right now, the s&p is up by about four. dow futures up by ten, nasdaq up by 26. we're going to be watching earnings after the bell, especially nvidia, after the close today to get determination on all of this. yields this morning have not been stronger than what we've seen the last several sessions. ten-year's at 4.28%. folks, that does it for us today. we'll be back here tomorrow. we'll see you then. right now, it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. futures steady but we got a bunch of movers, especially in consumer, as foot locker and peloton get crushed on results. meantime, in europe, dollar getting a bounce. our road map begins with a retail reckoning. foot locker is the latest to c

cite consumer softness. shares of nvidia, well, they've hit record after record of late and are potentially higher ahead of the open. investors, of course, will be closely watching those quarterly results. they will be delivered after the bell. and mohow about some concer about housing? demand is dropping to its lowest level in 28 years. toll brothers, though, out with earnings and points to a supply-demand imbalance in the market. let's begin with foot locker extending the retail rout we've seen. suspending the dividend. ceo mary dillon says the company saw a softening of trends in july, and we mentioned nike and this losing streak we've seen. >> mary's got -- she turned around ulta, took her a couple quarters to get it righted. you could argue she could turn around foot locker. i would point out, and i think this is important, they do have $180 million in cash. they have $600 million credit line, and they will have to use

it. i've known it for a long time, and she's got great strength of character, which is what's to be needed. when you have minus nine same store, august continues, you got a lot of stores you got to close and you have a lot of inventory, i mean, a huge amount, almost $2 billion, you have to discount the heck out of it. i believe mary and so far it's been a mistake. but she's got a track record of being able to turn around. it's just the clock may be ticking here. >> yeah. as you point out, comp store sales down 9.4%. gross margin down 460 basis points compared with the prior year period, as jim just said. of course, that probably means you got to get rid of a lot of inventory. >> more than a billion dollars. >> and by the way, we're talking about a market cap now that may actually fall below $2 billion. i mean, it's a small company, jim. you said it's been a mistake, and you're getting a lot of heat. this always happens to you. >> i don't care. >> because you've been positive

on the stock. >> i made a mistake. that's what happens. >> what do you do here, though, when you're looking, you know, obviously -- you made a mistake, it happens. we always talk about the fact that you get some right, you get a lot right, you get some wrong. >> for me, i got a travel trust. at the end of the year, if this stock is still there, i'll take the loss. it's been horrendous. i bought stock when she bought stock. the plan has so far not worked. i banked on her because she had been successful at her previous place. that's a very good learning lesson for members of the club that just because someone's done very well at a previous place, if the situation is too difficult, and foot locker is a very, very difficult situation because now you're dealing with younger people who are stretched. you've got problems with student loans. you've got a demographic of people who just, frankly, don't have the money to afford. the shoes have gone up. there are two takes here. she is very optimistic, but she has gotten it wrong, and i believed in her optimism, and i

got it wrong. and i think that it's incumbent upon our guests and our show to be like i do and show humility. at the same time, our guests make mistakes. i got this wrong, and when you do get things wrong, you own it. you try to figure out what to do. you listen to the conference call. you speak to the principals, and you come back and you say, she doesn't have the horses, which is how i feel right now. >> she doesn't have the orses. >> no. >> carl, also worth noting, of course, they saw softening trends in july and they're adjusting their outlook for the rest of the year to best compete for price sensitive consumers but this comes after dick's yesterday and macy's raising some concern about where we stand in terms of the consumers, and they, by the way, they also do note shrink, which of course, includes damaged goods but often these days is much more focused on theft. >> yeah, in this case, we don't really have a really good breakdown. >> right. but are we -- should we and are we starting to see some signs of

consumer weakness? >> yes. in this case, it's absolutely true. but remember, it's a younger demo. it's a youthful demo that does not have student loans, and it's also people, frankly, they have a lower income skew. they skew lower income, which is very bad. williams sonoma skews up and they delivered a number that was impressive, not necessarily for comp store sales but definitely when i look at the operating margin. not bad. when i look at the estimate, it's 312 versus 280. that's good. revenues were weaker. it's case by case. obviously, abercrombie and fitch, carl, this is a game of short and long, and people were short all these, and it turned out that was a big mistake to short. they got it right. so, laura at williams sonoma got it right. abercrombie got it right. mary dillon at foot locker's got it wrong. she'll do a very staunch

defense, and she's quite confident, but you know what, carl? my parents are in retail. my grandparents are in retail. when you have minus nine and that continues in the next month, you're going to need your credit line, and you're going to need the inventory and it's a very difficult balancing act. >> inventory is up 11 year on year. mary sees sales down 8 to 9%. prior, down 6.5 to 8%. jim mentioned anf where $1.10 crushes a 16-cent estimate. oh my. >> they've been wrong. they got it right. there, that's fashion. >> right. >> i mean, foot locker, i don't know why it's not a ten. it could easily be a ten when they suspend the dividend. abercrombie, obviously, when it was in the 20s, they had wrong management that didn't know what it was doing. they've cleaned out the bad inventory, and they've got a demographic here that's a little bit more middle income to high income. remember, you have to be off mall. mary's got 50% off mall now. it's much more than she had

before. she's closed stores this quarter but not enough. and frankly, when i look at that balance sheet, i know that when you know the credit line's going to come into play, well, then you're playing russian roulette. >> yeah. it's always interesting when companies sort of cite their -- the availability of capital that they have. i think peloton did that as well. >> that's problematic. >> in their quarter. when they just tell you how much cash they have on hand and what it's -- and their access to their revolver, not the stuff you want to have to see in print. >> that's the kod, david. that's the kod. >> which stands for? >> kiss of death. >> kod, kiss of death. yeah, where is -- i'm just looking through the various things. there it is, yeah. ended the quarter at peloton with $814 million unrestricted cash, and they say, we have access to a $400 million revolving credit facility and we haven't drawn any of it. >> that was a job-like quarter. they had a recall that hurt them. they said free cash flow will

not be as good, and -- >> won't be positive for the next two quarters. >> that's a better way to put it. >> peloton once had a 50-plus billion dollar market value, it's now going to fallbelow $2 billion today. let's climb the peloton mountain and -- like we did with zoom yesterday. let's go back. look at that. that's -- remember that guy, foley? he was levering up. he was going to consider running for mayor. >> president. >> president. i thought it was mayor of new york. i think he was considering mayor of new york for a while before that. maybe that was on his way. >> can i just say, he's a jovial fellow? >> he was going to replace the jim experience is what he was planning on. >> but you -- you've been a fan, back to -- you've been a fan of mary dillon and a fan of mccarthy's. >> so i'm 0 for 2. >> tough hand. cost structure he inherited from foley, very high. you are potentially 0 for 2, that's true. >> i think, and this is what i'm going to explain to my -- the

le learning lesson to the club. it's not a learning lesson that makes a good life, but that's okay. this is about learning. i believe in joe papa at bausch health. that was wrong. i believed in mary dillon because she was a huge success at ulta, and mccarthy did a fantastic job at netflix. and at spotify. so, i look at the -- i think the great man or great woman theory, great person theory, i have to reimagine it. obviously, it's one that hasn't worked for me and the club, and it's a learning lesson that's cost my trust a lot of money, but if i don't own it -- let's have like most people on air. you just wait. i'm not giving up so early. i'm saying i'm dead wrong. it's my fault. i didn't do a good job. i made a mistake estimating people. i had a phone call with my wife last night because it's obviously very jarring. when you bring lisa in -- when you bring your wife in and you say, listen, i want to speak to

the ceo. what do you do? she says, be kind. own the mistake. don't blame it on her. blame it on yourself. it's not the stars, brutus. >> understood and appreciated. >> that's called humility, and i got it in spades and hearts and diamonds and i'm clubbing. >> when it comes to the fundamental outlook for peloton -- >> well, that's different. >> i'm curious, is there an opportunity here? >> i'm curious red. red ink. >> is there -- or is this thing kind of reminds me a little bit -- it's a bit unfair -- of go pro. remember go pro? >> i told people to short gopro. >> it still has some relevance to a certain population. >> i remember gopro was at 100. i was in hawaii, and i watched video of a goat on a surfboard with the gopro, and i said, that's it.

