will be the hot ones for us tomorrow morning a quick final check on the markets. take a look at where things stand right now. we're in the red dow off about 65 points, nasdaq off about 82 points, the s&p 500 off about 15 points, and i don't know if we're going to say that's a function of fitch or that's a function of a lot of other things we got the jobs number tomorrow, becky. >> that will be a biggie >> we got a lot to do. join us tomorrow for that number "squawk on the street" begins right now. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the mark stock exchange. david faber has the morning off. bond yields still elevated even after reassuring productivity and labor cost data. our road map begins with warren buffett telling cnbc he's not worried about the fitch

downgrade. apple and amazon set to report after the bell tonight. speaking of earnings, we're going to talk to shopify's president this hour on the company's latest quarter after topping some estimates but let's begin with tech as we look ahead to apple and amazon tonight the nasdaq, as we said, worst daily performance since february, jim. are we going to use qualcomm as a read for tonight >> no, qualcomm is just pa theting i. i was disgusted with that quarter. i'm so tired of their hype i'm sorry. i have a negative attitude about them i'm positive about other things. i mean, at the start, once again, they do this thing, it's great, it's great, it's great. and then you get to actually, but you know what, it's bad, and it's weak. it's great, it's great, well, it's bad, it's weak, and this is post auto and handset inventory build-up and, no, i'm making the samsung story, the solutions to apple. but no it is not a tell now, you could say, well, look, maybe apple is coming in too

hot. i think there's a -- there's three pieces to the service revenue that's going to be very good, so i like that but qualcomm is a tell for qualcomm, and i'm getting annoyed at qualcomm, because you can't constantly say you're good and then drop bombs. that doesn't work. i'm not saying it's, how was the play, mrs. lincoln that's the next time if he goes to that. >> right, right. >> i just think it's a time to have a real sense that this is a company that is one step forward, two steps back, and i'm tired of it. i'm tired of being an important company for us, because you cannot do what they're doing, which is having no accountability other than right here, right now, saying, enough. stop saying things are great when they're not >> lot of calls today. db does cut to hold. they go to $120. shave about ten bucks off. commentary last night was more about, we want to go in with a conservative attitude. no big promises. >> well, but my problem is that

when you have -- you have an -- look at what lisa su did yesterday. the stock was up and finished down horribly. lisa said, listen, we're getting near the end of the inventory problem. there's been an inventory problem. with qualcomm, when it was at $130, people were saying, it's okay auto he talked about how there's every auto company is looking at their product. and then auto's slow look, i mean to be critical. i am saying that the buck stops here we cannot -- there was a downgrade. you've got to -- when things aren't good, you have to say, listen, we're not there yet. you don't say, it's good, and then have your cfo drop a bomb this is not amy with satya nadella. hood will tell a good story but say, listen, we've got to be sure amy's great. they have total credibility. qualcomm is really a cautionary lesson for all ceos out there.

when you have -- when you tell people that you're going to make it up with auto, because auto's so good, you better really come in like a rock star. so, i just think -- i don't want to spend any more time on qualcomm because i was very disappointed >> what is on the line tonight for apple and for amazon >> we have someone come on amazon in the previous show and talk about how amazon web services could be 10% growth if that's the case, the stock's going to go up ten points. i think amazon's going to slow to maybe mid-single-digit growth for amazon web services, and so i'm -- it would be great if they could say, because of a.i., we could have a strong fourth quarter. but amazon, again, polar opposite of qualcomm brian is the cfo, and i want people at home to understand that these are big personalities. these are not just voices that are talking. brian is gospel.

if brian says that aws is slowing to mid-single-digit after it was in the 30s, web services, then he's saying, look, i don't know if we can come back. and it will be a very important call, because they are the -- by the way, they do no hype whatsoever it's just a terrific call. no hype whatsoever >> of course >> they're just delights and you're never going to get a qualcomm ever you're never going to get someone saying, it's really great, and then someone saying it's not >> but it does sound like you're going in to tonight with your eyes wide open >> i hate to say -- i think the world of tim cook, but the 30-year treasury is crushing them, because all anybody can realize is, holy cow, we thought there was going to be a recession, so let's keep buying the 20-year or the 30-year all those people were wrong. there's a mad route out of bonds, and it's impacting stocks, and this is a bad day to report

bad day to report. and i feel bad because what's going to happen is it's going to be overshadowed in the same way that lisa su reports a great quarter and a.i. was great and the stock was up 7 the night before, then up 6 and finished down, a 14-point swing because of the bonds this is an ugly environment for stocks because interest rates are going up so far so fast right now that it's taking my breath away. >> right last night, they talked about the likelihood that ten-year goes to 4.25%. >> i love that piece >> but that the victims might be the magnificent seven, the mega cap eight, or is the rest of the market hangs in there and keeps its target for next year >> we had a couple -- we had three companies report that did m marvelously. emerson. the last quarter was pathetic.

god, i'm mean today. >> check out ingersol. >> i wanted to put eden in the bull pen for travel trust. i can't believe they would make this much money at this point in the cycle. jim came on, but his numbers with caterpillar, these are the companies that are uniquely set up for 2024, because as eton said, we haven't even seen any of the infrastructure money yet. wow. the magnificent seven, on the other hand, i had larry williams, one of the greatest chartists of all time, he's a historian, and he said, jim, you're going to be on the wrong side of nvidia jensen huang has a talk where he's going to talk about division now, these talks are talks where it's like, you know when you blundered in -- i once blundered into a philosophy class at harvard, and i had no idea it was mathematical it was this guy, and i'm in the middle of class, and i say, i got to leave and he says, what are you doing

back there and i said, getting my head blown off by your class. i said, i'm going to ruin my transcript because of this class. when i listen to jensen huang, i'm ruining my transcript, i know it, because i'm so blown away by the man. but he's the only guy right now that's blowing me away >> we'll talk more about the big tech names coming later tonight in a moment. jim does mention, though, bond yields, and we have new commentary from buffett this morning, shrugging off some of the concerns about fitch's credit raiding downgrade, noting it's not changing what he's doing at the moment. saying, berkshire bought $10 billion in treasurys this monday and the only question for next monday is whether we will buy $10 billion in t-bills >> that's not danger, will robinson he's got a lot of cash, put it short. i think that the speed with

which, if you were trying to buy the 20-year, you would get the report, and you would be down immediately. and so, that's fine. look, i like the fact that he says, don't worry. he's always calm >> echoed by dimon yesterday >> yeah. i mean, by the way, leslie picker -- >> great interview >> unbelievable interview. let's acknowledge when people do amazing things had jamie dimon say things that i thought were very instructive. obviously, does not care about the regulatory environment right now, even though he's winning in it look, when i look at -- at the magnificent seven, they are linked, hand in hand, with the 20-year, and i wish they weren't because that means that they're not going to have a good time. >> if you missed leslie with dimon yesterday, take a listen to what he said about fitch. >> it doesn't really matter that much you know, the markets decide number two, they point out some issues which we all knew about, about our debt ceiling crisis, things like that number three, the american

public, this is the most prosperous nation on the planet. it's still the most prosperous nation on the planet it's the most secure nation on the planet there are a bunch of countries rated higher than us, like aaa, but they live under the american enterprise military system to have them be aaa and not america is kind of ridiculous. >> jamie says his bigger concern lies with some of the geopolitical stuff going on, nuclear threats, ukraine, so forth. >> well, look, apropos of his excellent note each year and the things he says on air, i think that we all kind of feel like, why shouldn't he be president? he's got this great world view but he doesn't want to be president. he told me, he opened a branch in philadelphia, i think he is not afraid to be very common sensical i think that fitch would not have downgraded our debt if he were in the room i just think, look, i always -- warren buffett does great, he says, relax.

