the next few months you're going to have to see that tighten up >> thank you for your time >> thanks. quick check on the markets futures this morning are sharply higher, up from where we started the session. the dow indicated up by about 175 points i want to thank jon and mike for being here today >> it was fun. >> it was. >> folks, have a great day today. we'll see you back here tomorrow right now, it's time for "squawk on the street. good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with sara eisen at post nine of the new york stock exchange. cramer and faber have the morning off. we close out the month of august today with the best week of the s&p since june as july core cpi prints in line ten-year, pretty subdued our road map this morning begins with the fed's preferred inflation gauge, what core pce results might mean for interest rate policy. also this morning, shares of

salesforce jumping after quarterly results and guidance exceed forecasts as the company rides the a.i. wave. on the flip side, add dollar general to the list of stocks hit by this month's retail rorout let's get to the markets and that batch of inflation data we've been waiting all week for core pce add to that consumer spending, 0.8, second best number of the year, pretty nice mix here >> we knew spending was going to be good because we saw an acceleration in spending for retail sales is question is, is it temporary? is it the barbenheimer effect? they've been spending on tickets for taylor swift i'm four minutes in line on that that's the question. as far as inflation, adds to the evidence this week, and we got

the revised q2 gdp, which included the pce deflator, and some weaker economic data overall. all of that paints a picture, carl, of a federal reserve that is likely to pause in september. market feels good about that right now. you've seen a bid for bonds and a bid for stocks as a result we're off those highs of, what, 4.3% on the ten-year yield and that's important, psychologically. it shows the data may be changing look, inflation data is more important than economic data, but if we see both continue to moderate, bond market seems to like it. so do stocks >> jpmorgan's note this morning suggesting that given the data flow and some positioning within treasurys, you might be looking at a picture where rates decline a little bit further from here there's the ten-year, as sara points out actually got to 4.098% earlier this morning and the fed speak continues today. we're getting collins on the tape remember what harker told steve last week about waiting for these hikes to work their way into the economy

the lag is pretty significant. now you got bostic sort of echoing that >> i feel policy is appropriately restrictive. i think we should be cautious and patient and let the restrictive policy continue to influence the economy lest we risk tightening too much and inflicting unnecessary pain. that does not mean that i am for easing policy any time soon. >> he goes on to say, underlying inflation may well be close to our target already >> that's about as dovish as it gets, though, and he's a nonvoter, so take it with a grain of salt, but yes, he has been known to be out front and sway some of the opinions on the federal reserve. i think the close call is now going to be on november. do they feel they need to hike again in november, or are they feeling like bostic is feeling let's see what the lags look like we're starting to really see some economic weakness, nothing pronounced in terms of recession or anything, but we know the lags can be long and variable, and that's what the federal

reserve has been banking on. that's what history shows us about more than 500 basis points of tightening. the bigger question is, why hasn't it worked so far? i think the jobs report tomorrow will be sort of an interesting test, because we are expecting a weaker number, cooling of job gains, but still healthy job growth we saw that evidence in the job openings data, which showed a decline into the 8 million, but there's still more job openings than they are unemployed people. expectations are in the 170s for job growth but you have weird things happening in august you had the trucker bankruptcy, for instance, but at the same time, strength in the retail area so, that will be -- this is the last pce before the next fed meeting. we are going to get a cpi report, and this is the final jobs report before that meeting. >> the estimate for tomorrow, low 170s, would be a 32-month low. i was struck yesterday by goldman sticking by 149. morgan stanley at 155. you're right, they're having to strip out strikers and there's

yellows and a bunch of cross currents >> writers strike in hollywood certainly part of the story there. but i think a lot of people are starting to watch the citigroup economic surprise index again, which measures where the data points come in relative to where wall street expects them and they're down as -- here's the payroll forecast, morgan stanley even weaker at 155 on private payrolls, but as far as the economic surprise index, vital knowledge points out it's now down 50% in the last month with a slew of data points signaling momentum market seems okay ifwe're seeing a loss in economic momentum, as long as we're not seeing a recession and then again -- then you wonder, how does it fit in with bank of america saying this is the trough in earnings and she likes what she's seeing on guidance and capital spending, on margins in particular this quarter? >> savita had a treasure-trove of information this morning about corporate sentiment getting better, one of the biggest bounces in several quarters they do think this is trough earnings

