it is 5:00 a.m. here at cnbc global headquarters of the here is the "five@5." the rate shock rocking wall street. yields rise to the highest in decades. brooeaking right now. microsoft is looking to ease concerns of the regulator. the regional bank reckoning. showing no signs of slowing down. the s&p now joining moody's and slashing rating on a number of names in that space. the wait is over.

softbank's a.r.m. is filing an ipo for this fall. calling a changing world order. china and russia kickoff a summit focused on the brics. it is tuesday, august 22nd. you are watching "worldwide exchange" here on cnbc. good morning. welcome to "worldwide exchange." i'm frank holland. the nasdaq is coming off the best day since july and the tech sector seeing the best session since may. futures right now in the green across the board. the dow looks like it would open 50 points higher. nasdaq a .50% higher in the early trade. we are checking the bond markets. yields with the 10-year treasury trading at the highest level since 2007.

4.31%. the 30-year treasury is highest since 2011. 4 4.42. the 2-year treasury is a tick under 5%. take this all together and high rates for auto loans and credit cards and mortgages. as of this morning, the fixed 30-year mortgage is sitting at highest since 2000 up over last month. now with a look at the markets and bringing in marian bartell. mary ann, good morning. >> good morning. >> the first question is rates. they are rising. what impact is it to the market? where do you see them going and finally stopping? >> for the tech-year, we -- for

the 10-year treasury, we think it will go higher. if we reach those levels, you can lock in the long h-term rat. it will be challenging for the markets. we have been anticipating a market pull back. we think that pull back is choppy and that will go flew oct -- go through october. >> you are calling more for the nasdaq. the two indexes with the big tech names that dominate. why do you see a deeper pullback for the nasdaq? >> s&p up 15% and nasdaq up 30%. what goes up the most will come down the most. that is why it gets a deeper correction. >> there are areas of the nasdaq that you see hit? mega cap tech drawing down as

you see priessure from valuatio? >> it will would be across the board. mega cap tech is a major impact. >> okay. looking broadly, we are seeing downgrades of u.s. banks. we have heard regional banks and there is a thought moody's will look at the larger banks. how is that weighing on the markets? >> in this is an area of concer. stocks may look cheap, but we don't really want to go there because of the concern of higher rates and concern that the unrealized losses are growing on the bank balance sheets. the banks that are most vulnerable are the regional banks. if we continue to get downgrades, this is going to weigh on the banks. >> mary ann bartels, thank you. turning to the breaking

news. uk regulators say it will look at the $69 billion deal for microsoft's proposal for activision-blizzard. as of this morning, the uk cma is the lone regulator holding that deal up. under the terms of the new deal, microsoft would sell the cloud rights of all current and future activision games for the 15 years to ubisoft entertainment. shares of ubisoft moving higher on the news along with microsoft up .50%. activision-blizzard up 1%. for more on this and joining me in the cnbc interview is the chief executive of the uk market authority sarah cardell. this is breaking news for the audience. i want to highlight the cma is the lone regulator holding up the deal. the self imposed deadline of october 15th. can you share the thoughts about the proposal? >> it is about two important

developments for us. the first is we have finalized the legal order that concerns the prohibition of the deal with microsoft and activision. that original deal cannot proceed. as you have said, microsoft announced restructured deal which is substantially a different deal. that means microsoft will no longer acquire the cloud streaming rights in relation to activision games. those rights will be sold s separately to ubisoft. that is a different deal for us to look at and we started the new investigation with the deadline of 18th of october for review. >> according to reports, microsoft held 60% of the cloud gaming market in 2022. that is without the activision-blizzard titles. a lot of popular games. how do you see allowing ubisoft

to offer the titles for the next 15 years? how does that shape the competition over that period of time? >> it is important to go back to our original decision to block the deal. we were driven by concerns about competition in the cloud gaming market making sure that market which is developing rapidly remains open to competition. we want to make sure that gamers can get the benefit of innovation and choice of the market. what we had concerned about was the combination of the microsoft position in cloud with activision's content in games. in particular, the activision to have the ability to control how the content was distributed. what we have now is a new structure which puts the control in the hands of the separate party and independent gaming company ubisoft. ubisoft will enter into licensing deals with other cloud gaming providers and providing

