always have more to talk about you than we have time. >> well, you want to bet on something. there's going to be a super bowl in las vegas it's going to be formula one the individuals that they attract are not going to go to the buffet for a dollar. so, there's going to be a lot of spend during a seasonal downturn you want to buy golden entertainment, caesar's. >> you got to come back, mario right now, it's time for "squawk on the street. >> i got to have you sign it ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. premarket is taking a spill on that downgrade of the united states big menu of corporate earnings, and the macro data runs a littl hot today. our road map begins with that downgrade, though. fitch is the first major ratings firm to downgrade the government's credit rating in

more than a decade earnings in focus, state of texas, ea, match, humana and amd's chief lisa su will join us later this hour. apple sports books reportedly reaching a new streaming deal with the pac-12 let's begin with the fitch downgrade. downgraded the u.s. to aa plus you talked about this last night. is the market shrugging it off or not >> i think it has to in some ways, it's just an upgrade of the way we run our country, and i think you want to go back and think, well, what happened in august 5 of 2011 when the s&p downgraded us s&p was at 1,119 it had gone down to 1,095. so, there was a big decline. then, one year later, it went up so, in other words, if you just take the worst case scenario, which is what happened in 2011, it was an amazing buying opportunity. and when people looked at it, i

think they said it was quizzical. tim geithner was very angry, said it was wrong. this one says, you're a completely dysfunctional country, and we recognize that but all countries are dysfunctional. we're dysfunctional less than others >> are you buying the pushback that their model is actually on the mend why didn't you do this three years ago when things were even more tire? arguably, they say >> look, i think it's very easy to say that we are, as people are saying, that it's the worst we've been since we started as a nation i think they should take a look at that, like 1860, 1862 period, which is kind of perilous. not being facetious. there were times -- lincoln had a lot of fiscal responsibility, but if you want to go there, i think you can say, well, you made a big splash, fitch, thank you, but a week from now, we're not going to be talking about it maybe we won't be talking about it three days from now >> that's sort of the view

there's a bunch of notes and reaction this morning. one of them is exactly as you said, that this is going to turn very political, and you can sort of see that in yellen's statement last night >> yes well, look, i mean, should we be doing this since debt ceiling? it's obviously a very inefficient way to deal with it. i like to speak to speaker mccarthy, because speaker mccarthy had some very practical things to say about how it's not the way to run the government. i think that both sides don't want to run the government this by the way if that's what fitch is saying, it could promote anything like that, that would be good interest rates are up again today. i don't think it's a coincidence. i think the economy isn't as strong as we thought the job numbers are very good. we're talking about fitch today, so you can make -- anybody can make themselves relevant i mean, it's relevant. i get up and say, i got to look at fitch haven't looked at fitch lately good for them. the people at fitch right now are saying, they're talking about us make it louder they're talking about us

this is really good. we're relevant this is amazing. and there you go and then tomorrow, they're like, well, that was nice. >> what happened to fitch? >> yeah. >> there are a host of reactions. larry summers calls the downgrade bizarre and inept. wells today, we believe, any pullback in stocks would be relatively short and shallow i am reminded, jim, of when we were still facing the showdown in congress and you were leery of whatever effects might come from a failure to agree. >> i didn't think speaker mccarthy had it. i just didn't. i underestimated him he was very strong in terms of getting that done. and didn't get heralded because, i mean, look, if you're from the right, you didn't like him he compromised if you're from the left, you didn't like him because he's still too far right wing, but he pulled it off, and you have really no credit for it. i'm not trying to say, listen,

he's the guy i am saying that if he hadn't done it, then i think that we would have -- then fitch should have -- that would have been a good time for fitch to say something. but now, it's just kind of -- it's very interesting. i agree with larry summers for the first time since he was president at harvard since then, i felt that he liked to throw bombs he's kind of a bomb-thrower. >> that's going back a ways. >> by the way, he's hilarious. and i don't mean that like when i say someone's nice, which means i think they're incompetent. he's a smart guy, but, well, this is something i agree with him on that picture's younger >> as it is for a lot of us. >> yes, it is. >> so, where does that leave us? are we still watching memes? are we watching earnings adt relevant today >> i was doing some work on tupperware, because rick goins used to be the ceo of tupperware they had a great business, and it kind of went down during covid, and they kind of decided

to change the distribution channel. they had three million women work be for them it was really great. do we go back to that? that one has a buy on it too, and they have to have the stock ready. they have to have a hundred million shares ready not at the market but actually it's a boat load and hit the memes with it the memes don't really understand the process, but as soon as you get that okay from the s.e.c., which they say is going to happen any day now, then they're all going to have enough money to pay their bills and get in compliance, but their business model is so bad and they're really inept at running the company, it won't matter >> you talked about the giveback this morning >> i was saying last night that tupperware should be shoulder unless they bring back rick go-goings. by the way, no one ever thinks their stuff is bad by the way, the nul stuff is starting to sell so, the memes can have some fun.

you know, i think that they're exhausted too. like, the memes are trying to find, well, give me something new. we can't see the balance in '20. tupperware was fun while it lasted now we're in the amazon, apple part of the order, and real companies, and a lot of those stocks were down very badly on this fitch thing at 4:30 -- i love watching frank, by the way. frank holland. and you look underneath it and it's like, okay, alphabet is down 2 bucks on the fitch downgrade. who's doing this who's trading in their pajamas and the answer is people who are stupid enough to trade in their pajamas. i always got dressed at 3:00 in the morning. you don't wear feet pajamas to trade tokyo rail >> you've been consistent in your pajama criticism for years now. >> there's a lot of guys who do that trading please take their money away these are people who bought cbs

when it was up, and now it's down or they bought cbs, thinking it was paramount. i don't know there is no sense to watching the ticker early on, because it's just everybody does it wrong. and now that we come in and we suss out fitch, we realize, why did i sell it? and then you start googling fitch. >> yeah. well, you mentioned apple tomorrow night i see jpmorgan today goes to $235 >> that piece is revolutionary that piece says it is no longer a product company. it's a service company it's a derisked company. now, i always feel like if you derisk apple the day before, you run the risk of running into a genuine buzz saw, but it was such a positive piece. i was like, wow. jpmorgan is just all in, but i like the piece, and i think that when we talk to apple tomorrow, we're going to have to start talking about the idea that, what are they doing for programming?

pac-12 i don't really care for pac-12 football, but the fact is that if you could watch pac-12 football, using the vision pro, i mean, i was watching an mls game, and the ball came at me, and i ducked it was that realistic. i hope tim talked about that tim cook, ceo of apple >> also tangentially, not that it's a huge -- not the first priority for apple, but it does look like the riders after 92 days are going to return to the table and talk to studios. you were looking for any signal of labor peace >> you want labor war? take a look at the things that sean fain is saying in autos he's talking about a workweek that's incredibly short. he's talking about going back to the combined benefit he's basically talking about that class that i had about the sparsest workers league and how marx was wrong because marx felt that there should be some capitalism only the workers belong. this man -- this man studied

trotsky, pre-ice pick in ear >> you think some of the weakness this morning is about uaw over fitch >> walter ruther seems like he's a man of peace it is -- i have to tell you that if this guy, if sean feiain, the uaw head, if he gets his way, you can short every single auto company until the cows come home they will be the least competitive companies on earth there are companies in france right now who are saying, holy cow. what are we doing working wednesday and thursday why can't we be like ford motor? >> well, they present to gm today. >> it must stop. honestly this is not capitalism it's not capitalism. it's some other form -- i took seven courses on communism at harvard because i was in a particularly bad period at harvard. there should be an eighth course sean fain and what he had to do with engels.

it was marx and engel and fain when we come back, we'll talk earnings and chips and a.i. with amd's ceo, lisa su. meantime, there is material weakness in the premarket, although we've gone 47 trading days without a 1% decline on the s&p. ♪ old school wisdom, with a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world. ♪ what if buildings could tell you how they could be more efficient? i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights.