good guidance on capex because there's so much reshoring going on years of underinvestment, lots of incentives in place really, the only area where she thinks things are lacking are buybacks because they're spending so much on capex and debt servicing as well >> which ultimately is bullish absent a collapse in demand, she says q2 likely marks the trough on earnings. question mark around that collapse and demand. let's turn to salesforce, though biggest gainer this morning. now up more than 70% for the year quarterly results and guidance both exceed wall street estimates, gets a big boost from a.i. here's ceo marc benioff on the conference call last night >> we are at the dawn of an a.i. revolution, and as i've said, it's a new innovation cycle that is sparking amounts of tech buying cycle over the coming years. it's also a new tech investment cycle. we are very thirsty to make sure that salesforce is the number one a.i. crm, and we have done a lot organically to do that in the last six months.

of course, there's things out there that we could do to help us with inorganic as well. we're looking at those things. >> well, it was all about a.i., carl, what actually impressed the street was the margin story, which continues to be the huge improvement story since all the activists were in the stock. dan ives of wedbush calls it djokovic-like performance. even with some of the macroweakness. that was some of the skepticism going into this report they're vulnerable when i.t. pulls back, but 11% growth was better than the 10% expected >> that margin guidance was the holy grail getting back to 30. i think the note out of ray jay today was too legit to quit. goldman reiterates a buy they see a 50%-plus upside and you saw that cramer tweeted there's going to be a rebound of analysts who doubted their ability to get margins back to this level and they're going to be issuing mea culpas.

>> they kind of already are, actually, when it comes to the analyst community. the other thing, and i read the investment note letter that jim put out last night on this name, since he's been all over it and such a strong believer in it he noted the revenue attrition rate stayed low, a sign that enterprise customers cannot afford to leave salesforce as mission critical software, he says, because the macro commentary did note what's happening and some of the weakness amy weaver, the cfo, for instance, talked about elongated sales cycle, additional deal approval layers, deal compression in our services business clients have been more careful, she said, since july 2022. so, that's an issue for salesforce, but you can see they're cutting -- i mean, first of all, they've done layoffs, so that helps and they've been cutting administrative expenses. research and development as a percentage of revenue, all declining, so all of that is what's leading to the 30%-plus

operating margins, which has come a lot faster than the street expected. >> three quarters faster than crm themselves had figured and it feeds to this string of solid results in software in general last week, you saw decent results. cisco was interesting as well. okta today raising their guide by a third even crowdstrike, not as dramatic a premarket gainer but a pretty nice beat with revenue ahead as well. >> that's going to help. if you're worried about the i.t. spending environment, which always pulls back during recessions, companies' willingness and ability to spend to upgrade their software and their products, it does feel like whether it's a.i. or continued shift into the cloud, it's holding up better than expected, and it has been sort of one of those wild cards and a lot of those quarters prove that point. >> b of a has -- they're starting to track actual use cases, because we talk so much sort of generically about what this is going to do for corporates but they're starting to delineate hard use cases.

i think one example was meta rolling out chat bots where you can choose your own personality. so, they don't all come equal. you can -- i don't know what that means >> you can ponder that >> exactly >> but i think it helps with the markets now it's the monetization what does that look like so, salesforce is going to host dreamforce in the next month, in the next few weeks, and so that's the lingering question about what kind of growth that will drive because that's not even priced in at this point so far, they're being rewarded for the improved profitability >> right also, struck by benioff's constructive comments about san francisco -- >> because of a.i. >> what he called the a.i. capital of the world it is the last trading day of the month. s&p is on pace for its first negative month in five, but riding this four-day win streak as we get into september how should investors be preparing for the new month ahead? wolf research chief investment strategist chris is with us here at post nine to celebrate the end of the month we might trim our losses for the month to a percent or so

