lot about. >> no, it depends -- i keep my pool at 85. it's not a "can't stand you" problem. >> it's a huge problem in the industry overall, but everybody uses it to varying degrees. >> it's a real thing, though. i wonder if it really was a real thing, worse than other places. >> we'll find out more. >> absolutely. talk about shrinking, the share prices. make sure you join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. tesla and nvidia up another 2 to 4%. big morning. retail earnings, another bank downgrade and more. our roadmap will begin with the

retail stuff. lowe's and macy's beating on the bottom line. dick's tumbling on a big miss. on the m anda front, microsoft submits a new proposal to u.k. regulators, seeking final approval on the deal to buy activision. the chip designer filed for what is expected to be the year's largest i pfrpo. >> i think renee hawes is the real deal. spent a lot of time at nvidia before he went to arm. i'm now putting out $100 billion. i was trying to be spontaneous. >> we do it every time. we blow up what we plan -- >> i was trying to go right there. >> literally the second the show starts. >> thank you. >> you're welcome. we'll do retail since the booth has it stacked. macy's, dick's and lowe's all on

the move. i'm not sure what's so important, the warning about shrink at dick's or credit at macy's. >> i told jeff bennett that i don't like it when you make a forecast when you say next quarter is really bad. we're not selling cars at macy's. you're selling stuff that could be -- including their own brand, could actually be very good. the new guidance from bloom y's, i think this is an opportunity because they've really set the barlow. lowe's, i think marvin ellison continues to do a great job. i was surprised there that the home remodeling for individuals, do it yourself was weak, but the pros is very strong. this is typically a store where the pros are weak and the diy is strong. so i like that. the pros spend a lot of money.

dick's we have to go very deep. there have been others that have said theft is a problem and we've just looked the other way. these guys made it so central that it was, frankly, made me feel they've lost control of their inventory. >> a lot of discussion that dick's is widely considered pretty savvy operator. this element of shrink, meaning stealing -- >> stealing. >> stealing, is a third of their gross margin reduction. >> we had cornell at target who has a real shrink problem. you're talking $500 million. but he was able to deal with it. loren hobart, a terrific ceo, is going to figure out how to tag the merchandise. i think it can be done. >> what did target do -- it's not like it got that much better at target -- >> it wasn't good at target at all. it wasn't the most recently

reported quarter, but the quarter previously that we learned of and spend a lot of time talking about that almost inconceivable number of almost half a billion dollars' worth of stuff going out the do. >> who has a shrink problem? this is not a cos stanza joke. where would you never shop to save your life? >> are you talking, like, dollar tree -- >> that's another place. they have a great candy aisle. tjx. >> that's the only place i shop. it's right next door. >> what tjx does, they don't talk about it. when you go there, you'll see a lot of men just roving around aisle to aisle. they're police or ex-police. they pay $50 an hour making sure that you're not someone stealing. i think that's the way it has to go. i have suggested that to many retailers, and they're all puzzled that it could be so

good. >> that's not going to hurt margins either, paying a whole workforce $50 an hour to walk the aisles of your store. >> look at the stock of tjx versus the stock of dick's. >> you think that's the defining factor in terms of the performance of these two companies? >> yes. >> all right. >> dick's has discretionary stuff that obviously will be stolen. ross stores did very well. ross stores in san francisco, you have to wait in line and there are police -- guards who vet you. they had a dynamite number. david, the companies that have control of shrink, look at ross stores and tj xfrments and then look at dick's. >> what are people walking out with? >> at the same time, weave heard you sort of complain about the shopping experience at cvs. >> there it's ridiculous because

you always feel so guilty. this morning -- here is a good one. i had my clicker for my comcast, trying to get comcast. it wouldn't switch off espn. i was throwing it. >> just throw everything. >> right. because the aa batteries were dead. i said maybe i'll go across the street to walgreens. am i kidding me? i went right to amazon, they've got same day. when i get back, i'll put my new batteries into my comcast clicker. i don't have to ask someone and say thank you so much, thank you for opening that. i really appreciate that. that's done for me. i'm not doing that anymore. i don't need the batteries at work. i need them at home. same day! >> i hear you. >> andy jassy, giant fan, good luck. >> it is an issue. we talked about it a lot this year. there is a new effort apparently to combat some of these group thefts that are potentially a part of organized crime.

>> one of the things that's incredible is when you go to home depot on amazon, they have a house link and you can get everything. they don't put their house brand on amazon. it's all organized crime. can you imagine that? what does congress do about it? nothing. now, when i asked the register people after a major breakout i saw on mission street in san francisco, how could you let those people go right by you, they said, we're not police people. home depot had two homicides. home depot lost people because of this. this stuff is a federal issue. it is not anything that we can handle other than the way that tjx handles it. >> meantime, the line at macy's, we experienced an increased rate of delinquencies, the speed with which this occurred is faster than planned. we're working closely with our partner citi to mitigate the bad debts by underwriting

strategies. >> i didn't like that ine. they did say point-blank that it was their credit card that was below -- almost every line was above except for that line. jeff gennette, outgoing ceo, is so conservative, that you may be getting an opportunity to buy macy's for very little money. i'm saying bye macy's. they didn't raise the numbers. bloomy easy really like. i think it's a great place to be. yes, they're uncertain about the macro environment. who isn't? even cash aurora from the fabulous pal toe alto. i don't feel that way about dick's until i get my arms around loren. loren is a very good manager, loren hobart. we have to find out about that. >> do we know what the number is

nationwide at this point for what stealing is costing these stores and, therefore, really the american consumer? it does require higher prices. >> it's an amazing task on the consumer. tjx still has incredibly low prices because they have a plan. the plan is very simple. they just say -- the former police, hey, how is that going there? meaning how many pants are you going to steal? i know this, because when i went to see zuckerberg i got these $14 pants. i told him about it. i said this is one of the great bargains ever. he was impressed i got them for $14. thought they were probably worth a lot more. actually the central issue -- >> with zuckerberg? >> yes. you asked what am i thinking about. i'm wearing these black pants

from tjx. they have a lot of poly in them. i got them for 14 bucks. >> fascinating, jim. >> people are people. >> you put your pants on one leg at a time. >> the pants look good. what am i going to say? i'm thinking about threads? i'm thinking about insta? i'm thinking about my pants. i'm sweating like a pig. >> people are people. >> you know what he offered me? laqua. fabulous. i give you insight you've never had. no, he has to give me -- by the way, on we xfrments this morning -- >> you listened to her. >> let me tell people what we're about to talk about. >> we are still talking about microsoft trying to buy activision which, of course, it's been a long time, hasn't

it? there was a new deal submitted to u.k. regulators, the ones we've been talking about for i don't know how many months now, the cma. it essentially will be -- let's call it -- they're getting -- the cloud business there -- the cloud streaming business of activision will be divested, streaming rights at closing with respect to current new pc and console games will be moved to this french company, ubisoft. now you get the cma saying we'll review it again. this is completely unexpected. weave never seen anything quite like it at the cma which, of course, deemed the deal a no-go. we thought it was more or less dead. then it came back to life in a very significant way. many people in the marketplace, of course, expect that it will close and, in fact, is on its

way to closing. the question really is one of timing, and that's where it still becomes somewhat difficult. early october is what a number of people who follow the situation closely expect will be the likely -- let's call it likely close, maybe. it's hard to estimate exactly when that's going to cost. you've got to get through essentially everything we've expected. but you've got to get through the end of phase one. call it october. that's a guess. >> david, how exclusive is it? >> what do you mean. >> ubisoft gets the right to the cloud. microsoft, they're just doing console, just streaming, or can they also do it on the cloud? it was not clear to me from the regulation. >> a structural divest tour. >> what does that mean? i think it leaves it open.