$100. get the hell out. good call. >> it was a good call. >> i put that in because i've just now revealed some really horrendous calls and i feel like i should be a little more balanced. did you ever think nike would be at $97? >> no. i don't know, actually. i had no thought about it. >> you got a guy from service now on ebay running the joint. maybe that's not a good pedigree. he did play basketball. >> are you worried about nike? >> nike's got u.s. weakness, as we know, because foot locker is a real outlet. it's not positive. >> mike santoli points out, big yankee fan, they have had nine straight losses since 1981. since 1980 for nike. so go the yankees and nike, apparently. >> that's good because nvidia is atlanta braves. it's never been this good. they're on target to win more games than ever. but i didn't want to get to nvidia until later. >> do you have any thoughts on

nike? >> have any thoughts on nike? >> yeah. >> yeah. i used to wear nike. >> you know what you want to own? you want to own on. >> on has an inventory problem. >> market value about five times that of foot locker. >> on has an inventory problem. can i just get out of the sneaker game for a second? adidas is probably making a comeback. i don't want under armour sneakers. i don't want sneakers. i don't want nike apparel. there you go. >> okay. >> i just think this is a bad group. ralph lauren reported an amazing quarter, and all the stock does is go down. you have to have a big short base to go higher and that's abercrombie. nike down nine is saying a lot. it's just not mark parker. >> carl, there is a larger question in terms of consumer demand, not just middle but even the high end. some of the credit card data, you start to hear from the hedge funds who track all these

things, and perhaps it is starting to tail off. >> bank of america credit is still okay. >> i know, but i'm hearing stuff. i don't know what they're looking at. >> the lower income is really hurting. walmart's doing rollback, which is good. i think powell is winning. powell is not -- look, powell, all right, he sees these, and he can't just come out at jackson hole and just say, you know what? things are so good, i'm thinking about buying the property from ceos who have retired. there are some ceos who retired and bought -- >> mike has retired. retired some time ago. how did we get to this? >> he's bought land out there. >> where? >> in like the jackson hole area. >> oh. >> he's doing a little developing. >> i see. is that where you're going to retire? >> coverage starts tomorrow. liesman's got mester, couple others. >> mester on fridays is always bad. this is a thursday. thank heavens. kohl's had a decent quarter.

>> yep. we're going to get to kohl's. interesting call on dollar general. we'll get to nvidia and analog devices this morning. also, goldman ramping up pressure on employees to come into the office five days a week like a couple other guys i know. market here, fairly steady. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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goldman-sachs said to be cracking down on employees who insist on working remotely. company reportedly embarking on a new effort to enforce its policy of working from the

office five days a week, according to bloomberg. revenue-reducing employees have mostly returned full-time but senior managers increasingly frustrated by the lack of staff and other groups, which does constitute a significant chunk of goldman's workforce. the memo was essentially a reminder of existing policies. i don't know if you would call it a crackdown or not. >> i think that's important. solomon has said nothing. there is nothing from solomon. the stories made it sound like it was from solomon. there are some divisions that are still not completely back to work, but it is not solomon's pressure. he hasn't said anything since march of 2021. there are some divisions, i know, where people thought that they were doing very well at home. >> yes. >> the company doesn't want that. >> this is a continued issue at many of the companies that have called or want employees back in the office four or five days a week, and facing continued resistance from a certain portion of their employee base that simply doesn't want to do

it, so they're being reminded constantly at that some point, their compensation or their job could be at issue if they continue not to show up when they're expected to. >> right. and i think that it's very important to point out that there are reviews. i mean, at goldman, you have reviews, and the reviews are real. you're called in, carl, and they look at your numbers, they tell you where you stand, and they'll tell you how they feel about what you're doing at the company and whether you're being helpful. and i'm not saying they'll say, hey, listen, you're deadwood, partner, but i'm saying that your review will not go well and that if you didn't have reviews, then it would be like, hey, easy come, easy go. but there are reviews, and the reviews are tough. and i have been in those reviews, and if you didn't do a good job, the review goes like this. you did not do a good job. and the people who are not coming in, well, they're going -- they're, per se, not doing a good job. but nothing from solomon. no update. made it sound like solomon's going around doing this thing. >> no, yeah, he's not going --

you got to be in more often. there's an expectation there. that said, the larger question, which we have entertained at this desk now for over two years, is, to what extent has it -- the workplace changed forever in terms of people's willingness to be there, hybrid is clearly here to stay. many newer companies don't have an expectation that employees should be in the office for five days. some of your newest companies, in fact, don't even have offices to begin with. and that is reflected, i think, there's a "journal" story today about office space in terms of new leases. yes, companies are reupping, but they're reupping for a smaller set of spaces. >> i thought that was significant. >> it makes sense. it's what we've been talking about as a real possibility. they simply don't need when they have two or three days a week where people are coming in as much space as they did previously. >> i think that we have to accept the fact that it's, again, once -- if you -- if you're in a b building, you want to go to an a building, the b

buildings and c buildings, they're hoping they will get a price break, somehow the government will make it so there's some sort of stipend. you can't do it. right now, the buildings are too expensive to convert. and i don't know why people keep thinking, why don't they just make it residential? it costs a fortune. >> and in some cases, just not feasible. >> you got to blow them up. that's what developers i know say. you got to blow them up and start over, and that's a very difficult thing to do. >> we'll talk more about that being reflected in changes in architecture and obviously office furniture even. we'll get cramer's "mad dash," countdown to the opening bell. futures pretty steady. back in a moment. [phone: starting route.] technology helps us navigate to work. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure,

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welcome back to "squawk on the street." time for jim's "mad dash." we're counting down to an opening bell that's about seven minutes from now. analog devices. >> i want to talk about it, because it's disappointing. industrial was good. auto was good. consumer, not so good. david, you know, sometimes i like to make good on promises. here you go. >> oh, wow. thank you. that's beautiful. >> yeah, well, i made a hundred of them and i've gotten another 50 to do. >> jim -- what does that say? >> jim's done better. >> jim's done better. >> none better. not done better. this is fresh. you have to have it tonight. i took it out of the freezer. >> signed by jim. >> this was made on sunday. i don't mind, i put a little dairy in it. >> okay. do i -- if i'm walking around all day -- >> put it in the refrigerator. this is not rao's. this is not ragu like my dog, ragu. by the way, his middle name is nvidia. we'll see his card tonight. >> thank you for that.