>> we came into the week oversold, and we had some better economic data in terms of the lower, you know, jobs openings, and i think that was enough fuel to put the market higher here. september, we all know, is a very challenging month october is as well, and it's conference season and there's going to be a lot of corporate managements that are out there talking starting next week and we'll hear what they have to say because i think the economy is slowed over the last month or so >> you're nervous about the comment commentary we were talking about the analysis of call transcripts for q2 where sentiment had gotten a little bit better, at least by one estimate >> i think it's a bifurcated economy. on the one hand, the consumer is slowing, and that's the biggest theme from now to the year-end is will the consumer slow enough that the market shifts from soft landing narrative to recession worry narrative? and i think in tech with these small business models, whether it's salesforce or microsoft or others that are seeing the secular trend from a.i., i think they're benefitting and almost

becoming acyclical at the moment >> it's interesting. we had the visa payment volume for the most recent month up 7%, which was better than the prior month, but then you have the savings rate back to 3.5% and you have challenger layoffs tripling month to month. how do you -- which is heavier >> we're worried about the consumer as we get into the fall here you've got the student loan repayments restarting in october. you've got companies looking at year-end to make their numbers and cut costs, and you have the excess savings, by all accounts, finally dwindling down it's shocking what happened to the sentiment surveys, both institutional investors and individual investors after a drawdown in the nasdaq of 8% they really fell, and that shows you, to me, how sensitive spending is to not only the stock market but gas and food prices >> but chris, and i read your notes because they're very good, you've been cautious on the

consumer from the beginning of the year and cautious on the stock market as well august was a down month, but we're still looking at gains of more than 17% year to date so, the economy didn't surprise you in terms of the resilience and change your forecast >> the economy has surprised to the upside at the end of last year, it looked like we were going to recession and the consumer came out and spent. the trends that were in place was the excess savings drawndown, which we underestimated the extent to which consumers would do that and tap home equity loans and tap credit cards, and then secondly, when the fed came in and rescued the banks in march, that added fuel to the fire and throw in nvidia's upside guidance in early may and that was the ingredients for a very strong market. we just don't see those trends in the back half of the year you have liquidity going out as the fed draws down the balance sheet. you have the consumer slowing for the aforementioned reasons before and i don't know what the impetus going to get the economy

to reletter. >> do we think get away with the soft landing, nonrecession with the federal reserve stopping to raise rates? that's the goldilocks scenario that the market has latched on to which has helped stocks and bonds lately >> i think over the near term, the market's going to view this bad news is good news scenario as we get into q4 and people start to recalibrate the soft landing narrate ive -- >> you don't buy it? >> i don't buy it at all i think it's a false narrative, and i don't see it happening >> are there pockets within equities where you can sort of play out that thesis >> yeah. we like energy energy's our favorite sector counts are down. it's been a strong group the valuations are still cheap we like the big seven tech as a barbell hedge, but i think discretionary's a hornet's nest right now. companies are missing here and there. you have to barbell it energy, tech, discretionary. energy, tech, and then discretionary and industrials and some of the more defensive

groups on the other side tech can work, i think, over the near term, as long as companies can make their numbers and beat them i get worried as we get late into the year that tech companies start to give more cautious guidance, and i think when they give that more cautious guidance, the stocks are very much priced for perfection so you have a market where the vicks is around a 13 handle, the market is trading at 18, 19 times forward earnings, stocks are priced for perfection into a seasonally weak period of time just not the time to extend risk >> you are right about conference season next week. chris, good to see you >> you too still to come, what did you call retail just now a hornet's nest. we're going to hit that hornet's nest of retailers, including dollar general, which is the biggest s&p loser so far this morning. taking a look at futures overall, final trading day in the month of august, for the month, stocks are down about 1.6%, though it looks like we're going to end on a high note, dow

futures rising 147 points. nasdaq, ou, thghunder pressure more "squawk on the street" when we come right back 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.