>> well, nopt being in a position to release acti activision -- or to exclusively control the licensing terms of activation, blizzard games for rival services. >> still not clear. >> do we have the cma commissioner from this morning on wex? let's take a listen to what she had to say about this new essentially divesture. >> we haven't taken a final decision. we're opening a new investigation, but microsoft made clear in their statement they believe this deal fully addresses our concern. we'll be investigating that in the new investigation we've launched today. >> the full expectation is they're going to own this thing. the only question really is of timing. that said, given how many twists

and turns, still on the part of activision if not microsoft, something hesitancy to fully believe everything they hear from the cma given previous statements. >> this thing has taken microsoft way off the ai path that we would be talking about. instead we talk about this gaming thing. >> i know. in terms of the future of microsoft, it has certainly -- not that it was ever front and center given the size of the company and the size of the deal itself, but you're right, jim, the conversation has shifted over the last, let's call it, nine months, in terms of what is propelling certainly microsoft's stock price. >> goldman had a great chart yesterday of microsoft year-to-date. you can see the date where they priced copilot. remember that day? >> that was the high. after that the conference call was horrible. amy hood who i think is just fantastic as the cfo, her conference call was like the

tool and dye conference kauchlt it really was, like an auto parts conference call. like that. >> like advanced auto parts? >> no, that's not fair. >> i knew you'd like that. more like autozone. >> still to come, chip designer arm holdings filing to go public. we started the conversation with that. we'll get more in depth with that, what's expected to be the largest ipo of the years. we'll get into the s&p 500 bank wnade. baidu got some airline news. f futures holding. we'll be back in a minute. avoid the wait by scheduling for you... ...or the whole crew. or if you prefer to just pop in? do you. and if you wanna even tack on a covid-19 vaccine to your flu shot, feel free! and speaking of free? our flu shots are... well... free. really? yes, really. healthier is getting a flu shot on your schedule.

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softbank-owned arm holdings has finally given us the filing for going public. it will debut on the nasdaq a few weeks from now. in fact, it's going to price the night of the 13th for trade on the 14th. that's what we're working with. >> is this the auto strike deadline? i've got to talk to renee. >> the going dates right now. >> not here. >> not here at the new york stock exchange. sadly, it will not be physically here with us. they're going to sell about 10%. that's based on what i'm hearing. i think the journal reported similar. going to have some strategic investors as well. remember, arm sells its designs to -- it's in everything. >> everything. >> certainly when it comes to

cell phones. 99% of the phones on the planet, it has royalties or licensing fees related to them. there's a look at some of the strategic investors that i'm hearing are lined up to take part in the offering. intel, tsmc, samsung, amd and nvidia. i've been hearing five to seven. you've got five of them right there. the point is, if they all step up -- let's call it 100, $115 million, there's not going to be much stock left. it seems like it will be well oversubscribed. jim, there are those who look at the revenue number down 1%, $2.68 billion. my understanding is they did change their accounting from irfs to gaap accounting. there is an expectation there will be double-digit growth from 23 to 24, 24 to 25.

so those are the numbers you can start working with. the question i will turn to you for is what's the appropriate multiple for this company? >> it's very hard to figure. they're moving aggressively into the data center. notice amd, intel, too. remember, when you're in the data center, what you're thinking about is what jensen huang is doing in the video. they have this chip called grace hopper. and hopper -- it's all nvidia, but grace is the cpu and hopper is a gpu. amd makes cpus, intel makes cpus. they're on the x86 model. this is not that. this is a major break through by arm to be the partner. remember, nvidia tried to buy arm. the head of arm is from nvidia,

and they're very close -- very close with jensen. the reason i'm very excited about this deal is because, if they're the cpu chosen to be in grace hopper, which is a gh 200, the fastest computer -- what they'll need for soup your computers, that's a huge leg up on amd which i like and intel which i don't care for. going away from the 286 toward arm. arm is the winner. they have the best technology. that's why i'm excited about it. >> i think a key part of the story that they'll be selling to wall street will be ai-related. of course, it's real and offers particularly significant growth off the numbers you just saw. >> spectacular. >> what's spectacular? >> what arm has. by the way, arm is so savvy, you could argue they are going to displace intel, but also amd. >> they don't make their own

chips. >> nobody does. it's fabulous, much better than qualcomm. >> licensing royalties -- >> hand in glove with nvidia. that's pretty fabulous. grace hopper is an amazing -- you should call elon musk, ask about the grace hopper. >> okay. i'll do that during the break. i'm sure he'll answer because elon picks me up whenever i call. he's waiting. he's sitting there waiting for my call. >> i'm the corner manor zuckerberg, so you go. >> you're like burgess meredith. >> i am. >> the match is not looking good. cage fight not looking like it's going to happen. >> it's early. they have to do it in the jungle. why? >> in the jungle? >> has to be a rumble in the jungle, or it has to do where in the philippines, the thrill in

manila. >> after the break, countdown after the opening bell. futures trying to hold on to gains. >> there goes frazier. >> down goes frazier. he tech bounce continuing today. don't go away. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. at stores everywhere without a prescription. 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?

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tesla coming off its best single day since march 21st, another 4% today. followed by nvidia. a look at european chips as well,. opening bell in under five minutes. don't go anywhere.

let's squeeze in a quick mad dash, then opening bell. campbell's soup. >> this is important. sometimes a group gets down,

usually the algorithms. right now consumer goods stocks are all being crushed. then the analysts come up with reasons they're going down. snack is the bright spot. they boot rao's which is the second best tomato sauce. this is a good company doing well. people do not want to own with rates going dramatically higher, recession stocks. it's kind of counterintuitive. historically you'd be buying at campbell's recession stock. they're just not doing well. i think claus is doing an incredible job. >> what are the algos doing? [ cheers and applause ]

>> whether it's doeb, marvel, broadcom, they just want ai -- >> back to that one. we were broadening for a while. not anymore. >> let's get the opening bell here and the cnbc realtime exchange. at the big board insurance underwriter old republic celebrating its 100th anniversary, provider of architectural products and services celebrating its 40th listing anniversary. we're going to try to stay elevated above 4400, jim, where we were timed out of yesterday. >> one of the things that people talked about all morning really jabbers is about the s&p down grades. one i want to take issue with is key. the average deposits are basically unchanged from the fourth quarter of '22.

the fourth quarter -- key is a very good bank, a great opportunity. i think the s&p downgrading the banks now is a little bit horse out of the barn. even though i can't just go by schwab and go buy huntington bank, i think these down grades are fabulous. >> are you cool with comerica? >> comerica wasn't that bad. it's been a trusted franchise for a very long time. when they downgraded, it makes you feel like it's not a great bank. it's a great regional bank, so yeah. i don't like the banks. it's a very solid bank. >> the financials with a bit of a bit at the open here. we had schwab yesterday as well looking at job cuts. >> i thought schwab rationalizing their head count makes a lot of sense. david, people are making it sound like it was desperate, out of desperation. that's wrong. they're doing the right thing.