>> analog is one of those things. here's what you don't want to see. the consumer, not good. i've not seen a disappointment like this -- it's been really a horse, but remember, there are semis that aren't hitting it out of the park. >> all right, the end market here, is there a concern about the demand for the end market? >> yes, that's why i brought it up. the consumer, again, is weakening. this is a chart, the "j." we know him as jay now only. jay can say, listen, i'm winning. i'm winning. he's got a winning hand. and i think he better understand that he has a winning hand before he goes out to jackson hole and starts bemoaning things. >> maybe you should put up a chart of analog devices and say, i'm doing well. >> refrigerator, you only have two days to eat it. it's got no preservatives in there. >> your sauce? >> yes. i put a little cream in it. >> i got to bring it home today and eat it --

>> it would be best to eat tonight, frankly. put some zucchini in a hot skillet, eight minutes, bingo. do it in olive oil. don't use butter. >> this going to become a new feature? are you going to add it to your mezcal line? >> i don't know. my mezcal line is kind of nationwide. >> that sovos got sold for $2.8 billion, man. that's just rao's sauce. this is our show, by the way. >> i'm sitting on a gold mine. >> openingelisomg xt. bl cinup

>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we have a lot of irons in the fire. i've got a lot of tools in the toolbox. i mean, i'm -- i don't mean to sound like one of those ceos that's completely disconnected from the stock price because it's not lost on me and i walked in the door when it was $39 and it was hanging out about 5 bucks at the start of this call. but i have never been more optimistic or excited about the future of the business, and

there's just enormous disconnect between the stock price and the energy in the building around all of the partnerships and co-development things that are cooking. >> that's peloton's mccarthy talking about the stock, reacting today to the drop in subs, 29,000, higher than expected churn, jim. they tried to blame some of this on seasonality, but not all of it. >> on the recall. barry mccarthy, like mary dillon from foot locker, they're seasoned. they know better than to say, hey, listen, you know, we are are in big trouble. i would point out that both he and mary inherited just -- barry and mary inherited, david, really horrendous situations. >> yes. >> and these people are seasoned, and they are turnaround, and i do have to worry that these are things that maybe are too difficult. it could be too difficult, even for the best. >> to your point, mccarthy

inherited a very bloated cost structure. he's got to wince when he sees what the stock is down since that, but by the way, overall value-wise, it's still down more under foley because it went from $150 or whatever it was down to that level. >> but when you have -- these are people, by the way, who are incredibly competitive. carl, they are not people who are used to losing. they are people who are used to winning. they are the best we have. among the best we have. and those who are looking at those stocks right now have to say to themselves, it just looks like you can't come together. they don't have the horses. and i can't share optimism right now, because the consumer may be in a little more trouble than we think. and that was not the case when they took the jobs. >> indeed. as we try to get back to 4,400 here at the open, jim's point about the consumer is reflected today in this call on dollar general from edward jones, jim.

they up to buy, why? because half of purchases are in cash, which means less internet competition and a lot of the core customer, they argue, can't afford the membership fee that would get you two-day free shipping. >> i read the piece, and i have to admit that those are exactly what you should buy in real tough times, and of course, i think a lot of us know that when you go to a dollar general, a lot of times, the size of what you buy is smaller. it's not necessarily a real bargain. but people interpret it as a bargain. dollar general is a very good company, but i'm not going to go crazy for it and say this is the time to buy it when walmart is truly rolling back prices. now, walmart stock has been horrendous. walmart's prices at their stores have been spectacular. very difficult to beat them with that balance sheet. david, dollar general is a classic place. i go to my dollar general, it's terrific, and there's some interesting stuff. but when i go to walmart,

everything i buy, i feel like it's a bargain. and when i go to costco, i know they're losing money on half the stuff i buy. >> that's a good feeling as a consumer, isn't it? >> costco has very little shrink because you're stealing from yourself. >> why, because you're -- >> because you're a club member. it's like going to the elks and saying, listen, i'm not paying for the beer. you know when you go to your elks. >> i don't go to the elks. i haven't been to my elks club, i assume, you're referring to? >> yeah, the elks. >> what's next, toast masters? masonic lodge? what else do you go to? wear the little hat? shiners? >> i am a proud darn member of the elks, and we -- >> do you guys put on antlers? >> we've got lucy. she's a great bartender. we do not -- no. we were started right after the civil war to help people who are

more in need. >> i don't know the history of the elks. >> it's phifellowship, but it's also very cheap beer. if you don't pay for the beer, that's like not paying for the stuff at costco. >> one coda on peloton. is there any tie between that and wegovy? because today, nova has thermo fisher to be their latest supplie supplier. >> they had a bad covid hangover. i will say everybody seems to have -- medtronic had a read-through from wegovy. the biggest read-through is from food. people feel they won't need it. that's a bad read-through because you can actually eat more with it. the read-through that has been discouraging is the one that, you know, it's a high-end -- that's a nice number for thermo. mark casper doing a good job. you don't need -- it's a very good drug against diabetes.

>> thermo's been hanging out at that same level after poor performance. we talked about it for so long as a great performer. >> mark casper is a really great ceo. if you really want to dump on people, david, have you looked at danaher? the spinoff is better than d danaher. >> to come back to carl's point on the alienatbility to -- righ it's still a shot, but it will be a pill. to take a pill that lets you lose as much as 20% or more of your body weight. >> but it's muscle and fat. >> so, people are still going to be encouraged to exercise, we think. >> you're supposed to double your exercise. >> there was also a thought that it actually lessens your taste for certain types of food. >> they're doing -- they will be doing studies. >> they include fast food and things like that. >> there will be studies for alcohol. the heavy drinkers, you know, if you have two a night, and by the way, if you don't use the jigger, if you just pour it so you're a liar, you have two a

night, you know -- >> we're talking two glasses of wine or two -- >> no taste for alcohol. wine tastes like grape juice, i don't know. but there was a double upgrade of brown foreman today by morgan stanley. >> i thought of you because of the agave stuff. >> i know it had some interesting agave analysis, but they taste like flat diet coke. >> when you're on one of these drugs? >> these are important drugs, and they're changing america. let's be sure. lilly has the capacity. wegovy, their borrowing capacity at novo. >> just so -- something i think we should say. wegovy is the key drug from novo. >> and lilly's capacity, they just opened a new factory in north carolina. david ricks opened it the day that he was on "mad money," but e e eli lilly, look at that chart. >> that's a chart, man. >> is that nvidia or eli lilly? >> largest market value of any

farm ma. >> passed everybody without lina khan trying to blast them. >> we're going to get to lina khan later. we'll have a conversation about the ftc and a number of things. can we come back to toll brothers? we mentioned very briefly at the top of the show. >> yeah, what's the matter? >> nothing. stock's up about 1.4%. >> david, they've got some really good numbers. so, here's jay powell's problem, writ large. i just showed you some good news about jay, right? >> you did with the chart of analog devices going down. >> 25% of homes are bought with cash. those are people who are not really impacted by the higher mortgage rates. and toll brothers also said there's a $2 billion -- i'm sorry, 2 million housing shortage and they can't cure it. they did a huge number of houses on spec that were sold, and doug yearley is one of the great ceos of our time >> you always talk about that call as being a very important one. what have we learned? >> it's not finished. we're actually here.