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carl, we have a welcome back

treat for you. we've got lisa su. shares of amd are rising ceo lisa su joins us now lisa, it is so great to have you back on a day when a lot of people felt, i don't know, maybe you're just kind of becoming also-ran to nvidia, which is completely not true. >> well, good morning, jim good morning, carl it's great to be here with you guys >> so, tell me what you've done is that you ordered a lot of chips, a lot of cards that are as fast as a lot of nvidia's, and it seems like every hyperscaler wants what you have, which means you've got not a quarter, not a year, but multiyear revenue stream beginning right now. >> well, first, jim, i'd like to say, we were very happy with our execution in the quarter we're seeing some positives. we saw our pc business actually grow 35% sequentially. we saw really strong pickup in our newest products, our fourth

gen epic cpu products. we had great partners like amazon and meta, as well as oracle and all announced -- microsoft azure all announced new installations with our newest cp us and we're very excited about a.i. everybody's talking about a.i., but you need all the computing infrastructure to be there, and we're all about multiyear, multigenerational road maps and setting up not just the hardware and the software but also the supply chain for that. so, yeah, we're excited about what we have in front of us in the second half of the year. >> let's take them one by one. when i listened to your call, i started thinking, my pc is not going to be the pc that it is right now, and that they're -- yes, sure, we're coming through a period where there was a glut and coming out of that can you give me an instance of what my pc might be like a year from now because of your chips >> yeah, we're excited about

a.i. in all parts of the market. when we see it in the largest datacenters to edge devices to pcs, we just launched a set of products that actually have a.i. inside the pc, so it's really on board. and what that means is, you know, our pcs are just going to be much more productive going forward. so, we are coming out of, let's call it, a volatile cycle for the pcs. we see growth into the second half of the year and even more so as we get into '24 and '25, and the idea is that your pc should be your productivity tool to help you really organize all aspects of your life, and generative a.i. is going to be a big piece of that. we're working very closely with microsoft and a number of other hardware and software partners to really bring all of those experiences to life. so, it's an exciting time for the pcs. >> if i have a -- a microsoft pc, would i be able to say to it, i've got lisa su on at 9:15,

and i would like to be able to just talk to you, pc, about what you might think that we should be talking about >> i think we are going to have the capability to just organize all of our thoughts and all of our history and all of our capability that's the beauty of jergenerate a.i. you have the power of the cloud and all your personal data as well this is a multiyear journey. these experiences are going to continue to get better we're working very closely with the entire ecosystem to make that happen, and so that's part of the promise of all of this new computing that we're able to bring on >> hey, lisa, i think one of the more interesting wrinkles this morning is your comments about how to satisfy customer demands in china while still complying with export controls can you talk about how amd and maybe corporates at large are trying to navigate that? >> well, i think i would step

back and say, carl, overall, there's just a tremendous interest in a.i. overall what we've seen just over the last 90 days is we've seen our customer engagements increase by over seven times everyone's looking for how do they get more a.i. solutions, and we're very happy that we have a strong road map to do that as it relates to china, china is an important market for us of course, the export regulations are very important, and we all see that. but we also see that there's an opportunity to develop products that really fit within that. and so, this is all part of what we do to really take our baseline foundational technology and make sure it's for the market >> people are saying, when will xilinx kick in there are a number of references to some of the businesses that i think you picked up with xilinx, and maybe you can tell us about the company's mosaic and where

it was before the purchase of xilinx >> our embedded business now has had a tremendous run, so we had very, very strong the last six quarters in terms of just overall revenue growth i love the markets that we're in the fact that we're in aerospace and defense, industrials, test measurements, emulation. these are really great markets that need a lot of computing the beauty of it is we're finding a lot of synergy between, let's call it our fpga and adopter products and customers are coming to us looking for overall solutions for their computing needs. so, very pleased with that, and we've really been able to brain our a.i. teams together. a.i. is absolutely our most strategic priority from the largest cloud datacenters from people who are running the largest training and inference models to what you have at the

edge to what an industrial customer would need, what an automotive customer would need to what you have in a client when we just talked about pcs a, and that really is the synergy of the great technology we've gotten from our acquisition of xilinx, as well as our strong investments over the last few years. >> lisa, i know you'd love to talk about the business rather than the macro, perhaps, especially in light of this downgrade that the u.s. got from fitch, but can you give us an inkling of how kceos are discussing it? >> the environment still continues to be a little bit mixed when you look across the different market segments, but from what we see on a long-term basis, we see a growth environment, and from our business going forward, we see the second half, actually, we see nice growth across the business we're particularly excited about the growth in the datacenter,

and again, what we see now is the data center looks to us to be about, you know, 50% or so in the second half versus where it was in the first half, which is a really strong statement of where we think demand overall is so, you know, agree that there's some, you know, mixed signals in the market and we have to navigate through those, but overall, we see a bias towards the positive >> one last question, lisa at this time last year, i was worried that you had way too many chips or clients, in other words, for pc. do you have enough of the mi- hundred, which is the rival, the equivalent to h-100 of nvidia, to be able to make it so that you can literally fulfill all the orders that you have >> well, jim, one of the things that we are really good at is managing the overall supply chain, and as we work through some of the inventory on the pc side, we've worked through a lot of that, and i can tell you on our mi-300 or on our a.i. chips,

we've been planning for this opportunity. it's a really important opportunity. i think a lot of customersm wan to be able to ramp as soon as possible we've been setting up the supply chain for the last couple quarters and we feel very good about what we have in the second half and into 2024 as we really participate in the most important technology trends over the next five years. so, it's an exciting time. i would say, to be in a.i. and in computing, but we're ready for it >> well, it's true it's good to know that it's just not nvidia and no one else i think it's nvidia and amd. lisa su, ceo of amd, thank you so much for coming on. great to see you >> great to see you guys too still to come, we'll get cramer's "mad dash," take a look at the premarket as futures are weak more "squawk on the street" when we come back

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take a look at the premarket here once again, a lot of discussion regarding the fitch downgrade of the u.s. and the menu of corporate earnings not a lot of relief in at least long-term yields with that long bond back to 4.16% opening bell is in a few moments, and don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street: opening bell" podcast. ♪ thousands of women with metastatic breast cancer, are living in the moment and taking ibrance. ibrance with an aromatase inhibitor is for adults with hr+/her2- metastatic breast cancer