different subscription services and cloud gaming through non-windows operating systems to keep the market open. we have not taken a final decision. we are opening a new investigation. microsoft made clear in their statement they believe this deal fully addresses the competition concerns. we will investigate that into the new investigation opening today. >> you have a self imposed deadline of october 18th. i want to talk about the regulations. uk is addressing tech broadly with the digital markets to propose law that your office addresses in part the potential for competitive challenges of a.i. give us a sense of the bill more broadly. how could it potentially impact the big u.s. tech companies? >> we recognize it brings a huge benefits to consumers and businesses. no regulation should stand in the way of the benefits. we do want to make sure that companies who have very

substantial power in those markets are not able to dominate the markets in the way it stops effective competition. it brings choice and innovation and lower prices. the proposals that come through from the uk government that introduces the legislation gives the cma the ability to regulate the companies with substantial long lasting market power in particular to digital activities. there will be rules that control how those companies engage in the markets. i should say that we encourage companies to engage actively and collaboratively with us as those new rules come through. we see it as an opportunity to work closely with companies to make sure the markets remain open and competitive and deliver a benefit to all businesses large and small in the uk and international. >> a lot to watch there.

the uk cme updating the issue over the deal with microsoft. sarah, thank you very much for your time and insight. >> thank you. we'll stick with tech and developing story in the ipo space after months of waiting, a.r.m. finally filed paper work for the nasdaq ipo shooting for the debut next month. let's bring in arjun kharpal. >> good morning, frank. we have few details yet. we know a.r.m. will be listed on nasdaq under the ticker a.r.m. we don't have pricing yet. there are a number of reports that the company is valued at $70 billion. this is an important moment for a.r.m. and softbank which got the company for $32 billion. softbank is the biggest tech

investor with the massive vision fund. it sustained heavy losses. this could be a chance to get new funds. for a.r.m., it is looking to ride the a.i. boom. it designed the blueprint for which other chips are based on. 90% of smartphones contain an a.r.m. chip. it is looking to data centers and pcs. whether it can achieve this, it will need to convince investors it has a role to play in a.i. a.r.m. says it is central to a.i. computing with the excitement with companies in nvidia. softbank has timed this to capitalize on that a.i. atmosphere. >> live in london, arjun, thank you. more to come on "worldwide exchange," and the one word investors need to know today.

first, s&p joins moody's taking the axe to a number of regional banks. plus, calling it a changing world order. russia and china kickoff a summit focused on the brics. we have a very busy hour of "worldwide exchange" coming up. stak stick with us. ata ac uds, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. ...to make quick decisions? check. aaaand check. that's the solution ibm and a global bank created. what will you create? ibm. let's create.

welcome back. let's check on the corporate

stories with silvana henao. ha silvana, good morning. >> good morning. s&p downgrading key corp and comerica and three others in the u.s. on concerns of the impact on rising interest rates and deposit outflows on the banks funding. the valley national and umb and associated bank rounding out the list of downgrades with the s&p lowering river city bank and keeping the view of zion bank negative. and bhp group dipping after the 37% full-year profit decline due to pressure from china's struggle thing economy. bhp citing struggling demand for iron ore and it expects china and india to remain a steady source. tesla is looking to extend

yesterday's gains where it rose more than 7%. snapping the six-day losing streak and marking the biggest single-day gain since march 21st. the bounce helped by getting on the list of best ideas and including the cyber truck launch and autonomous driving tools and expansion into new markets. >> tesla shares up 3.5% this morning. silvana, see you later on. turning attention now back overseas. leaders of brazil and china and other countries gathering in johannesburg, south africa today to kickoff the two-day brics summit in what is seeing a show of unity. arabile gumede is here with more on what to watch. >> good morning, frank. four themes to look out for

here. the increase in trade and de-dollarization. expansion of the brics nation is the third and final one is funding. will that continue for the nations? trade has been significant to note ever since the term brics was coined in 2010. you see an increase in trade with africa as the emerging market to look at here and really what is happening over that time is the u.s. has dipped off with regards to how much it invests in africa while china has gone higher. in fact, of the united states foreign trade, this makes up 1%. africa is 1% of the u.s. foreign trade. for china, that makes up 5% of the foreign trade. that tells you the significance and importance for that nation. if we take a look at the expansion picture which now means it will be a bit more of a