sometimes i find that when we have these conference calls while we're here, it's difficult to make a judgment, but i have a good preview of foot locker. >> zillow today, jim, had a conference call about their housing trends report. first-time buyers now make up 50% of all home buyers. that compares to 45% last year, 37% the year before that. somebody's finding a way to make this work, whether it's cash or not. >> maybe they're getting some sort of teaser, but i got to tell you, they're paying very, very high rates as autos too, if you buy autos, you're paying very high rates, but those people may have to be in the market. maybe they can't live with their in-laws anymore. i like my in-laws. i could live with them. >> you have house guests for five months at a time, but yeah. >> yes, we do. boom. don't say i said that. that kind of blows my cover. and we have cable out there, which makes it even worse. but david, i do think that when you look at the housing market,

you're looking at a market where people won't sell their old homes because they lose that incredible mortgage. 3.1% for me, partner. >> no, and the average is 3.5%. >> what'd you get? >> i think i'm below that but i'm adjustable, but i got a few more years. but the average is 3.5%, which is why people are not going to sell their homes. >> exactly. and i think that's why -- and rents are still high. but that's starting to go the fed's way. again, the fed is winning on this one too. >> purchase apps today, lowest since april. down 5%. and it's the lowest composite since 1995, which is insane. interesting because we mentioned the ten-year back to 4.25%. tom lee with a note last night saying, maybe you start adding to risk here because it looks like rent is set to start helping out. shelter's going to come online. used cars. new hire pay. >> yes, see, this is all the fed

playing for time and beginning to win. and i think that that's really important. i mean, you know, you're in a situation where i'm talking with people, like the job hop is over. the job hop to raise how much money you make is just done, david. it's done. period. put a fork in it. >> and that's something you had been worried about earlier in the year. >> oh, my. i mean, like, dutch bros today, which got an upgrade, a very surprising -- i'm not sure i believe in that one. but dutch bros had been paying -- they were part of the job hop. like, hey, i'm at dutch bros, now i'm going to mcdonald'. very positive piece. but i have told dutch bros directly that they overexpanded, but they didn't want to hear. some people have this, oh, cramer, what does he know? i spent my whole life in business, but maybe i'm an idiot. i don't think so. >> they spent a lot of time focused on their one thing, and you've got a lot going on. they may say, you know, jim, thank you. >> i own restaurants. i own liquor -- well, my wife owns liquor. >> you're not going to open that theme park in new mexico. we've done a little research

too. >> i didn't fall off a turnip truck. >> you didn't? that's funny. i thought you had. >> i lived in my car. that was a brutal period. >> it was. >> i learned a lot about retail during then because i was trying to find places to sleep. but they will kick you right out of a retailer if you're trying to sleep. >> you were a young man, though. >> i spent most of my time in denny's. they were open 24/7. >> moon over my hammy? delicious. that said, u.p.s. workers do approve the deal there, five-year contract. that's almost 350,000 employees. we've talked about some of the comp that's going to come out of that and i know you're worried about a strike. >> u.p.s., stock was at $180 and the market has spoken. they think carrollton gave away the store. fedex -- it's a duopoly and they can play against each other. i know ford just put out a very expensive car, a coupe. i'm thinking about going to the vegas formula one. i'm not sure yet. but ford is -- that's, you know, that's got strike written all over it. if you look at a chart since

march, you will see the peak was when people said, wait a second, this new uaw leader is not like any leader we've seen in a long time. he actually wants to not cooperate. he's not a cooperator. he's a rabble-rouser. >> yes. >> from the days, david, when i was at spartacus workers league, this is the way we played it. probably thinks spartacus is something with -- >> kirk douglas, right? >> great book, by the way, "ragman's son." he talks about the making of that movie. >> born in abject poverty. >> how great. anyway, that's neither here nor there. >> no, it isn't, but something else we talk a lot about in addition to kirk douglas is antitrust policy, both the department of justice -- >> what kind of segue was that? >> it wasn't one. is the fact that the aggressive stance of both, of course, has mitigated the willingness of

certain companies to pursue deals, to pursue mergers and acquisitions. >> okay. >> interesting data point of late. and since, really, the ftc lost that case against microsoft, we've seen a number of deals that might have been expected to be challenged by either the doj or the ftc get through. now, is it indicative, necessarily, of anything in particular? it may be a brief trend, but it's worth noting. one was this week. vmware got ftc approval of broadcom. that was somewhat unexpected. there had been some belief that they might try to step in there. ice-black knight. they did a divestiture, if you recall. that was able to get approval. l3harris-aerojet. >> that was amazing. >> assa-spectrum, you see. this is based on a bloomberg report from yesterday, but some viewers recall the doj and ftc

said we're going to look at companies that merge into existing portfolio companies. we're going to look at antitrust concerns around that. i talked to bravo about that, and he had indicated at the time, when we spoke with milken, i think, that he was concerned in terms of what that might mean, but deal as well, apparently, at least according to the reports, going to be allowed to go through. all of this taking place, of course, since the ftc lost against microsoft. there's jonathan kanter. he looked at lina khan there. the two key antitrust enforcers. >> and you acknowledge they're two different strategies. >> they are. and jim, i do want to talk a bit more broadly about that, but i do want to point out as well, an important case coming up for the ftc, of course, is one we've talked about a lot, which is amgen trying to complete that deal to acquire horizon for some -- what was it -- what is it? >> it's very large.

>> i didn't write it down. anyway, i'll get to it in a second. they're trying to complete a deal announced in december of 2022. they're potentially going to court to do that because the ftc is suing them. september 11th is when that is supposed to begin. yesterday, amgen responded in a voluminous, well, actually, it wasn't that voluminous, but it was chock-full of really good quotes, response to the attempts of the ftc to get an injunction to stop the transaction. here's a few things i thought were worth sharing from that brief. "plaintiff's case hinges on a theory never before adopted by a court that potential future rivals to two horizon products may potentially be disadvantaged at an unspecified time in the future as a result of amgen potentially offering payors a form of bundled rebates that has never been used before." they go on to say, "even if that hypothesized bundling were viable in theory, plaintiff's case ignores an inescapable

truth about this transaction amgen is not going to bundle any of its products for any reason or at any time with tepezza or krystexxa. there had been talk around a settlement what i have heard more recently is that while the staff may be willing to talk, the staff is not really able to talk or have real conversations with the commissioners because the commissioners are actually also overseeing this administrative proceeding in which they sort of stand as judge and jury, so there's a belief on the part of amgen that what the staff offers, you may not be able to be followed through on because they aren't talking to the commissioners. will that change before we get to court possibly but jim, this is a key case. there was a very strong defense here made by amgen that goes on and on i love some of the quotes. >> the quotes are amazing. >> no basis to conclude that any theoretical rival will enter in the near term if one ever enters nor is there reason to predict

such a rival would be harmed by the transaction. they say bundling is not part of the rationale or planning for the transaction, and none of the millions of pages of documents suggest it will do so or is considering doing so >> they're saying, there is no doctrine behind her thinking, and the staff doesn't believe in that kind of thing >> i do want to make a quick point, because we have talked a lot about lina khan, and we've talked a great deal about, you know, being aggressive but they do have a view that antitrust policy over the last 40 or so years has focused almost solely on the impact on price for the consumer >> correct >> and their belief is, i think, and obviously, you could spend a lot more time on this, but simply put, is that the power of platforms such as meta and alphabet and amazon is such that they stifle innovation and they stifle competition in that way much harder to prove, and it's not clear that antitrust law is there with them, but they just have a different view, and it is worth saying because they believe that, and they believe there does need to be a pivot in