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and creepy ads that follow youa from google and other companie. and there's no catch. it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. a few retailers out with results this morning, including dollar general, tumbling on an earnings miss. similar story for five below, at least on the guidance front, lowering its guidance to account for shrink but signet jewellers bucking the trend with a number of retailers

warning of weakening demand and spending declines. i did have a chance to speak with authentic brands ceo jamie salter they have all sorts of consumer brands i always listen to him what he says about the consumer and retail he downplayed fears of a slowdown listen to what he says >> the overall consumer -- where are we at right now? are things moving a little slower i would say that things are moving a little bit slower here in america, but not -- >> not recessionary? >> not recession and there's other retailers like t.j. maxx, which is doing incredibly well. you can see it by their numbers. costco, incredibly well. so, the landscape is changing a little bit, where people are shopping so, people are still really shopping they're just going to different places to buy their consumer, you know, product today.

do i think we're anywhere close to recession i don't. and from a global standpoint, there's lots of pockets around the world that are booming you can go to southeast asia the numbers are sort of through the roof so, it really depends, you know, if you ask me, specifically, how's business in china? i'd tell you china is moving slower than america. >> we see that in the data >> yeah. i mean, i'm quite optimistic that we're going to go through this the biggest problem i think we're having right now is interest rates and interest rates, people look at interest rates, so the first thing that you do is, you know what i canget 6% at the bank right now. i'm going to take my money out of the stock market. i'm going to put it in the bank. i can sleep at nighttime >> jamie salter, part of that interview with the heads of shein and simon property when they did that deal last week,

and i wanted to play that, carl, because he has so many brands. reebok they brought a lot of the troubled brands, barney's new york, forever 21, has a really good sense says consumer's slowing a little bit in the u.s. but not recessionary there's a lot of noise right now with retail, whether it's shrink hurting margins, you know, we heard that from five below, got a little bit of that from dollar general. the dollar general customer in particular is a little challenged right now we saw that in the comps and the traffic numbers. it's not easy to figure out what's happening there's not one straight narrative with the consumer. >> you could easily make a list of the blow-ups in the last week or two, foot locker, the dollar stores, dks, macy's, nordstrom, even campbell's, which we'll talk about later, from a margin standpoint but whether it's shrink, whether it's the comments about delinquencies, whether it's margins, really, the best thing they've got going, perhaps, is that a lot of the destocking is out of the way. and you might be going into a

holiday period where you don't have to be quite as promotional and maybe that helps the transports a bit as well >> i think i'll be watching lululemon, because that has been an outperformer, solidly, but there's always caution going in on lululemon quarters. if they can continue to show double-digit growth, raise their guidance or reaffirm their guidance, that, you know, a lot of the bank of america trading notes says that will put them in the stratosphere of tjx where they're just executing better and they're in the right categories right now for the consumer ross stores, tjx we'll see about lululemon tonight. there are parts of retail that are working where the consumer demand has held up i just got back from vegas, carl, and i know this is not retail, necessarily, but you would never know there's a consumer slowdown there. the numbers there are unbelievable and they're not seeing any signs of slowdown. >> that's interesting, because we have seen -- >> and it's 110 degrees. >> we've seen cautious comments on the airlines at least, and lodging. i want to hear more about that -- i guess what happens in

vegas stays in vegas >> yeah. i stay at the roulette table i was actually there working on a project. >> yes, yes. we'll take a quick break here, get one more look at the futures as we close out the month of august nasdaq has settled back into the red but obviously, the dow is going to be helped by salesforce, and we will get to sara's favorite story of the morning as taylor swift brings her concert to movie theaters. >> amc is up 17% premarket >> when we come back people are excited about what ai will do for them. we're excited about what ai will do for business. introducing watsonx a platform designed to multiply output by tailoring ai to your needs. when you watsonx your business, you can build ai to help coders code faster, customer service respond quicker, and hr handle repetitive tasks in less time. let's create ai that transforms business with watsonx. ibm. let's create. (upbeat music) - [narrator] what if there was a hearing aid that could keep up with you? (notification dings)

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dow futures pointing to a strong start for wall street today. thanks in part to salesforce, stocks surging 9% week to date and it's up a bunch this morning on the back of earnings.

3m, apple, verizon, caterpillar rounds out your top gainers on the dow so far for the week. opening bell just mes aymontaw to duckduckgo on all your devie duckduckgo comes with a built n engine like google, but it's pi and doesn't spy on your searchs and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. and there's no catch, it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today.