rear guard action for the brics nations. this is significant. if they will maintain a sense of power to show their alliance means something and gathering more to create a brics plus is significant. saweudi arabia and morocco and egypt. more than 20 countries asked to be part of the brics nations. if those are agreed to is significant. all five nations need to agree. the last time the country was allowed to come back into brics was in 2010. what does this mean for the equity markets for the nations? a bit of a mixed picture. shanghai has dipped 4%. the russian market has gone up 40%. let's remember a lot of money was staying in the country during this time, particularly since the invasion of ukraine. a positive sense for the others

and the nifty 50 going up 10%. it will be a lot of collaboration, frank. the question is will they find more partners? >> guarabile gumede, thank you. ahead on "worldwide exchange," we are talking cloud and the last on tewix. we have the "worldwide exchange" exclusive coming up next. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

welcome back to "worldwide

exchange." a buzz word on wall street with no signs of slowing down. of course, we're talking about artificial intelligence. the rapid rise is giving a boost to companies with 40% of s&p names mentioning a.i. in the earnings calls. that includes the next guest who with says a.i. is helping to grow more efficiently. the ceo of wix.com. offering web site building services. he is joining me now on the "worldwide exchange" exclusive. good morning. >> thank you, frank. >> you mentioned the core business is web site development. give us the sense of the demanded picture now. >> what we're seeing is 1.5 million users joining wix every month to build their web site. over 300 million users register.

we have seen huge demand. >> you are seeing strong demand. what are you seeing when it comes to pricing and ability to spend? 12k >> well, obviously with the economy not in a great place, it influences our business. however, if you think about it today, the web site is the most important part of your business when you build a business. we still see growth and solid demand. >> let's talk about a.i. you mentioned it on the earnings call. you really are focused on not only what it does for customers, but what it does for web site development and code writing in general. it will stop a lot of errors that pop up in code and make it efficient to use. as we see that trend continuing, what does that mean for the companies that use your sites? >> obviously, if you look at the

the value of wix has been reducing the friction when you try to build a new page and content or the web site. again, reducing the friction when you try to understand how to manage the business better. what happened yesterday and how you should react and what part of what you should offer. now with the power of a.i., we can actually help customers do it better and simple ler. if you want to write a post and you want support for customers, you want to know what you need for products and a.i. can help you achieve all of that. in many ways, we believe it will continue to help us in the new ways to enhance our offering of reducing the friction of when you are trying to do something for your business on your web site. >> that's for the web site

it itself. does this allow them to collect more data for the web site through a.i.? i'm sure that is what your customers want. they don't want to just build a web site, but a web site to help build their business. >> let's take an example. one of the big questions is what kind of products do i add? this is something that i can do very well. how do you promote your products and if you are a gym, how do you promote it? do you have an event? a.i. can write the product for you and it will automatically push it into google or facebook or any other agency. the value for the business is you have less of doing it yourself and you can do it more efficiently and get better

results. >> one big story right now is rising rates in the united states. rates coming up to multi-year highs right now. how does that impact wix directly and how does it impact your customers? >> i think for us directly, it is less significant. for the customer, it is a tremendous significance. a lot of customers are smaller businesses and i think with the interest rates going higher, then it has an influence on the economy. i believe we will see it in the amount of transactions the customers have. we have the broadest view on the planet. we have 192 countries which we operate wix. more than 10 million do some kind of business on wix. we can actually see it and it has a tremendous effect on the economy on small businesses. >> avishai abrahami, thank you

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york. futures are popping in the early going. microsoft restructuring the takeover deal for activision-blizzard to appease the one regulator stand in the way. what the cma told us. getting set for retail. we look at lowe's and if it can bump the slowdown trend. it is tuesday, august 22nd, 2023. you are watching "worldwide exchange" here on cnbc. well mcccome back. i'm frank holland. we pick up with the check of the u.s. stock futures. the dow would open up 60 points higher. nasdaq .50% higher. the nasdaq coming off the best day since july and the tech sector seeing the best session since may. we are looking at the bond market.