antitrust. >> well, i think we gave away the store. the airline mergers, carl, were so horrendous, and i'm not going to dismiss that we dropped the ball i am saying, let's not create new doctrine without any fact. meantime, market's getting a little bouncier as more pmi misses in this country now let's get to rick santelli >> yes, pmi misses, you're right. green in equities, but definitely lower interest rates, green on the buying of treasurys. okay, s&p global, manufacturing pmis, these are preliminary august 47.0 on manufacturing. that's the weakest since june, not that long ago. however, it does represent a 7 out of 8 of the last months, so basically every month but one month has been under 50 in the manufacturing. now, let's go to the services side 51.0 and just like manufacturing, less than expected, less than the rear view mirror that's the lowest level since

february but it is now 7 out of 8 above 50 for services, even though it's lower, and i'm sure that's what the market's paying attention to is rates drop they're not nearly as low as some of the uk pmis that we saw. and finally, the composite for the preliminary is 50.4, also less than the 51.5 we were looking for. lowest level also since february and it does represent 7 of 8 above 50 as well so, it's completely the opposite on service and composites. they've been mostly above 50 manufacturing's mostly been below 50, and interest rates have been moving down. we definitely want to pay attention to the closing level against 4.25 in ten. "squawk on the street" will return after a short break

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let's get to jim and stop trading. >> one of the worst hit groups is the product group general mills has been awful i read a note this morning o'on neilsen numbers that says serial is getting crushed but pet food for the first time there's been elasticity. people are saying love the dogs, they can eat another kind of food they don't have to eat the good food. >> we get wolf tomorrow, right >> yeah. i just think there's a big switch in how you take care of your dog

trading down dog never complains. they don't know. >> sorry ragu. >> getting used to milk bone. >> you don't give them your delicious sauce. >> eating that just food that stuff my step son ate that looks like salami the one in the refrigerator. >> what do you have tonight? >> looking at schwab and pet fresh, kno, david. we're going to go the other side. >> i see deutsch today -- >> that was very good piece. remember, i made a mistake in foot locker. i'll talk about it 10:20, my morning show you own your mistakes and that's how you get better but it doesn't make you feel better. >> see you at 6:00 important day with nvidia tonight. "mad money" -- >> don't forget arm. you need the cpu of arm to make

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good wednesday morning welcome to another hour of "squawk on the street" i'm carl quintanilla with david faber and leslie picker s&p adding 42 points we're on nvidia watch today but there's bond buying going on as global pmis miss in europe and the u.s. and rates are down across the board. >> nice breather for a change. 30 minutes into the session, three movers we're watching. foot locker shares slumping, missing estimates cutting guidance and suspending the dividend after net sales fell 10% year over year that stock down 33% right now. here's another volatile one. peloton plunging shares now more than 95% off

their 2021 all-time highs. remember that in the midst of the pandemic and today's move, down 19%, coming after losses came in 30 cents worse than what the street was suspecting and new subscribers also dropped and watching toll brothers on the positive side beating on the top and bottom line and raising the full year home delivery guidance as they say prices rise into q4. let's get to new homes with rick santelli. >> yes, this is july new home sales expecting a number around 700,000 that's seasonably adjusted annualized units. 714,000 better than expected last month's job at 697 is a bigger drop at 684,000 making it over 4% pop, what's unique, this is the second best number going back quite a ways, 715 was made and that was the best number going back to february of last year.

so second best number since february of last year. we know if you have a low mortgage you're reticent to put your existing home on the market so sales become that much more important. preliminary benchmark provisions on jobs. we could be taking away 500,000 jobs that's going to be coming out momentarily and an estimate of the revision the final number is in the january jobs report. but more on the big new homes number from diana olick. your thoughts? >> rick, it's a really strong number better than expected and interesting because these numbers are based on signed contracts in july. that's people out shopping, signing the contract making the decision with the builder. july was when rates popped higher they started moving higher in may and june again but solidly over 7% for the bulk of the month of july. we know the home builders have been using incentives, they've been buying down the mortgage

rates but also showing the report the median price of a home sold in july was down .8 6% so builders are lowering prices are offering more on the lower end which means home buyers are more active on the lower end than the higher end. i would also say the inventory is a 7.3 month supply more than twice the existing sales inventory. and a number i love to twatch, the numbers of homes sold but not started yet dropped sharply this month which means the builders are working through the backlogs and getting the homes out to buyers because we know they've had problem with material delay and labor so a solid number for new homes. mortgage demand from home buyers is hitting the 28 year low this morning as interest rates continue to be elevated. home builder stocks down for the

past three weeks joining us with more is steven kim, evercore analyst. it's a interesting we were looking at the existing home data yesterday steven where you had supply ticking up, days on market ticking up and now toll with the average order price miss are we seeing inflection in the trends >> you're not. certainly not the trends that would reflect what had been going on through july. i think diana put her finger on it you have mixed issues that are going on in an environment where rates have been elevated, the builders are doing what you would expect them to do, adjust what they build to make sure they're achieving affordability. in the case of toll brothers you have geographic mix that the ceo did a good job explaining 30 minutes ago on the conference call the bottom line, the forecast

for the relevant metrics for revenues or closings or orders or gross margins they're all going higher estimates higher for toll, that's why the stock is up, this is consistent for what we've seen with all the builders the last few months. you know what's interesting going forward because stocks are all about what's going to happen, not so much what did happen is what's going to happen now that mortgage rates have hit a level higher than the fourth quarter of last year so i think the stocks would be up a lot more today if it weren't for concerns that the mortgage rate could maybe change things in august and september. >> explain those changes that toll was laying out. >> for toll specifically, remember they're a high end builder their average price is double any other builder so they're basically catering to the luxury end of the market what they've been doing the last several years is moving into geographies and offering some

products, product lines, types, that cater to a buyer with maybe a little lower asp in mind so they've been making a mix shift and that's taking them into markets like away from the coast for example which will bring a lower asp. so it doesn't demonstrate a weakening or anything like that of trends as much as it reflects a little bit of movement in terms of where they're selling that's all >> diana i'll let you jump in here >> i'd be interested steven to know when we talk about the incentives, the builders had been doing incentives last fall and into the winter to get buyers back but then the spring they didn't need to do incentives anymore because there was so much demand in the past month though we are seeing builders talk about incentives again, buying down the mortgage rates that hits their bottom lines how much can they do on the incentives and how long can they do it before >> that's a good point i think you will see rate buy

down activity increase, particularly for builders that are catering to a more affordably minded buyer. there's a limit on how much a home seller can gift to a buyer and still qualify for various mortgage products, for example an fha mortgage you can gift them about 6% of the loan value, for example, that's your limit and things like that so there are limitations there but i believe you'll see the builders increase their activity there. if rates stay here or move higher, and that will put pressure on their gross margins. i think most investors should be clear eyed about that, on the other hand we are still seeing that there is still ample demand for the product they are selling and so, the outlook for 2024 and the earnings per share, we think are still going to be moving higher as we go into next year remember, also, that most of

these public builders, including toll have done a wonderful job shoring up balance sheets. you saw toll with their repurchase activity, that's something to look forward to next year. >> to follow-up on your outlook for 2024 what happens to the dynamic if we start to see a cut in rates. >> a reduction in mortgage rates is just good for home building demand it increases affordability and makes all kinds of, you know, things look better basically gives the ability to raise prices or reduce incentives in the industry because it doesn't do anything to increase the supply instantaneously. so it increases the demand the supply is the same and that has a positive effect on your price and that means better margins. so lower rates, as we head into next year would be nothing but good for the builders. you know, there is a false narrative out there that perhaps if rates go down you see a bunch

of people put their house on the markets, don't believe any of that that's not true. you may see more people decide to move but that means you'll see more people look to buy because a mover asis a buyer and seller their impact isn't necessarily significant. i would say lower rates no question better for builders next year. >> it depends on whether they buy or rent where they're going. i guess that's a dynamic we have to see flush itself out. thanks, guys >> sure, thank you we are just a few hours away from a key test for not just the semiconductor industry but generative a.i. as part of a business model for so many companies. why? nvidia yes, nvidia leading the way in a.i. is going to report after the bell kristina partsinevelos joins us to tell what we're looking for >> i sense enthusiasm.