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and responsible investing. watch shopify this morning rallying after announcing this new partnership with amazon. the tech giant is releasing an app in shopify's network that will allow merchants access to amazon's buy with prime option within the shopify network you can see the shares going to open up about 7% canacord says they met with management they say e-commerce is a secular growth space and shopify has become a de facto standard for small and medium-size businesses they go from $60 to $70. >> on this deal, they say they like it because it keeps shopify's own checkout and payments but also utilizes amazon's, what they say, best in class fulfillment and delivery capabilities, which can only be additive to their merchant gmv, which is, of course, their key metric they also say it seems like shopify merchants are outpacing

broader consumer spending, signs of a slowdown in broader spending, but they haven't heard that from shopify. >> interesting we'll watch that along with the opening bell here. at the big board,it is oil and gas company pacific celebrating its fifth listing anniversary. and at the nasdaq, it's the jed foundation with the mission of preventing teen suicide. back above 4,500 by the way, yesterday's close was the first close above 4,500 since august 7th and we'll see with the bulls can hang on to what's been a pretty dramatic win straeak. >> looks like we're opening with every sector higher. information technology is up 0.3% stock story of the morning just became amc the entertainment, the movie company, it's up more than 7% now premarket.

this after a thaylor swift twee where she tweeted her era tours movie is coming to theaters in october, and she tweeted a link to amc i only had a four-minute wait before the show started, so it wasn't like crazy breaking the internet, which is a good sign, but also a sign that amc is getting in on the taylor action, which is only bullish. >> right is it just amc imax is up 2.25% >> maybe, but the tweet link was to amc theaters for signing up for tickets. i'm trying to reach out to adam aron to find out if it's exclusive or what the deal is. either way, this is part of the story. it's part of the macrostory as well we got these personal spending numbers, and they were strong for the month, and there are questions about whether we're really seeing a re-acceleration of spending in july or if it's just factors like "barbie," "oppenheimer," taylor swift tickets, beyonce tickets, which are averaging $2,000 crazy, crazy prices for some of these tickets. morgan stanley says the unwinding of these events

combined with the expiration to the student debt moratorium, 1.4% downside to real pce in the fourth quarter of 2023 of course, that would be perversely good news for the market because it would signal that the federal reserve wouldn't have to do more raising interest rates to deal with potentially rising inflation if it's just a temporary boost this summer because of these phenomena. >> would be interesting. given the fact that the strike in hollywood -- the strikes in hollywood have not really give us any clue that there's any resolution in the near term, it would be interesting to see the movie theaters try to incorporate the strength we've seen in live performances if they can find a way to make that some of their content going into a year where we don't know -- we've already seen releases pushed back because of the strike >> at some point, it's going to start hurting the movie theaters, but we have to wait a few more months before we start to really hear that. at the time being, it's helping a lot of these production companies in terms of their cost-cutting and that's been

something that investors have cheered. one stock that i wanted to hit here in the early action is campbell's soup, which reported earnings today it was actually a beat on organic revenue growth and the company's guidance also looked strong this was the first time they put out full-year guidance for the first year stocks up about 3% here in the early action we're going to talk to mark clouse, the ceo of campbell's soup later in the show in the 11:00 hour the strength is in snacks more than meals and beverages that was a big performer, and then pricing is still what's driving the growth, up 10% while volumes were actually down 5%. so, we'll talk to him about just how much more pricing powee costs come down for food items, and as consumers slow down and then the middle of the store always gets a bad rap because it's just not where consumer tastes are but so far, they're putting up pretty decent numbers and

suggesting that they feel confident in the future. >> what's organic for the year guidance, like, one, maybe >> to negative >> yeah. >> i think they put out a negative number to 1%, which was a little bit weaker than expected we'll talk to mark about what he is seeing from the consumer and why he expects that. >> yeah. it's interesting, compare that in terms of the consumer mindset with what's happening with chewy today. we had concerns about petco last week, but chewy comes in this morning ge here, that would taku back to early 2020, essentially erasing any of the boom they got from covid where everybody got a pet. >> i liked that report the stock has big-time underperformed the market so far this year, down 23% into the print. down another 11.5% today