too many people. >> so nobody should read into that anything negative about schwab? >> i think schwab is doing quite well. i think what the problem is we have to -- this is one of the things that's been bothering me. david, nobody really talks about the stock market. >> you talk about it. >> that's kind of my job. >> yes. >> i have people talking about the premier league and the champions league more than talking about the phillies and the braves. >> what's your point that people don't talk about the stock market? >> there was a time when -- other than nvidia -- you get together. i see people at the beach and i'd say, what stock do you have? now they say, go eagles. >> are you saying it's not a topic of conversation. >> yes. >> is that a good thing or a bad thing? >> quiet market not so bad? >> we can't change the rules, make it so you have to pitch faster. i'm saying that we're not as

much of theconversation -- we're, meaning stocks, are not much of a conversation when you meet people. they just don't bring it up. i think they're very soured by the stock market. >> it's also easier to ignore the stock market when you can get 4.34 on the ten-year. >> that's true. the short rates are very good. >> short rates are obviously higher. >> i think a lot of people feel it's rigged. i've been saying that for several years. i don't think young people are interested in the stock market at all. they're interested in trading nike's at the 10:00 ipo. >> sports betting. >> i thought you were going to say the stock of nike back to the november low. >> incredible. nike versus nvidia, an extraordinary story. noik key, by the way, has i think a brilliant business model which is to make it very exclusive. macy's says nike is coming back

in. i don't know. i think people are reading it as china being weak. there the government came in and bought a lot of stocks last night like they did in 2015 and '16. president xi must have like a technician because they come in right at the 200-day moving average. >> he's on his first foreign trip in a very long time, the ricks conference. >> look out. secretary raimundo is going to china. >> she's going next week. >> that's going to be a wake-up call to the chinese. >> they didn't say who she was meeting. >> it doesn't matter. she's a business person. i think they'll discover she knows who grace hopper is, she knows what the gh 200 is. >> the advanced chips that obviously will not be available to the chinese. >> right. this collar, i hate it. by the way, remember, the c.h.i.p.s. act, we're not able to make those competitive chips.

they cost a fortune. i think she can go and say, listen, we have the upper hand. she's not going to say the seventh fleet is moving up and we'll put the 82nd airborne on taiwan. i think she'll do the moral equivalent. guys, do you ever want to become a major power? you better start playing ball with us. she'll do it because she is tough! >> i believe that. i think there's a concern as you continue to see declines in the overall chinese economy and things becoming more difficult, you do tend to see more militaristic response as well to generate, broadly speaking, more positive sentiments in the population if you have an unemployment rate above 20%. how do you combat that? you become more jingoistic. >> they have a culture which is not nearly as easily written off

as a lot of the intelligentsia thinks it is. i always hate this, when we were in a cold war with russia, the actual people of china have no interest in being in a fight with us. none. my father worked for the chinese for 20 years. he could not believe -- that's anecdotal, i know -- how much they loved him. i think we should not be at war with the chinese because the people i think like us more than almost every country on earth. it bothers the heck out of me that it's like this. >> it's a difficult one to deal with. jim, nvidia all-time high. so we've got that going for you. is that good or bad ahead of tomorrow night? >> i think it raises a bar that they have to say, look, we can't make the chips enough, but we can charge anything we want. one of the things i like about nvidia, for those who think --

if it doesn't report the great number or they sell it, i know i'm a broken record on this grace hopper chip, but that's a '24 chip. >> that's coming out in 2024, that's the expectation? >> yes. that chip is -- if you are a hyperscale, of which we know, here and in china. >> that's what you're buying. >> if you're tesla, you no choice. >> if you're tesla, oracle, microsoft. >> oracle keeps being favored by jensen huang. vmware has got a speech -- >> why? >> they're good partners. the other guy that's good partners, the guy that admired my pants from tjx. >> mr. zuckerberg. >> they are greatpartners. >> if you decide to sell the stock, you don't realize you're selling something in the midst of a product transition that is

just awesome. >> the other name you brought up is tesla. shares are coming down a bit right now. started the morning up almost 3%, this after yesterday as well. >> david, the competitive advantage they have against the striking with the uaw going against companies in saying they're all fat cat billionaires -- the rhetoric, david -- there is no rhetoric at m musk. >> no. when you're talking about general focus on the stock market lagging, there is still excitement around mr. musk. >> there sure is. >> and tesla shares. a lot of dissension as well. >> we want to know what he is saying and what howie rose well is saying. >> is he on the cover of si? >> he's on the cover of si. no curse there, no curse.

i do think when i look at nvidia, i'm urging people to understand everyone has raised price target. but jensen, if you go over word by word what he said in the last quarter, he said, look, we can make everything by the end of the year. then we have a big chip transition. the chip transition is going to be extraordinary. >> it's going to have to share attention tomorrow with snow. citi goes to 191. we talked to tyler rad keel last night on "closing bell" he thinks the days of guidance cuts are coming to an end here. >> that would be important because frank salute man, when he was on -- flying dutchman and ceo of snowflake. he went to erasmus in the netherlands. you think he's american, but he's dutch. he gave me a forecast, it's really downbeat. i said, come on, frank, you're snowflake, give me something good, give me some loving. he wouldn't. he wouldn't take it up.

so, yes, the bar is so low and it is a great way to be able to get on the cloud without spending a lot of money. so i'm thinking that maybe this is the breakout for snowflake. >> how about wells today arguing that dreamforce will not be as big an event this year and gen ai won't start paying off until fiscal '25 at the earliest. >> it's interesting to be as wrong as they are. they work for charlie scharf, he al allows first amendment starts. >> analyst at wells fargo. >> mark has been -- marc benioff has been very quiet. good or bad, i don't know. i wish he were a little more robust. i'd like him to say something. last night palo alto. marc hasn't been talking lately. i don't know about marc. there are these people out there, david.

it's like cher. >> cher as in sunny and cher. >> like you don't have to have a full name for cher. >> i wanted to make sure because your pronunciation is a little different. >> steve cher from hertz. >> okay. what does it mean when he's reticent, by the way, which is misused all the time. reluctant to speak. >> i think it's going to be like palo alto where nick cash really pulled a fast one on friday evening. he put together a montage of songs about friday and had a great laugh. >> you pointed that out yesterday. >> what are you saying? >> we should take benioff's virtual silence as a positive perhaps? >> i'm saying it's a long time since you start playing that stock. he hasn't said anything lately.

he ain't saying anything, nothing great coming. i think that's wrong. i think the ai he's using right now matters. baidu statement is all ai. i look at what baidu is doing and say, well, do i really care about, david, this funny name -- property country -- >> country garden. >> guns and gardens. >> you don't have tomatoes anymore -- >> my tomato patch is morth more than country gardens. >> how much are you paying -- >> i pay for the ball jars and that's about it. >> still haven't gotten my sauce. i'd like some sauce. >> i'm bring you some sauce. did you come and get my beef steaks yesterday? >> no. >> i brought nine beef steaks

in. they're so perfect. >> i want to get some tomatoes. >> cream cheese. >> you, too, carl. >> oh, great. thanks. jim, emerson gets the call today out of gpm. >> my travel trust owns it. it's one of these upgrades that says these guys aren't as bad as they used to be. i don't like that kind of upgrade which is like, look, they were really bad, but now they're not so bad. what is that? what is that? i ask. >> i don't know. >> i don't know. >> go take a call. >> i can't. i'm trying to look at headlines here. >> i'm saying that was a damned phrase upgrade. i didn't like it. my trust owns it. i dislike it the execution was

miserable. >> how about zoom with a beat in raise? >> i listened to that call. they started talking about, we've got this new product and it's great. nobody is taking it because there are issues involving the economy. i think kelly steckelberg is fantastic. in the end they killed their own busby saying we've got this great product, but we also have -- there's macro concerns. now, macro and concern put together in a conference call is a kiss of death. almost as bad as theft. >> shrink. >> shrink. >> price target moves on zoom, nothing dramatic. the cash now 6 billion is a third of the market cap. >> it's been big for a long time. my stepson worked there. it was an amazing experience. i think eric is terrific and zuckerberg is terrific. the fact is, they've not been able to still come up with products that have mass adoption in the enterprise. >> what was the all-time high in that stock?