surging yields is the biggest story of the summer. the 10-year treasury trading highest since 2007. the 30-year treasury bond is at 4.42. as we mentioned, the 2-year treasury is ticking close to 5% yield. we want to look at the energy market. oil specifically. wti down fractionally at 8$80.5. brent crude is similar. natural gas is unchanged. and we have lowe's results on tap this morning after home depot posted sales decline with the slump in consumer spending. it has been a strong session for walmart and home depot and target beating on eps estimates. target is the only name bucking

the trends missing on revenue and slashing guidance for the year. let's talk about lowe's with michael lasser at ubs. michael, good morning. >> good morning, frank. >> give us a sense of lowe's coming up and rating and price target. >> we are expecting that lowe's will show the home improvement sector is bouncing along the bottom. it is probably going to do a bit lower than home depot which is likely down in the 3% area. it has less exposure to the factors that had improved for home depot from the first to second quarter with california and the pro customer segment. still, we think lowe's will show it is generating a track record of consistency which should lead to better performance of stock with the buy rating of $170. >> 170.

>> sorry. $270. sorry. >> $270 to be clear. good upside for lowe's. i want to ask you as we talked about mortgage rates hitting a multi-year high yesterday. a 20-year high with mortgage rates. how does that impact the business of lowe's where it is a higher percentage of do it your selfers? >> what is happening with the high mortgage rates, frank, it is forcing people to stay in place. it is too expensive to move especially with mortgages of 3% to 4%. existing mortgages at 3% or 4%. there is a strong disincentive to move at this point. consumers are looking around saying if i'm going to be here for a while and do work on my home, then it is benefitting the home improvement sector. it has been an offset in the purchasing that we all made

during covid like buying a new grill or patio furniture or appliances. lowe's has moreareas. that is where we are seeing weakness. >> what about rising rates? how does it impact lowe's overall business and broader retail sector with rates rising? >> we could lead to less appetite to do big ticket remodels given that consumers tend to finance those with a home equity line or some other form of credit. it will make those purchasing a bit more expensive. the rising interest rates. what we expect in lieu of that is consumers will do smaller items. instead of redoing the entire kitchen, they may do a backsplash or counter stop. we will see modest purchases

over time. as rates come down, it will provide an incentive to make the larger purchases. >> what about broader retail? >> broader retail has seen a continuation from the last couple quarters where consumable prices like food and household products are expensive. that has crowded up the spending on discretionary. the rate of inflation is coming down and that is good news because wages are still growing. that means the consumer has more purchasing power for those things like sporting goods and consumer electronics and furniture. that should lead to better trends. right now, the consumer is showing more desire to buy needs rather than wants. >> michael lasser, thank you very much. >> thank you. let's look at microsoft and

alphabet and nvidia which is coming out with the earnings release tomorrow. steve kovach is joining me with what delivered and what has failed to impress. >> we start with a.i. and hype and promises. q2 earnings investors wanted to see results. most failed to deliver. microsoft is the best example of this during the earnings call. shares were punished after executives said co- pilot, the a.i. tool won't generate meaningful sales this year. microsoft said it needs to spend a lot of money over the next year building infrastructure for all of its a.i. projects. all of this coming after investors sent microsoft soaring a week earlier with pricing for copilot of $30 per user per month. it is not just enough to put a price tag on the products, but investors want to sea sae salese

in soon. the story is slightly different at dpoogoogle. it has made promises the core search business will benefit. most of the optimism were due to return in digital ad spending. it was a mixed bag for the a.i. names we have been talking about this year. apple ceo tim cook told me a.i. plays a role in the products, but it is mostly under the hood. not user facing. amazon tout customer wins with 3m and hsbc, but nothing about meaningful sales. meta talked about a.i. features with image generation and chatting with avatars. the biggest contribution is the model for training a.i. to the world for free as an open source product. nvidia is poised to be the beneficiary when it reports tomorrow. lots of pressure on them, frank.