what the market didn't like about this is the net adds in q2 there was a decline of 52,000 after a modest increase in q1. also, the outlook for net adds in the second half wasn't exactly what the market wanted to see, and so that's part of the downgrade today and also part of the sort of negative vibe on the stock, even though the numbers weren't that bad and they said, yeah, we're not immune to sort of the macroweakness on pet spending, but so far, it's been very strong >> yeah. costco, similar vein as core august comps come in line pretty much in line, about 3.2% watch visa as well we've been talking about the increases in these fees. interesting piece in the "journal" today that suggests that merchants might have to pay an additional $500 million as at is payment volume, kind of points to whether they're relying on the credit part is difficult to

tell >> we know that more americans are using credit cards now and we don't know how problematic that is. it could just be a sign that we're back to pre-covid levels and that the savings are dwindling. we saw that in the savings rate, went down to 3.5% today in the pce numbers. the other one i wanted to hit since we're talking about consumer and spending and trying to figure it out is signet jewellers. they had a beat and maintained their guidance, which was very important. stock is higher by 8.5%, so these stocks are getting rewarded when they come in better than expected heard from jenna, the ceo, this morning, in a note to me, she wrote that she feels good about guidance, confidence in the full-year guidance, believe that engagements -- and here's the key -- she told me, are on track to begin their recovery in q4. she said we're seeing a modest improvement in trends in purchasing behavior since june with rebounding, particularly in

fashion. we know, and she's been talking to us about the fact that engagements were way down because of the covid trends. they put some numbers on it, actually, engagements down 25% than a typical pre-covid year. 2.1 to $2.2 million in 2023 in the u.s. they see signs that's changing it's changing and troughing. q4 looks like. they do this whole proprietary study of all the factors that would lead to couples getting engaged. they have 45 different signals they look at on couples. they say 27 of them are flashing milestones that people are going to get engaged there's the comments >> i've got to see what they feed into that model >> i have no idea, but apparently27 milestones improved by 700 basis points, so ee engagements are on track for a multiyear recovery >> we'd be looking at a big wedding season next summer, i assume >> exactly and for years to come, which is so key and so

critical in the signet business. and also, the fashion jewelry. the fact that fashion merchandise below a thousand dollars is coming back strong. >> and travel and lodging and all of that as well. china is a big story this morning. piece in the "ft" today that president xi, according to western leaders, is not going to go to the g20 in india, that these tensions with modi are really beginning to assert themselves and that india's coming around on the view, the obvious view, i guess, among some, that their ascendance is not going to go unnoticed by beijing. by the way, india gdp kind of puts china to shame. interesting out of goldman as well, yesterday, their prime brokerage data shows there was capitulatory story also cutting mortgage rates in china on the heels of raimondo's visit. >> we're going to speak to commerce secretary gina

raimondo a lot's been made of her trip, but what deliverables does she expect she did use the word uninvestable in describing how some investors are feeling about china these days on some of the economic weakness. we'll see what she learned from chinese leadership as far as the data is concerned, we did get two data points overnight. the pmi series, below 50 so, still not expanding, but 49.7 was better than the 49.3 expected the nonmanufacturing numbers in china slipped a little more than anticipated, so it was kind of a mixed bag, but they're in expansion mode at least from 51.5 doesn't really do anything to calm fears about the chinese economy right now. but it also doesn't show necessarily collapse and it's mixed -- you know, i mentioned

l lulu before. they've seen strength in china ralph lauren has seen strength in china as well it's not a straight picture of all-out weakness there is spending, and it's domestic spending, and you can see that in the services number versus the trade numbers on manufacturing. >> all right we continue to monitor the damage out of hurricane adalia in florida as it makes its way to the carolinas and georgia interesting assessments in the "journal" this morning about potentially the insured losses maybe just south of $10 billion, which wouldn't quite put it in the top ten of all u.s. hurricanes in history. maybe a little bit less damage than feared because it hit landfall in a sparsely populated area of the state. could have been a lot worse. >> we'll continue to monitor that, of course. just as far as other movers beyond the insurers, brown foreman is one to watch after a terrible reaction to a miss on earnings we didhave some analysts comin in to defend this stock, so i was curious where it would be trading this morning morgan stanley believes that the big decline yesterday was a