can we go back? let's take a look at, like, five years? >> back to where his options were priced? is that what you're trying to do. >> back to the long term on zoom. there it is. >> that's a year. give me five years. five. thank you, thank you. there it is. >> so maybe some people bought it there. those are the people that don't talk about the stock market. >> a new ride at disney, zoom mountain. >> that's the right side of the mountain, the north face. and then boom, you take the other way back down. >> they want people back in the office at zoom. >> yeah, i know. eric wong wasn't meeting anyone for the first two years. talk about the one place that does -- that needs people back. what have we gotten work from. >> very curious after labor day and what the numbers look like again. >> jamie who also is like

cher -- >> five days a week. >> jamie likes people working. >> i think meta has made it very clear we have expectations, and people who are not listening and they don't seem to be -- >> the memo there is, like, if you ever want to be anyone or a company, you've got to work every day. that's taunting. >> or three days a week. he won't show up in the office. >> three days a week is code word for five. >> friday is the battleground. >> if you're an e-15 level -- >> other than financial services, they're not coming in on fridays. >> as someone who works on fridays, i find i can get into the city in about 27 seconds. >> you see this journal piece this morning how new hire pay is starting to slifrl. average pay for new hires down year-on-year, steepest drops in tech and transportation. >> that's something that jay powell has figured out. we're getting there. there was a great article about how cars -- the defaults on

cars. jay powell is winning this war suddenly. the biggest problem initially was 150,000 star price and i go move across the street for 200,000. that game is over. these kids are struggling with the student loans again. they're shopping in places that you wouldn't believe. they've traded down. premiumization is over. >> i heard that yesterday. >> the idea you can charge whatever you want and the millennials and all the other letter xs, zs, they're drinking pacifico. >> you mentioned that, jim, speaking of that. you mentioned north face, vf at the worst s&p at the moment followed by ulta, nike, best buy. >> we've got to go over these. vf corp has a new ceo that i

love. >> that's a painful year that stock has had so far. >> it is the year of living dangerously. >> as i like to continue to state the obvious. >> yeah, captain obvious with the target down three. i think the f corp, i'm looking for a major turn there. it will take a little while. meanwhile, ralph lauren had a great number. they need a life raft. that had a great quarter. nobody cares. david, nobody cares. you said we'd be safe in ralph lauren. you were wrong. >> thanks for nothing, david. terrible. >> sorry, guys. >> you've got to hold him accountable, jim. >> i think that store on 72nd street is very nice. you can be safe there. >> the mansion? >> yes. >> let's look at the bond portfolio. a lot of data today. we had barkin on the table. existing homes as well. richmond fed coming up in about 12 minutes. not a lot of relief with the

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some s&p gainers, hasbro, moderna, tesla on the list, followed by medtronic, as they raise the guidance we're a going to talk to the company later on this morning. moderate gains here for the s&p. 4408. dow is down marginally. stop trading with jim is coming up next. let innovation refunds help with your erc tax refund so you can improve your business however you see fit. rosie used part of her refund to build an outdoor patio. clink! dr. marshall used part of his refund to give his practice a facelift.

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let's get to jim and stop trading. >> not just our friend but good friend dave kostin and ryan put out a tremendous piece about goldman about who are the winners in a.i. and the enablers, which i guess is typically not a positive, but in this case, it is, he says he likes credo tech. i'm not -- crdo, but marvel, mrvl, matt murphy, i think if you go to the last conference call he actually has something to say and this kostin piece is getting rolling. be aware, get kostin. as always, he's a thoughtful guy and i really like him. >> interesting.

chips basically flat now. >> you need marvel to get what you have in the trip comes to the data center. it's vital. it's because he bought an optical business a few years ago that turned out to be a bonanza. sitting on a gold mine. >> how about tonight? >> i've got lowe's. >> i got that. it was funny. >> and i think that marvin -- >> endless loop. >> marvin is, i think, one of the most exciting ceos in the country because he took the company and has ignite the it and made it a fun place to shop. i like to get my plants there. i like the management. >> you get your plants at lowe's instead of home depot now? >> i bought my flats, some at lowe's, some at home depo. i split my flats, if one has a blight it's important.

>> lowe's outperforming depo. >> if you are a plant or gardener, you never get your flats all from one place. if there's a blight and you're taken down, look out. >> done. >> need to have diversity. >> right. >> i look forward to that. we'll see you tonight on "mad money." we'll talk more retail in a bit, including a cnbc exclusive with the head of macy's when we're back in two.

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good tuesday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with david faber and leslie picker, live at post nine of the new york stock exchange. sara eisen has the morning off. muted open here around 4400, but there is something for everyone today. banks, retail, semis, china, fed speak and a lot more. >> ipos, deals, it really is a news worthy tuesday here. we're 30 minutes into the trading session. here are three movers we're watching today. shares of dick's sporting goods plunging this morning. reporting a 23% drop in profit in the second quarter, also slashing its earnings guidance amid an increase in retail theft and slow sales in the outdoor category. those shares down about 23%

right now. target, another retail mover, hitting a 52 week low as nvidia racks up another all-time high, though in the redhead of results tomorrow. and shares of macy's dropping despite a beat on the it top and bottom lines. the retailer striking a cautious note about consumer spending in the back half of the year and standing by its conservative full-year guidance. shares now down about 8%. ceo jeff gennett joins us to break down the numbers in just a moment. we'll see if that conversation can turn that stock around. in the meantime let's get some existing richmond it fed with rick santelli. hey, like. >> yes. i'll tell you, there's some interesting data points here. richmond fed manufacturing index for august was down 15 consecutive months in a row, meaning the numbers were negative. minus 7, makes it 16 consecutive months in a row and believe it or not, minus 7 is the best numbers since december of last year when it was minus 4. we haven't had a positive number since april of last year.