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comment is actually in relation to the way gen z thinks. bill believes that gen z doesn't like combat. that they don't like the back-biting. they don't like letter x and they're going to pinterest if they can get international up to anywhere near the margins and frequency, this stock flies to $40. bill ready is very, very smart, and he's doing a lot of right things, and people are coming back to pinterest. the numbers were quite good, but the stock was up some 40%. >> i did notice that rosenblatt guys to buy $35. enticing progress. they do talk about rising relevance. >> it is good. and i think what people are going to end up doing is if you plan your trip, you're not going to then go to bookings you're going to stay there i think that bill is revolutionary in the sense of realizing, as -- with shopify, as with roku, you've got to do everything on the site

you can't be, like, learning there and going to amazon. and that's what bill ready is doing for pinterest. very solid >> we are going to get shopify tonight, along with qualcomm >> i know. >> big day tomorrow afternoon. let's get the opening bell at the cnbc realtime exchange at the big board, it's a weight-loss platform celebrating alisting via spac. at the nasdaq, it's the new york city department of transportation celebrating the summer streets initiative where they clear the streets of manhattan and the boroughs, jim, let you party for a few hours. >> i think it's terrific i know that on the starbucks call, and we'll get to that, they still have 3% of the city -- of the urban area has not come back. but i see it over and over again. the urban -- at least in new york it's back, it's back, it's back, and people may think that it's related to whether people are

work-from-home, but the streets are packed tonight >> i'm curious to know what you thought of starbucks last night and the cfo's comments on "squawk" today and the guidelines >> china is extraordinary. did you know they had done $24 million more in the u.s., they would have done 8% comps in all these nay saying analysts would find themselves eating crow i think the china numbers are incredible, just in terms of the amount of white space they can have my only criticism about starbucks is that they have missed out, and this is not their problem, they've missed out on the super high caffeinated drink in the afternoon, the dutch bros drink. i think they'll solve that problem. they've solved a lot of throughput problems. the membership, their rewards program is extraordinary no one's trading down. i think it's wrong that the stock goes down big. i think this is the beginning of a new ramp, and look, big shoes, okay he's following howard schultz,

who always had a production, a grade play for the quarter, and i think that lakshim is more like pepsico, which is like, here, we're just going to do the number so, i think the people are -- my travel trust owns it i say, bring it to me. keep selling, because this is not the kind of starbucks that you're going to be used to it is going to be consistent and good and growth, and i like him very much, and i think this is a buy. >> that's interesting. u.s. up 7. it's still better than some of the yum metrics. kfc, pataco bell, pizza >> yum put a brave face on it. i know starbucks wanted an upside surprise. i say look at the basics look at the machines they're putting in look at how they've now adjusted the cold brew, and please, look at the fact that the china numbers were extraordinary but everyone -- by the way, the

analysts, uniformly, take a chill pill go get some xanax if not some clonopin, or maybe true leaf in florida, because boy, were these people negative. i was like, wow. geez you guys really had a bad day. it's not going to be starbucks that you want. it's not going to be what i would regard as being funny girl i don't know what they want. i mean, it's more like "rent." you like theater, carl, and starbucks -- he does not want theater. he wants blocking and tackling starbucks, and so do i, because i'm tired of the episodic that way, this way, that way. bank are him, not against him. america already terrific he's an operator, and i love operators. he'll do a great job >> you mentioned some prescription meds. maybe they can go to cvs for

some of those. they got their results in following reports, of course, yesterday, about some head count reduction. >> yeah, i don't know -- that's up a dollar and then it's down 3.3% yield people do not like brick and mortar that's the problem they don't like brick and mortar because even though she's done this great health care initiative, people actually go to cvs when they go to cvs, they're confronted with that very difficult plastic piece of paper -- plastic sheet that makes it difficult to buy things, so you're constantly having to press a button it's a very bad model. >> two names in consumers that are flying today are e.l.f. and freshworks >> we were all talking about freshworks, is it for real but i have to tell you, the man who runs e.l.f., and i brought it home to my wife, it's very funny. it's very inexpensive and also, by the way, very good

environmentally. a lot of people feel that way. she says, look, i don't want -- i don't want this e.l.f. throw a couple of mac tops on it and estee lauder, and she goes, it's never been better so, you have to be aware that this is a revolutionary company that is in target, that is in sephora. i happen to think estee lauder's stuff is superior, obviously, but they are the ideal company for the young person who doesn't have a lot of money and needs make-up, and that's why they keep delivering, delivering, delivering my hat's off to them remarkable quarter >> chart elf against estee lauder oh my gosh >> my travel trust owns estee lauder and we've made a huge amount of money, but he made his bed with china, and elf's made its bed with everywhere. tarang is -- he's so nonpromotional that you want to say to him, look, be as good as your product, but he won't he says, that's not his style. he just goes and delivers.

now, estee lauder will deliver because i think that fabrizio is one of the great packaged goods people there is, but he made a lot -- he made korea he made china huge, which was great for a long time, and now the -- you know, he needs the stimulus program he needs there to be a program, literally, for skin conditions, because i mean, oh -- >> you mean a government -- >> yeah, like, stop coal and skin conditioning. >> we mentioned autos a while back ford is posting u.s. numbers for july let get to phil lebeau good morning, phil >> good morning, carl. these are roughly in line with what some of the analysts were expecting for june, july, excuse me, sales up 6.4%. and it's really the internal combustion engine vehicles and the hybrids that are offsetting the weakness that we're seeing with electric vehicles at ford f-series, up 8.2%. bronco, up 20.1% ev sales overall, down 18.1%

hybrids, up 31%. that's part of the story about why they're doing the pivot that they're doing. by the way, lightning sales in july, just 1 is thousand 552 were sold. that was an increase of 9% compared to june, but remember, they had production suspended for most of june we'll see if this pivot, in terms of the price cuts and greater production, actually increases the lightning sales as much as ford is hoping for in the second half of this year again, ford sales for july, down 6.4 -- sorry, up 6.4%. >> phil, just get you for a quick second we talked the other day about how disappointing it could be. we know that they just restarted the f-150 lightning assembly line i mean, are we going to find those backed up at dealers dealers' lots? >> i don't think so. well, jim, it's pretty hard to find one at a dealer lot right now. the few dealers i've talked to who do have them, they don't have a ton of them

they have some, but they don't have a ton of them, so i think the idea is they'll have greater inventory, so there will be greater selection at the dealer lot. you combine that with the price cut and the idea at ford is they believe this will start to juice the market, if you will, that people will come in, and maybe they were interested in a lightning, and now they'll see, looking, xlt, i like it now at this price compared to where it was before that's the theory or the game plan from ford >> to be personal about it, my daughter's got a -- she had a bronco, and when i was there, all the bro ncos were sold out each bronco had a name on it i listened to farley he's not talking about his strong suit. what happened here why is he saying, hey, listen, go try to find a bronco, good luck to you? >> well, he knows the way the market works, jim. come on. this stock doesn't trade on internal combustion vehicles today. >> i know. i'm just trying to help them >> whether it's right or wrong,

it doesn't they are killing it when it comes to i.c.e. vehicles as well as their commercial vehicles nobody's arguing with that, but if jim farley sits and talks about that, you know where the analysts are going, but what have you done for me when it comes to electric vehicles for better or worse, that is the game for ford and for all the automakers >> right as rain i know trying to change the narrative a little late in the game. thanks, phil >> you bet >> she does like the bronco, for what that's worth. >> yes we mentioned -- we haven't yet mentioned humana and unh moving on these results >> look, i mean, humana was crushed, because the pickle. remember that? >> i remember. >> remember that period? >> u.p.s. note >> i had played pickle, and i've got to tell you, i play contact pickle, so i totally understand what you're talking about. no, i play contact gardening no, this is -- we had this problem with unh, and they're