buying opportunity, good entry point, and they see increased conviction of some of the tenets of their recent upgrade of the stock and number one is that agave prices are down, so even though we're starting to see alcohol -- this is a big secular trend that we're going to watch about whether alcohol consumption moves lower because of health concerns, because younger generations just aren't as into it, because covid marked an increased period of drinking, but they say that tequila is outperforming and the lower agave prices should really help on the margin story for brown-forman looks like it's lower again. >> speaking of sort of sin names. you saw the news about cannabis yesterday where hhs is going to ask dea to downgrade cannabis to a schedule 1 msos is the ticker on the advisor shares cannabis etf hasn't done much for a long time but did pop yesterday. we'll see if it holds. levels getting back to the

200-day average on that etf, which it hadn't really been at since december of last year. interesting times. >> any piece of good news on the regulatory front will just bring these stocks to life, because they're so -- they're hated, and they've underperformed, and this whole concept of legalization in the u.s. has been pushed out, and on the back burner, so any sign that there's some momentum here is good, especially for the big ones like tilray, for instance, and canopy >> so, 4,525 let's say let's get to bob pisani. >> pce data generally supportive of the soft landing. we'd like to see a little more aggression or reduction of inflation, but generally, pretty good, and the broadening out story is sort of coming back in the last few days, so you see tech communication services and consumer discretionary this was the leadership groups, the three leadership groups in the first half of august, fell back a little bit in the second half, and the last few days, they have been coming back as

the data's been more supportive of the soft landing. banks, which did not have a generally good month, are looking a little bit better. health care was a very good early performer in the first few weeks of august, slipping back a little bit here. if you look at the movers today, fairly broad stocks moving up verizon's had a very good week so far nike, caterpillar, microsoft, salesforce, good earnings there from salesforce all helping. if you look at the -- for the month, this is the last day of the month. and it's a sort of interesting evolution, shall we call it. energy and health care were big movers in the first half of august technology, generally, was moving down. that's kind of reversed now, and the six, seven trading sessions, technology's made a bit of a comeback energy faltered a little bit because oil came down in the middle of the month. banks had a very rough month overall and are still ending among the worst sectors to the downside here. so, we've kind of had a tale of two months here. the first half of the month, we

have stronger data we had higher rates, and we had lower stocks and then, in the second half, we have had the goldilocks data we have had stable to lower rates. and stocks have been rallying as a result of that the big issue for earnings, and this is where i come in for the stocks guy, is how far can earnings support these markets moving to the upside as you can see, in the bank of america people, we're talking about this this morning, second quarter was the trough, and the estimates now have been steadily rising for the third and the fourth quarter and into 2024 we're at $60 this is how you get to $240, essentially, for 2024 earnings estimates versus, oh, you know, somewhere around $218 or so for 2023 you can see, carl, that the estimates are rising steadily here the estimates increases somewhere in the 10% range the important thing is it's still an expensive market. we're trading still for more than 19 times forward earnings for the next four quarters that's a very expensive multiple so, earnings have to move up a

little bit more to make the market enticing from a valuation perspective. carl, back to you. >> bob, thanks for that. meanwhile, morgan stanley among the firms coming out to react to this morning's consumption data and spending data, looking at q3 gdp of 1.9%, which is way south of what atlanta fed -- >> where are they still? 5.9% they're going to have to adjust to it after spending data, but it did come in in line >> little more data on tap today. chicago pmi. let's get back to rick santelli. >> this is very fun data here. there's a lot of asterisks this is an august read for chicago pmi, expected to be 44.2 it's well better at 48.7 and that's under 50. it's under 50 for the 12th consecutive month. hasn't been above 50 since august of last year. one year and what's ironic is 48.7 is still the highest level since

one year ago's reading of 51.9, the last time it was above 50. so we have had a lot of sub-50 soft readings. we could see interest rates have moved up a bit since the 8:30 release of some of those data points the significant issues continue to be that inflation is moderating, but some of those core year over year numbers are moving down like helium balloons with a slow leak "squawk on the street" will return after a short break