on the business conditions side, the nonmanufacturing, positive 1. we break the streak, carl, of 17 months of negative numbers in a row. not to be at number 18. and positive 1 actually is the best level since february of 2022. we all know interests are moving up just look at the curve today and how does that affect housing? well, for existing home sales for the month of july, for that data point, we turn to diana olick. diana. >> rick, existing home sales in july dropped 2.2% from june to a seasonally adjusted annualized rate of 7.4 million units. the street was looking for flat. sales down 16.6% year over year and that is the slowest july pace since 2010. closing, contracts signed in june when mortgage rates went from 6s for well over 7%. the realtors blaming higher rates and tight supply, 1.1

million homes for sale at the end of july down close to 15% from a year ago at the current sales pace that's a 3.3 month supply, six-month supply is considered balance between buyer and seller and that short supply continues to push prices higher. the median price of a home sold in july was $406,700 up from july of last year. competition is still strong with three quarters of the homes sold on the market for less than a month. we did see first time buyers get back in a little bit. 30% of sales up from 27% in june. and that is being reflected in a jump in fha mortgage demand. so a miss once again, david? >> yeah. that seems to be the way things are going. diana, thank you. diana olick. let's turn to tech. microsoft and activision, those shares both at least had been headed higher. activision the key here. you can see it is up getting closer to the price at which microsoft is going to buy the

company. it's 95. they paid the dollar dividend. sorry for that. what news is this morning, of course, is that the uk authority, the cma, the antitrust regulator there is reviewing a new deal essentially because there's been a structural divestiture microsoft has agreed to make, that involves -- it's cloud gaming business in the uk. microsoft will not acquire cloud streaming rights for all activision games during the next 15 years. it will divest its cloud rights to the french game publisher ubisoft and as a result, it will also -- that was the cma, will take a look tat this deal again. you can see what's being divested and why it is being divested. because, of course, the uk regulator had objected to the transaction previously, seemingly dooming it, then things turned around over the course of the summer unexpectedly and now we have

what will be this new divestiture requiring a new review by the uk regulator. they have the deadline until october 18 to the complete it from what i'm hearing, most likely will allow or expect, there's an expectation that it will close perhaps as soon as let's call it early october, but again, that all becomes uncertain. what does seem a lot more certain it will close at some point. one other thing to add here, is as a result of the changes taking place now, there is the possibility that the eu will require them to refile which would, of course, have the effect of delaying yet again the transaction. i'm told that's uncertain. not known whether that would be the case. but it is yet another thing that investors need to take into account. as for microsoft, of course, we've talked so often, leslie, about the fact that this stock is not trading off this deal at all, but the prospects certainly for a.i. and how that's going to fuel its business have been the chief engine behind that stock

price for quite some time now. nonetheless it is important, activision shareholders as you might anticipate. >> absolutely. makes the deal more palatable for them. how important are these divestitures for the kind of the strategic vision of the deal in the first place? i mean, you're divesting cloud, you're divesting streaming. >> only in the uk. >> only in the uk. >> not as -- >> it's not a large market. it's large enough so that they would not have closed around it and said we'll just ignore it, but that said, it's not economically it wouldn't seem to be that big a hit. i don't believe it is seen as being particularly material. >> the market not acting like it is. >> no. remember the break fee does go up as of august 29th. if the deal were to break there is going to be more money going to activision as a result of that. >> meantime guys, macy's down despite the early morning pop today. the company standing by its cautious forecast for the year. our own courtney reagan at post nine on set with a special

guest. hey. >> thanks for having me. macy's ceo jeff gennette thanks for joining us to talk about the quarter and beyond. we'll start sort of right there where carl made the introduction for us. you had a nice quarter. your earnings beat substantially, double analyst consensus. why not raise your full-year earnings forecast? >> so, hi, courtney, great to be with you, and see you again. we take a cautious view right now of the consumer. we've been talking about this consumer for the last number of quarters and we're taking that all the way through the back half of the year. there were some good things that happened within the quarter. we, obviously, beat on what we expected in terms of sales and gross margin as well as sgna expense, but we did have shortfalls when we looked at credit income and we also kind of took note of where the consumer is. what are the tailwinds when you think about savings rates, but what are coming in as potential new headwinds like what's going on with student loans and the expiration of the loan

forgiveness that is happening in october. just the persist the amount of inflation and how that affects the psyche of the consumer and how they spent. when we look at our consumer, they are spending, when you think about services and experiences, more of a point of their wallet share than goods. and then within goods, where are they spending. we're looking at that very carefully. what i would say is the good news is that our inventory is in great shape. we've built in liquidity across all of our categories and we have a lot of confidence in what we've constructed for the back half of the year the fourth quarter, categories like beauty that have a higher penetration in the fourth fourth quarter than other three quarters of the year. new additions like nike, under armour on deck for spring season, toys "r" us, disney collaboration for the 100th anniversary coming for the be fourth quarter, but it's prudent to take a view of the consumer and have the liquidity we need to chase those demands. >> obviously, macy's sells many

categories. you mentioned butte beauty as one. discretionary has been in focus. the previous quarter to your point as many consumers are shifting more of their income towards experiences. so in general, how would you view the consumer when it comes to spending and discretionary categories? you overindex in like apparel and footwear. >> when you think about our battery of our three banners, blooming dale's, bloomer and macy's, multichannel, great strength digitally, great strength on mall, building new competencies with off malls for an example, new private brands, reaching the customers with modernized marketing through our personalization it technique, drafting off of strength and luxury for the aspirational customer, so we have lots of options with customers and things like marketplace so that we don't have the ownership of the inventory but able to expand

categories and brands, so we're working in the right direction because we're so committed to getting back to profitable growth. and so when you think ability what our plans are for '24 and beyond, we believe the growth factor is going to be a foundation of that, but we have still lots of work we're doing on the fundamentals of the business as an omnichannel retailer. >> so you have a lot of work to do as you say here on the fundamentals but a lot of external pressures as well. you went through some of them with the consumer and broadly what they're dealing with but retail in general is dealing with a higher level of shrink in the biggest piece of that seems to be theft. i guess i'm just wondering, in your view, is it still elevated at macy's? and it is it from organized retail crime? is it employee theft? is it theft at other points along the supply chain? >> so we had record shortage in 2022 and we're going to be higher than that in 2023. i think if you look at all of retail, you're seeing those trends. to answer your question the bulk is the change in organized theft, and just the organized

function of you've got elements that are coming into stores and they're stripping them of big categories and doing it in bulk so you're getting the big shortages happening in certain areas of the country. you're seeing that across most of retail. what you're then seeing is seeing a lot of those goods are being fenced on marketplace so the digital component of this has opened up a revenue stream for a lot of these elements. so we're not standing still on this. the opportunity to basically say first and foremost, to make sure that our colleagues and customers are safe, making sure that they're protected. then looking at our assets and pulling them away from the entrances or mall entrances and making sure we're protecting it that way. very, very carefully working with all of our competitors. >> oh. i think we might have lost the signal there for macy's ceo jeff gennette. interesting quarter, conservative guidance, not unlike what we've seen from other retailers even when they put up better quarters right

now. so much uncertainty with the consumer and what we'll be buying, when and how much of it. >> i'm bummed we lost him because he was really getting to the question i think a lot of viewers have, what is the solution? if you're not going to rely on a federal criminal crackdown, what tools do retailers have to arrest this problem which is clearly material? >> it is. and, obviously, i think a lot of us as consumers are probably admittedly annoyed when we go to some stores and things locked up and behind lock and key. it is a harder experience for honest shoppers, but we can kind of understand why retailers have to go to those lengths. they're looking for help from local law enforcement. it does seem to be worse in certain areas of the country that have higher felony thresholds and the criminals are smart enough to understand that. it is tough. some are using technology to try to work through things like checkout and facial recognition, but, you know, it's difficult. >> you reported years ago on theft rings. >> i did. >> i did. i reported years ago, pretty