all recovering bruce did a very good job, the ceo of humana. those are conservative numbers i was worried this morning, because this has become one of those things where everybody just says, look out, everyone's back doing operations and the raw -- their numbers are going to be bad. the numbers aren't bad so, i feel very good about it. i think it's the beginning united health led the group. it's the group is not expensive .good numbers. >> yep swings of consumer behavior. generac is taking it on the chin this morning, jim, on this miss, although revenue was ahead they do cut the yearly guide lower residential sales. it's volatile. >> it's crazy. one of the things -- and phil is so right i mean, when i was out at ford, i kind of wanted the story to be more than just "e," but generac can be hurt by the f-150 lightning. >> you can plug it in to power the house. >> the amount of money they're losing on that mustang is really

incredible but yeah, i just feel like this whole alternative energy save trying to fix the grid, become a bad story. the end phase energy a lot of younger people are in these stocks, and i think that they're discovering that they're playing with fire. it's not a solar revolution anymore. it's not a back-up generator anymore. it is really about wind, which was really good. we know that from larry. and about improving the grid, which is why i think that both eton yesterday and emerson today are doing fabulously fabulously they're improving the grid that's what matters. >> just to stick with the cyclical industrial trade, we had cat on yesterday that's above yesterday's record high >> yeah, well, look, there was some real, i don't know, i want to be polite there were a bunch of stooges that were telling you to short the stock. they were major firms. i came on, and i challenged it basically to a claymation death match. and i got to tell you, two

enter, one leaves. i left they're still in there they're like the master blaster. i cannot believe -- guys who are against jim, he said over and over again he was going to do x. now he's done x. if you go listen to the eton conference call, it is so clear that no orders have even come through yet for i.r.a., and it is going to be caterpillar, get on board get big or go home >> you think it's just getting started. >> oh, yeah. there's been very few orders placed, according to eton. eton's quarter, oh, man, that was a critic it was belichick when we realized it was really brady and not belichick. i just wanted to take a cheap shot i just was in the mood >> does dupont take any of the shine off that this morning? >> no, i got to tell you, ed green is delivering exactly what you want you're troughing a lot of their electronics with pcs and semis, that's coming

back i think this is a bullpen name you want to buy ed green right here, lot of firepower also, water is good there, believe it or not. i think it is the right time green is more energized than any time that i have heard him in this many years. dupont is an inexpensive good stock, it reminds me of 3m without the lawsuit. >> couple names we'll talk about later on this morning. one is match beat and raise btig goes to buy $60 >> tinder. >> the commentary around the ad market hasn't been all that terrible >> look, i think that the ad market has shifted entirely. the consumer packaged goods story, when roku, which reported on thursday, very unheralded quarter, was extraordinary people -- the amount -- look, 37 -- according to netflix, 37% of the people are now streaming, and they're streaming and again, we'll have shopify shopify is doing a lot of stuff where you can buy things online,

like basically looking at your machine. i believe that the ad market is alive and well it's just not where i thought it was going to be. although charter got upgraded. >> i was going to say, what goes bullish, charter and let's see. 565, outperform. they have some nice things to say about our own parent as well on comcast >> yes, they did they had nice things to say, and a lot of it just feels like the worst is over, just the logic behind it. i find that charter is such a challenged balance sheet that i'm not sure i want to go there. but i do -- look, obviously, parent company, comcast, is not expensive stock. stock's down substantially from where it was two years ago good yield i don't know i mean, i think it's -- these -- when you look at comcast, what do they always say peacock's the contained. peacock was flat, i would say, roku was talking about how, look, we're already at the level of peacock when it comes to our

advertising and use, and that was a very deflating thing for me when i read that. working at comcast but if they can contain the peacock losses, the numbers go up >> it reminds me to ask you about disney and warner, both down today here's a question. if the writers go back to the table, and let's say they get something put together with the writers alone, is that bullish or is it too expensive could a new deal be expensive and depressing on earnings >> well, you know, your biggest fear is that you're going to get a u.p.s. deal. i mean, u.p.s. finally gets a deal and the stock goes down five bucks look, i have had two really bad stocks this year that i have bought for the trust walt disney and estee lauder now, estee lauder was great. made a lot of money, came back disney's been an unmitigated disaster, and i think disney, not airbnb, but b&b. bad quarter and then bad

quarter. and i don't know how bob iger gets out of that, and it doesn't matter, writers strike or not, it's just terrible by the way, comcast, frisco's pretty cool. >> it does make you think about travel, though, in the light of the norwegian results yesterday. >> geez, are we now just down to marriott >> neutral, 17 >> carnival is up 100% this year that's going to be wiped out you mentioned warner brothers. that's zaslav, and i think that his is a debt paydown, if apple decides that they like the nba and they want to show the nba in -- on the vision pro, well, that's the end you can compete with apple they report tomorrow, and when i look at what apple's doing, the world's their oyster when i see what youtube did, alphabet owns that, with the nfl package, suddenly they became relevant and the ads for youtube are extraordinary, and a lot of

consumer packaged goods companies i'm talking to are saying, you know what? we're going to go where the viewer is. it would be incredible if they went to mls. i just think -- i don't like to trade. someone was internally asking about apple, and i said, my whole mantra for apple for the last, i don't know, almost 200 points is, own it, don't trade it i mean, i don't think there's anything revolutionary with apple. it's all evolutionary. but vision pro is the way to watch sports it's also a way to watch taylor swift, i decided that i didn't want to pay the thousand dollar ticket thousand dollars must be some concert >> you could argue that the device would pay for itself after one show >> i've argued that, and i argued that to my wife, who went to the concert, and she says, you're an idiot. you don't know anything. that's fine. it's always good to be -- your wife can call you an idiot, but she has the free fire zone right to do that >> it keeps you grounded

>> she doesn't know i have a show, which is so terrific she doesn't have cable >> i'll ask lisa about that next time we talk for now, though, markets down a little bit, not as much as you might have feared in the wake of the fitch downgrade, but s&p down 35 points as we go to break, let's watch bonds as well. adp, by the way, the number today, 324,000 the estimate was 190,000 but after the last couple of months, some people discounting adp as a tell for friday's jobs number back in a minute >> announcer: the bond report is brought to you to by pimco, a global leader in active fixed income you're a rock star. you are a rock star. no more calling co-workers rock stars.

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and coming up talking with fitch and stock trading with jim in a minute

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one of the greatest quarters is pioneer natural resources, stock is up $8 i have to remind people that the permian is alive and well and some guys know how to do it right. rich deally is a terrific ceo, loved him forever. the yield is lower than i like but it's good. we get oxy tonight. >> people think they're rivals team of rivals. >> yep. >> and then an ongoing discovery unlikely that opec plus tweaks their policy on friday. >> unlikely but i think the government has not been willing to refill the spr, which hurt pioneer. but pioneer is a situation where you realize the permian has not peaked there's a lot of people who think we peaked in our production, which is not the case >> good to get more on the supply side see what happens with demand.

tonight you have shop kwqualcom dash. >> yes, and i have tony xu tonight. i think the stock has been on a monster run but everyone knows that tony is a complete delivery man from start to finish his story is a uniquely american story too. i've always gotten a kick out of it and larry williams on tonight for chart week, speaking of david zaslov, a take off on shark week. >> are you sending out as much swag as warner does? >> i have so many warner discovery, there's just everything, vests and jackets -- >> i'm surprised you're not wearing barbie merch right now. >> look, that's why waste management land fill is doing so well wm, time to buy. >> we'll see you tonight. >> welcome back. >> thanks good to be back.