i was riveted to the picker interview because he said, things are fine. we have had a huge rally we've only been down three years and up this much in the first se seven months and that was the crash in '43, where it was still in doubt so, we're on track, but this is going to be the toughest part of the month. right now. we're at the tail end of earnings the companies that are really doing well with industrials. there are not that many industrials left >> and basically, no catalyst until jackson hole >> no catalyst >> yikes >> and i just want -- i'm walking -- the administration is going after every second and i got up at 4:00, i worked out, and it was like, you could afford a house at 4:00, at 4:30, couldn't buy a house enough let's just slow it down. by the way, did i tell you i was disappointed by qualcomm >> yes, i think we led with that >> did i get to that did i get to qualcomm? >> i think it was very clear >> enough.

enough look, i want them to change their act. that's all i mean, that's all i'm not asking for anything more than a wholesale change of attitude >> i'm sure they'll take that into consideration still to come, we will talk to shopify's president on the company's latest earnings beat shares down about 3% there as jim said, some weak ness in the premarket. barkin comments on the tape. bank of england did hike 25 basis points t ns ts uray good luck. 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. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

canadian gem shopify beat on the top and bottom joining us now, first on cnbc, harvey finkelstein it's good to see you >> great to see you as well. thanks for having me on the show >> because i know you well enough, i'm going to hit you from left field. i'm on this roku call, roku is up 30%, and i'm thinking, what are they doing that is so right? sure enough, i get to the president of roku media, and what is he talking about he's talking about you he's talking about what you're doing to make it so that my tv is shoppable i want people to talk about -- i want you to talk about this. this is one of the most amazing things going on right now in media. >> look, the thing that we pride ourselves on is creating this future-proof retail operating system, and what that means is that every single one of the merchants and brands and companies, whether they're small brands or large brands, fortune 500-type brands, when they come

to shopify, they can sell across every single service area where consumers spend their time the online store is the main one. we also want to make it easy for our merchants to sell across instagram and tiktok and snapchat and facebook and also streaming television and we want to qualify to be the leading retail operating system for every modern brand, we have to make it easy for the merchants to sell anywhere where consumers might be just to be clear, what you're also seeing, jim, is that we are loser focused on performance right now. we're building the best product, the best business, and the best team and that is possible because we have architected a new shape of shopify, way more focus on our main quest, better talent density, and we're executing with greater speed revenue was up 31% gmb was up 17%, and we are also earning more parts our merchants' businesses, delivering our rate over 3%. and we delivered our third

consecutive quarter of positive free cash flow, and we expect the positive free cash flow for the third quarter of this year will be greater than the entire first half of 2023 >> which is extraordinary. something else you do that's extraordinary that i think people may not realize is you actually have empirical evidence about how well you doe with shopify checkout, which is as easy as can be, and if i were a consumer products company, which i know love you, i would be fascinated by how much better you do with your checkout. you've got numbers tell us. they're incredible >> yeah, so, i've been saying this for a long time, but now we actually have evidence from a third party -- a major management consulting firm that put out that shopify's checkout is unequivocally the best on the internet in fact, it converts 36% better than the competition, and if you look at every checkout on the internet, it converts 15% more on average so, we're building an and optimizing, we've been doing that for two decades, and cthats the reason why supreme and

taylor swift can run these massive sales. shop pay just surpassed the gmv since the launch in 2017 it's the most popular accelerated checkout on shopify and it's the best converting one as well. we think that really sb substantiates that building a modern business without shopify is a competitive liability >> there's a thought that services, particularly in travel, the consumer might be sated here they have had enough and the argument goes maybe they shift back to goods spending i'm wondering if that's a dynamic you're looking for in the last couple quarters and into next. >> we're seeing everything from bike sales and boat sales. swimsuits are up over 50% on shopify. jungle gym are up over 100%. we're see the barbie effect. we're the e-commerce partner for mattel but not just for mattel across the board, we're seeing doll sales up 56%, play vehicles

up 70% we still see that the u.s. consumer is very healthy, very strong but more importantly, carl, we are seeing them go with their wallets to buy their favorite brands, brands that they have a deep connection to direct to consumer is what they're looking to do. and all of their favorite brands are on shopify the really cool part is now when you add new technology, we talked a bit on the call about shopify magic and side kick where we are uniquely positioned to harness the power of ia.i. t unlock these incredible unprecedented capabilities, we think we can help more companies get started and grow faster than ever before. >> you've got to talk about audiences. amazon is not a partner. shopify's my partner, because of audiences. this is working for people, isn't it >> it is remember, most email don't refer to shopify this way, but if you were to pretend that shopify was a single retailer, aggregate all our merchants in the u.s., for example, we would be the second largest online retailer in america. what that means is we have

incredible economies of scale, so when we go to negotiate rates on things like payments, for example, we're negotiating as if we're the second largest online retailer and we're able to provide those economies of scale to small businesses, medium businesses and even larger companies like glossier and mattel audience is really interesting because it allows merchants on shopify to buy ads more effectively. we have shopify additions come out last week where we announced 100 new products and features that we have been building and one of those announcements was audiences 2.0, which is our new algorithm. so, once again, we're trying to make the price of starting businesses easier, but once you get started, every aspect of your business, we want to take care of it and make it better for you. we're cooking with gas right now. >> people are listening to harvey at home and they're fired up, and then we get to the guy who can't resist, and he says,

well, what -- do you have conversations with amazon? does it ever get you down that there's someone that has to ask that question? >> i don't mind that question. like i said, we are talking to amazon, and frankly, conversations remain productive but there's no news yet to share on that. >> well, i don't think there should be. anyway, thank you. i like -- we all love amazon, but harley is mr. small business person, and there's nothing better than that, even those guys who hate consumer product companies. harley, great to have you on thank you. >> see you >> we'll get cramer's "mad dash" in a minute, get to other consumer names this morning as well, dash, wayfair, etsy, clorox, paypal "squawk on the street" is back after a break.

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nasdaq 100 baglaggards paypal, not far behind we're going to get to that quarter. and watch travel booking holdings down 3% as we get some negative tone out of some of the hotel companies again today. opening bell in just about six minutes, and don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street: opening bell" podcast.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. the revenue is growing in the, you know, 30%-plus, very healthy range consistently, and the bottom line, though, is growing almost three times year on year, so there certainly is a disproportionate growth in the bottom line versus the top line, but i wouldn't call it a pivot to us, this is natural growth. we are still on offense. we are still in investment mode. we want to build the biggest size business for the long run >> tony last night with jim. >> i think there was an

undercurrent where people felt, well, once things start opening again, maybe doordash, which does add to the expense of a meal, would lose a lot of business it's not happening turns out that doordash is -- has become almost synonymous i know uber -- great interview, by the way, that andrew had with dara, but i like what uber's doing, but doordash is the winner it's good to see winners come out. etsy is a winner i know the stock is down shopify's a winner i know it's down but doordash is synonymous with how we get our food, and tony, very humble origins. i was coming at him, saying, you guys were willing to lose money to win and he did not like that narrative. he would say, listen -- narrative from safali but i think this is a place to go after the bond shakeout, because it's going up, it's going to move the stock down.