seems like wall street every analyst out there is enthusiastic with price targets as high as 800 but a lot of focus on data center i say data center revenues because that encompasses the a.i. chips we keep talk about talking about, that's expected to be $8 billion in q2 q1 it was 3.3 billion so that's a massive amount of growth the major concern is getting the supply jensen huang did say they're okay for the rest ofthe year but you see the numbers, we're going to ship half a billion chips this year and maybe between 1.5 next year, that's a lot of chips they're reliant on taiwan semi. the largest chip contractor in the world. so for tmc to increase at the same rate nvidia is seeing in growth rate is difficult and can't happen overnight so this earnings report will obviously -- i shouldn'tsay

obviously. will reflect demand but maybe hinder by supply >> the stock has moved up dramatically since the last quarter when they forecast far above what anybody had anticipated. that's what -- what are we talking about? a $1.4 trillion market value what are investors and analysts looking for? >> long-term investment plans. the big question right now is this a one-time lump sum amount of revenue coming in to nvidia because everybody is buying the hardware or is there an opportunity later on to get that reoccurring revenue which would probably fit in more with software the second avenue is gaming. the we can't forget about gaming that contributed in q124% of revenue. has there been an upswing? maybe bears say you i don't need the most advanced chips for online gaming. but to your point, the stock

movement, the options market is putting it 10.5% implied volatility with the stock aftermarket. so expectations have increased too. so maybe that's a good thing but because of that there's potential for volatility. >> i have to ask about china they've pivoted for that market given some of the export controls on the higher quality chips they've been producing is there an expectation that that could curb sales at all >> 100%. i don't think that's factored into the estimates going forward. why is that? china is said to be double ordering, rushing the orders now because they're concerned about future export restrictions right now they have access to a watered down version of a certain nvidia a.i. chip so if they're ordering the chips now, what happens a few months from now, a year from now when they stock piled to a certain extent or the united states completely blocks certain chips.

so you have to factor that in. the china situation is almost opposite what you see in other names, companies given the weakness in the market but to your point that is a concern. >> as far as the october guide goes, j.p. morgan's point is the line in the sand somewhere around 14 1/2 to a billion or so which would imply crazy growth even if there's a payback next year. >> how do you go from 14 1/2 to more the last earnings report in q1 they blew past analysts expectations by 50%. can we keep it going that's the question for nvidia, a lot of the a.i. stocks given the influence in the runup a we saw in so many s&p 500 names that's why the emphasis is on the report do you think it can go with this momentum a year from now >> i think there are a lot of people that argue absolutely.

>> maybe supply will diminish that a little bit. >> we'll see depends on what gets pushed out at companies like amd and others. >> q4 is when the new chip could come at amd, if it goes on time. >> keep talking about it, we'll see. >> huge report tonight when we get nvidia. a retail route, the key names to watch as questions grow around the consumer and inventory shrinkage. >> and more on the markets with thomas petterffy calling a soft landing wishful thinking. and mark mayo trimming estimates on the big banks he joins us here to tell us why. a big show still ahead, don't go away this is cynthia suarez, cfo of go-go foodco., an online food delivery service.

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shares of foot locker sinking this morning, earnings match e mates but revenue was shy. nike on a losing streak on pace for ten straight days of losses, the longest since the ipo in 1982 others like macy's and dick's saying credit is weighing on bottom lines sales and margin outlook for the retailer is a concern as consumers normalize spending on categories that outperformed during the covid-19. those come after dick's worst day on record. not sure what value they added for those who owned it

yesterday. >> interesting timing there. and, of course, a volatile retail season -- earning season. that dip is where we begin our next discussion. let's bring in jan rogers who is the ceo of j. rogers niffin wwe. rising theft from organized crime, cited by foot locker, macy's, home depot, you say you've never seen anything like this shrink in your career, meaning it's never happened before why do you think it's happening now? do you think it's reached a peak >> you can say i'm old, it's okay, leslie yes, i think it's not reached a peak it's not going to reach a peak until we figure out what to do about this we're not getting any help from state, local and federal government and not getting

enough help from technology to make the goods unusual if you don't buy them we know that low's has worked on chips on power tools but that won't work on everything we have to have a way to keep the goods from being sold at full price at marketplaces because that's killing the value of the goods when you can go out and buythe exact same thing at better prices and the person who's selling it has no cost to goods. so that's a big big problem. i don't see how it gets better until we can figure out a a way to keep the theft from happening and punish the people that do. and neither one of those is happening right now. >> it seems like retailers would be motivated to solve the problem given it's material in so many earnings in the second quarter. why aren't they putting more resources towards this problem is it just where we are in the cycle that they can't really afford it or is it something that's just out of their control they need to do more in terms of

partnering with law enforcement and other government actors to try to prevent this from happening? >> we've put enormous resources towards it for 50 years that i know of now. because it is so important and i am sure that everybody is putting a lot of brain resources towards it rights now. it's hard to put monetary sources toward it, until you can figure out what you can do you can't stop them from taking out of the stores right now. you can't put people in to man handle the guy trying to steal the stuff out of the store you don't have that flexibility and you don't have the flexibility to call the police and get them there to do something about it because we're not charging crimes for under $1,000 in a lot of places as far as the theft goes. so we need a solution, and i'm sure people are working on it and rfid is probably one of those. because if we could track every good and we were willing to go to the marketplace and say if

you sell this you're going to be in big trouble and track it back to where it was stolen and you have to authenticate it but that would be a complicated system to get in place and an expensive system and it would also be hard to do. >> it's david, aside from this huge issue of shrink and theft really what's your sense, given the reports we've gotten on consumer demand right ow? what does it look like from your perspective? think about it, david. we're putting record numbers of people through tsa at airports right now. you can't get a table in a restaurant and more people are vacationing in europe this summer from america than there was in 2019. so it's not like the consumer is dead yet are they not spending it on discretionary goodst like we'd like them no, they're not. inflation has run the price of it up and they've still got to buy it so discretionary goods are

holding. and spending is hurting nondiscretionary but there's a drift back towards good so i'm more optimistic for holiday than i was because i think we're slowing down a little bit and allocating a little more of those dollars into discretionary. and i think that will continue to happen every month through the holiday. but is the consumer not as healthy as they were before the fed raised rates at the fastest pace in history and not quite as healthy as they were before the fed reduced the money supply at the fastest rate in the last 90 years? of course they're not. that's why the fed took the actions. they wanted to slow the consumer down but the consumer has been re resistant to being slowed down. >> does it concern you we've seen a tick up in delinquencies cited by macy's and others is that a sense cracks are starting to show here >> when you raise interest rates

at record levels you're going to have some cracks in consumers' ability to pay back their debt am i surprised that's happening? no did i expect it to happen? yes. are we at levels that are scary? not yet and unemployment is still below 4% and jolts are still double what job seekers are. so they're going to have to press the consumer harder if the they're going to get the consumer to stop we're not at that point yet, i don't think. >> interesting stuff jan, thank you so much for being here. >> thank you still to come this morning wells fargo's mike mayo fresh off a new note trimming somest matts for the banks. why and which names to watch here, although financials are green here as we have gains on the nasdaq stay with us could be more effi? i'm listening. well, with ibm, you can use software to help you connect and analyze data— from hvacs to elevators to lights. what if we use ai-driven insights to pinpoint inefficiency?