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welcome to another hour of "squawk on the street. i'm carl with morgan and david a little bit of pressure on equities this wednesday in light of the fitch downgrade last night. vix is elevated this morning but the dollar is trading higher. >> 30 minutes into the trading session here, here are three movers we're watching. pinterest under pressure, expenses growing faster than revenue. sales up 6%, while costs and expenses up 11%. shares up almost 30% in the last two months but down about 4 1/2% right now. shares of match losing all of the premarket gains as well. the firm pointing to tinder's

improving outlook. up 1% right now. finally cvs health headed higher beating on the top and bottom lines due to cost cuts and fresh layoffs. cvs has been an underperformer on the year but outperforming today, up 3% the fitch downgrade did make news last night. we wondered what the effect might be this morning on treasuries and the dollars and equities in general, the reactions seem to be this is telling us nothing we didn't already know >> i think that's the takeaway from any credit rating on a sovereign issues in other words it's not based on any information that the market has not already been aware of. that being said, it pushes at least lightly in the direction of some market trends which is higher in yields at least so far. what's interesting is that was not the initial reaction in treasury yields because they

popped after the adp jobs number, hotter than expected and it's a matter of bond traders not wanting to bet outright we have two fluke months in a row. all that being said we have a market that's been hesitating for really two weeks we got overbought, stayed overbought in the indexes. a nice broad rally, total return in the s&p 500 almost everybody pointing to the seasonal he wiheadwinds e emer emerging in august earnings reaction, earnings better than expected, feared, the reactions have been relatively uncharitable. mainly because i think we priced it in getting into the reporting season. >> folks pointing to valuations as well. seasonality as you mentioned, maybe we're overbought at these

levels 4,600 is maybe a challenge or pressure point for the broader market but talking about what we're seeing in yields, the 30 year hitting the highest in since 2022 you had the treasury department raising the borrowing estimate by more than a quarter trillion dollars to $1 trillion, so talking additional supply of long term treasuries, that's denting bond prices, boosting the yields and speaking to the bear steeper in the market as well and we've seen the inverted yield curve and speaking to long term traders that is a bearish sign for stocks in the coming months as well. >> as everybody has migrated to the soft landing cape which i think is still the prevailing assumption that the economy can grow, even if if it's slowish. the inverted yield curve usually

requires you steepen the yield curve but usually it's people be cutting soon this is different. people more inflation expectation of doing what it's doing. >> fitch, in that downgrade, a mild recession in their forecast later this year in that downgrade towards the bottom of it as well the idea of what specifically constitutes a soft landing too i know we're going to get into this in more detail in a second. but a lot of people pointing to what we saw play out in the market and recovered and then some before the end of the year >> yes. it did get -- we thought we had a double dip recession on the way. it was very much a kind of risk averse moment. that being said you did get

another 10% down, a quick panic selling. in retrospect, i don't think anybody looks back and said that was smart to panic out on the s&p downgrade. because what didn't happen is treasury yields didn't blow out. you didn't have a long term concern about the market for u.s.-issued debt if anything it reinforced the status as kind of the water in the plumbing of the world's financial systems which is still retained. >> this morning, the downgrade unlikely to trigger any selling of treasuries. remember s&p 2011 the downgrade and remember coming away unsc unscathed. let's bring in emily wilkins with more on the impact of this drown grade. good morning. >> reporter: good morning. as we've been discussing fitch downgraded the u.s. to a double a plus rating. that move shocked washington after a number of positive economic indicators in recent

weeks. janet yellen called the ratings arbitrary and based on outdated data she went on to say the change should have come under the trump administration congressman richard neil, the top democrat on the ways and means committee blamed the republicans for the downgrade saying americans bear the consequences from the drawn out. the counterpart on the ways and means committee said biden is to blame for pressing the debt limit to the brink this kind of back and forth is why fitch said they downgraded the u.s. not just the recent debt limit debate it's 20 years of what they called steady deterioration of governing and congress' failure to address riding deficits and increasing costs of

social security and medicare the change may come as a surprise but we're expecting more conflicts on capitol hill in the coming months as congress tackles spending and a potential government shutdown. >> thanks so much. a little more of a policy in g governance call than a financial ju one. joining us now is jeffrey's chief market strategist. david, good to have you here put this in context for us what it means, doesn't mean but also coming at a time when markets are digesting what the bank of japan did or didn't do last week and yields have been moving higher in general. >> i think, you know, you summed it up very well in your initial take here. there's a lot go on that is affecting the long end of the bond market and that is affecting people's thoughts oval wags in stocks i think what the boj did last

week is being digested, seeing a significant rise in long term yields in japan people assessing what they think the buying out of japan, one of the largest buyers of foreign securities in a fixed income market what that will be the next couple of quarters if not longer so these are big moves and changes in the market. and then, of course you have the data today the adp data was strong. the data we have pretty much across the board has been strong we've seen good data in gdp, weaker inflation, but we've seen good news data all around. and i think that's -- you know, that's going to keep people's thoughts that the fed is going to keep pressure up here for a while. remember, mike, we have 120 basis points of rate cuts priced into the market for 2024 that is a lot of rate cuts and that is what's priced into the stock market as well

if we start to maneuver some of that out over time and take out that part of the yield curve, that money market curve or projection of where money market rates are going to be, i think it's going to weigh on stocks, steepen the curve out a little bit, and it's going to be a little simatico with what we're seeing in the markets. >> yeah, the market has had to continually move the forecast of when the fed may be cutting and when rates may stay up here but can we isolate how much of those projected cuts in short term rates is in the stock market as opposed to the bond market because it wasn't that long ago the market was projecting cuts for the latter part of this year and stocks were lower before those were priced out. >> right if you keep rolling them out and keep the ten year yield kind of in and around whatever, 375 to four and a quarter the stock market is going to be

fine with that because it's focused on that long term point. but if we start to really push ten year yields up to the top of the range, four and a quarter or higher that's where you can get an issue with people thinking about valuations slightly differently. right now the market, whether they start easing back or taking their foot off the brake if you will, a couple of quarters earlier or later isn't going to matter as much to the stock market it's going to look to the longer term structure. but if we're longer, at the higher yields for longer or a more permanent basis and staying at higher levels than people thought i think that's going to have to weigh a little bit it's one of the reasons i think stocks get a little tricky as we go into this year. a heck of a run and i just -- i think you've got a lot of easier ways to skin the return cat by looking at those higher yield

credit sectors of the market particularly in leverage loans where you're off the short rate instead of the high rate but even the high yield bonds. >> given the fact we're focused on deficits and how much the u.s. government is and has been spending, should we be talking more about the countereffects of all of that fiscal spending on the economy right now and how that's contributing to the soft landing narrative at a time where the fed has tightened as aggressively as it has. >> no question it softened the blow of covid. we had 20 plus million people getting thrown out of their jobs at the beginning in that fiscal expansion which lasted quite a long time cushioned that blow as we recovered but i've never been one, morgan, to get too excited about fiscal multipliers. it's my economics training come