the stock was up $6 after the interview, deservedly, because the numbers are that good. the gross margins are that good. the path is that good. this is just an engine, and people discovered they liked having food delivered during the pandemic, and they're still doing it >> kind of hard to go in reverse. >> yes, it is. people just -- they got addicted we talked about that they're addicted to doordash, and that's a good thing if you're a business person >> straight quarters of 25%-plus growth the difference between dash and etsy is tony guided up etsy did not >> and we'll talk to josh. i think that he said he's become very conservative. i do think that -- i did not think etsy was bad we'll have discussion tonight. i also wanted to mention that $4 billion in earnings for the dashers, and dashers are not full-time. they pick up incremental money good reminder that small business people doing well with

etsy, doing well with shopify, and we were speaking, small business person is alive and well in this country, and that's terrific, and doordash is part of that. >> there's a lot to get to this morning. let's get the opening bell and the cnbc realtime exchange at the big board, it's nyc kids live and at the nasdaq, rock the bell celebrating the 50th anniversary of hip hop the organization's founders, ll cool j, and jeff yang are doing the honors >> wow >> nice. >> i remember when my daughter met ll cool j at a swimming pool, and she said, hi, mr. cool j. by the way, one of these people who's just -- a remarkable figure i don't know if people know. sometimes you meet these people and your kids meet them and they're kind you never forget when someone's kind to your kids.

>> when you meet your heroes and they're good to you, it's great. >> lot of media today. you want to dive into warner >> i think that zaslav -- people have to understand that everything about this company right now is about viability and about whether he has the cash flow to do what he says he can do well, what better way to do it than to do a tender offer for your buy you may want to sell the stock be my guest. what matters to me is that the reason the stock is $12 to begin with is because people feel he can't pay off his debt i'm not looking at necessarily any one particular line of what's going on. i'm looking at the cash flow, and the cash flow is everything he said it was at the beginning, and i applaud him, and i think that if you want to sell the stock, you're selling the stock because you don't understand what his game plan is, which is to make it so that one day, you'll wake up and say, ayei'vet this engine. the engine is going to be max.

i'm very word with when you listen to tim cook tonight if they say, you know what? we really love sports, it turns out that vision pro would be amazing with the nba well, that's the problem you are up against companies that play with unlimited capital. i'm watching messi yesterday in mls, and mls is apple, and if apple decides they want to go after anybody, they can do it. but this was a quarter where they saved a lot of money, and they're lowering their debt. you've got to go back to what he said could happen with the spinoff. he said they could pay down debt, and he's paying down debt faster than we thought he did not say, and wait until you watch our program on x that was not his rap his rap was, watch us do this, and he's doing better than we thought. anybody who sets out to do something and they do it better than we thought is okay with me. >> as you can see, they did up their post-merger cost savings target synergy happening sooner than expected content sales up 180% as they start to sell these goods across

the fence and streaming losses down to $3 million here's a taste of zaslav on the call >> with respect to linear, the fact is we have a uniquely different hand, one that we believe makes us more resilient. on any given night, we reach an average of one-third of all cable viewers, and it's a great platform for driving our brands and products we've worked really hard on driving efficiency and productivity enhancing our market.

>> and an antagonistic view. i want you to compare the labor negotiations here to the ones in auto, where i think it's going to be a strike and i think it's going to be horrible >> you're making that call today? >> september 14th. i think they're going to strike. the guy who runs uaw, i find him frightening. >> and teamsters u.p.s. didn't give you any solace? >> teamsters turned out to get a good deal. historically, very powerful union, rich union, but the uaw leader won -- there was a contested -- very contested vote between the company, the union that wants to work with the autos together to try to preserve some jobs and give the elder people a good pay. and then this man, sean, who is just talking aboutcapitalism and the nature of capitalism and

how it's really hurt workers this is very walter reuther language it's -- it's a kind of language that when we had in this country, we'll take you down if you don't play ball, that's the language i'm hearing from uaw. and look, i mean, it's the kind of language we just say, you know what? we should have built all our evs in mexico. it's that bad. i don't think people are paying enough attention the man is -- i'm not saying he's irrational. i'm saying he was elected in order to make it so that there's a very short week, to find benefit back and then the notion that we're fat cats. the shareholders are fat cats and have been overly rewarded. we haven't seen this -- he's class warfare, and it's very shocking to hear class warfare >> i remember a jim cramer a while ago who lamented the shift from capital to labor -- i'm sorry, from labor to capital over the last 30 years >> i always felt that the middle class benefitted from unions

i've been a union member -- twice union member, and i always felt that you could work together and everybody would do well i never felt that i -- we had to destroy the people that we were fighting i helped -- i was part of a jp stevens, at one point, great textile company, walk -- stoppage, tried to block them, and they went under, and i've always regretted that. i said i was part of that. jp stevens, we didn't want them to go under. we wanted them to, you know, it was like bond. do you want to -- we just wanted them to talk we didn't want them to die i'm always reluctant to see a union spew such language that makes it feel like it's zero sum. but i am pro-union, because the unions, in the way that ronald reagan was pro-union you want people to do well you don't want people to have no health care. come on. but this is toxic. >> among the movers today,

paypal is pretty much in line on eps and revenue. they do reiterate the guide. final stages, jim, of their ceo search >> i don't know. i mean, they mentioned that they have some losses we don't want to hear that we want to hear what tim cook has to say tonight the buy now, pay later at apple, i think, is really killing everybody, and paypal -- the ratchet down in growth here is so severe that you're going to think it's a commodity and now, i hate to say that because i think a lot of us got involved in online spend with paypal, but it feels very kmod thais and no, i'm not there. can't find a bottom. >> clorox is the move today about the beats, organic up 14 more about just the tone of the tape right now >> i think it's procter-like in that they are -- their costs are good the brands turn out to be better than expected. there's a little twist where there's a division that was vitamins, which has been a bad division, and they kind of moved

it over to another area, which i got to find out tonight when i speak to linda, are they getting out of that division this is one of those that they shouldn't have bought, because they have unbelievable brands, and i'm very glad that they pulled this one out. people were starting to think, are they, you know, is clorks -- has clorox lost it clearly not. they were one of these hangover -- you got these companies that did so well during covid, and then nobody wanted to touch them this is the beginning of the next leg of clorox i'm looking forward to the interview. >> it's a good one couple things in travel. jeffries cut southwest to hold, and host is a miss they trimmed the guide they're getting a lot of outbound international travel without the corresponding inbound. >> that was interesting. the people are going to say, wait a second, america's best, did they say that? they didn't. mastercard, did they say that? they didn't. mixed picture travel obviously, mayer was great

fantastic interview. i like bob jordan very much, the ceo of southwest air, and the big issue has always been, was he given a bad hand? he's never going to say that we all know -- i think the problem with southwest is that everybody else has kind of caught up with southwest southwest hasn't gotten bad, but the other airlines you see, with the exception of jetblue on that screen, i think united is very good american is good delta is like in the 80s when you used to buy delta stock because it was blue chip >> it was actually pleasant to travel >> delta, i bought 30 shares for my dad in 1983 at goldman and was it was just one of those stocks of a company that's terrific southwest is routinely missing their numbers, and maybe you got to -- they have three things. they're missing their numbers, and they're going to have to have a very hard offsite they need an offsite >> little retreat. we mentioned the weakness in booking holdings premarket, and of course, airbnb tonight, jim, will give us a little more