>> expectations for nvidia with shares up 1%, steve. a big event for microsoft next month. can we expect new products related to the a.i. push? >> frank, this is likely the annual surface event where they have surface tablets and laptops. beyond the hardware, they have to play out to the windows 11 ecosystem. it is interesting how they frame the devices around the big a.i. push. >> steve kovach, thank you. the unofficial end of summer is fast approaching with labor day around the corner. if you looking to book a last-minute trip, be prepared to face crowds. aaa says flights domestic and travel is up 4% to 44% from last year. for the latest on spending, i'm joined by the senior vp at choice hotel international.

anna, thank you for being here. >> thank you, frank. >> you have a high end of brands. give me a sense of where you are seeing demand. >> we are seeing demanded right now across all segments. travel spend has been high. customers are looking for experiences. in the extended stay segments, specifically, we have occupancy premium overall. the segment for the first half of the year is up 11% over the rest of the hotels in the market. we are seeing that across the board. doesn't matter the market at this point in time. it has to do with with the non-di non-discretionary travelers. we have different demand drivers. >> you think about travel and you think about leisure. there are other factors with infrastructure and other things pushing demand.

especially for extended stay. let's talk about rad dison. does it benefit? >> i think the market they are in and folks want from the survey from this summer, they want to be close to landmarks and close to different cities and places they can bring families which offer different experiences. it set up well in the portfolio. >> there are things challenging to the consumer. we are talking about rising rates and gas prices. how does that impact business and impact business not only right now in the summer, but holiday season where travel picks up. >> the good news is about choice is we are situated along the roadside. we can cater to folks going to a travel destination from the holiday. we also have some of the lower-tier brands. you can trade down into a really value an accommodation.

>> we talk about a.i. in almost everything. what about a.i. and travel? how does it change yourbusiness and how you offer deals on hotels and how do you advertise? does a.i. impact that? >> one of the things we offer for franchisees is the a.i. driven management style to allow them to price dynamically based on market conditions at this point in time. the other way we use a.i. specifically in extended stay is for development. we have a proprietary algorithm for the product to be placed. that has an impact on advertising and where you want to be locally or internationally. >> wages are rising. wages are higher than inflation. how do wages impact business? how is it sourcing the talent?

people to work at the hotel and work there for a long period of time. it is refreshing to talk to someone who knows the property or restaurants in the area. >> in my segment specifically, you know, we have a lean operating model. extended stay, you have guests staying for seven nights or weeks or months. the labor pressures are less with the operating model and house keeping model we have. in terms of retaining talent is something where you see relationships with guests and they have been there for a long time. we are not immune to the cost increases. i think there is value in being able to retain employees for the long term. >> i have been a choice hotel consumer on many occasions when traveling. thank you very much. anna, really great to have you here from choice hotels. >> thank you, frank. coming up on "worldwide

exchange," a long time coming, but the wait is over as a.r.m. files for a u.s. public offering. what it means for softbank and the questions at sllthti remain. stay with us right here on "worldwide exchange."

welcome back to "worldwide exchange." quick market flash. baidu shares are popping. reporting better than expected revenue. up 15% year over year thanks to

growth in advertising. baidu says a.i. language models hold a large power and a significant market power. shares of baidu up 4%. time for the morning call sheet. iron mountain upgrading to $68 a share. rbc says it reflects strong pricing trends for growth in dividend payouts. shares of iron mountain up 1%. jp morgan is raising emme emers electric to overweight. now the stock appears under va valued. shares under changed right now. jeffries upgrading applovin from

buy to raise which points to market share in the tech segment. higher growth outlook for soft p ware. shares up 4%. time now for the global brief. uk regulators say they will with take a fresh look at microsoft's deal for activision-blizzard after microsoft submitted a restructuring deal. under the terms of the deal, microsoft said it would sell the cloud rights of current and future activision games in the next 15 years to ubisoft enterta entert entertainment. here is what sarah cardell told me this morning. >> we have not taken a fine p al -- final decision. microsoft made clear in the

statement they believe this deal fully addresses our concerns. we will be investigating that in the new investigation we launched today. softbank is taking a look at the biggest ipo filing this year. it will move a.r.m. to the ipo in october. and it would provide a massive windfall for the softbank fo founder who lost $30 billion last year. it will price the ipo the following week. no terms of the deal out yet. the plans to seek valuation of $60 billion to $70 billion. still ahead, the one word you need to know today and he