from a shchicago rochester schol we look at lower fiscal multipliers through time i don't spend too much time on it and i don't spend that that much time worrying about deficits and debts weighing on creditability. i think the downgrade as you have pushed it under the rug, you won't be talking about it in a day or two, it'll be gone and we'll be talking about things like what the bank of japan is doing. a little bit about inflation expectations, and really more about the u.s. data and how likely a more serious slow down is and how likely those rate cuts for next year are i think those are the big topics you did bring up one point we haven't discussed. the treasury borrowing is pretty heavy. and that probably is a little bit, at least in the short term, on this steepener. it's a pretty heavy calendar we have to throw into the back end of the market. so that could be -- >> without a doubt

supply -- demand matters more that credit ratings. the view from the interstate 90 school of economics, rochester, chicago. david, thanks so much. >> always a pleasure, guys as we go to break let's get a road map for the rest of the hour the health of the consumer is in focus as starbucks is the latest name to show some cracks an important group when it comes to the housing market. new data on which cities are seeing the most investment and where investors are pulling back. and a first on cnbc interview you do not want to miss microstrategy chairman and cofounder chmiael saiylor with his thoughts on the business, bitcoin, we have a whole lot ahead. stay with us communities and the people who live and work there grow and thrive. we're proud to call these places home too.

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starbucks carving out some gains on the back of the latest results. same store sales for china soared 46% however for america and other international markets were weaker than expected let's get to that with david palmer reiterating an outperform on starbucks with a price target of 125. it sounds like at least in north america, u.s. you think resilience is the key here. >> yes i think there was a lot of expectation that sales decelerated through that quarter, ending june and they would be cautious about

the september quarter. but they're really speaking to consistent 7%ish type of sales growth through that quarter and continuing into the september quarter. and that's really big for the narrative because they were talking about getting some productivity on the cold beverage platform and to see that yielding some results here with stable comps is really helpful for the story. >> do they get a pass on china how does the market view that, do you think >> to some degree they do. there's still going to be a big argument there to some degree tourism and the high end consumers needed for starbucks needed more than other c concepts but also concerns that other local competitors are nipping at the heels of starbucks and limiting the long term opportunity i don't think anyone is going to win the argument on china in the near term but the u.s. and north american business is taking the burden off china in the near

term, their margins are ex expanding rapidly in the u.s. and for comps to be consistent here, that's really helpful as they get ready to set their fiscal 24 guidance in november. >> whether it is starbucks after the bell last night, chipotle last week, yum this morning, what can we glean about the state of the consumer here in the u.s. especially if you start to break it down across demographics? >> pretty solid. these chains talk about their being some evidence of trade down, but there's not a lot of evidence of weakness or slow down within the quick service arena. even on the casual dining front there's been stronger for longer than we would have anticipated with easing food costs the labor pool has gotten a little bit looser. although a little bit of an upside to the labor inflation side hearing a lot more of inflation than we would have thought there and so, there's going to be some

reasons for some price increases from players like texas red house or chipotle we expect both to take price in the second half of the year. so a little more of the strong e for longer, a touch up on pricing. >> david, quick last question for you. top pick if you could buy one stock right now in your coverage universe, what would it be >> that's tough. i think yum is setting up pretty well here. we expect good ongoing results for qsr. starbucks this next quarter is massive for it if they do what they say they're going to do for the september quarter this is going to pack the most punch if they do what they say they're going to do for the september quarter. so perhaps the most upside in the second half if things go right here we'll be watching the september quarter in the u.s. for starbucks. >> finally, coming off of mcdonald's earlier in the week i wonder is unit growth the story just at mcd or is that the name of the game for a bunch of

other players? >> there's going to be, you know, with mcdonald's you're really talking about having their unit growth go from 1% to 3% over time and they outperformed players without unit growth by comping everybody else but you're seeing good comp growth from yum, accelerating unit growth for restaurants, 6% already for yum. so unit growth is important. seeing it from chipotle, starbucks. mcdonald's is just catching up here and they're due they've not grown in units in the u.s. for a long long time. >> renovations but it'll be interesting to see how many they do add in the coming years a lot to get to in the coming weeks. thanks for the time. >> thanks, carl. a check on the chips as amd slumps after results from the company and investors look to

qualcomm numbers after the bell. what investors need to know after the break. down 1%, hasn't closed with a 1% loss since may 23rd.

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ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

one of the things that we are really good at is managing the overall supply chain and, you know, as we worked through some of the inventory on the pc side we worked through a lot of that and i can tell you, on our mi-300 or a.i. chips we've been planning for this opportunity. it's a really important opportunity. i think a lot of customers want to be able to ramp as soon as possible we've been setting up the supply chain for the last couple of quarters and we feel very good about what we have in the second half and into 2024 as we really participate in sort of the most important technology trend over the next five years. it's an exciting time to be in a.i. and computing but we're ready for it. >> that's amd's ceo lisa su talking to us last hour. results are off the highs of the morning. you heard her talking about ramping up production of the mi-300 but data center was a

slight miss, gaming slight miss, pc getting some relief. >> the street was willing to say great new product cycle we'll build that to guy dance and take their word but the fundamentals as they came through in the quarter of the core businesses with the stock, of course, up along with the entire group pretty significantly this year seems like some give back and nvidia also 3% down today as well. >> yeah. i would say sort of like real time the bottoming or stabilization of the pc market seems to be an emerging trend coming out of the semiearnings in general whether it's amd or the others we've gotten in the last two weeks but longer term analysts do point on that a.i. chip possibility. it's going to be not only the investments right now but the monetization of that in the co coming quarters seen to your point the closest thing to competitor, distant competitor for now to nvidia. we have qualcomm earnings after the bell which i'll cover on

overtime focus they make chips for telecommunication and other consumer e lexelectronics. >> if you look at nvidia as valued, this is the only game in town everyone has to pay for what they have what does that mean for everybody else saying we're in the market too it creates tension inside the sector. >> they talked about it in that first paragraph of the earnings release yesterday. seen seven times more hit. >> engagement. yes, customers engagement. >> that's the word on a.i. >> amd as we say not the only semi name on the move as the street looks towards qualcomm results after the bell >> if you look at the reasons why, amd today got an upgrade over at citi to a buy, a call there given the fact they missed the whole idea that investors wouldn't care about valuations but there appears to be some of the moderation happening right now. look at the overall chip sector

and some of the etfs that track it the etf has been the momentum trade possibly of the summer so far and the year up 40% of the qqq nasdaq 100 and 18% for the s&p 500. so that chip trade has been part of the upside momentum story so on a relative basis, an outperformer look at the etf in general and wonder why there might be moderation and stabilization look where it stands on the 50 day price rolling basis and 200 day rolling price. right now talking about a 3% gap over the 50 day average price. but right now this gap here over the longer term 200 day is roughly 25% at one of the widest levels we've seen over the course of the last year. so that momentum may be waning a little bit if you put the peers up there with regard to amd and the pull back we're seeing. point to the other names, nvidia specifically which has been the

workhorse behind the whole thing. all of that chip complex moving to the down side has been giveback and by the way, you mentioned qualcomm, morgan, mike, carl, with regard to after the bell today. what's interesting about the qualcomm trade right now we're tilting towards the higher end of the trading range so far this year so much so the options market is predicting a 5% move in the stock on the heels of the earnings report later tonight. to give you context, morgan, carl, mike, over the last two years, the stock has moved on average, an average of up or down 6 1/2% so the market is pricing in slightly less volatility for the qualcomm trade on the heels of earnings back to you guys. >> this sounds like something i'm going to cite you in the 4:00 hour on. >> remember those stats. >> you are the only person that draws a straight a line as mark

siegel -- as mike san toll lee. >> you should see the circles i draw still ahead, microstrategy executive chairman michael saylor breaking down results for that company as shares surge more than 200% on the year as we head to break, shares of virgin galactic under pressure, it launched commercial service at the end of q2, losses widening as they're investing in the nextgen class of planes. also guiding the flights starting with the first private astronaut mission next week gene rating only modest gains in the future back in two. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation.

