i'm polish. >> good to have you in. >> thanks for having me. >> what's not to love? >> just a couple of blocks. >> take an uber anyway? >> city bike. >> ride fast. peddle quickly. >> that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and mike santoli. cramer has the morning off. coming off our first back-to-back s&p gains of the month, futures look to give a little back of the open as we await inflation data beginning with jolts in about an hour. our roadmap begins with, as we said, first back to a back gain since july, still on pace for the worst month of the year. the white house names merck,

amgen, abbvie products among the first ten drugs for direct negotiations between medicare and those manufacturers. commerce secretary raimundo making her way to shanghai, this as she continues the four-day trip overseas. we will take you live to china. let's begin with the markets as we start talking about the month of september. yesterday, mike, it was sam stovall who said, look out, it's the month where you're more often down than up. be spoke says when you're up double digits going into september for the year-to-date, not usually as bad. >> usually strength on some level begets further strength. i feel like we've been hyper focused on the seasonal stuff this year. it's worked. there have been a bundle of years where you did have a weak august followed by a weak september. it's not as if you get one or

the other. that said, i think it's going to have to be about more than just the calendar and working off the rally we had going through july. i was looking at the valuation levels as well as the absolute market levels at the end of july. the s&p 500 got up to the kind of peak for this rally of 19.7 times forward earnings. since then, market is down a few percent. let's call it 3.5%, since the closing high. you've had the forward earnings forecast for the s&p 500 go up 2.5%. so it's moderated the valuation to like 18.5. not cheap, but if you need it to come off the boil, it has done so. ten-year treasuries from 395 to 422. so everything seems very rational. i think the two-day rally we've gotten in the s&p has pre vented the market fromming looking like it's breaking down hard. there were markets that maybe you didn't want to test below. here we are, still stuck in the

middle. still between catalysts, still not cheap. didn't get super oversold. we got into a panic. who knows if you always need that? 5% pullbacks happen sometimes. >> mike, carl and i discussed this a little bit. last week we were so focused on nvidia earnings. they arguably were as good as they possibly could have been, including the guidance. some say it's got ramifications far beyond nvidia. stock has done nothing but gone down since. anything to learn from that? >> i think the rule of thumb is worth heeding if you fail to go up on really good news, it shows you that the market had priced some good stuff in, you didn't have that extra lift, people were positioned for it. maybe there's some people willing to kind of sell into it. certainly it looks like that outside nvidia. if you look at where microsoft and apple are, they're in these little ten percentage

corrections off their highs. even if the stocks don't immediately go up on good news, the news was still good. that's why i think the fundamental basis of what's going on, if you really believe the longer term story and the fact that everyone is ramping earnings estimates for nvidia, it doesn't necessarily mean game over. it just means, look, we've pulled forward a lot of the excitement into those valuations, and now it maybe has to -- >> do you ever get a sense for the influence of enormous firms like d.e. shaw, citadel, two sigma, which i don't know what percentage of the value on any given day they represent, but it has to be enormous and whether their algorithms somehow are behind this? >> they're a huge amount of the short-term trading flow i think. they are very catalyst-oriented typically and very, like, we want to get to the second and third derivative indicator of

where the market, where the fundamentals are going before somebody else. i don't think it's pure trading the noise. these multi-manager hedge funds, like the pods as they call them, massive amounts of new aum, assets under management. i do think it's this risk conscious, high turnover, let's get to the smart trade before the other guy gets to the smart trade. yorng i see it in the day to day. >> you don't? i wonder sometimes. >> i don't mean i don't see it -- i don't see it thematically as being directionally relevant, as being something that's the tail bagging the dog. i zee it as the faster version of the fast money that's trying to be smarter and might be a little more solve fiphisticateds willing to cut their losses and get out. they reallocate capital towards what's working.

there's a short-term self-reenforcing momentum flow. i don't think you can discern it well enough to know if that's what the marginal buyer or seller is on the given moment. >> i do wonder whether there's ingredients of an echo for the market chase. we'll got google next week. you've got chatgpt for business. upgraded oracle which we'll get to. wh who's really positive on this is our friend jim cramer who says nvidia, among others, is ready to run. >> the ingredients are there. it's the only multi-year growth story open-ended that you can really latch on to right now that's pervasive, that's everyone. i think it's between ai and the anti-obesity drugs, in terms of what's going to change the world more, what's going to hurt competitors who don't get on board or don't have an answer.

i don't know how it plays in the near term, if we'll wait for next earnings season. september is a month, not just weakness in general, but when you might see downwards earnings revisions to companies in general. in part it's because you had a lot of deferred maintenance. people aren't around in august and they don't update their models. i don't know that the directions of derivatives has to be negative. we're actually firming up on the consensus. i think ai is a piece of that. i just don't know how to quantify. >> when it comes to the end-use cases, that's behind nvidia, you can't buy the chips forever without getting some return at some point. it's earlily days and it will be years before we truly know. it is interesting, carl, to note, chatgpt enterprise has been introduced, and we'll see how it competes with, interestingly microsoft's copilot which is also a generative ai tool for the enterprise, 30 bucks a month

there. of course, microsoft is the largest single investor, really has provided much of the capital that has allowed chatgpt to actually run those large language models that it needs to to create that engine. >> if you look at nvidia, it's mostly holding the gains. yes, it's trimming around the edges. it went above 500 for a little bit. it's not a changed story. >> the multiple has come down since last week, because the numbers have gone up so much. >> exactly. i almost think the stock kind of going sideways as it has is registering that background concern that this is not a replicatable growth rate. i'm not saying it is, but it's registering some of that -- maybe we can't extrapolate this earnings pace forever, but i think it's held in fine. moving on to china. commerce secretary gina raimundo is headed to shanghai, part of

her four-day trip to china. earlier today she met with that country's vice premier while emphasizing the importance of u.s. national security, she said washington doesn't seek to decouple or hold china's economy back. our focus of late has been on all the various things that are holding china's economy back and what that's going to mean for the world economy, the continued ascension. we don't hear quite as often as china dethroning the u.s. as the world's number one economy, even as we did just a couple years ago. >> for sure. there's a daily policy announcement or effort saying, we mean it, we want to get things rolling, we want to get consumers energized. the authority is pushing on a string so to speak with getting people to aggressively consume. then there's the ambivalence of the government itself, not really wanting that to be the growth story in general. the markets, they've had a lot

of these sort of fleeting fizzled rallies overnight. it's not falling apart at the moment. the journal has a piece today -- >> the cheap. we had brennan hearn from crane shares, they have a few etfs talking about that thing. >> the growth managers sold to the value managers. a lot of times that's not instant graph case because value managers live in pain for the most part until things get cheap enough. iron ore and copper and things that break down when stuff is going poorly in china and is going to reverse in terms of the economy is not really breaking down. maybe it seems like the headlines aren't encouraging, the market has been stubbornly lagging, but it might not be that big a change in terms of the overall underlying growth. >> it's interesting. raimundo has given us a steady diet of headline, said she's

been hearing increasingly from businesses in this country that china is uninvestable because of the uncertainty. it seems like some of the best traction is in travel and tourism, where if they return to 2019 levels, probably bad $30 billion to the economy, 50,000 jobs. >> waiting on the boeing approval as well. who knows if that was considered to be maybe the capper for all this. >> all this is happening on this train ride between beijing and shanghai. the commerce secretary did talk to members of the press on route that high-speed train. eunice yoon is on the train and joins us with more. hey, eunice. >> hey, guys. the commerce secretary, as you had said, is on this train. her delegation is behind me. she told us reporters within the past hour that she believed that the u.s. and china are at a moment, and she hoped that this becomes a moment of action.