clarity on that. >> i wish it hadn't run so much. every time that brian chesky comes on, and he's been on multiple times, the stock gets hammered as people feel that he says, you know what, the high end is not doing well, and then you'll talk to him, and you'll say, did you say that? he'll say, no. there's always long knives for this company and remember, the focus should be the app and the focus should be, it's still to come. like doordash. it's airbnb. they've won. but the stock coming in hot like this, up at 1$140, it's ripe to get hit, but i think once again, it gets hit, then buy. that's been the satisftory if y look at the stock since december hit, buy >> as for hood, gap profitability. the mau missed >> and they're still doing that thing. a lot of net interest income is where they had the good numbers. and i look at the breakdown of what people are doing, they're still playing options, playing

crypto they're not warren buffett and when i saw the number first, everyone got very excited, but then when you look under the hood, it's still the same old guys i mean, these are the guys, when you look at robinhood, i see -- i bet you they were buying a lot of tupperware. they should buy tupperware the stock. get out of that mode maybe they were buying yellow. you know, buy yellow what are they going to do? everyone thinks it's always going to be hertz where you have a bankruptcy and actually make money. i didn't like the profile of what people were doing in robinhood because robinhood introduced this really interesting retirement package, you know, the match, and no. i mean, the -- they still resonate with stuff that's very zero sum and loses people a lot of money >> i remember when vlad tried to make the pivot with you and talk about long-term -- >> no, and vlad, look, i think his heart is in the right place. the customers are the customers that are -- they have to re --

they have to rethink what they're doing. they need to go buy and hold a really good company, and it's not what they're doing >> warner, we mentioned the strength of barbie, and speaking toys, hasbro, this is the high for the year here. they did talk about inventory reduction cost savings, selling a unit to lionsgate. >> i thought that was good this guy, chris cox, ever since he's come in, he's done a terrific job i was very skeptical brian golden was a guy -- the late brian golden -- had been consistent in trying to do w what -- by the way, just understand inan is mattel he didn't get -- he just got a few points from warner on the movie. was not -- it was all in the ancillary. it's all in the back end but goldman was doing the same thing, and it looks like that's being a little bit undone by cox, but what cox is doing is terrific so, we have two great ceos in the toy business that's unusual usually, one's good, and one's

bad. this is a renaissance for toys right now. and it's good, because both guys are -- both people who run the companies, they're very good people >> we mentioned amazon tonight, and speaking of the cloud, jim, crm, below the 50-day, i'm trying to think. >> you go and look, and what, four out of the last five times before dreamforce, which is coming in september, you had to buy the stock. marc benioff has -- the ceo -- he's been quiet, and a lot of people feel when he's been quiet, nothing's going on. they felt that way about bill mcdermott too, and service now did very well. i'm steadfast. salesforce has probably been the longest holding other than apple for my travel trust, and it's another one where the roi, when you bring them in, is rather amazing. so, yes, i see the breakdown i see the breakdown at nvidia.

intervie nvidia's got -- you know, these stocks are rolling over. i think they're rolling over because they're either quiet -- nvidia's in a quiet period or because, again, even since we started the show, it's become even -- your mortgage just went -- by the way, good numbers. real good numbers. >> a little energy here, jim conoco and occi. occi boosting their production guide for the full year, although the saudis say this voluntary cut may be extended for another month. >> occi was down the metric we're looking for this quarter is more with less were you able to drill were you able to have fewer rigs and get more oil that's the metric, and that's why pioneer, pxd, has been the best perform what you're looking for is holding your costs down and producing more oil, and i got to study conoco more. occi, i didn't see it either, but that's the metric. each quarter, you have to look at what are -- why would you buy

an oil stock right now, you'd buy an oil stock because they're drilling with fewer rigs and making more money. that is what you should care about. >> pioneer, of course, yesterday, saying, we might have 80 to $100 crude into the new year >> they're very bullish. i was did appointed by devin, because devin is run by rick moncrief, and he is just fantastic. they have not been able to do the numbers that i wanted. i don't know why drill down with rick because he's amazing but yeah, pioneer's been very bullish, though. the stocks -- the stocks to buy up in the pipeline, no one really wants to buy the pipeline, but they've been very consistent and very good >> our data menu continues let's get services pmi with rick santelli >> yes these are final reads, carl, which means you take the earlier months and replace them with this current one 52.3 replaces 52.4, and 52.3 is still the lightest level going back, well, actually, to february of this year.

and if you look at the -- that was services if you look at the composite for s&p global pimi, it remained at 52, which by the way was also the weakest level since february, and the data stream does not stop here we still have factory orders, durable goods and ism services pmis yet to come at the top of the hour "squawk on the street" will return after a short break your brain is an amazing thing.

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take a look at the markets on this thursday bears, still in control, although not to the degree of yesterday's drubbing s&p down about 18 points a lot still to come, though, this afternoon with amazon,

apple, airbnb, and a bunch of others we'll get stock trading with jim after a short break.

he has no idea >> camer >> i have talked to the heads of every one of these firms in the last 72 hours, and he has no idea what it's like out there! none bill pool has no idea what it's like out there my people have been in this game for 25 years and they are losing their jobs and these firms are going to go out of business and he's nuts! they're nuts they know nothing! >> cramer. >> i have not seen it like this since i've been for half a million shares of citigroup and got hit. this is a different kind of market and the fed is asleep >> 16 years ago. >> the thing to look at there was the corner where the date was, was august 3rd, 2007. and what i was saying was these lockstep rate increases are killing us i had come out, that was my friend erin burnett, we were

going to talk about a stock, i talked to somebody my company is about to go under, very prominent, very prominent mortgage company, and had spoken to another person who was another bank, my bank is finished and when you tried to communicate to the fed they thought everything was fine and then the minutes came out and didn't reflect it, but when the actual transcripts came out they laughed. bill pool a nice man, but made me into someone who was, obviously, a crazy man look, that was a concerted effort by me and, obviously, a heated moment of what i thought could be a great recession. >> has that moment changed >> you would do the same thing today? >> yeah. >> i wouldn't have personalized it with pool because he was doing his best, but what mattered was that they had -- they thought they had great information and they had no information. they thought that they were really, really smart, and, you know, sometimes -- and i like to

go back to school -- you'll be in your class and you may not be the smartest person in the class but maybe you've done more work where you're clever, and ben bernanke, who is a good guy and his team, had not done the level of work and they were not rigorous they just didn't demonstrate rigor. i had a way of saying it wasn't very vigor i read it in a different way than they do my wife feels badly about the way i lead my life, i work every night. my kids are grown up i have the luxury of spending a lot of time working and they did not work i don't know who they were talking to but in the end this game comes down to practice, it comes down to watching film, it comes down to not missing a session. these people do not -- did not deserve to be on the playing field. that's what it was about it was about being at the practice ahead of the game and they didn't. they just went to the game they disappointed. it's like the nfl.

they didn't belong in the nfl. they just didn't belong. they didn't go through the tunnel and they were not jacked. >> i love how the moment has endured. >> look. i could come out and say yeah i would do this -- no. they lacked rigor, hadn't done the work, didn't deserve to get on the playing field. >> want to do a quick stop trading? >> cummings is the one to watch. maybe not the greatest quarter in the world for the power generation, similar to caterpillar, the stock going to continue to go down this is a tough day. this is today's caterpillar. >> how about tonight >> clorox, again, like these stories like proctor where they have pricing power, even though the raw costs are going down supply chain problems. looked like linda solved them. josh, brooklyn's own, i think etsy's quarter was better than the stock reflects, always bounce back, because small business, small business you get these companies and

doordash and they celebrate and make money for small business people i buy a lot of stuff off etsy including jim's none better pickles my labels and none better tomato sauce. there's no other place to get this stuff other than on etsy. >> package good mad man. >> i love cpg. i do thank you erin burnett for allowing me to do what i did there. >> that was good see you tonight. "mad money." still to come, the ceo of kelloggs on the company's latest quarter. >> a breakup coming. >> the state of the consumer market is down, elyid is stubborn, 419. don't go away. good thursday.