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welcome back i'm pippa stevens with your cnbc news update. a lawyer for donald trump is pushing for the trial in his latest indictment to happen

after the 2024 presidential election he made the argument on the today show this morning. a grand jury indicted the former president on tuesday on charges related to overturn the results of the 2020 election special counsel jack smith said his office would look for a speedy trial ukrainian officials say russia hit a key grain port today sending food prices higher. the port has become ukraine's main alternative to keep up foot shipments after russia halted the black sea deal according to ukraine today's drone attack damaged almost 40,000 tons of grain destined for export. and hollywood writers and studios are expected to go back to the table after a three-month hiatus the writers are demanding better pay, staffing changes and

control over artificial intelligence morgan, back to you. >> pippa stevens, thank you. microstrategy, the largest public holder of bitcoin back to profitability. eps exceeded estimates but missed rev fusion expectations adding more bitcoin to the balance sheet. joining us now executive chairman michael saylor great to have you on the show speak with you again. >> thanks for having me. >> when it comes to mi micros microstrategy. you have the dual strategy, it's an operating company on dual intelligence and moderately leveraged play on bitcoin. does the marriage continue to be worth more than the sum of the parts? >> absolutely. the operating company provides diversification for investors versus the volatility of bitcoin and allows us to borrow money cheaply, our blended cost capital is like 1.5%

and we're able to invest that money into bitcoin and on the other hand our bitcoin investment is -- bitcoin itself is up 145% since we started buying bitcoin and that bitcoin position crates the volatility in the stock that allows us to borrow and raise capital cheaply in order to buy more bitcoin and grow the business. >> i know you retired one loan earlier, i guess last quarter. and brought your leverage down, when i hear you talk about being able to borrow cheaply, are you doing that right now >> we're not borrowing right now but we go through successive cycles f of leveraging and de-leveraging. we've been de-leveraging now and generally our decision about whether or not he leverage or de-leverage is a function of the market opportunity and what's most creative for our shareholders. >> in terms of the rally we have seen in the bitcoin, what do you attribute it to?

especially on a day we've seen other folks invested in the asset class say soft landing is what the rally is contingent upon >> there's a growing consensus that bitcoin is a unique and valuable international asset endorsed by politicians, regulators, investors, you hear money managers like larry fink say this that has created a change in sentiment, the odds of a spot etf being approved this morning is 65% according to bloomberg analysts so that's driving the near term sentiment. plus the fact there's chaos in the crypto industry, bitcoin is the safe haven institutional asset if you want to play the space without parsing through the politics, the legal and the regulatory complexity. >> would a spot bitcoin etf be

good news because it's a tide that lifts all boats in terms of bitcoin and microstrategy shares or something that could actually dent your investor base as you see some folks that are invested in microstrategy to have a liquid option in bitcoin shift there. >> i think spot etf is great news for the space bitcoin you can think of it as this beautiful house in a scary neighborhood that you have to pay for in cash, takes a year to buy and you can never rent it. the spot etf is the same beautiful house in a nice neighborhood and you can buy it tomorrow no money down you can rent it and refinance it from your bank it's not a threat to microstrategy. microstrategy is like that beautiful house with 10 ho000 ae of land behind it that can develop the land so we offer yield and leverage through active management, which

is unique for a set of our investors. we obviously don't have room in our capital structure for tens of billions of dollars of sovereign wealth or major hedge funds so they need a spot etf in order to take the position in the space. >> i know that in talking about the price performance of bitcoin, you know, your time frame is going to basically determine whether it's done amazingly well or has been disappointing. if you go back three years it's about where the price was in dollar terms three years ago in the meantime we had the most inflation in four decades. we now have a lot of questions about the size of the fiscal burdens of the united states and also, as you mentioned, bitcoin has emerged as kind of the survivor and the original digital asset of this type in other words, it's seemed to have created distance against other tokens in this in that context are you disappointed we're at 30,000

still or does it matter what the price is today >> i think three years is clarifying three years ago, bitcoin was 10,000 if we look at the three year chart from august 10th of 2020 to today, bitcoin is up 145%, s&p is up 37%. the s&p is the cost to capital gold is down 3%. bonds down 18% microstrategy is up 254% and our enterprise valleue is increased by a factor of ten, like $8 billion or something we're glad we adopted bitcoin. if you're not getting 37% gain in those three years via the s&p you're not keeping up with the cost to capital. >> michael, you know we talk to you so much about cryptocurrencies and the stock is arguably a proxy for crypto i wonder if there's anything

that makes you want the street to view as a.i. play. >> i think microstrategy has opportunities to harness a.i. bringing out a new product based on a.i. shortly we're excited about that what i'd say about a.i. is, a.i. is de-valuing assets created with pure information or white-collar type of straightforward labor. and a.i. is going to create value to assets that are energy rich you know, that acre of beach front property in palm beach that a.i. can't create, bitcoin a.i. can't create. and ultimately, bitcoin is the solution to a lot of problems a.i. creates and if i was looking at the a.i. revolution, i would think how do i buy scarce desirable assets that the computer can't spin out of thin air. 23 you own those you'll be good. because the stuff that the a.i.

creates in a split second, that's going to get devalued >> yeah. i do want to dig into the a.i. piece of the puzzle where microsoft is concerned as well you did ink this multiyear partnership with microsoft you'll integrate azure, open a.i. service to enhance the a.i. capabilities with your an alytic what's the uptake been so far on this had how do you expect this to continue you touched on it just now but how do you expect that to contribute to the broader fly flywheel >> microstrategy has been in the business intelligence business for 30 years we brought this module to our customers recently there's a lot of enthusiasm what we can do. anyone usin-- a.i. does a good of joining with our software and our proprietary graph in order

to get them that answer faster and quicker. we think it's good for the business intelligence industry and it's going to make every enterprise, more nimble, intelligent. >> i want to ask you about regulation, something we talk about every time we see each other. the commissioner of the cftc was on cnbc earlier today, here's what he had to say >> there needs to be action by congress so that we can fill these gaps in the crypto space and i've said, as the chair of the commodity futures trading commission we've been bringing enforcement cases without clear authority over the space and a huge portion, and i've argued up to 70% of the market, is largely unregulated because they constitute commodities >> i want to get your thoughts on that, especially since we have seen regulators, the s.e.c., for example, cracking down on cryptocurrencies and exchanges but bitcoin has been