she credited the diplomatic flurry of activity by the biden administration since mid june with getting to this point where she did meet with the chinese premier, as you mentioned, the vice premier who handles affairs at the commerce ministry as well as the tourism minister, all speaking for several hours over these past two days to get to what she described as good deliverables for the u.s. business community. one is what i mentioned before, the working group she said would address specific commercial interests and meet twice a year, and export controls information exchange which already met today and is a way to help from her perspective, have the chinese become more compliant after discussing those export controls with her -- with the tourism

minister here, agreed to a u.s.-china tourism leader summit in the first half of this year. this was actually shelved because of the pandemic. most importantly, she said for her personally what she thought was really important was that her counterpart agreed to informal and frequent discussions and exchanges. she pointed out to us that the commerce secretary has not been out in china for the past five years. she was saying they had very little communication with the chinese on her level. now it looks as though things are opening up, and from her perspective, she says one of the big complaints from the u.s. business community has been that there haven't been enough lines of communication. guys. >> eunice yoon on her way to shanghai. we'll see what other headlines we get. i think the secretary might be visiting shanghai disney tomorrow. we'll talk a little more about travel and tourism.

we'll talk about the degree to which it is cheap relative to the rest of the world. >> both chinese stocks and disney maybe in that regard, yeah. i don't think there's any doubt that it's cheap. the question is are you implicitly capped by the way the economy is a little hamstrung right now and the way the government doesn't seem to want to have national champions and have these big companies accrue a lot of wealth for folks. >> they want national champions, they're just state-owned enterprises, not private companies. >> they don't want them to be global champions in a sense. >> what's also interesting, the trade dynamic with the u.s. is not as strong as it is, say, with germany where the discussion has been able germany's growth, not being able to leave europe, even as wanls at a record high today, 6.8 year-on-year. >> we start to see, wait, do we think europe can be okay if

china slows to this degree. >> we'll talk more about what shanghai is doing, as mike mentioned, a lot of the efforts to goose the markets have resulted in short-lived rallies over there. still to come, the biden administration out with its first list of drugs that will be subject to medicare price negotiations. what that means for consumers as well as the pharma industry. we'll seifhee t bulls can string three wins in a row together. a lot more "squawk on the street" is straight ahead. 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.

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the white house announcing its list of the first ten drugs selected for medicare price negotiations in an effort to lower health care costs. our emily wilkins joins us with details on what some are arguing is an historic move. >> definitely a historic move. this is the first time the government will negotiate with drug manufacturers over the price of medication in an attempt to lower costs for consumers. the ten drugs include medication for cardiovascular issues, diabetes, autoimmune disease and cancer. these ten drugs were picked in part based on how much seniors were spending on them. the white house estimates those on medicare spent $3.4 billion in out-of-pocket costs. the administrator for the medicare and medicaid services told cnbc this morning that she's mindful that research and development costs will also be

considered when negotiations occur. >> we want to make sure that it's a viable market for drug manufacturers because, again, we know we have the shared goal of making sure people have access to treatments, and we want to make sure we have a strong and vibrant drug market. no one wants to see anything different than that. we cannot ignore that we are not on a sustainable trajectory. >> the reduced prices won't go into effect until 2026, but these medications are only the first to be negotiated. another 15 drugs will see their prices hashed out in both 2027 and 2028, and from 2029 onward, 20 drug prices can be negotiated per year. drug manufacturers are pushing back against this change. a number of companies including johnson & johnson and merck have already sued the government claiming the negotiations are unconstitutional. back to you. >> emily, thank you for joining

us. what's probably most well known, el quist and gentleman noouf yeah might be up there. >> no doubt. obviously the real revenue impact is down the road. it's much more about what incentive structures are created in terms of what drugs get developed. i think that's very long tail stuff. in general, if there's a popular move to try and limit inflation in some of the most widely-used drugs, i think that's politically pretty smart. also, it sort of gets it normalized to a degree where i think the industry is going to assume it can't just win all these. >> right. in terms of the cpi impact, we'll have to wait a while before these actually hit the street. >> exactly. still to come this morning, a lot of the morning's movers including best buy with an earnings beat. take a look at the premarket trying to inch our way out of

the red on this tuesday morning. a lot more "squawk on the street" when we come back.

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oracle one of the top gainers. increasingly confident oracle has carved out an underappreciated edge in terms of the gpu capacity getting out sized allocations of nvidia's 'lus relative to its side. wel talk about that and more with the opening bell in just under seven minutes.

got some retail earnings to work with. best buy with a quarterly beat. sales declines were smaller than expected due to demand for some items. the company says they believe this year will be the low point in tech demand. mike, they talk about tv sales trends getting better, laptops

getting better, holiday comps will improve and could potentially turn positive. >> i would call it cautious guidance just in terms of bringing down the upper end of revenue and epps expectations. not out of the range. very similar story with a lot of the older chain retailers which is they trade at super discounted price to sales ratio because the market assumes there's not a lot of growth in the cycle. in best buy's case, under .5% scales. all of it bundled together says, yes, it's the best the category but not going to be a fast growth category, not really an inflation beneficiary among the retailers. so not a bad performance. it's what over a multi-year time frame do you expect out of it. it's interesting, too, how we're still seeing various companies reckon with, well, i guess there was a lot more pandemic pull

forward demand than we thought. last week it was dick's sporting goods to a degree. the street was suggesting it was surprising. pet food retailers are in that similar boat. i'm not saying -- best buy seems to be reckoning with it and thinks they're at the trough. it's had a long tail. >> they still see comp store sales to be slightly better than the negative 6.2% they recorded for this current quarter, second quarter, and the non-gap operating income to be a growth of about 3.4%, to your point. that said, it was quite a few years ago we were talking about this company being in seminal decline. it is worth mentioning -- it's obviously years ago already, you can go back and look. they did manage to come off a very difficult period. >> that's true. to the point where it's almost in the other direction. now the question is can any retailer get to scale without physical presence? all of a sudden ubiquitous

physical presence isn't automatically a sign of obsolescence, but a sign of how much growth can you push through over a number of years. >> unlike, carl, some of the retailers whose earnings we've been looking at closely, to look at shrink, whether theft or other, not really a key part of this release. >> they benefited hugely from the work-from-home trend during the pandemic. goldman had a great note on work from home, arguing the share of workers who are working from home has gone from the peak at 47% down to 20 to 25. what's interesting is they think it's really not hitting office vacancy and won't for a couple years because so many of those long-term leases don't expire until 2025, where they say it could start adding a couple percentage points to vacancy rates. >> it has been a slow push through that pipeline, i guess. i still think it's going to be hard when you have nine job openings for every unemployed person, at least on paper, to

really budge the work-from-home thing. for now the worker has enough say in the matter that it's just moving that quickly. amazon notwithstanding. >> we'll talk about what jassy told employees reportedly in a moment. opening bell on the cnbc realtime exchange. at the big board is amarant bank corp based in florida -- tennis channel celebrating the u.s. open which is kicking off one of the great traditions of the end of summer here in new york city. >> absolutely. >> 4,430. support levels, mike. arguing 4,356 is the danger zone. >> that was the august low from i think the 18th. a week ago friday, if i'm mott mistaken. between 43 and 4,350 gets you