welcome to another hour of "squawk on the street. i'm carl quintanilla with julia boorstin and mike santoli. david and sara have the morning off. bulls trying to find legs here, yields are making it difficult s&p down another 15, lot of data on tap today along with mega cap earnings after the bell. >> and we're 30 minutes into the trading session.

here are three big movers we're watching qualcomm, one of the biggest laggards on the s&p this morning, the chipmaker under pressure on disappointing sales and guidance as they see a slower recovery across markets shares have under performed on the year they are down 10%. sales topping estimates that company did warn of potential weakness in 2024 when it comes to the consumer. those shares up 10%. and keep an eye on expedia, slumping after gross bookings came in below expectations for the quarter down about 13% right now. >> let's get some factory orders and ism services rick santelli has got it rick >> yes carl, there's surprises here factory orders for the month of june, these aren't final these are new reads on factory orders expected to be up 2.3% and it is up 2.3%. that is the best going all the way back to june of '21. that's a big number.

rearview mirror, a positive revision from up 0.3, up 0.4 which looks poultull tri, in hindsight, 2.3 turns into up 0.2% and if we look at last month, positive revision there, still negative from half of 1% minus to now minus 0.4%. let's get into durable good orders these are final reads which means we toss out the mid month read 4.7 becomes 4.6. still a very, very healthy read and the best since mid-2020. if we look at ex-transportation, same dynamic, transportation figured in just like factory orders it's a healthy up 0.5. up 0.5% replaces up 0.6. if you look at capital orders, proxy for capital investment by business, up 0.1 it was up 0.2 on the mid-month

read if we look at shipments, 0.1 is the number versus unchanged. now ism services index for july, 53.1 expected. 52.7 just a little bit of a disappointment, but if you look at may when we were 50.3, it still looks pretty good. prices paid, remember, when this goes down, that's a good thing 56.8 and that's not down. that is actually up from 54.1. 54.1 in the rearview mirror. 56.8 we have to go how far back to find a bigger number you have to go back to april when at 59.6 so that's not healthy. 50.7 unemployment. that is well below 53.1. considering tomorrow is the big jobs report and finally on the new orders front, 55.0 versus 55.5 in the rearview mirror interest rates are up 417 last

in 10s, 4.24 and change is the high yield close for october that's the number to pay attention to carl, back to you. >> a lot of information in there. rick santelli. stocks are coming off the nasdaq's worst day since february and the s&p's worst since april following the fitch downgrade. berkshire's warren buffet shrugging off the pessimism noting he's not changing what he's doing, saying berkshire bought $10 billion in u.s. treasuries last monday, $10 billion this monday and the only question for next monday whether we will buy $10 billion in three month or six month t bills at the same time, bill lachemann commenting on the long end and the prices paid might fit into that discussion. >> for sure. buffet has a point in terms of the downgrade not being that much of a swing factor the yield are going up no matter what the reason. we can point to many of these, one of them being the realization that fed is going to

be higher for longer, making its way into the market, the stock market has hesitated every time we've gotten yields above 4% no magic formula for what the correct level of the indexs are relative to what yields are, but it's definitely the case after a five month sprint higher in the s&p 500, after we priced in a pretty good earnings season and earnings draw from the second quarter that's going to look better in 2024 and, you know, all the other stuff, disinflation, all the good news soft landing thesis that has made its way into the market we have the seasonal shakeout in stocks in the face of higher yields i think that's the way to read it right now, and, you know, the response to earnings in general has been pretty stingy even when the companies have beaten. i think those tell you we've priced in a decent amount coming into august. >> you see this as a seasonal shakeout and responses of the long-term trend as opposed to the response to the fitch downgrade. it's interesting to note that even buffet acknowledged some of the andunderlying concerns and e also heard yesterday from jamie

dimon in that great interview that he did with our colleague leslie picker, i would like to play a little bit of that sound. >> there's been a sea change in capital flows around the world governments have to sell more debt than ever before, all governments, including the united states. some say less than down deficits, they're not down from precovid debt limits are high, selling more debt, it interest rates have gone up central banks are selling. they were buyers and now they have to sell we never had qt before and then also the new economy the green economy, $4 trillion a year ira, militaries around the world, almost every country beefing up its military, this may be a sea change in capital demand six months, nine months, talking about crowding out, so we'll find out the 10-year bond went to 4.10. i think it could go to 5%. don't be afraid of it. just be prepared for it. >> sort of acknowledging some of

the fundamental shifts but not seeing them as red flags essentially. >> exactly. >> sea change in - >> i thought jamie was going to answer you right there i think there's certainly a general undertoe there of we have a lot of treasury issuance coming out, it could happen on the longer end if there's liquidity for it we know these things the point about fitch maybe focused attention on it, the 10-year japanese yield in the last week is up from 0.45 to 0.7. it went vertical that's a low level fitch said nothing about japan in other words, it's a global phenomenon happening in part for not bad reasons, the recession risk is getting taken out of the bond market in the u.s but it does create a challenge for stocks at these levels meantime richmond fed president tom barkin speaking saying inflation remains too high steve liesman joins us with more on what he said. hey steve. >> tom barkman is an interesting

guy. not really an economist, doesn't talk about the economy and common metric terms as the regress of jobs and gdp. he talks about it in a business sense and his sense is that economy has avoided a downturn and tries to explain and if there is a recession it will be one that's more mild he talks about the idea that businesses have spent, among other things, the last year preparing for a recession, kind of hard to have one when everybody is prepared. yes, may need another shock in order to tip the economy into recession. monk the shock that's happened which is the fed raising rates he talks about different industries having been in a mini recession up to this point but overall, it's the kind of cautiously optimistic outlook that says because you're unlike thro -- unlikely to have firings and businesses have right sized for low demand we may be in shape.

quickly on the ism, it's one of those questions as to what are you looking for here obviously, objectively you don't like to see the service sector coming down or really weakening, but if you are looking for a soft landing, taking a few points off the ism service sector, maybe what you're after. don't like to see the prices paid going up. the employment right around the 50 line. it's one you want to watch if it weakens further. a little bit of weakening in line with of the soft landing idea mike >> yeah, steve it definitely seems like there are all these offsetting currents as you cite at this moment didn't get a chance yesterday to have you weigh in on this second straight super strong adp private sector employment report going into an official jobs number we know the market likes to sort of set that aside, it's not really determinative of the official number, but it seems like something did actually get the bond market's attention like that, like a just in case we get a hot number tomorrow.