the exception thus far can the case be made that bitcoin is a commodity and doesn't require the same regulation as everything else or is it coming >> there's universal consensus generally everywhere in the world across all parties that bitcoin is a decentralized global asset that has value. it is without an issuer and it is a digital commodity in fact, it is the gold standard of digital commodity you study bitcoin to figure out how to create a digital commodity. there's also pretty general uncertainly in conflict and controversy surrounding the role of crypto exchanges, digital securities, tokens and de-fi i don't think that that uncertainty is going to be resolved any time in the next two years. and the chair of the cftc is correct in saying we need a political solution coming from congress it's clear that there's not going to be a quick solution

coming directly from the regulators or organically from the industry so we're waiting for political leadership to resolve that ambiguity. meanwhile, bitcoin is the one unambiguous thing. it's the most certain thing in a promising innovative economy but full of regulatory uncertainty if you want to participate in the space, the way do it is with bitcoin. >> yeah. and, of course, we're looking for changes to the fasb accoacc accounting rules which i know affect you at least nice to talk to you, great to get your thoughts. >> the price of bitcoin was the current level 12-31-2020 two years, seven months ago. i said three years ago, that's what i meant. >> we got you, mike. >> still ahead, growing fevers about a key buyer in the housing market discuss that and a programming note as we go to break do not miss an exclusive with

jamie dimon, 2:00 p.m. eastern this afternoon get his outlook on the banks and the reaction to the downgrade from fitch stay with us

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welcome back to "squawk on the street." higher rates are not just hitting domestic demand for residential homes this year. diana olick joins us with the rest of the story. >> reporter: foreign buyers of u.s. real estate are pulling back as well it's not just high mortgage rates but high price supply of homes for sail international buyers purchased roughly 84,600 homes this year the lowest number since they began tracking it, a 14% drop from the year before bought fewer homes but paid more for them, with the median price of $396,400. so who's buying? china, mexico, canada, india,

and colombia this does not count new construction that's by number of homes and not dollar volume. chinese buyers had the highest average purchase price of $1.23 million, likely because a third bought in california where home prices are highest. in total, 15% of foreign buyers bought homes worth more than $1 million where are they buying? florida, california, texas as well as north carolina, arizona and illinois as for the how and why not all foreign buyers use cash but 42% did. and half of foreign buyers bought the properties for use as a vacation home, rental property or both and that's up from 44%, the previous year. does this make it easier for domestic buyers out there? sadly probably not overall foreign buyers make up just over 2% of home sales but in some of the popular foreign markets it could have maybe a

small effect >> i got it. when you've seen the policies coming out of the government, florida comes to mind where there was this proposal around limiting purchases or stopping purrs chas by some types of buyers i think chinese buyers in that state if i'm recalling correctly. is that going to have an impact? >> it could going forward but buyers are heavy in california as well. and text texas is getting more popular. it depends on where they are real estate is local it could have an effect going forward but buyers are coming from china actually was the biggest growth we saw in foreign bu buyers, even though the overall numbers declined. >> diana olick with fascinating data there we'll talk to fitch's cohead of the americas with us to defend the downgrade making waves today. and get the white house's take as they say that fitch is

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stocks struggling right now. the s&p down about 1%, on pace

for its worst day since may 23rd the nasdaq on track for its worst day since july 20th. bob pisani is here with more on the morning action >> and you can see the effects of this fitch downgrade. high prices, very vulnerable to a sudden downturn. and not surprisingly, some defensive names holding up better health care, consumer staples doing a little bit better. and stuff we call the high bag day names, technology and consumer discretionary these have been the ones that have outperformed throughout the year or to the downside. a different way to look at this is high beta versus low volatility high beta names are names that will move a lot when the s&p is up 1%. they'll move a little bit more like 1.5%. and high beta names like technology stocks, like intel or bank stocks like key copper, some of the auto stocks, like ford, energy stocks like apa are typically high-beta names. freeport mcmoran, mosaic in the materials space. all down a little bit more and the stuff that's holding up better is what we call low volatility names

these are typically consumer staple names like general mills, hershey's, insurance companies like chubb health care companies like united health. you can see the market sort of bifurcated along those lines this fitch thing plays into the market's vulnerability right now, which is very, very high prices high multiples we've talked repeatedly about the current multiple being close to 20 times forward earnings that is very high, historically. typical historical levels around 17 a lot of people say, just take out those magnificent 7 stocks those stocks that are out there. apple, amazon, alphabet, amazon, microsoft, and you get a lower multiple go down to 17 or so, that's more historic if you take out technology completely, you're in the high normal range at 17.8 the problem is, you can't take these things out if you look at separate sectors, it's very clear, technology is trading at multiples 28 times. these are crazy numbers, way above historic averages, consumer discretionary is. you look further down, it looks a little cheaper

consumer staples at 19 and health care at 17. but they're not bargains that's the problem nothing is cheap financials, of course, because of the bank crisis, is trading at an historically normal multiple it's always been lower at 13% or so or is that a bargain because it's trading at its historic multiple i don't think so that's the real issue that we're facing right now the issue is what does it mean really to be expensive we say that, what does that mean it means that you're not getting paid much to own stocks at the current prices and there are compelling alternatives what we call the equity risk premium. bond yields at 5% offer very compelling alternatives to stocks right now so what all of this means in plain english, as you know, mike, is that we're very vulnerable to sudden downturns we saw this last week with bank of japan we see this today with fitch we're facing a potential of 1.2 --this will be the first down day since may 23rd, as i recall but it's this vulnerability that we keep talking about. that's why, don't be surprised if we get a sudden 5% downdraft in the markets with this kind of

pricing. >> rich valuations kind of a pre-existing condition that makes any little jolt a little bit worse. plus, you've got the seasonal factors turning a little bit less positive, into negatives. and also, i guess, the answer to the valuation question is saying the market says 2024 earnings are actually going to pick up more and the market is getting ahead of it. >> that's exactly right. we have a u-shaped earnings expectations here. the bottom of the trough is q2, as you've been talking about, and every quarter, q3, q4, q1, q2, we're up, and so suddenly q2 in 2024, they're expected to be up 15% from the second quarter so there's your u-shaped recovery in earnings that's what's got to happen to get this multiple down a little bit. and if that doesn't happen, you know, it's going to be very hard to justify the prices at this point. we need -- we are baked in not just a soft landing, but an earnings rebound in the market right now. >> i mean, two areas that are very economically sensitive and tend to be early indicators of where activity are going,

semiconductors, and you've seen some green shoots or at least in stabilization within some of those names and some of those different segments and also, freight. freight has been in a downright recession, but you're starting to see some recovery or beginnings of recovery in that market, too. i bring it up, we have rxo logistics ceo joining us in the 4:00 hour on the heels of that company's earnings earlier today. logistics, brokage, that's what it's focused on there. but it also speaks to some of the wild memes trading we've seen in things like yellow for that bankruptcy. >> bob, thanks with that, session lows, s&p down almost 60 points. teth cties the street"onnu afr is

good wednesday morning i'm carl quintanilla top of mind were investors today, this historic downgrade of u.s. debt fitch ratings head of the americas richard frances will join us to defend their call plus, immediate reaction from counsel's economic advisers jared bernstein as the white house pushes back hard on the timing of the call >> then, a c-suite double play the ceo of teva pharmaceuticals with us. big boost for that name after an earnings beat and raise. and later, mch