back to the levels before the blastoff in july. for now, that's what i meant. markets avoided a breakdown. what does it take to prove something on the upside? not that much. probably you'd start to build the case, if we close above 4,460, that's where it looks like that down trend line from the peak is coming in. we're really arguing over small bits of territory at this point. market is still in the range. everything is in the range. i think that's something that has enabled the market to hang together which is, yep, bond yields have definitely been eye-catching, but not definitively far above the late 2022 highs on the tens, hovering right near there. two-years near the high but not busting through. oil prices similar, in retreat. even the dollar has been on a very strong run. we all know the reasons. again, it's like this nine-month range that's been capped. that's one of the reasons we haven't had to recalibrate

cross-asset valuations and messages that much, even though we can still argue all day about why bonds have moved the way they moved. is it just about growth being better, is it about supply, higher for longer from the fed. probably about all those things on some level. >> does it matter, mike, yesterday's volume was the lightest of the year, 8.1 billion shares across exchanges? >> i would say it doesn't really matter. i would say you maybe want to withhold a lot of credit for the strength of the rally in telling you that people are rushing back in. i think it's just august. marketwide volumes i haven't found a lot of information value in, individual stock volume anomalies dchl seem to matter. they're a good input. i think it's mostly what we know, which is seasonal issues. >> got some upgrades of things in david's universe. david, did you watch this citi

upgrade on verizon nt? >> i did take a look at it. a better tomorrow -- sorry. i don't mean to laugh, taking a more positive view. >> the fact that there is a tomorrow. >> i think that's risable right there. but there is. there's been nothing good about tomorrow. you want to go back 20 years? it's pfizer-like when you look at verizon. none of them have done anything for you as a long, long, long-term investor, other than give you a dividend. you can look at the chart, but you want to remember the ultimate return, larger is better. >> both verizon and at&t are in the 7% to 8% dividend yield range. citi makes the case that basically you have trough, kind of washed-out type valuations, if you look at enterprise value to cash flow, very low. dividend yields very high end of the ranges. also making the case that the

potential lead exposures, whatever might have to be done with remediation might be either less or priced in. >> yes. there was some questions and continue to be questions about some of the reporting around that. again, we'll get more clarity as time goes on. i thought the interesting part of the note is they simply said they see few factors that point towards a stabilizing wireless competitive landscape. a few factors, i should say. a few factors. therefore, that is one reason that undergrids. >> i think they prefer t-mobile. >> t-mobile last week did announce significant lay-offs, in part citing the fact that things were changing very quickly and they wanted to stay ahead of them, 7% of the workforce was the number from t-mobile in terms of those. not a lot of front-end employees. a lot of back office operations. certainly notable.

t-mobile is always seemingly the favorite. sometimes we forget, controlled by deutsche telecom. still worth mentioning, by far their largest single asset. still a german-controlled wireless operator here in the u.s. just looking at the leaders in the s&p, you do have at&t up there as well as best buy. best buy is taking that -- the new guidance as a positive, up 3.3% to start. and then 3m, of course, kind of officially saying that they have an agreement on those liabilities regarding the military ear plugs. that stock, again, is another one that's been really washed out relative to the group, hasn't participated at all in the upside of industrials. a lot of skepticism about the pure conglomerate model. maybe some catchup as the stock is up another 2% today. banks with a lot of activity

today. fdic will vote on proposals that will affect regionals with $100 billion or more. the head of supervision at the san francisco fed is going to retire at the end of october. was on guard during silicon valley bank. and goldman, as they get rid of this unit, mark mayo at wells arguing they're undoing the expansionary changes that i guess mayo was never a fan of ps. >> few seem to be a fan of them. enhanced by current ceo david solomon. that reversal was notable. never amounted much in terms of revenue and profitability at the firm. certainly has gotten a good deal of attention. when you put up the movers board there on the s&p, it was worth noting cat lent was at the top, a pharmaceutical company that helps with drug sales. subject of an activist campaign from elliott. they've got a lot of board

members on there. the four all joined the company's board of directors. they put out an earnings picture that at least it doesn't worry people midpoint, the initial 2024 top line guidance, up 5%, at least versus where the street was. then, the question, of course, is what role will elliott be playing here, how significant will it be given all those board seats, and is there m&a in the future of this company as well i think has to be a key quest. it's having a positive impact. speaking of m&a, i want to turn to one of our most active situations out there. not huge in terms of dollars, but still profile, u.s. steel. they put a new release out this morning just talking about the process as it's currently on going. remember, of course, cleveland clips has tried to clear the field here but doesn't seem to have been successful in doing

so, despite agreement with the unions, trying to make it a fait accompli that we're the only real buyer. matal is in there. for its part, u.s. steel wants you to know there's a lot of customary confidentiality agreements being signed with numerous third parties, and they're sharing due diligence focusing on that uc fair and competitive process for what they hope will be maximizing stockholder value. i can tell you it seems to be fairly robust at this point. we'll have to wait and see how that all plays out. very important -- seen as very important for cleveland-cliffs, electric furnaces which will figure prominently in the perspective of those concerned about carbon emissions and the like. >> i'm still amazed at the relatively modest market caps.

it's amazing -- there's more to it than just the equity value. it still seems strategic as an industry. cleveland-cliffs is making an aggressive play. you mentioned the google next conference started. stock is up at 1.4% again today, up a couple% this week. it's basically bucked the negative trend in august. outperformed meta by a lot, microsoft by a lot. i know jim was talking about it, too, as being a bit of a standout relative to other mega cap tech. a lot of things maybe behind that. it could be sort of a resilience of the media strategy within google. obviously enthusiasm about the ai and what they might be able to tell us about cloud services today. it's pretty notable that it has held its gains from the first part of this year coming in. maybe it's a little bit of a halo of meta as well. that was such a monster move to the upside in the beginning part of this year, that to the degree

they travel similar paths, some bid there from alphabet, too. >> i think it was the goldman desk last week, what's up with amazon lagging google almost every single day? there's a bunch of different dynamics you can point to. ai is certainly one of them. the other interesting point, senator schumer will be holding a meeting with i think zuckerberg and musk talking about policy going forward for ai. there's still a school of thought that says you're going to wind up with some international regulatory body long term to figure out how to grow this thing responsibly. >> yep. i think so. i don't know how anybody plugs all this into the equation, especially when you have the policymakers still in a mode of asking industry leaders what this thing is and getting educated on it. i don't know. it seems like the concentration of expertise and everything is still with the private sector on it. i don't know. you have to have a lot of

assumptions about how big it's going to grow on its own without any regulatory attention to know what the impact is going to be. definitely -- also that the industry seems to be wanting to be in on the formation of whatever structure there is. >> you notice tesla at the bod tom. byd earnings, piece and barrons about vfs which we talk about every day, essentially looking at the small size of the float and noting nobody is getting rich on it even though the market cap is, what, number three? >> it's enormous. i think we can fairly say it is not an accurate representation of the fundamentals of this company in any way, simply reflective of a shortage of shares because there are so few that actually trade given the size of the actual spac transaction being so small. 99% of the shares are held by its founder. you're talking about a minimal float. that contributes to every time