>> well, i don't know if this is helpful, mike, but my mantra has always been, if you're not confused, you're not paying attention. and there's an awful lot of data out now that we didn't have before adp is different from how it used to be adp is not trying to forecast the jobs number even the private sector part of the jobs number it's telling us what happened with its own universe of millions of workers who were on the payrolls that they process and there's actually a piece by b barclays where they say you know what, the data from adp may be just as good or better than the bls when it comes to what's happening in the employment market i've been looking at other high frequency data the home base is a little bit on the weak side. ukg in the middle. mike, the bls has had a low response rate, they do come back and revise it later, so we're looking for what is it 200,000

tomorrow right around there. i think you have to take the idea that adp is reporting strong job growth as a reality because that's really what is on its books and the data that it has, carl. >> yeah. even a challenger today, layoffs lowest since august. we'll pay attention to the number steve liesman, thanks. apple shares in the red a touch. investors awaiting earnings after the bell the company expected to notch the steepest drop in third quarter revenues since 2016. baird's will power has an out perform rating 204 target and joins us now with more on what to expect. it's great to have you. >> our question is whether or not qualcomm's comments about handsets color the view going in what do you think? >> that's a good question, carl. thanks for having me great to be back on the show look, i think generally speaking, you know, there have been negative data points out there, qualcomm, probably a piece of that. i will probably need a lot more

hands if i can count the negative supply chain data points over the year that didn't prove very accurate as it pertains to papple. we're expecting solid numbers relative to expectations yes, revenue is going to be down year over year, but we're looking forward at this point to the september quarter and of course the numbers next year which we think can still improve from here. >> it seems like the big focus is less on what they report from this quarter but the outlook for the coming quarters when it comes to the new iphone cycle and then the question about the long-term potential for the services business and the growth area what are you looking for >> well, i think julia, you nailed it. i think investors are going to be focused on trying to read the tea leaves as it pertains to the september quarter and the iphone cycle. our expectation is we will see seasonal uplift into the september print and typically this is a stock that does perform well in front of that. as you look at august and into september, if you look over a 10-year plus time horizon it

typically has some out performance relative to the market and as you noted this is a story very much about the expanding ecosystem. we've taken a long-term view for some time, services has been a key pilar of that bullish thesis we're still looking for solid growth there, both in this quarter and as we move forward >> are you concerned about weakness in the max cycle? do you think that will start to pick up and what are you seeing in terms of some of these other hardware pieces? >> well, for apple, at this point the max has been a smaller piece of the business. i think the worst is probably behind us, but when all is said and done this has been a remarkably resilient story as it pertains to the broader macro economic climate and consumer spending in iphone which is the principle focus, is brazil despite some of the challenges in mach and ipad which aren't fully behind them but prove resilient as they move forward.

>> will, apple kind of continually proves itself as the stock for all environments where people are worried about the fundamentals, it's got this safe haven status because of the balance sheet, the predictability we talk about services growth. even year over year we're talking about 6%, that's what cpi did. it's not as if it's a current growth story we get to a new phone cycle and it's we can focus people on what's to come therefore, there's always s seemingly a reason it makes sense. the stock is 30 times forward earnings and may be starting to struggle a little bit around these valuations how would you treat it in terms of trying to figure out how aggressive to be >> look, we've taken a longer term view on it and learned a long time ago it was a fool's game to trade the stock. and so, you know, we've stuck with that. this is a story about expanding into major new tams. early in health care and early in financial services. apple pay was the start there

and they, you know, furthered from that. the long-term is around the tam expansion and the ecosystem strength and continuing, you know, to grow its market share, opportunities on a global basis. all of that said, you know, valuation is at historical highs and as we laid out in our preview note this is a name we would be aggressive if there were weakness. we're not expecting it on this quarter, but you have to acknowledge that, you know, valuation, you know, over 30 times forward earnings is, you know, is at peak levels right now. >> apple shares have seen such a run higher this year i'm curious if you have any thoughts on this broader question of a.i. we've heard so much about a.i. from all of the tech giants. it's front of mind for everyone from google and microsoft, alphabet and microsoft, to meta. how much do you think we're going to hear about a.i. and do you think they're going to be talking about it as a driver of efficiencies or upside potential. how much will they get into this generative a.i. game >> i doubt they'll talk much

about it you know, i think similarly to the more recent calls it hasn't been as much of a focus, without question, you know, they're utilizing it probably as much as anybody internally as you look at enhancing products, whether it's working on siri and the rapid other solutions they have in the market. in terms of a consumer facing product potentially would compete with openai or, you know, google solution and others, you know, i think that's a lot of us like it. i don't think that's the game plan for them. but the -- without question like others there are bound to be internal efficiency opportunities. >> lots on the line. thanks, will power, ahead of apple earnings tonight after the break let's get a road map for the hour a lot of big earnings movers including robinhood and wbd. >> plus, the amazon playbook ahead of results this afternoon with one analyst who calls it

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shares of warner brother discovery down, but the company posted mixed quarterly results and missed expectation for revenue and earnings per share but report $1.7 billion, nearly a billion dollars more than the

year earlier quarter and far more than analysts had anticipated. the company also forecasting that same 1.7 billion in free cash flow in the third quarter also announcing a tender offer to pay down $2.7 billion in additional debt. ceo david zaslav talking about this on the call. >> the delevering we're doing now which has really accelerated and accelerating, is a key element of making this turn. we've already started to focus on each of our businesses now for growth we like the businesses that we have we have a diverse set of assets, global reach, great -- that are under used we can get into. >> zaslav said the combined service has gone well and the direct to consumer business did lose 2 million subscribers, lower turn than expected, he also noted that they have the

potential to live stream sports. take a listen. >> when it comes to our sports rights, domestically and globally, you know, taken as a whole we're money good we own the digital rights to our sports, so we have the ability for no incremental costs to put that content on our platforms. >> i thought that was interesting given the content of espn to the consumer the barbie movie won't boost results until next quarter and hopeful there's a quick resolution on the strike at least they've gotten back to the negotiating table there. >> i was interested in the comments from the cfo they're modeling a return to work in september, although anything could happen. >> that's earlier than what i heard. the fact that wga is going back to the negotiating table as of tomorrow, friday, that is a positive sign, though i'm hearing it could be months still before the actors, screen actors

guild, resolves their piece of the strike. >> from the stauds owe's perspective, modeling a return is conservative because it's going to cost more to have to ramp up more i was interested in the contents sells. is there a sense that they are going to use that as an ongoing source of revenue or one off at this point >> they were very clear that in the past, especially as they launch their original streaming service, they were really focusing on taking all their content and bringing it direct to consumer and streaming. now they're going to be more strategic and license some content to netflix, different windowing system to monetize it both on other streaming services as well as on their own streaming service and want to be more careful and kaucautious to maximize all the potential revenue there as opposed to just prioritizing their own streaming service so much that they could end up leaving money on the table. >> so arms dealing, right. >> back to the arms dealing. >> yeah. >> and warner brothers, the factory for other networks for a long time.

>> absolutely. >> warner not the only laggard this morning check out some of the biggest losers on the s&p. you'll see names in there like expedia, paypal, yeah, etsy is in there as well concerns about the consumer and travel to some degree today. as we go to break, don't miss a fresh read on the housing market with builders first source, shares up triple digits and ceo sees more strength ahead after a sht ea orbrk. (vo) verizon small business days are coming. from august 7th to the 13th.