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you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. turning to financials, the sector coming off the longest losing streak since april 2022 but our next guest lowers estimates on j.p. morgan, citi and bank of america. citing less than expectedloans and capital growth and few

buybacks mike mayo joins us at post nine to discuss the moves you have the regulatory layer on top of these things as well. why are you doing this now do you think the markets fully appreciated some of the overarching trend you highlight in the notes as reasons for the lower estimates? >> i don't think the market appreciates the game-changing nature of the proposed regulations. a decade ago i said the big banks need to protect themselves from themselves and the regulators did it for them so i say thank you regulators. i thought it was mission accomplished as i look at the new proposed regulations i'm like, wow. in terms of the complexity, the addition in costs, in terms of the marginalizing of the bank, more business going outside the banking industry, in terms of tougher rules in the u.s., outside the u.s. i think the banks are going to get on a glide path to building

more capital and less loan growth, less buybacks than you might have seen. but we're in in the middle of a debate this is a comment period for the banks to talk with the regulators i don't think the magnitude is appreciated. and september is conference season for banks on wall street. so, you know, look out when jamie dimon speaks. what a change. i thought the loan loss has been half the level the past few decades but i guess it's not enough so sit back and watch the big debate about to unfold. >> i asked about the new rules when i spoke with him earlier this month he said they were hugely disappointing. you obviously seem to believe they go too far. and one of the interesting things in your note is that you believe the feds have basically said we're going to increase

capital about 19% at the high end for the largest banks. you think the internal models show it's higher, maybe even as much as 5, 6 basis points for what the government is telling the market why is that? what do you think that means in terms of the overall estimates for credit, for buybacks for capital buffers and so forth >> i think numbers could be higher than what the averages were as stated by the fed. first of all, you have data year to date. second of all the banks have more data. but the impact is marginalizing the banking system more than you had. after the financial crisis, it was pushing so much business away from the banks so pushing more business to the shadow banking industry, you don't want to see that. pushing more business to trading

outside of banks and how ironic on almost a 25 year anniversary of the failure of long-term capital you're pushing more business outside of the banks. so what i take issue with in the proposal, like page 400 and something -- how ironic. the goal was to simplify regulation in a document that's 1,087 pages, but that's beside the point. the banks will be stronger, the banks will be stronger and therefore able to support the economic system. that's the part, if you're one fourth of the financing how can you support 100% especially if you become more marginalized i think there's a bigger debate, this is my fourth decade doing this if you look at the 50 year record of banks going back to citi group, saying countries if don't go broke and huh losses on latin american loans on commercial real estate in 2001,

and mortgages in the global financial crisis so you say regulators you're right with a 50-year lend but the 10-year lend, you, me asking so many more questions and the derisking that's taking place, if you take on the last decade, you go wait a minute, i thought we were done >> good review of history there. reminds me of my history when i started in '87 as a banking reporter dealing with the consequences of those loans. but the private credit market now has grown enormously it's taken an enormous share only would seem to continue. the banks obviously continue to complain these guys aren't regulated. what do you expect will happen there? >> how ironic, the week that vice chair barr gave his speak apollo hit an all-time high. so i think the private equity firms are going to continue to

gain share on one hand banks should be held to a higher standard on the other hand has it gone too far and banks giving up too much business to the banks, certainly in the mortgage market, jamie dimon said it on your show, leslie, over 80% of mortgages are done outside the banking industry i was there for two decades complaining about the banks and the risk -- >> i remember. >> -- and the misguided incentives a balance between resiliency and also having healthy banks that compete on a level playing field. >> and you also point to the credit markets and just the overall spreads relative of the big banks relative to the regionals. showing healthy, you know, activity there's some bond issuance as well as they try to boost the capital buffers here what signal does that send to you just about the overall

appetite for bank sentiment right now? >> well, as far as big banks versus regional banks. this is unique now the big banks led by j.p. morgan their credit spreads are better than regional credit spreads. so at the one time, really in the last 50 years when the biggest banks, the money center banks led by j.p. morgan are perceived as the safer banks in the $6 trillion bond market, they're going to have even more capital regulation pretty ironic from me from a long term perspective. but saying what's going on with bank stocks. bank stocks are down we said look out until the banks come out with the impact of the regulations. at first you had silicon valley fail and you said we'll have more banks fail. we had the three banks fail, no more big banked failed then equity irn shuns, didn't

have that. then dividend cuts didn't have that regulators forcing the issue with banks didn't have that and then another 8% of deposits fleeing the industry hasn't happened as much as you thought. then a hard landing haven't had that then credit losses going up. haven't had that so now you have the regulatory uncertainty and that's weighing on the minds of equity investors. >> and the ability to merge given the regulatory environment isn't a necessary solution there as well. mike mayo thanks for being here. appreciate it. >> thanks for having me. let's get a news update with kate rooney. >> good morning here's your cnbc news update. the number of people accounted for in maui stands between 1,000 and 1,100. the fbi cautions that doesn't mean many people are missing, it says that the information they

have is just still incomplete there. authorities have been asking family members of the missing to provide dna to help in the search the official death toll now stands at 115. according to a new court filing by jack smith, mar-a-lago's i.t. director, a key witness against former president trump and his co-defendants in the documents case, recanted false testimony and gave new information implicating the defendants after he switched lawyers. the testimony leto last month's super seeding indictment. and an uncrewed indian spacecraft touched down on the moon's surface, they're now the fourth country to land behind. a russian spacecrafttrying to land on the south pole there on sunday crashed still ahead, a deal dividing the hedge fund world. and more on the markets