we talk about it or somebody else does, this this thing is going to run. the market cap is laughable. that will change over time. if they were to try to actually sell shares at any level, it would not be here, mike. >> exactly. >> it would not be here. >> it's another lesson. it's a little built of an echo effect of a lot of what went on with some of the spacs, but also with the add'd merging market, secular theme, we saw what happened with tesla before they had -- all that kind of silly stuff loaded up into the first instant that it starts to trade as opposed to going up over the course of eight years or whatever with tesla. >> there is the continued discussion about the prospect of strikes at the big three. adam jonas from morgan stanley last night talking about it. saying the concern creates divergence and buying opportunity. goes through a bunch of reasons why these cycles happen. labor negotiations are part of the business cycle. bottom line, we'd be a buyer of

both ford and gm right now, and during the negotiations as we believe even a difficult outcome can catalyze far bigger exchange to strategy that will yield long lasting benefits, which is not the view of many. >> no, it's not. the view of many is that this is going to further stack the deck against the big two or three, depending on how you define it in making this transition. it also is always a tricky spot when you're a leader of ford or gm and you're making the case that this is going to be fine, we're going to be get there, and then you have this where you have to go to the unions, in effect, and say, hey, you can't cripple us here. we have to be able to have cost flexibility in order to do it. if you get what you want, we won't be able to. that's a tricky dual message to try to deliver. >> moderate gains at the open. dow is up 50. only energy and industrials are lower.

let's get to bob pisani. good morning. >> nice move. three days in a row, the vixx is down two points. take a look at the sectors moving. china at a period tick upswing, guys, with the commerce secretary over there. we see nice moves up here about three, four days in a row. up about 5%. tech is flat, bank is flat. that's good. communication is up. that's because of at&t and verizon, that citi upgrade. as for where we are on the month, it's a tale of two different months. first half of the month stocks were generally down because we had higher rates. second half stocks are generally higher because we've had more stable rates. that's simply the way to look at things. the other big story is the ai and how to parse that. nvidia, the big gest gainer is unchanged. there's no relationship between the biggest gainers of the year which is nvidia and the extent

of the tech pullback. nvidia is flat, amd down about 10%. remember all these stocks are up dramatically on the year. there is some ai tentacles in the broader market. it's nice to see gainers in industrials, eaton and ingersoll rand had a good month. eaton is big in power management. that's significant. a lot of investment in enhancing labor productivity. power management comes into that as part of an ai story. ingersoll rand is a big industrial compressor company. they're positioned for -- there's a reshoring story on there, but also increased investment in automation. the big story has been the money going into money market funds this year and treasuries for yield. i know david mentioned the citi upgrade. it's interesting that we have dividend payouts that are huge in these stocks, and we have an analyst saying you can support the dividend payouts, despite

the concerns, the lead cable issues out there. take a look at these dividends, the three biggest names, altria which is always at the top, at&t and verizon. to give you an idea, verizon paid 5% for years and years and years. in the last year the price haves dropped dramatically. there you go, 7.8%. that's a pretty high dividend to pay right now. look what's appearing on the high dividend yield list for the first time in ages. banks used to pay 3% to 4% dividend yields. that was typical. now these guys are up to 5, 6. keycorp 7.5% right now. if you want to talk about whether yields are safe, you can talk about these banks and how they'll deal with these dividend yields. this hasn't happened in the past. this is characteristic of the bank drops we saw in march and april. other than that, the big story is the jolts report at 10:00.

we'll get jolts in about 15 minutes. michael barr speaks this afternoon, seven-year note auction. dow is up 82 to start this tuesday. don't go away. at pnc bank, you can find us in big cities and small towns across the us, where our focus is to always support the people who live and work there. because you call these communities home, and we do too. pnc bank.

they kick off next 23. google cloud announcing new customers and partners, some product innovations, anything above 134.25 is going to be your new intraday high for the year. we'll pay close attention to that with the dow up 80 this morning. don't forget it is back to school time on "mad money." this week jim continuing a special week of shows dedicated to his rules of investing and the market lessons he's ard lene over the years. tune in tonight at 6:00 p.m. eastern time. we're back in a moment.

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amazon's chief andy jassy has a message to workers who do not want to return to the office. it's not going to work out for you. that's according to a report from an insider. his basic take, it's past the point of disagreeing. we're coming in at least three days a week. >> over time that he amped up

the rhetoric or the threats. if it's not part of your lifestyle it's not part of this company. we have talked for some time about whether we would see some of the large employers start to gain more leverage or come to a point they felt this was key in terms of running their business. we're at that point it would seem. we're not talking about every day. more likely two to three days a week. >> yeah. >> carl, you mentioned that goldman sachs study. what i loved about it, it references estimates of the productivity of work from home that range from a 19% draw down on productivity to 13% enhancement of productivity. nobody has any idea. >> nobody has any idea still. >> depends on how you measure it and what you're considering. if you're the employer you want the accountability. >> it's the intangibles, the cultural attachment how important is that, chance meetings and things that might

occur as a result of being together that are, again, much harder to quantify and/or the well-being of the employees. i mean, i don't know if you seen it, alphabet, google has their new headquarters about to open in st. john's terminal, washington street, right on the river. it is gorgeous. >> sure. >> i walked by it yesterday. it is beautiful. why people would not want to go to the office -- >> i would love to be in the office if i didn't have a commute. >> yeah. that's pretty much the line. it's rebelling against the travel. >> that said, guys, listen, we also focus on the continued decline of the office market, what that means for those who have been financing office buildings and it is worth note something charts from moody's most recently that sort of keep a focus on matured office loans. the rate of matured office loans that are delinquent, not making a monthly debt service payment up to 27.6%. that is much higher than the comparable delinquency rate of 16.7% in the second quarter of

2023. so this is a continued problem and will be, regardless of how many people return to the office, it would seem, in the near term. >> it is interesting that it travels relatively slowly through the system, as, you know, leases get repriced, banks try to come to terms, some recovery value. i don't know. it seems like it's not a market seizing up type of issue. it's a constant drag. >> it's a constant drag. it's unclear whether it's going to be a crisis. >> slow moving train wreck. we'll see. still circulating around 4450 here. dow up almost 70 points. jolts after the break.

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♪♪ so you can rise from pain. icy hot. 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. moderate gains on this tuesday. dow up 60, s&p up about 11. sectors mixed but being led so far by communication services. a lot of data is headed our way this week including some pces, global pmis, jobs friday. jolts in about 30 seconds. >> market in wait and see mode.