extensively back in 2019, and actually, we do have mr. gennette back. if you wouldn't mind finish answering your question about what retailers can do to help improve the issue of strength, most specifically when it comes to the organized retail crime? >> it's going to be solved by one retailer alone. from the nrf, i give them credit for how they've come together and pulled together a collective voice working with legislation on a national level and then really working their certain pockets of the country that are more grievous than others and working with mayors and local law enforcement. working with state officials on this. to ensure, you know, you're all sharing the same information. we all, obviously, are looking for legislation that curbs recidivism. so when you've got organized crime going into buildings, you know, we, obviously, we know who they are, we have a great sense of that, that we know where they potentially could strike and so making sure that we're all sharing that information with our competitors to make sure that we're all in this together

and we have law enforcement behind us for where we're going. >> and, obviously, it's in place, do you have confidence that will curb some of the reselling activity when there's more identifying information about some of these sellers? >> it is absolutely a step in the right direction. you know, this is a problem that is continuing to mount, and we're all in this together. the objective is, we want to make sure we're protecting -- i talked about colleagues and customers but our goods. making sure that our intention of getting the right goods to our customers, the customers disadvantaged not having the content they want and expect from us. it's crucial to our viability as profitability retailers. >> before we let you go, you announced new small format locations. generally what's the strategy there? are all macy's going to be much smaller in the future? are they more efficient for you? what's the goal? >> the goal is that we are a multichannel customer base that is omni channel in their nature. think ate a customer they want

to shop online, an app, go to a brick and mortar location convenient to their home or business and so this is our opportunity to continue to put flags where customers are putting signals out about where they want to physically shop. we, obviously, have all -- we're in all the best malls, bloomingdale's and macy's across the nation and locations and we're going to continue to invest in that. when you think about other places that customers who don't go to malls where they shop is where we're interested. so you've heard about our small door existing markets, replacing stores in decaying malls and looking at new markets with bloomingdale's going into seattle, so there is -- it's a multipronged approach and really is to be omnichannel for our commerce. we're looking at all the signals of the 10 that we have launched thus far and be ready to scale it when we show the board that we have the right strategy for this particular important part of our growth factor.

>> thank you for joining us today. >> thanks, everybody. >> before we let you go, i would love to on the subject you want to call it shrinkage or shortage or theft, dick's is one of the features of the day losing almost a quarter of its market value. what do we know in terms of the hit to market from shrinkage. >> i talked to the executive chairman the son of the founder at dick's and says it is a problem. it is responsible for a third of what was shaved off of our gross margin. he expects it to increase going forward, which is what gennette said as well. he agrees it is a wider problem and they are doing what they can. he acknowledges certain areas of the country are worsep than others, but did not detail it. dick's has not come forward and given detail on that previously. it was mentioned, i want to say it was in an sec filing in a 10k as a one off but they haven't really delved too much into it, not at least as much as they did today. so the worry, of course, is that it elevates from here and that

is baked into the guidance which is pulling shares considerably lower here down 23%. >> at what point do you think they start closing stores in some of these pockets? seems like it's isolated to a certain extent but do they start closing the stores. >> >> it's tricky. every year they're looking at their portfolio and closing stores for a variety of reasons. i know that dsw, dbi the parent company did end up closing a couple stores, in fact, one here in new york city because of the crime in the area. didn't detail further than that, but i think that's a risk. the other thing retailers are careful of when they close stores it they often lose online sales in those zip codes because so many of us order on line and return to stores and the worry is that the loss radiates in the business beyond that store. it is often difficult to pick up that customer and get them to go to another store or retain their business online. >> it's not always a point of

sale too. a lot happens in the supply chain. >> it can happen in the supply chain. obviously, shrinkage, writ large, is damage or loss in many different areas along the way. theft is part of it. it could be organized retail crime and petty theft and it could be employee theft. the retailers have not told us that a lot of it is happening but a lot of us are wondering if that is happening. somewhere along the way, if they're helping the thieves get it. i think we have a lot of questions and things to figure out. >> remarkable it's the main thing we're talking about this morning. >> it is. >> courtney reagan. >> let's look at the road map for the hour. another downgrade of the banks today. find out why and which stocks are in s&p's cross hairs. >> the chip making firm arm filing to go public in what could be the biggest debut of the year. we'll tell where you what investors need to know. >> and tesla in the green once again after posting its best days since march yesterday. more on this tesla trade this

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xfinity rewards creates experiences big and small, and once-in-a-lifetime. welcome back. s&p global the latest credit agency to sour on its outlook for the banking sector. s&p downgrading five banks including comerica and keycorp and lowering the outlook for several more. its rationale similar to what we heard from macy's a few weeks ago, fitch last week, deposit shifts migrating from noninterest bearing accounts and

areas like cds which cease funding costs. the sell-off in treasuries is putting a dent into the value of their securities portfolio, pressuring liquidity. and all of this against regulatory backdrop that's emphasizing higher capital buffers for mid-sized banks with $100 billion to $700 billion in assets. equity investors seem to be sharing the sentiment as the rating agency with the kre down about almost 10% in the month of august, down about 1% today. guys, you know, the regionals continue to get squeezed, you know, in all angles here. >> seem to be relief after many of the earnings, and it has dissipated. >> it's kind of switched back and forth. investors are paying attention to the bottom line with earnings, and now they're kind of back focused on balance sheet, and it goes back and forth and then, you know, depending on whatever the headline is, whatever the way sentiment shifts -- >> it may be due to the move in the long end, right.

>> exactly. >> the rates higher and refocusing people on the balance sheets and where they stand. >> we reported on friday, we got exclusive data from goldman sachs that we commissioned basically looking at how just in the month of august, and just since the end of the quarter, as w well, regional banks in that category have taken about a $12 billion aggregate hit to capital just due to the move in rates. it is having an impact and why is that important for the overall economy? well, when you start to see, you know, dent in capital and then increasing their capital buffers as a result of some of these regulations, that impact the appetite to lend, it impacts their margins if they're not lending, and it has the circular impact. >> pretty remarkable what's happening with the banks today at least. speaking of the banks, the small business feeling the heat amid the tightening credit conditions. kate rodgers watching that this morning. hi. >> good morning. our cnbc survey monkey small business voour for q3 out this

morning showing a dip in levels of optimism among small business owners and challenges around funding. it fewer owners said it was easy for them to access the capital they needed to run their business at 48% versus 53% last quarter. this is something we needed during the regional banking issues we saw in the spring but interesting it's coming up again now for owners. the drop also concentrated among those who bank at larger institutions according to our survey. more owners are banking with larger banks, two thirds are with community or regional banks, but the ones that are with the smaller banks did have a smaller drop in saying it was easy to access capital under 5%. larger bank customers had a 10% drop in terms of them accessing that funding. 42 out of 100, the all-time low level we saw exactly one year ago. there was a dip in the share of owners who say that current business conditions are good right now from 40% in q2 to 48% now. 38% said conditions were bad,

46% called conditions middling. how much of that remains to be seen in terms of how much of it is tied to the financing situation that's going on right now on main street. guys, back over to you. >> kate, thank you. still ahead british chipmaker arm filing to go public in what could be the biggest debut, probably will be, of the year. we'll talk about what the investment case looks like for that stock. that's coming up after the break. don't go anywhere. .