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welcome back to "squawk on the street." we'll check on the markets now, an hour into trading nasdaq posting some strong gains so far our next guest says investmentment allocations to the u.s. are being reduced thomas petterffy joins us now. how are they reduced and in so, where is the money going >> the u.s. has for a long time been the most stable country around the world to invest in. but now, that image of stability seems to be weakening politically, legally, monetarily, and even culturally. as you know, politics is driven more and more by the two extremes, legal troubles are

mounting for both presidents lady justice has lost her blindfold, the ballooning debt service and deficit spending projected for a decade seems to be spiraling out of control. >> thomas is this more your belief or is this backed up by the data >> well, it is my belief and it is, to some extent, backed up by the data, yes. that's what prompted me to believe this, yes. >> what is the data telling us >> the data is telling us that the markets are not -- are going up less than they used to, and more and more money is coming out of some of the larger accounts and some of it is going into other markets. >> and what does that mean for

your overall view of the equity markets in in the u.s. >> i think that until we get our house in order, the large investors must consider relocate their investments. and this may continue up until valuations either become very low or some stabilizing news comes to dominate the news cycle. >> there is no doubt we have our share of issues. thankfully we won't debate them here but most of the allocations i hear about are not out of the equity market to another equity market but into fixed income given the rates that we're seeing available for the first time in really a generation. >> yeah but -- >> are you seeing that as well >> yes, but -- and, you know, they go -- the allocations go into the very, very large

multinational tech companies that appear to be somewhat safer than the u.s. government, right. so yes that's -- that is also the explanation for the magnificent seven. >> are you one that shares the concern overall in the long term the ability for the u.s. government to pay its debt, interest on its debt. >> to be able to pay the interest, to be able to pay the interest with less and less valuable dollars, right. and eventually that is going to become unsustainable >> right right. yeah, we can print them but that's not necessarily a good thing. thomas, always good to get your sense of things. thank you. >> thank you very much. i wanted to move to a story leslie and i have been following about a well known hedge fund,

sculpture, we talked about it earlier in the week in part because there was another bid from a group of hedge fund owners that they say was in excess of the bij accepted by sculptor from rhythm and now we have this scathing letter to the commercial committee members of the board that decided that rhythm's proposal was still superior to that of this group that has come up to make another offer and a lot of it gets into compensation basically saying that really what seems to be motivating the special committee, in turning away higher bids, is that they would not entrench management's compensation and rithm reduced its offer because it acknowledged it would need to spend more money than an tis paid in long term incentive

plans and retention plans for senior leadership. >> it's a remarkable situation here they have lamented jimmy's compensation for quite some time now. levin a former protege of daniel och. but now you have a situation where there are clearly multiple bidders in the process dan och in the new letter is saying the company and potentially the board could be and they believe -- he believes it's in violation of its fiduciary duties, ignored potential transactions that would have maximized value for shareholders and also as you mentioned, this concern that basically they're opting for the deal with rhythm in order to keep management, as well as management's compensation. if you go through the proxy, it does say something different and that's what dan och is disputing here

the proxy itself says the new deal would do away with jimmy levin's long term compensation and also be open to a potential change in management. >> right so basically saying -- he said/she said. >> yes you're keeping the management in place and paying more. >> exactly. >> no one is going to shed a tear over these overpaid and overcamp sated marketers which is what these guys and ladies that run hedge funds are many of them are my friends and i tell them that to their face. >> and they agree. >> yes it's fun to follow though and curious to see what happens with the legal actions taking place or actions and counter actions. >> either way, even if the weinstein bid does prevail, you're dealing with a lot of stickiness here. a lot of noise what do you do with it on the other side who do you put in place to

manage this institution which these hedge funds to your point on the marketing side of things, they're all about reputation. >> they are. >> i wonder -- i don't know if you heard how many people are leaving. if you're working at sculptor do you send your resume out regardless >> that often takes place with these consolidations in the first place. it's uncertainty and a job that's high in demand if you're a good performer and done well -- >> you have value. >> yeah. >> quick programming note as we head to break. a couple days now from the fed's jackson hole symposium cnbc is going to be there live including an interview with philly fed president harker. join us tomorrow in the 10:00 a.m. hour. we have interesting decline in crude and rates. stay with us

the s.e.c. is poised to pass

a final set of rules for the $25 trillion private fund history, hedge funds, private equity, venture capital. the long awaited regulations are aimed at improving transparency and reducing conflict of interests between managers and investors. the finalized set of rules adopted under the act of 1940 would require more disclosure from funds to investors on a quarterly basis and the s.e.c. is restricting the ability of managers to pass through fees related to things like investigation into the fund's practice and subtracting the use of taxes it also seeks to level the playing field by limits preferential treatment for some investors over the others. it watered down the more controversial portions it's not adopting a change in

indemnification which we reported on previously which may have managers making less risky investments. the bulk of the rules should be implemented before mid 2025 assuming they pass, which pretty much everybody pass, w interesting to see that given what we've seen in the proposal to the final version, they have certainly done away with some more controversial parts and you have some of the trade groups that were readying lawsuits, preparing to really fight some of these areas >> what were some of the more controversial kinds of things? >> negligence versus ordinary negligence standard, which basically makes it easier for an lt to sue over things like a venture capital investment that goes to zero something that is part of the overall everyday practice of those businesses it would change the standard

that's not in the final rule things like that that the nsa was looking to fight pack on as well as some of the other trade groups, as well. >> i'm not saying we forget them but we perhaps don't focus on them as much the government policy can dictate action for many years to come both in banking, as we heard from mike mayor earlier, as well as regulations like this on hedge funds and private equity >> and we were talking, as you mentioned, these are shadow banks. and a lot of these measures will be costly, especially for managers who aren't currently doing them, but they won't change the overall way that the industry functions and that was the key concern with the proposed rules, that it would change the way that they operate. so it seems based on the final version, that won't be the case, although we have yet to see a full-fledged response from the industry at this point in time, because it has yet to pass so we'll keep an eye out for that and we'll bring it to you once we get it

>> meantime, session highs here. dow's up 115 watch abercrombie, adding to gains at a fresh decade igh. up 25% after the strong results in the guidance there. we'll talk about that. bakowceo will join us next hour tore dn some number. don't go away. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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volatility hitting risk assets like bitcoin as yields continue to climb. the crypto's in the green, but hitting its lowest level since june early this morning. kate rooney's got some details >> bitcoin is famous for its volatility, but it had been in this historically calm period lately analysts were calling it a time of investor apathy the cryptocurrency was trading to pretty tight range of just 4%, but that all ended last week in what some are calling a flash crash. bitcoin saw its steepest percentage drop of the year. it was down 7.2% in a day. it fell below $25,000 and sliced through some key support levels. it broke the 200-day, 200-week, and 111-day moving averages. that move caught a bullk of options traders. implied volatility had been at lows last week, and it's now roughly 50% below the long-term average in terms of implied volatility that's according to glassnote.

and volatility now getting re-priced in that options market, more than doubling for some of the short-dated contracts. the flash crash also wiped out a lot of leverage from that crypto system $2.5 billion of futures contracts were closed out in a single day that was a roughly 25% decline yet according to glass noteand a complete unwinding of all the leverage that had been built up over july and august it was also the largest liquidation event since the crypto collapse last summer, about $230 million. long positions were liquidated and forced to close in just a few hours. >> kate, thank you before we go on this hour, i want to take a look at shares of netflix, up over 5%. the rest of the group is also benefiting that group being at least those that provide content based on the work of actors and writers, both of which were on strike perhaps you may have thought it's because of hopes that the writer's strike may soon be resolved, although that remains quite unclear, that the two

sides are talking, though. it may well be this oppenheimer note this morning, in which they say they think the complexity, the multiple drivers are being underappreciated by investors. and they say they've only seen 2% -- i don't know how they get to that number, 2% of the benefits so far. their analysis indicating a clear path back to double-digit rench growth and that should support a 25 p\e on netflix shares, but did want to note, of course, those shares having quite a strong day so far this year the day continues, as does this show don't go awhe. nyer good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald.

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good wednesday morning i'm carl quintanilla with leslie picker today, can accord chief market strategist tony dwyer is with us his recession call and chief takeaway from earnings so far this year. >> and the ceo of abercrombie & fitch also joins us. huge earnings beat here, raised guidance and the impact of shrink in retail later on, roger ferguson on the possibility of not one more rate hike, but two, as we get closer and closer to powell's speech on friday >> and a