30 minutes into trading. here are three earnings movingers. shares of pinduoduo in the green beating estimates and rising 66% year over year. defying fears of a consumer slowdown in china up 17% right now. keep an eye on best buy beating estimates, but scaling back its sales outlook for the year. shares up 5.5%. smuckers headed higher, the company raising guidance amid strength in the coffee and consumer food segments, though revenue was a bit of a miss. don't miss ceo mark smucker with his take on the quarter in the next hour. jolts is hitting the tape. let's get to rick santelli. >> carl, all you need tooz is watch the yields. yields are dropping and why are they dropping? jolts disappointed. expecting a number around 9.5 million. 8, 827, 000.

that is the smallest jolt, job openings, since march of 2021. reverting there. that comes at a time when our last look at 9, 582, 000. so we could see the trends here. now let's start looking at consumer confidence. these are from the conference board the month of august. if you recall our number last time at 117, that was the best in two years, but boy, did we drop down. 106.1. we go from the best in two years to the weakest since may when it was 102.5. and if we look at the present situation versus the headline a very similar dynamic. the 160 in the rearview mirror downgrades to 153. it had been the highest since march of 2020. now we have 144.8.

takes us back to the weakest since november of '22. march 2020 high downgraded to a lower number and see the weakness. what may lie ahead in expectations, 80.2. rearview mirror was 88.3, best since february of '22. downgraded to 88. 80.2 the lightest back to may of just this year. interest rates have dropped. the big area has been right around 4.25. of course we're paying close attention to the rise above and now dip below 5% in 2-year. last of the auctions, 7-year note. carl back to you. >> rick santelli. rick is right, 10-year dipping down to about 4.16. jolts missing by 8.8 versus a 9.5 estimate. >> clear market reaction. yousaw it in the 10-year and in the equity indexes going higher. that inverse correlation between

yields and the broader indexes is back, at least on that data that we saw this morning. >> keeping an eye on the -- well right there on the long end given where we were, we were 4.34 just a week ago. we have been coming down since jackson hole, moderating, but that's important. that said we're still above 5% on the short end 2-year. >> but the volatility is significant throughout the month of august which, you know, we've seen a difficult month in terms of equities and a lot has to do with the overall volatility on the long end, the 10-year in terms of, you know, how much it's swung back and forth throughout the course of the month. interestingly the russell 2000 small cap index has under performed even the bigger ones, people are paying attention to, because it's more indicative of the health of the u.s. economy. a lot of small caps are domestically focused than the names you would see in the dow or s&p. >> yeah. it's reflected in the dollar as well, lower after the data just

now, the dollar still enjoying some of its best runs since march. of course, just a few days left in the month of august. trading days that is. stocks on pace for the worst month of the year. let's talk about what's ahead for the market with tom lee who has been trying to remind people that inflation is going to roll over quicker than you think, tom. does jolts point to that? >> it certainly does. i put this in the camp inflation is on a guide path lower, lower job openings, evidence it's been easier to higher and new job postings have lower wages, takes the wind out of someone saying wage pressures will keep inflation high. there's a lot of data this week, but i think by the end of the week, we're going to see a picked of inflation falling faster than consensus expects. >> what's the lag between these prints and the fed rhetoric that would back it up for equities? >> that's a great question,

carl. because we've had some really soft inflation readings for some time and only recently have fomc members, who are data dependent, acknowledging inflation is softer. i think markets are unconvinced because if you look at fed fund futures there's many expecting a hike in november. i think the probability now is at 48%. i think that's going to get towards zero if we get the soft inflation we expect. i think that's why things week is critical. >> a lot of people read last week and the events of jackson hole being more hawkish, having a hawkish bias. you disagree with that? >> i'm not at jackson hole and i can only go off what i'm adding and from powell's speech, but to me there's a huge anchoring bias at the start of this year, the majority of economists and pundits are hawkish and read everything as if it's a hawkish statement. i kind of looked at jackson hole

and i thought it was actually a real validation if inflation comes in soft, the fed is going to change its view. to me, that's a risk on interpretation, but you're right a lot of people saw that and are staying hawkish. >> risk on where? the reason i ask is because we've seen pockets of risk pop up, you know, even despite some of the weakness in august, namely just the overall crowding in the magnificent 7 that hedge funds have been, you know, kind of piling into that trade, even more of a tilt than they have historically. that is a concern to you for the overall market sentiment? >> yes, and no. i think people overstate the impact of these seven stocks. i mean what we have to keep in mind, is one, if anyone is going to be buying equities globally, the u.s. stock market remains the most liquid outside the u.s. it's pretty much a small cap world anyways, small and mid cap

and the seven largest stocks have great fundamentals. not looking at nvidia's stock price, look at the guidance changes. to me, those are core story to the u.s., the technology leadership, pretty central to both generative a.i.'s future and the inflation problem. i think they're important stocks. i wouldn't be surprised if they continue to gain into year end. >> there's one of them right now that's actually in the green for the first time since it reported the incredible earnings. any takeaway in terms of nvidia's performance after, again, what was that just blowout quarter and guidance? >> it was disappointing to see good results and a stock sell-off. it told us about people being too long into the earnings result, but i think in the aftermath the fact that stock is stabilizing, shows you there is a lot that did sell nvidia during its correction into july

into august. if someone is trying to bet on the future of generative a.i. and a.i., there are just a small number of companies and nvidia is one of the key ones. >> what does it say in terms of how much just the overall a.i. hype is really baked into the market at this point? you know, obviously, a lot of this -- nvidia is kind of the anomaly here in terms of how much of it is actually material to earnings at this point in time. but what does it tell you about kind of just the overall modeling that's being done on wall street with regard to figuring out the overall trades on some of these names? >> well, i mean, there's definitely hype. hype accompanies every major cycle. you know, when i did wireless there was a lot of hype in the early days of the internet too. but, of course, a lot of that ends up underestimating the outcome and leadership of a handful of companies.

i am certain there's going to be a lot of demand for a.i. i mean it's pretty relevant today because of labor shortages and the need to actually improve processes and actually improve judgment. i do think there's a real future there, but you're right, there's a lot of hype. i'm not sure it should be additive to the overall stock market. there will be winners and losers. >> yeah. we'll see. maybe some of the presentations from a variety of vendors in the next few weeks can give us more grounding in reality when it comes to use cases. thanks, tom. good to see you. >> good to see you. as we head to break, here's our road map for the rest of the hour. regulators announcing the first drugs facing medicare price negotiations. more on how to trade it this hour. the regional flamnames to w here. best buy to cut its sales outlook from the top end of the range. >> a look at the race to the bottom in fin tech and what paypal has to do with it.

big show still ahead. dow up 12010ear , -y4.14, about a two-week low. don't go away.

pretty heavy diet of upgrades and downgrades from the street this morning including at&t and verizon. kristina partsinevelos has them. hey. >> could the tides be it turning for telecom, citi seems to think so calling them both a buy. they say the wireless environment is starting to stabilize helping operating

margins and improve free cash flow, could support the super high dividend payouts at 7.8%. there's one big uncertainty, though, continued frisk lead exposure found in cabling around the country. verizon, that's a big part of why verizon is trading near its lowest level in a decade and at&t hit its lowest level since the aearl 90s in july about 13.43. we can see here in july. switching gears, oracle getting love from upgrade to buy with a price target of 140 bucks. analysts did their own digging and suggest oracle snapped up nvidia graphic processing units and bodes whalell for its generative a.i. applications. oracle is close partners with nvidia and oracle only 6% off its june high at $12.54.

jpmorgan removing salesforce from its focus list, sticking with an overweight rating. they cite the stock 60%, about 57% year to date gains among other things like the pace of business, sluggish sentiment. salesforce is set to report after the bell. shares are down about 1.4% right now. last but not least, disney, getting added to red bird and atlantic sell list. analysts say even though disney is home to the world's most enjoying franchises it faces too many negative catalysts, with the difficult transition into streaming and impact on advertising revenues. disney has been a laggard down about 3%. david? >> kristina, thank you. the biden administration announcing the first ever price negotiations on ten prescriptions programs. include ready drugs bristol-myers, pfizer and other names. what does it mean for many of the big providers of these

drugs? capital street's health care analyst joins us now. give me your take quickly on sort of any surprises here in terms of what was included or perhaps what wasn't? hour. . good morning. thanks for having me. i would say this long-awaited list for medicare to negotiate these drugs in 2026 is finally here. i would say most of these were drugs and companies that we all expected. j&j, bristol-myers, astrazeneca, merck. some surprises for sure. insulin on the list. remember medicare beneficiaries have a $35 out-of-pocket cap on insulin. it's a head scratcher why that is there. it won't change the out of pocket for seniors. j&j, a medicine for psoriasis, something that is supposed to have a biosimilar, essentially a copycat or a generic for a large molecule drug is coming.