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mortgage demand from home buyers dropping for the third straight week as interest rates rise despite inflation rate concerns supply and demand plmetrics wei heavier in pricing dave, it's good have you here. you wouldn't know it from the way your stock is performing but you have been navigating a bit of a down period in industry activity, revenue declining, things like that but what are you modeling and anticipating in terms of housing demand from here on out, both single family and multifamily? >> thanks for having me on the show we've heard from our builder customers through their reported

earnings that housing demand has been greater than anticipated and revenues and margins have been greater than anticipated. so we're cautiously optimistic that the demand profile is going to continue through 2023, and, in fact, most of these customers are forecasting improving demand throughout the year. our home builder customers have done a great job of buying down rates, offering options that include less square footage, fewer options for the home, ways to afford that or ways to solve for their affordability challenge and, of course, we get the -- we're the benefactor of those successful transactions through additional building material sales we're very optimistic single family home construction has bo bottomed if you look at the current macro environment. if things change with the macro environment you have to

reevaluate given the current macro environment and the ways that have proven to be successful for our customers to move homes we're optimistic that the full-year single family will be down single digits to 2022, but much better than we expected coming into the year, and it also underscores our belief that fundamentally housing has been under built and there's still a demand presence out there that is going to carry us through. >> yeah. it does seem as if clearly with a tight housing market very little supply, the new home construction has an advantage, they can buy down the mortgage rates as you say, they can kind of modify pricing. what does that mean for you, if, in fact, they're trying to make these homes more affordable and trying to, you know, obviously,ly save where they can. does that mean pricing pressure for you? >> i think it might affect our top line a little bit. obviously, less fiber in the home, but we still prefer that

alternative than the home not sell at all. in addition, our value-added products, they helped control the costs of the build those prefab bri bri cated components come to the job site ready to install it savings time and labor costs and makes the construction process more efficient cycle times for builders have been reported to continue to come down post covid we're doing our part on helping that as well we are relentless on our customer service, on-time in full metrics and trying to make sure we have the materials there at the right time. so we're doing what we can to continue to solve the affordability challenge in this current environment and we believe that we have a good plan in this current environment to keep demand going through throughout the year. >> it almost seems like some of the premade products are addressing the labor challenges. what are you seeing in terms of the labor challenges and how are

you investing in automation to help address that? >> yeah. that's great question. labor is still a challenge for our customers, especially skilled labor and for ourselves. we have invested heavily in our manufacturing operations, over $100 million since 2021 designed to increase the through put of our operations per labor hour. so that has been a focus for us, again, on growing that value-added segment profitably and cost effectively and technology is helping us do that >> dave, i appreciate the update dave rush. builders first. >> yes still to come, why robinhood shares are slumping this morning and what to do with amazon ahead of fresh numbers after the bell. "squawk on the street" has your earnings playbook that's next. we're back in two minutes.

welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. security barriers now surround the federal courthouse where donald trump is expected to enter a plea this afternoon in his latest arraignment, the former president will answer to charges that he used unlawful means in an attempt to overturn the 2020 presidential election his marshals say he will not have a mugshot taken when he reports around 4:00, but will have to undergo digital fingerprinting. hyundai and kia telling drivers to park outside because of a problem with the oil pump that could cause their vehicles to catch fire. the automakers are recalling a number of 2023 and 2024 models, including certain elantras, sols and sportages. no injuries reported so far. and tom brady may be retired, but he's already dipping his toe back into

football, the british version. the legendary quarterback is a minority owner of birmingham city and according to the team, he will offer his sports expertise and knowledge toed advisory board the club operates in the second tier of the english league it's august, so doesn't seem like he's going to unretire, at least not from football. >> he's going to have to her troy get to camp if that's true. thanks bertha coombs. shares of robinhood getting slammed despite posting its first profitable quarter going forward. hey, kate. >> carl, that was a milestone, robinhood's first profitable quarter in its two years as a public company executives pointed to cost cutting and the boost of higher interests but that positive surprise was overshadowed by a drop in moj active users robinhood lost about a million active users and has 10.8 maus as they're called. it's making more revenue per user that increased to $84 from

$77 in the beginning of this year aside from the drop in users, analysts say a pretty solid quarter. the company is making good on its promise to cut costs. cfo jason warnic telling me this is the result of maintaining cost discipline and staying what he called lean and scrappy, we're hearing that a lot these days the bottom line no doubt hemmed by higher interest rates net income jumped 13% in the quarter partially offset by slower trading activity. that's robinhood's bread and butter transaction based revenue fell across ad set classes. options down 5%. equities down 7. sharpest drop is in the crypto transactions off about 18% robinhood did improve its outlook for expenses for the back half of the year. part of that is stock based compensation robinhood also sounding more like a traditional financial institution on the call. things like retirement funds and bought a credit card start-up to get into consumer credit and technology and underwriting

capabilities can help keep some of that risk in check and it will look to expand robinhood's value proposition. back to you guys. >> thanks so much, kate. amazon is getting ready to report earnings tonight. cloud, the consumer, ad revenue and a.i. all in focus for investors. joining us now, michael morton has a $118 price target on the stock and an out perform rating. we it typically talk about a.i. and aws, but you're focusing on the very basic business of groceries. i'm curious, you write here that future of e-commerce growth is grocery but there's signs that amazon is really struggling here they laid off workers at their brick and mortar stores. what is your outlook for amazon's piece of the grocery business >> thank you for having me on this morning we did put out a report discussing amazon's venture into groceries, something they've been working on many years and we did a price comparison, a basket of average consumer goods

for groceries would compare across the list of competitors, walmart, kroger, target, and we found that in a rare case, amazon is not leading the pack they're more middle of the pack, probably at a 25% premium to a basket of goods from walmart and there's been a lot of recent press releases that have come out from the company even in the last week allowing nonprime members to shop with groceries on amazon. they're changing the distribution model we're excited to learn more about it we think this huge category of grocery and nondiscretionary that represents $2 trillion of consumer spend is the next channel for growth and something that we've been focused on, but it's early days and there's still a lot of learning to be had in that department sorry, go ahead. >> i was going to say, the higher margin businesses are still things like apparel and also electronics >> yes absolutely the high margin retail

categories have been effectively attacked by e-commerce players or easier, not time sensitive, you can pack up a small shirt, electronics are dense, and the e-commerce industry has done a great job taking share from legacy brick and mortar. the remaining pool that's left is what we refer to as grocery and nondiscretionary, and that's a who's who of capable competitors and also a structurally low margin business of the low single digits type of margin profile it's intimidating to hear any of these players entering the space. >> in terms of this amazon web services business, what's your outlook there? >> our grocery question is more longer term focus on how they will go about it on the results i caution anybody for making quick judgments when you see the press lease come out. what investors are going to want to hear is on the call, how aws

is trending basically on a monthly quarter to date basis. this caught everybody by surprise last quarter. you saw the loss and then down as people were surprised by the trend, and as you know, aws has been the profit driver for this business for many years adding $17 billion in revenue every year and then it rapidly decelerated as clients have gotten more frugal on how they're allocating their dollars. what we want to see here is this business meet expectations it doesn't need to blow investor expectations out of the water. meet expectations and what that will allow to occur is the retail performance that's doing really well as they've improved on the fulfillment and shipping costs. the profitability will be able to flow down to the bottom line. >> it seems as if investors remain somewhat skeptical about whether amazon's ever going to really get into harvest mode on

the e-commerce side and let their scale, you know, work to the advantage of profitability and shareholders at the same time, aws not just decelerating but whatever their push into a.i. might be, seems like it is not necessarily compelling how do you think the company is going to have to answer those things >> yeah. those are great questions there. questions we get a lot from our conversations. is amazon ever going to let us see the profitability or always a new channel to invest in and you saw recent reporting this week that amazon is building out the distribution footprint to have more same day delivery. their rational behind this they see a revenue boost. if you're going camping this weekend and need a flashlight and they're able to show you that they can get you the flashlight before you're leaving for your camping trip, that savings you from taking a trip to rei or dick's there seems to be a good return

on investment. they make intelligent choices around this. other aspects of the business that investors will be frustrated with. how much are you spending on devices? project launching space ships into space to provide satellite internet it's hard to justify rois there for a.i., your question is very meaningful there's two questions that are really part of that. one is does amazon have their own chatgpt or type of product that brings a lot of press and excitement around it, but are they going to be the infrastructure provider for the increase needs and demands from the compute requirements for large language models and such we think that they don't need to have the next chatgpt for them to be successful in a.i. and large language models. aws provides the power to a large portion of the global enterprise space everyone is going to implement these tools in one way or another. you don't need to have the

absolute cutting edge large language model to better serve your e-commerce platform make your retail business better we think this will be a rising tide that lifts all boats across the space for public cloud with amazon being the largest and benefit. we think it will take time to materialize, but it clearly appears to be a twinds for us. >> michael morton, thanks for joining us today we'll be watching the numbers when they cross this afternoon. >> thank you still ahead, the pulse of the consumer with the ceo of kellogg as the company raises guidance and points to continued strength in snacks we'll break down the numbersn st ment. i stay with us (man) what if my type 2 diabetes takes over? (woman) what if all i do isn't enough? or what if i can do diabetes differently? (avo) now you can with once-weekly mounjaro. mounjaro helps your body regulate blood sugar, and mounjaro can help decrease how much food you eat.