softbank owns it called arms holding and has filed to go public on the nasdaq pricing expected on the night of the 13th for trade on september the 14th. you can take a look at softbank shares. it's going to be a win for the company. it bought this company some time ago. uk-based if you recall and ubiquitous when it comes for their designs for the chips in cell phones and so many other things around the world. they are banking on a.i., of course, during another leg of growth for and with along with so many of their customers, and we got the filing as i said, for

the ipo and we learned some things, leslie, in terms of where revenues stand and earnings, not a lot of growth, in fact, at this point, so there will be some questions as to multiple -- there's a picture of rene haas, the ceo of the company, soon to be public, although still to be controlled by softbank. they will be selling roughly 10%. there's a look at the financials as we have them from the latest quarters that are being reported in the filing. they are, i'm told, talking about significant growth, double-digit growth into the future, which should give you some sense but figuring out a multiple on that earnings number or on the revenue number, of course, is going to be left to the marketplace. i think there's a hope that this thing will come in 60, as much as 60 be there valuation or perhaps even more is possible when vision fund transferred shares was at $64 billion. that was back in 2019, but again, wouldn't lie -- rely on

that transaction. investors, you may have seen it, the likes of nvidia, tsmc, samsung. amd and intel all going to participate, i'm told, in the offering as well. perhaps step up for $100 million, $115 million, not leaving that much in terms of what will be left for those institutions that are going to be there to step up. >> you've got scarsty on that front. one of the questions when you have big ipos can the market absorb the stock put into the marketplace. from a timing standpoint it's a good time. there haven't been that many new issues, so if you do have an investor class, which we've seen with oddity, and saw it with cava, people are kind of clamoring for new issues in the market, then perhaps you have enough to fill a book here, especially when you have the cornerstone, those anchor investors that are taking up some of the book as well. that supply-demand dynamic will be at play. but to your point, valuation is going to be interesting here because you've got the a.i.

angle, but you also have fundamentals that are declining, which you aren't used to seeing in ipos, although this is more of a sponsor back situation than a -- >> right. they are talking about significant growth going forward from here. there was a change in accounting from irfs to gap accounting which may have contributed to why it is negative year over year for the reported quarters in the filing but that said, yeah, you know, do you put an nvidia multiple on this. it seems unlikely given the growth rate that is going to be equal. but we will have to wait and. >> the a.i. aspect hasn't been proven out in the way that it has -- >> right. jim cramer pointing out earlier a part of the grace hopper chip which is combing cpu into gpu that nvidia is doing and arm is having a place in that. that's going to be important and they certainly will embrace that as well, i think in terms of when they begin their road show, which is going to start not too soon. excuse me. very soon. >> very soon.

>> as they get ready for pricing on the 13z. >> about a month away. >> yeah. >> less. we have like three weeks. >> two weeks and road show and then pricing. if fun. >> it will be. >> it will be a global road show presumably, because it's a global company. >> without a doubt. >> nvidia come off the high, got to 480 this morning and now negative as you can see. as we go to break, watch shares of baidu today. revenue up 15, was a beat. operating margin was a beat. that's going to take you back up to the 200-day where it dipped below. th h diane swashg will join us wier take on the markets when we were back in a can couple minutes. look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby!

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welcome back. i'm bertha coombs. here's your cnbc news update at this hour. ftx founder sam bank man fried pleaded not guilty to to a

new charge. it's his first appearance in the new york courtroom since the judge revoked his bail this month. his trial is scheduled for october. >> wagner group chief prigozhin has given his first video address two months after he tried to launch a rebellion against russian leadership. the person at the video hints at being in africa. nbc news has not independently verified the video's authenticity. the new york knicks suing the toronto raptors. the team accusing a former assistant of stealing proprietary files and sending them to the raptors. in a statement from the raptors ownership the group writes it, quote, strongly denies any involvement in the matters alleged. leslie, according to the lawsuit, there were 3,000 files that were transferred over. >> wow. >> lots to chew on there. >> yeah. >> wild story. thanks, bertha. we're about an hour into the

trading day. some of the major indexes losing some it steam here. let's get to bob pisani with more on what is moving this leg lower. >> yeah. s&p went negative. dow has been negative weighed down by banks and retail and that's the really two weak sectors we're seeing. good news, the old leadership groups, technology and communication services, consumer discretionary are leading, but barely. and banks and retails are the weak link. kind of unfortunate to see what's going on in retail today. the only good news if you're a broad investor, retail is so small these days, except for low's, most of them don't matter that much. macy's is a $3 billion market cap. i'm talking about in terms of influencing on the indexes like the s&p 500. banks, s&p global, this downgrade, keycorp and comerica, large outflows, don't we know that, depressing to see that. this head and shoulders for these companies here. comerica from 45 to 55 to $46

here. that's a head and shoulder's there, unfortunate for that group. we're slowly getting to the end of august. it seems very long. it's been a tough month overall. we're down, what, 10 of 11 sectors, to the downside, 6 of 11 are negative so far in 2023. i want to give you a sense of a small group of companies moving here. 55% of the s&p is positive year to date. 45% is negative. 73% are under performing the overall s&p 500. this is why the equal weight s&p 500, the r spshgs sp is only up 5% versus the s&p 500 here. communication services because of meta and alphabet and netflix you know what's going on with technology, consumer discretionary is doing well on top of that. finally david was talking about the arm ipo, this could be a $6 billion -- i base that on 10% float, $60 billion estimated value that's a reasonable guess right now. this would be the largest ipo

since rivian a while ago, and this would be the largest one this year. kenvue $3.8 billion. that would be interesting here. risk yan was in november of 2021. i'm not sure whether or not this is going to open the floodgates. this is not a unicorn. this is a company that's been around a long time, was public, so very different characteristics than say an instacart or a reddit. i think we can talk about this in the next day or so, but ike this is good news -- i think this is good news. i'm not sure you can compare this to unicorns waiting go public. >> bob, it it's david. as leslie and i were discussing, the growth rate in some question here, what the multiple will be for arm is also, to your point, not a unicorn growing exponentially. i want to come back quickly on the market because it doesn't seem it was that long ago, bob, we were talking about the broadening out and what end? >> well, what happened is, the banks started moving down. i mentioned that head and

shoulders top. consumer staples fell apart and didn't pick up any of the slack. and energy stocks, which had been a major factor in the broadening out, started moving down because oil topped out. so there was a number of factors that kind of moved in here. the good news is, tech has been tolding up reasonably well. it's down on a relative basis, down on the month but we're still seeing the basic leadership in technology right now. so if you want to know, energy moved down, retail moved down, consumer staples moved down and a couple of other sectors were also weak. banks, in particular, that was the big problem. >> yeah. retail too. worse day for the xrt since may. thanks, bob. our next guest is warning market headwinds are forming as tighter credit across the board takes its toll on growth later this year into next. kpmg chief economist diane swonk

joins us this morning. i am curious to get your take on retail and macy's comments about delinquencies and the consumer is actually beginning to crack this time? >> well, they certainly didn't crack in july. we saw a huge tailwind because for the first time since the pandemic and prices cratered wages outpaced in the second quarter and the blistering heat wave pushed people inside and everything from theaters with the summer blockbusters to restaurants and i think that's important, so that's the good news. the bad news is that yes, cnbc starting to tighten beyond just the banking sector, a third of credit in the u.s. economy. rejection rates on vehicle loans, mortgages and credit cards are up. i heard one person quoted yesterday on a mortgage rate of 8% because it's so hard for them to qualify for the houses they're trying to buy now, which is really quite stunning kind of