i think those were a couple of surprises that i would mention. >> what about the role that generics play here and/or what this will mean in terms of the future for some of them? i thought el low quist had a generic as well, for example? >> it's a good point. a lot of these medicines, truth be told, lose exclusivity in the 25, 26, 27 time frame, so i think investors have lad a little bit of a yawn or sigh as far as this list. the critical lists are for 2027, 2028. there are a number of lawsuits challenging the law, first amendment, fifth amendment, eighth amendment. i think with the list being leased today, it also creates some breathing room for some more lawsuits to come in and potentially some additional arguments. >> yeah. why in the out years or 2026, 2027, why is that going to be a more important list? >> well, i think because in some

ways, we all can look at medicare spend data and know what these are. as you get to 2027 and 2028, more importantly, if the law is still in place, you've got part b drugs coming in, the injectables, infused, ms, ra, those are the more chronic conditions, more expensive drugs, that could have a bigger hit to the company's bottom line. >> you mentioned some of the lawsuits you're expecting. what do you think the odds are they're successful in terms of creating some sort of preliminary injunction that halts all of this? >> we have done a legal analysis of the eight or so lawsuits that have come in to play. i would say about 30% odds a preliminary injunction halts all of this right now. the preliminary injunction would be for october 1st because now that list is out, manufacturers only have about a month, you know, around the corner, where

they need to now enter into a contract and negotiation process with cms. pretty low odds it gets tossed. there's motions for summary judgment which would take this all away, and rule in favor of the companies and plaintiffs. the companies, the chambers of commerce, some of the trade groups, were smart in that they initiated legal proceedings in various district courts because it increases your odd it gets to the supreme court some day. months, really likely years, of legal. >> but to your point, perhaps resolved prior to the important outyears, '27 and '28. thank you. >> still ahead, fdic regulators meeting to propose new rules for the regionals. increasing their oversight in that industry, as yields continue to rise, although not

after some of the ecodata today. what investors need to know after the break. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley.

gruenberg. welcome back. you can see there on your screen

there's a live ongoing board of directors meeting at the fdic. the agency out with some new proposed rules today in the wake of some of those bank failures from the spring. the fdic is looking to make any future wind downs of mid-sized banks more orderly. they released this proposal that they're going to vote on and requires banks with assets greater than $100 billion to hold a layer of long-term debt to serve as a buffer in the event a bank fails. the goal to wipe the debt for depositors which lowers the cost to the fdic. the largest banks have a long-term debt requirement and this won't apply to smaller community banks. it's $100 billion to $700 billion mid sized threshold there. they would be required to maintain a minimum amount of eligible long-term debt equal to the greater of three things. the greater of 6% risk weighted assets, 3.5% of total

consolidated assets or 2.5% of total leverage exposure under their supplementary leverage ratio if that's applicable if they follow that. the fdic is looking to overhaul the resolution planning referred to as living wills. how banks can be taken apart. some of these proposals due by the end of november but look at regionals they're in the green today. i think part of that has to do with the long-term debt amount or lower than that of what you would see at some of the eighth largest globally systemically important banks. maybe a little bit of a boost. these were pretty well telegraphed they were coming, there would have to be long-term debt requirement, but the actual amount i think is potentially a little bit smaller than the market was anticipating. >> we got this and then you've also talked, obviously, about the capital rules, the longer term. there's a lot of things to keep

in mind over the longer haul from the regulatory side. >> it's a long-term implication and comments are due in november but this will be a multiyear implementation. if you're modeling out say to 2026 this would be something you would be looking at. the overall uncertainty nonetheless really impacting just the overall bid capacity. investors willingness to buy banks right now because there is so much back and forth on the regulatory side of things, and if you're a bank and you're kind of looking into the future and know that you're going to have to raise capital and increase your buffer, you're going to be a little bit, you know, more discretionary when it comes to lending and pull back on your credit and your writing standards and all of those things that have a role to play not only in the broader economy, but also in the margins. that's kind of how investors are looking at all of this. >> perhaps welcomed right now by the fed. >> that's right. >> in some way. >> that's right. >> making -- >> that's what they're

engineering. >> exactly. coming up, the read on retail. best buy the latest big name to report results, what down beat guidance could be signaling. one analyst whjuo st hopped off best buy's conference call next. we're back in 2. rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. 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. emily used part of her refund to buy...

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. >> here's your cnbc news update. forecasters say idalia is now a hurricane and could reach category 3 strength by the time it's expected to make landfall in florida tomorrow. they warn hurricane idalia could deliver life-threatening storm surge along parts of the gulf coast including tampa bay and bring flooding through the pan handle and southern georgia. the suspected gunman in the deadly shooting of a university of north carolina faculty member was booked on first-degree murder charges this morning. authorities say they arrested the graduate student monday about an hour and a half after the on-campus shooting. they have not released the

faculty member's name or a motive. and meta says it disrupted a massive disinformation campaign linked to chinese law enforcement. the media giant says the campaign spanned more than 7700 accounts across several platforms including reddit and youtube. officials say the accounts generated positive news about china and criticized journalists, activists and the u.s. david? >> thank you. we are watching shares of best buy this morning. the retailer did lower the sales outlook and did beat on the top and bottom lines through the quarter it reported. courtney reagan joins us now as the stock is surging this morning. >> yeah. david, i think it's actually on track for its best day since november of '22 right now in the early going of trading, but best buy's ceo did reiterate what she said previously last quarter. she expects this calendar year to be the bottom of the downtrend for consumer

electronics and does expect that to pick back up next year. she did narrow her full-year guidance range for the sales guidance, though continuing its ability to control costs which does increase profitability for the retailer. now corey berry expects the industry will stabilize, hopefully, next year, possibly grow, with that natural upgrade cycle in tech innovation. insider intelligence projects consumer electronic sales will grow just 1.1%, totally retail sales will increase at 2.9% this year. the firm notes the sector did see sales grow nearly 14% in 2021 and the replacement cycle for consumer electronics spans between 4 and 10 years depending on the category. now best buy's earnings and revenues stronger than expected. comparable sales dropped 3.6%, better than expected and like home depot and lowe's noted the

bigger items like home theater. and on a media call, the ceo said while there are real issues with theft in the industry, best buy shrink, which includes all forms of loss, not just theft, is actually less than 10 basis points worse than in fiscal year 2020. the retailer has done a lot when it comes to educating employees, but also, just the way it formats its stores to make sure to do what it can to prevent theft from happening in as much as a retailer can. back over to you. >> interesting addition to the dynamic and discussion about shrink at least that's our courtney reagan on best buy today. eunice yoon who took part in a press gaggle with the commerce secretary on a train ride between beijing and shanghai. hi again. >> reporter: hey, carl. we're about to arrive in shanghai in about 10 minutes, and earlier the commerce