has a price target for the street. oppenheimer's john stoltzfus is here next. >>and > you miss us, check us out on your favorite podcast apps. more when "worldwide exchange" returns. my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

welcome back to "worldwide exchange." we begin with s&p gloebal ratins downgrading five key banks citing the impact from funding risks and weaker profitability. this follows a similar move from moody's. zoom shares on the revenue beat and boost to guidance with the enterprise business. zoom is far from the pandemic highs down 75% in the last three years. take a look of shares of zoom up 4% this morning. johnson & johnson's spinoff of kenvue will replace advanced

auto parts on the s&p. dick's sporting goods announcing layoffs ahead of the quarterly results this morning. it plans to reinvest in growth drivers and discuss reallocation plans during the earnings call. shares of dick's up 1%. teva and glenmark will pay for criminal charges for price fixing of three drugs. shares of the companies mixed right now in pre-market. charles schwab will cut jobs and close or downsize offices in the effort to save $500 million this year amid pressure over lower net flows of client money and scrutiny after the collapse of svb. here is what to watch. july home sales are out this

morning and richamond manufacturing survey. we get results from dick's and lowe's and macy's. we have the best performance in august up 1% for the stocks in the s&p. let's bring in john stoltzfus at omiat oppenheimer. >> good morning. >> s&p price target of 4,900. do you hold on to the price target with rates hitting multi-year highs? >> we do at this point, frank. we can't help but think higher rates right now is the normalization of rates. the fed will probably overshoot in the cycle somewhat. it will likely continue to show sensitivity to the effects of

the actions very much part of the ben bernancke legacy which is part of the jay powell style. we continue pto be positive on equities. >> i want to be clear. you are maintaining the 4,900 price target? >> positive on equities. looking for the s&p 500 to weather what has been a corrective process that began over last three weeks. now it is going back to a positive flow. >> with all that bullishness, john, what is the "wex word of the day" today? >> the word of the day is resilience. look for resilience in the consumer and in the jobs market and continuation of an overall feeling of resilience in the u.s. economy. >> all right. with the idea of resilience

moving forward with the look at futures moving higher in the pre-market right now -- you vizadvise advisers at oppenheim. what do you advise? >> consumer discretionary and in inve investables. that is a move to the sustainable economic recovery process from the pandemic era and corrective process which we saw in 2022. i can't help but think interest rates are at higher levels where they are now which is most traditional in terms of someone who buys a bond gets something in return in terms of coupon and bond issuers have to pay for the privilege of borrowing money. that makes sense over the long term. i have been in the business for over 40 years and i can remember

early on in my career in 1983 and 1984 and 1985 when interest rates were remarkably higher and stocks moved higher. >> so you are very bullish when it comes to energy. what pushes energy higher? we have seen mixed results. we see a slower than expected recovery in china. >> i think the reality of the pricing of oil is that we are at a process of transitioning to alternative energy. as the use of alternative energy incre increases, i think the thought is less dependence on fossil fuel. the timeline will cause strength in oil prices going forward. >> john, great to have you here. s&p 500 price target is 4,900.

thank you. that will do it for us on "worldwide exchange." "squawk box" is coming up next. thanks for watching. nice footwork. man, you're lucky, watching live sports never used to be this easy. now you can stream all your games like it's nothing. yes! that's what i'm talking about. [ cheers ] running up and down that field looks tough. it's a pitch.

get way more into what you're into when you stream on the xfinity 10g network.

good morning. breaking overnight. microsoft submitting revised deal to buy activision offering concessions should appease the uk regulator which blocked it. retail earnings on the way. we hear from lowe's and dick's sporting goods and macy's before the bell rings. the pe firm that owns arby's, they he ave the meats, reportedly in a deal to buy subway. what do you think is the biggest

fast food chain is here? >> i don't know. >> 10. >> $10 billion? >> yes. that voice may not be familiar. becky quick is back. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick with joe kernen. andrew is out today. it's summer. >> andrew will be back tomorrow. >> he will. >> two out of three. >> ain't bad. >> is that meatball? >> meatloaf. let's look at what i