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budweiser parent company ab inbev reporting a strong quarter despite a significant decline in sales of bud light beer after boycotts in the u.s. brandon joins us to break down the numbers and what executives are saying. >> that's absolutely right

look, we've been talking about the boycott, although they didn't use the word boycott on the earnings call this morning but now we have the numbers. bud light parent ab inbev reporting a decline of almost 11% in the u.s. this quarter, a core profit also falling over 28%. sales to retailers and wholesalers in north america plummeting double digits as well as a quick reminder this all started back in april after bud light partnered with transgender influencer dylan mulvaney in a social media ad. that sparked calls for a boycott from consumers who oppose the partnership. in may bud light lost its top spot as the number one selling beer in the u.s. to constellation brands modelo brands bud light sales fell 25% market share decline has stabilized and the ceo addressing the dip saying the company is listening and engaging with consumers. >> in the u.s. we are listening and actively engaging with consumers.

we learned a lot through this interaction so far they want to enjoy beer without debate, they want us to concentrate on platforms that all consumers love and this is what we're doing we are investing behind the platforms that we have engaged in throughout the years with our consumers so we can get better reading and result we have three months so far since this situation and we continue to learn. >> now, despite all of this, shares are still moving higher up there just about 1.25%. global performance making up for u.s. weakness. core profit overall rose 5% well above expectations while revenue grew over 7% as the company hiked prices due to inflation. still that u.s. decline a sticking point for investors and analysts on the call

executives emphasizing their confidence that bud light can have a recovery here. >> this has been an interesting case study of the impact of a boycott and corporate response how do you think other companies are going to respond to future boycotts or situations like this >> you've seen companies do it before think nike with the offshoring of production. a little apples and oranges there, but in terms of spirits you've heard from the heineken ceo saying companies are paying attention and have to be careful about what they say. he -- the ceo spoke with "squawk box" europe and said you have to be thoughtful and balanced especially in the western world we see polarization in society, so i think you're going to see executives starting to wave these -- the im -- weigh the impact this will have in their marketing strategy. >> it does make you wonder where they would be without the china offset it was strong enough for them to hold their guidance. >> absolutely. they see the impact has hit a

bottom and now is the point they can start to recover at least in the u.s. market but absolutely, in europe, and also in china, those sales boosting at least the results for the quarter. >> i was going to say, there's no evidence really that it's extended beyond bud light to other brands it owns, night in other words, people aren't saying boycott all of inbev? right. you see that mistake sometimes among consumers. they don't realize they are representing stella and moving from bud light to stella, supporting other brands in the portfolio. consumers are having to figure out how to vote with their wallet and do it the right way if that's the way they're going to go. >> fascinating corporate case study. brandon gomez. still ahead, expedia's chief peter kern as shares slump and bookings for the quarter the consumer, inflation, and more in ten minutes that begins n'gowa00 a.m. eastern time dot ay. switching to workday you've been a real rock star. rock star?

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kellogg's out with q2 results. the company is raising sales and profit outlook on some easing supply chain disruptions of course, that's all ahead of its planned separation on track now for q4 this year joining us first on cnbc this

morning, kellogg chairman and ceo. steve, it's great to have you back >> good to be with you thanks for having me. >> interesting quarter everybody's talking about the use of the word elasticity and what that says about where the consumer's mindset is. can you explain what's happening there? >> historically when you raise prices, you expect a certain effect on volume what we've seen over the course of the last several years is elasticities have been running extremely low. if you think about the last three years, you see prices in our categories go up 30% with no real impact on volume that you'd expect what you're seeing now is a return not necessarily to pre-pandemic elasticities but certainly an affect on consumers' behaviors are rising prices. >> does that mean the door is closed on further price increases? what happens if there's a resumption of input cost pressures? >> i don't think it means the

door is closed but you have to be incredibly surgical how you go about that. you have to keep in mind the consumer and consumer household stretched budget we look at pack sizes from when we promote during the course of the month, how we promote, which brands, which sizes. but we are seeing continued, i'd say, elevated levels of commodities, of input costs but coming down from where they were i wouldn't say the environment in any way is benign but it stopped getting worse for sure. >> what is your expectation in terms of those underlying commodity costs? do you think we'll see inflation continue to impact them through the rest of the year >> no. i see, for the most part, the commodity basket is going down there's certain commodities, sugar being one, for example, that are not necessarily going down on balance nothing solves high prices like high prices, right we are seeing a diminishing of that

some of the inflationary inputs that remain stickier, wages. wages have had to go up to keep up with the type of inflationary environment we've seen they tend to be sticky over time commodities in general coming down what we call bottle necks and shortages, all the types of disruptions that we saw coming out of the pandemic, coming out of the war in europe, are starting to diminish things like truck lanes and reliability of supply are, indeed, getting better. >> steve, the company's on track to separate its business into the snacking and international, c calanova and the cereal business i know you have an investor meeting coming up. how should investors think about this a faster growing snacks business versus the cash cow on the cereal side or what's the advantage of isolating these >> we're looking forward to next week taking investors through a great level of detail about the two new companies. if you think about the cereal

business, it will be 100% focused on north american cereal is what it takes to grow those brands in north america. when you think about calinova, i think what it unlocks is a real appreciation for the type of growth that this business has been really posting year after year the last several years, cheez-it, pop tarts, pringles, have been growing faster than the food category. i don't think that's been well appreciated by the markets we'll unveil the plans nekts week we're on track to actually get the separation done during the course the fourth quarter. >> finally, steve, we talk to a lot of corporate leaders about normalization in trends now that we're a few more quarters removed from the pandemic. and i do wonder, if people are, in fact, going to work with schedules that are more close to tradition, is that changing eating habits or cereal habits or snacking habits

>> yeah, carl, i would say we're still living in a hybrid world tuesday through thursday i think things are back to normal. monday through friday, not quite so much when you look at bag swipes and things of that nature i think the consumer has remained creatively resilient throughout this time and that's everything from how they get to work, how they spend their money, how they make their paycheck stretch throughout the course of the month. so, we aim to remain affordable, to remain with them and make sure our brands deserve a place in their shopping basket each and every week >> yeah. we are a highly adaptive species for sure, steve. thanks for the guidance on the quarter. see you next time. steve cahillane.

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good thursday morning. i'm carl quintanilla with julia boorstin today expedia's chief peter kern will join us in a few moments. a krnks exclusive as that stock is getting flipped after earnings. banana boat with results out and the ceo coming up. morgan stanley's wealth management on reasons to get bearish quickly in this market. stocks a