secretary had had a very full day of meetings in beijing. she told us she believed that u.s. and china are now at a moment which she hopes will become a moment of action. she said that this visit has resulted in several good deliverables for the u.s. business community. she pointed out the commercial interest working group which would be meeting twice a year and be able to work on what she described as very specific issues that the u.s. business community is very concerned about. she said export controls information exchange has also been established and, in fact, the first meeting was already today. she said the two, with the tourism minister, were able to hammer out a deal for a u.s.-china tourism leader summit to be revived. it had been postponed and shelved because of the pandemic, and now it's set to be held

again in the first half of 2024. one thing that she thought was really important was that she was able to have now more informal and frequent discussions with the commerce minister. she said that he agreed to that and it was significant to her because a commerce secretary has not been in china for the past five years and she said she has had no phone calls. she was asked by reporters exactly how the chinese responded and what the chinese asks were. she said that the chinese had asked for reduction in export controls on it technology to retract investment screenings on some of the it technologies. her response she said was no. very clearly. she said we don't negotiate on matters of national security. she did say that she brought up a.i. as one area that could be an area of cooperation for them in terms of tech. some companies that she said she

had brought up was intel situation, micron, boeing, possible plane sales. she did raise this, but said that the response from china was no commitment. she was also finally asked what kind of action would she feel was suitable by the chinese that she would feel satisfied with and she mentioned that the u.s. business community has been dealing with several different issues and have often said to her that china is becoming uninvestable or in danger of it, and she said that she wanted to see some action to address some of the bigger challenges that a lot of companies here have been facing, such as concerns about the anti-espionage laws, raids, and what she has described as a new level of challenges. guys? >> yeah. you know, eunice, you hear a lot about those laws, perhaps impeding the willingness of

financial services companies, advisory firms, for example, to set up shop or expand in china. any expectation at all that those kinds of concerns will be met? >> well, she said that those issues were raised in her discussions in her discussions with the premier, the vice premier, the commerce minister as well as the tourism minister. she's been discussing a lot of these very sticky issues, but again, she said that there was no commitment on the part right now of the chinese, but she did feel that she was being heard and she's definitely raised these issues. one of the main points she wanted to send to the u.s. business community is that she feels that the overwhelming message has been from the american business community that they need to have more interaction and engage plpts. that's what she feels she's delivered on. >> that's a strong message.

appreciate it. let's get back to best buy's latest results. retail here stateside. our next guest just talked to the retailer's cfo moments ago. michael laser, ubs analyst, has a neutral rating on the stock and a price target of 87. michael, maybe you can start by giving us the headlines. what sdid you learn from your conversation? >> good morning. the key takeaways from best buy was number one, best buy seeing a similar theme to other retailers that have reported earnings over the last couple weeks, which is discretionary spending is under pressure, as consumers have had to spend more on nondiscretionary goods, and purchase cycles for all those things that we bought as consumers during the last couple years, are normalizing. best buy, despite those comments that led to a 6% decline its same-store sales, is doing an effective job managing its profitability in light of that, but still, it's still uncertain

what consumer electronics industry is going to look like over the next couple quarters before it rebounds. best buy, the stock is probably going to remain range bound given all these right now. >> we saw the comp decline in the quarter, although it was better than most on the street expected. and you mentioned the trough, discussed in the conference call as well. what are some of the key catalysts to propel things to the upside? new technology? because you look at the overall picture of the consumer and excess savings are looking to run off. i would think a lot of excess savings have gone into purchasing some of the best buy products in recent years? >> you are absolutely right. the state of the consumer is going to be the number one factor that influences the direction of this category. the second thing will be as we get into replacement cycles, tv, mobile phones, computers, will

eventually need to be replaced. i'm talking to you on my ipad. it is an indispensable piece of technology for me. if it were to break i would need to replace it. that will happen for most consumers. third, innovation. there will be things more like augmented reality, artificial intelligence built into technology that's going to help. the clarity on when all of this is going to lead to an inflection in the industry just isn't there right now. in the meantime best buy is trying to return cash back to shareholders, manage through its profitability, and maintain its market share. the net result means the stock is probably going to hang out in this area it until we get a better sense of what's happening. the one other point that i would mention is, best buy generates about a third of its profitability from its private label credit card. what's going to probably happen over the next couple quarters is the lawsuits on many credit

portfolios start to roo iise wh means the source of earnings for best buy is under pressure. >> interesting. a third. michael, given your view, i'm curious what your reaction is to the fact that stock is up almost 6%, having one of the best days it's seen in a long time. what's the market seeing that you're not? >> the interpretation there, david, is expectations were low heading into print, and positioning has mattered a ton in terms of short-term actions to stock prices over the course of this retail reporting season. over the longer term, the market is going to weigh heavily the puts and it takes of what we're seeing across the retail space. best buy is doing a good job of managing through. we just think there are better opportunities in retail stocks at this point like tall beauty, target is another one that's poised for a recovery, and we like those stocks better than we do best buy at this point. >> i've seen on the cost

discipline side, i've seen some work that argues that sgna is a percentage of sales at best buy, actually hasn't grown that much since 2019 relative to some other players like chewy, for example. does that mean they are cost disciplined at the moment? >> so i think you are making a good point, carl, which is that best buy has had to adjust its model to the realities of its changing business. the reality prior to the pandemic 20% of best buy sales were done online. during its peak 40% of its sales were done online. now in a steady state basis about a third of that business could be online. what that means, it just doesn't need as much physical space. it doesn't need as many employees. it has been right sizing its cost structure to adjust to this new reality. the challenge is that sales have been under considerable pressure over the last couple years even as it has lowered its cost base. its sales have declined equal to or more than that and so that

has meant its profitability overall is lower than prior to the pandemic. >> so your take is it could be a little range bound before some of these overhangs are resolved. michael, thank you. appreciate it. >> thank you. still to come this morning, is there more room to run for tech here? our next guest says yes, and to bet on some names like amazon and alphabet, enjoying a good day. a couple pennies from highs for the year. don't go away.

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big tech continues to dominate on the street accord to data released by goldman sachs. hedge funds hold a record exposure to the seven biggest tech stocks by market cap. microsoft, apple, alphabet, meta, amazon, nvidia and tesla make up 20% of the market value held by hedge funds. joining us to discuss how he's playing big tech from here on out, wedbush tech analyst dan ives, dressed like he's ready to

see further gains in these magnificent sevens. very cheerful outfit today. in all seriousness, some people take that as a read that, you know, there's too much group think here, not enough funnel analysis. it's a sign of potentially a signal to the bears that a downturn could be near. does any of that concern you at all? >> i think those are all the arguments that the bears will make and i think it comes down to the growth. what i believe and i think we'll see with salesforce, with a lot of these off quarter earnings, palo alto, of course, this is going to be a strong, fundamental performance from tech, from software, from chips, in the second half of the year. in my opinion, despite the fed, despite what we've seen in terms of the 10-year, i think the tech powers through this. we see 12, 15% gains second half of the year. i think 2024, the new tech bull market is here. >> dan, you got everything you wanted out of nvidia. we talked about it for weeks.