interest rate for someone who has a pretty good credit rating overall. and i think those are the kinds of things, along with the resumption of student debt payments, that are going to slow down consumer spending as we go into the fall. also, the fed is going to keep its options open. jay powell talks on friday at jackson hole and he's going to be all about optionality the fed is either near or close to their peak in rates, but they won't quite declare victory yet. they see combatting inflation as a marathon not a sprint, it has been a marathon through the hardest miles so far emboldened them it seems to become a relay race with the strongest performing sectors earlier in reopening handing off the baton in the labor market to what were laggards earlier in reopening, and that's given the fed some confidence to, if they need to, keep going. certainly holding rates higher for longer. >> as we look ahead to jackson hole, one of the debates that's

been cropping up is this idea that there might be a 3% inflation tolerance relative as opposed to to the 2% inflation tolerance that fed has communicated. you've had some debate about this on x, formerly known as twitter. what's your take on the appetite for the fed to kind of readjust their inflation target? >> i understand jason furman and i have gone back and forth on this and i understand his debate and i can certainly people thize with it. -- empathize with it. we need to understand what is optimal inflation rate for the fed to target. arbitrary the 2% target. the fed is not about to change its target any time soon. they've been stednasafast in th. because we've seen the economy cool rapidly now than they expected they're much more emboldened to get to 2% and defend that 2% target. i don't think they're going to be as willing to do what jason says. will they tolerate 2.25%, 2.5%

after they couldn't reach the 2% target from the downside in the 2010s, that may be the case after we get to 2%. but i don't think you're going to see an explicit change in the fed's target, barring a major reset around the world in developed economies where they actually raise inflation targets. i just don't see the federal reserve trying to do that. >> finally, if credit is looking to be so tight, why is atlanta fed at 58, goldman and others raising their q3 tracker? what happened to the notion of real wages reflecting positive and a lot of mortgage debt fixed and those positive things we listed in the bull camp for the consumer? >> they are still there. that's why the third quarter is so strong and why the fed is still on a bit of the defensive and there's more hawks than doves within the fed. the third quarter looks like it's actually accelerating, like growth is accelerating in the third quarter and that's great news for the economy as long as

the economy has enough productivity growth to not reignite the cooling numbers of inflation and that's where we start to hit the lags earlier interest rate hikes and the lags of the fact that bond yields have backed up and that still is affecting the economy in the fourth quarter and then those sloens coming back. those are headwinds still there and they've just compounded actually by ironically the strength we're seeing in the u.s. economy today. >> right. we'll see what happens once we get past q3. great to chat again. talk soon. diane swonk. still ahead, tesla rebounding again after falling deep into bear market territory erthw. kno whe e stock might be headed from here. we're back in just a moment.

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on the back of its latest earnings. it's well-known cathie wood name her flagship rtf is having a tough august. dominic chu. >> david, if you take a look at the out performance that we've seen in the ark innovation etf over the course of the last year to date period, it has been outperforming for a good port of this year and the white line over here you can see. now just in the last couple weeks or so has dropped below the nasdaq 100 even though it's outperforming the broader s&p 500. if you take a look at arc it itself, one of the levels that people are watching right now that kind of 200-day moving average, longer trend, kumt days ago we bounced off the level around $39 and change, so if you watch the ark innovation etf it has to be two stocks driving a lot of action because tesla and zoom as david points out two of the most heavily weighted stocks in the etf, if you look at tesla and zoom, zoom is a roughly 8% weighting in that particular etf and it's down 3% on the earnings news and the loss of momentum

we've seen there and tesla, of course, the most heavily weighted stock there about 10.5% weighting there. so watch tesla shares some concerns about chinese ev demand and supply, price wars and what not weighing on shares. the zoom, tesla story having an impact on arc today. >> thanks so much. dominic chu. coming up in just a few moments, mortgage rates hitting highest levels since 2000. we have the existing numbers today. weakest since 2010. the concerns answered housing supply will grow. we'll talk with taylor morrison in just abou10inest mut.

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welcome back. tesla snapping its six-day losing streak and marking its biggest single day gain. still in bear territory. joining us is collin rush, he has a hold rating on tesla. first, let's talk about yesterday's move. is it technical in nature? was there some kind of fundamental basis for it or a stock that's been oversold that received a bit of a bounce on a little bit of good news? >> i think it's more the latter than the other dynamics.

the company is going through a bit of a product refresh here and i think some of the discounting reports that were out there on pricing were oversold. and i think we're digesting some of that. you also see a stock move 20% like this one has and a company that really is pioneering important technology over the coming decades. and i think folks look at this and say, time to take a short-term trade on this or cover a short. >> makes sense. you have a hold rating. the stock's basically flat over the last year or so. what do you think would be the catalyst to the upside or downside from here? >> for us it's around the changing dynamics around the manufacturing margins. incremental evidence around the ability to monetize subscription services or revenue, whether it's on the insurance side, on the self-driving technology, but the stock this year has moved in

large part around the a.i. trade. so, what we're looking at on our end is it's going to take a while for them to monetize some of that ip and investments they're making now. these are complicated challenges. there's a variety of technologies getting pioneered right now. as the company works through that, and we think they will be successful ultimately, there's going to be an investment cycle and lower margins for longer. that's why we're staying on the sidelines and so as we look at this company, it looks like it's kind of in hibernation mode -- not necessarily hibernation mode but in a flat line for a little while as the company works through the real product and monetization of the technology investments they're making. >> the long-term side of things, you know, for capacity, you note in your latest note that this is a company that receives i.r.a. benefits. they're investing heavily to expand that. what kind of time projection are you looking on that front to see

things ramp up in terms of capacity? >> they are getting immediate benefit from those i.r.a. provisions. that's happening right now. the real core dynamic around margins is the competitive dynamic. and the competition out of asia is getting very aggressive around pricing. the margins on the hardware with the cars are going to be challenged for a little bit as the industry goes through a cost reduction effort to break through and move into the mass market. that's not a short-term project. that's a multiyear project. we think the company has significant cost advantage versus their peers, particularly western oems and the challenges those western oems are working through right now. this is a multiyear process. as we look at this, waiting for the consumer to rebound, rates to stabilize and see the consistent sell-through and the

ability to raise prices, raising margins for the company, which we think probably happens over the next 12 to 24 months but it's not the next three to six months. >> we'll see how long a shift in momentum can last. thank you, collin. appreciate it. >> thank you. >> speaking of asian ev makers, vietnamese ev maker vinfast went public. did want to point out the move in the stock price. we discussed this on the day the company went public. the spac in question was quite small in terms of dollar size. therefore, they took roughly 1% of the company public in terms of the float. 99% is owned by its founder. and so you get these kind of moves, leslie, which are quite significant on virtually no real news, at least that we're aware of, but it might be a headline or, again, given how few shares are actually trading, available

for trade, it can move very, very significantly on not a lot of volume. >> it's the supply demand we talked about. this one up 72%. you don't always see those kind of moves regardless of a float for a $65 billion market cap company and it's had such volatility since it did that de-spaccing. >> you can see the incredible volatility. i wanted to point that out. the market cap is above ford or gm. "squawk on the street" coming bk teth. n'gonywhere.is rtunity is using data to create a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection.

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good tuesday morning. setting the agenda, retail warngs on the american consumer from dick's, macy's and lowe's just this summer. regina ra man dough heads to beijing. the downside risks to the economy and a read on friday's jackson hole speech. markets at this hour mixed and have been losing steam throughout the session, although regaining a little bit in th