensation package that we have for our manufacturing employees. we think it is very strong there's always aspects of it that we can look to improve and, again, while we're maintaining our competitiveness. we're trying to make sure that all parties involved and people with interests understand where we are at and have the facts and we can get to an agreement without a strike. >> strike uaw, the one that's more and i know you've been thinking about a lot, sara, the teamsters with ups which is an august 1st deadline. >> 340,000 employees frank holland has been doing work on that and could have a hit on the economy, the longer it goes on. >> they seem to be close though. >> they're talk still, which is a good sign. the negotiations resumed and they're talking about temporary pay. temporary health pay. >> it has to do with temporary

health pay. >> people worried about uaw which has a new president, more fiery and combative. gm investing in battery plant which aren't unionized and pay lower wages. that could be part of the problem there. the stock has run up 17% year to date overall takeaway on the consumer, 25% revenue growth is not bad. >> yeah. the numbers look good. they did raise guidance. they did hit their 50,000 eve unit target for the first half of the year and they are sticking with 100,000 evs overall in the production, 100,000 evs in the second half of the year and growing from there. to your point, maybe some disappointment in terms of where the guidance ended up on ebitda. i'm not sure jim had reasons as well that we're seeing a bit of a turnaround in the stock. >> down 3.3% the dow has joined the s&p and the nasdaq today in positive territory. we're seeing fractional gains,

but still, little bit higher driven by materials and technology. >> speaking of materials, let's get a look at that dom chu is back at hq to do that. >> david, sara, the s&p, mixed from that sector perspective but as you point out that materials trade as you can see behind me is a a standout to the upside among the 11 s&p sectors packaging corp of america is one of the leaders following a big earnings beat of its own and the company expects higher volumes in packaging and paper segments in the current quarter that is helping, by the way, other paper and packaging giants like west rock, international paper as well. let's throw in some paint. sherwin-williams is also among the sector leaders after hiking its full-year outlook, thanks in part to strong paint sales during the previous quarter. by the way, sherwin-williams and packaging corp are both hitting fresh 52-week highs in trading today. that materials trade, david and sara, as you point out, one of the drivers to the upside in today's session. i'll send things back down to

you. >> thank you feels like a lot of companies are raising guidance, sherwin-williams, kimberly clark, u.n. leanilever, raytheo. >> raytheon is down, a big issue with its whitney engines. still to come, shares of mining company, cleveland-cliffs are taking a tumble over the last six months. could results be the key to a turn-around? we'll discuss with their ceo and talk about the steel industry at 11:00 a.m. don't go anywhere.

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shares of spotify. they're down 12%, a little more than that. let's get to julia boorstin with the numbers and the reaction. >> it's been a roller coaster. shares are down 12% on lower than expected revenue along with lower than expected full-year revenue guidance the company's net loss also widened by more than double the

year earlier loss. now, all of this comes after the stock initially spiked on better than expected user growth. it's highest second quarter additions in the company's history. spotify reported 550 million monthly active users, up 27% year over year and far ahead of the 529 million estimated and also ahead of its own forecast the company also reported 220 million paid subscribers, up 17% from a year ago. now, all of this comes after yesterday the company announced plans to increase premium subscription price by as much as 20%. ceo saying on the call that the price hikes won't impact revenue peruser in the third quarter very much, but they are expecting a more meaningful impact in the fourth quarter bernstein sales desk with a note saying the additional premium subscribers seems, quote, skimpy, writing, i'm guessing they are worried about the

negative impact the recently announced price increase will have on churn, even though price increases don't start until september. on the call the company stressed the upside potential around a number of things, including ai, saying a.i. will benefit both from a consumer and advertising perspective. they talked about their generative a.i. deejay product saying it is driving strong consumer interaction. >> thank you i want to get back to raytheon it's been a feature. shares down sharply, though after off the lows this after the company disclosed an issue for powder in the pratt and whitney engines. >> we've been inspected about 3,000 discs, turbine discs, over the last three years we found a very, very small fallout rate, but based upon what we have seen recently, there has been a concern that we

need to inspect the fleet more rapidly. >> he went on to explain, sara, they've seen some deterioration they're concerned about, so they're moving, again, more rapidly, which means 200 pw-11 engines will be removed for enhanced inspection. then they go on from there another 1,000. could take airplanes out of service for, i think he said, as much as 60 days. >> that's why we see the reaction on the airlines and jim expects those numbers to be lowered. ge having a good quarter on the rise in aerospace orders >> and on land/wind as well, a beneficiary there. ge shares up sharply "squawk on the street" is back right after this the first unlimited plan that lets her choose exactly what goes in it. now she gets to pick only the perks she wants and saves on every one. and with an incredible new iphone on us, no wonder sadie is celebrating.

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no. i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc. good tuesday morning welcome to "squawk on the street." i'm sara eisen with frank holland live at post 9 of the new york stock exchange. setting the agenda today, starboard value's jeff smith is here his new stake in company algonquin and the actor investor climate. and the ceo of cleveland-cliffs, the stock moving higher on the back of a strong