you came on. it was an incredible quarter and the stock did nothing. does that concern you? >> i think that was a knee-jerk. i think that scared investors i talked to, right. if nvidia, the god father of a.i., jensen, puts up a quarter like that and the stock sells off what is that telling you. >> i believe we sit here 6, 8 weeks from now and that stock is higher. because ultimately it just comes down to fundamentally it's unprecedented growth we haven't seen in 30 years. >> so you said what is that telling you? it's not telling you anything? what's the answer? >> i think it's telling you that was a knee-jerk reaction that i don't think is going to be sustainable. i believe nvidia and overall tech is going to go -- we believe it rips higher into the second half of the year. i view that pause we saw post sell-off as a golden buying opportunity, not the time in my opinion to get out of this. i believe this is halftime of a

super bowl type tech rally we see going into the next 18, to 24 months. >> this a name in the magnificent 7 or mega cap 8 you would underweight? >> our top picks if you look at amazon, apple, from -- if there's anemia, you underweight here. meta has had the massive move we believe that probably a lot of that is not going to be as significant as some of the others. i think the one that i view the table pounder is apple. in my opinion, going into the iphone 15 cycle it's massively underestimated by the street just how big this install base upgrade is going to be, and i think kuipcupertino continues t play chess. salesforce after the bell tomorrow. this is kind of a bellwether for enterprise demand. any expectations on that front with regard to kind of the strength of the overall enterprise software industry?

>> yeah. i think we're going to see strength in sales. i mean, we've seen an uptick in terms of cross sale. benioff, back against the wall, go back a few quarters ago, bears thought this was a stock the best days were in the rearview mirror. i think margins are starting to uptick and i think when you look at a.i., i think many investors are discounting the potential opportunity here for benioff and salesforce. >> what about the end user? i mean, the end user cases here today? chatgpt introduce a new product for the enterprise? co-pilot from microsoft. what are you hearing from companies looking to employ a.i. in terms of when it will actually start to impact their bottom lines? >> yeah. i think david's is the big one. the nvidia type numbers, when do we start to see this and the rest of tech. . in our opinion basically everything we see as we go into 2024, that's where there's going to be a massive inneck sln of

demand you will see it in numbers. what we see from use case, i think use cases are exploding. right now we're probably tracking 80 to 100 potential a.i. deployments. if i go back even call it three or four months ago, 2025, we're seeing that go up 4 or 5 x. in my opinion despite the fed and the bears coming out of hibernation mode in the last few weeks, we believe this is going to be a tech rally for the ages because of the transformational growth that we see on the horizon. >> i'm sure a 10-year, a breather on that front doesn't hurt things at all. dan, thank you. >> thanks. >> still to come this morning, elf beauty continuing its ride higher on the year up triple digits as the company announces a new acquisition this morning. the ceo will join us to discuss as "squawk on the street" is ckn st menba iju aomt.

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here in the bay, our cars takes and all of our stuff where we want to go. but, our cars can't take us e with unpaid tolls. vehicles with overdue, unpaid tolls may not be able to renew their registration until outstanding balances are paid. payment assistance is available. visit bayareafastrak.org/ase so go pay your unpaid tolls y and keep your wheels on the ! welcome back to "squawk on the street." let's get to kate rooney with news in the crypto space. >> we have forward momentum for spot bitcoin.

grayscale's application was denied to scale gbtc into a bitcoin etf. check out shares of gbtc. looks like they're up 15% or so. this fund had traded at a discount to bitcoin amid fears the fund would need to be wound down if the application wasn't approved. you can see it surging on this news. coinbase as listed as a partner in a lot of bitcoin etfs up double digits. bitcoin getting a pop as well. it could pave a way for the first of its kind etf. analysts have seen this as a way to open up the flood gates to allow the everyday trader get bitcoin and make it easier to allocate to crypto. grayscale says this is monumental step forward for american investors, the bitcoin

ecosystem and all those who want to use the bitcoin environment. and grayscale team is actively reviewing the details outlined by the court's opinion. you have blackrock and fidelity also in line. this has been seen as a major catalyst for prices. bitcoin in particular. the cryptocurrency has been trading side ways as volume drops and retail investor interest has slowed down along with prices. back to you. >> kate, a key part seems to be the commissions, unexplained discounting of the obvious mathematical relationship between spot and future falls standard of decision-making. that's from the decision. can you explain what that means to our viewers? >> well, so, one of the things they worried about -- or they said they worried about was market manipulation. the argument has been they already approved a futures etf.

they've gone back and tried to solve things like surveillance and added new partners. the argument by grayscale and others has been, we solved the issues in terms of market manipulation and what the s.e.c. has said are the issues here, and you've approved a futures etf, so essentially it's want that different. that has been the argument from the crypto bulls and from grayscale in particular. that's my reading of it. but there has been a lot of hand-wringing over why the s.e.c. has not approved this because it would be, you know, potentially safer to offer retail investors rather than getting exposure elsewhere. >> thanks for that. let's bring in bob pisani and get more color. there are movers as a result of all this. >> the question is whether or not this will force the s.e.c.'s hand. remember, they have punted on this. they have 240 days to approve or not approve the ark application. that was the first one out. 40 days. we did this january 10, 2024

would be the maximum date they can approve or disapprove the actual application themselves. here they're being sued by grayscale and saying the process is unfair and they have not adequately explained what's going on and why they denied the application to begin with. i think this is definitely going to move forward the process. it's not necessarily going to force their hand immediately. i don't think this changes their response time. they have a maximum of 240 days to respond to the ark application that was put in months and months ago. i don't think that's going to change here. i don't think any of the other ones are going to change either. the key point here is the s.e.c. has always cited fraud and manipulation in the underlying markets. it approved bitcoin etf futures because that's a regulated market. in the regulated market you're not dealing with futures exchanges, for example. that's a key point. they're all out of the equation when you're dealing with futures exchanges. that's one of the reasons that they approved the futures.

so, the question here is, i think this is definitely a plus for moving forward the bitcoin etf story, but i don't think it's necessarily going to result in some imminent ruling from the s.e.c. i don't think it will come out immediately and make a ruling on this. >> what does it mean for the s.e.c.'s credibility? >>. >> i think the s.e.c. has had a really hard time explaining why they approved something like the futures and disapprove the spot. the basic underlying logic is, look, if you manipulate the spot, then by definition there is an implication of futures being manipulated. for s.e.c. there are no things like bitcoin exchanges involved that were part of the problem. they essentially removed the issue, but you still had the fundamental problem of the manipulation from one to the other. the implication was still there. i think they couldn't explain that very well. the court openly questioned, why are you earning them down and

approving the futures at the same time? and i think they couldn't resolve that particular contradiction. they were just caught in a bind. they wanted to move forward the bitcoin story but they didn't want to deal with the fraud and manipulation and that's a problem. >> well, i guess we'll just keep waiting and see, given that time period you outlined. bob, thank you. bob pisani joining us on that ruling we got only a few moments ago. as for the overall markets, we're having quite a rally here. perhaps on those job openings dropping to the lowest level since early 2021. don't go awhe.nyer "squawk on the street" is coming right back.

good tuesday morning. i'm carl quintanilla with leslie picker on the floor of the new york stock exchange. coming up, higher yields are ahead, that's the thesis from jim blanco, and why there's one more hike coming from the fed. shares of smucker higher after strong earnings. the ceo will join us first on cnbc in just a moment. later, elf beauty announcing the biggest deal in the company's history. stock is now outperforming nvidia over 12 months. that ceo is with us in the second half of the show. but we're going to start this morning on investor