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pretty decent mix of gainers here at the open western digital going to lead you up about 5.5%. broadcom and micron. almost every sector is green dow off the initial highs but

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welcome back to "squawk on the street." it has been a slow few years for the ipo market, but with names like instacart and arm holdings announcing plans to go public, could this ipo drought be coming to an end? leslie picker joins us with more good morning. >> good morning, sara. a lot of people hope it is i sat down with alan waxman co-founder of sixth street for our delivering alpha newsletter out today. his firm has a sizable presence in growth investing having made billion dollar plus investments in spotify and airbnb before each went public i asked waxman where we are in the ipo cycle and whether he expects the window to open soon. he said we're in the seventh i think of the cycle >> we've already started to see a real pick-up in our pipeline as people ultimately commerce has to go. you can only extend the runway for so long and there are growth opportunities out there, and i think people are starting to look for capital picking their heads up and having the ipo

market open a little bit, a little bit of a small creek, helps and sort of gets commerce moving again our expectation is for 2024, volumes will be higher, i don't want to say much higher, it's hard to call right now, but materially higher than they were in 2023. >> he said this year the challenge was that startups, quote, withheld from looking for new capital because the valuations aren't quite what they were in 2021. but he adds, at some point they'll have to come back for more financing for more of waxman's thoughts including whether private credit is in a bubble or out of the woods from a recession, common topics, you can subscribe to our newsletter using the qr code you see there on your screen the full interview will be sent out later today. guys >> leslie on the ipo front just wondering how the companies are positioning and their bankers are positioning them potentially differently in an era of rising rates the cornerstone investment from pepsico on instacart whether

that's a sign or better fundamentals like profits out of some of these companies set to go public. just curious they're aware of what's happening in the environment and decided to pull the trigger. >> you're spot on. how can you go public in the current environment and make it as risk-free as possible for the start-up and investors cornerstone anchor investors known here in the u.s. that's a big component of it because it makes for fewer shares that you need to actually sell to the buy side because you have enough locked up by the cornerstone investors. profitability, an important component of that because it makes it easier for the buy side to model that out using kind of cash flows and more traditional models, as opposed to just looking at the top line and the potential for growth and then, you know, part of it just also has to do with the way that these deals are marketed. obviously, a.i. related companies have seen a bit of a boom this year you've seen that with arm as well as just the tech component

of instacart as well they're advertising and technology, being a part of this deal all of those combined are helpful in this environment, and then the need for these individual companies to go right now. >> it feels totally different than the last cycle, 2021. >> '21. >> rent the runway robinhood. >> doordash. >> yeah. >> airbnb. >> sweetgreen. there were a lot of them leslie picker. join us for delivering alpha, our investor summit in new york city september 28th we'll convene investors and leaders as we do to provide insights, ideas and analysis to help you balance the risk with maximized returns. scan the qr code on your screen or you can visit cnbc events.com/delivering alpha. still to come this morning, as sara said earlier the commerce secretary in her first broadcast interview since returning from that four-day trip in china. a lot to talk with her about

meanwhile, break-even for august is 4588. just a little under 60 points away s&p up 13. back in 2.

good thursday morning. welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla, live for you as always from post nine of the new york stock exchange. david faber has the morning off. big show ahead for us. commerce secretary gina raimondo later with us later this hour, her first live interview since returning from the high-profile trip to china. we'll get the read with one company big exposure, jennifer rumsey joins us at post nine take a look at how stocks are fairing in the early action. the dow is higher by 113 points. you can thank salesforce for that move. it certainly is the biggest contributor. the s&p 500 up a third of 1% on this final trading day of august and the nasdaq rebounding up 0.5% real estate, health care, strengthen, tech, industries, financials and materials. >> 30 minutes into the session

here are three movers. first salesforce, fueling the dow higher it top gainer in the s&p after beating on the top and bottom line and raising their guidance we're going to break down the numbers later this hour. dollar general slumping after slashing its forecast for the second quarter in a requite softer sales trend and increase in inventory shrink and watch the banks, ubs hitting an all-time high after a mammoth profit beat, first quarterly report since completing its takeover of credit suisse. going to be cutting about 3,000 jobs in switzerland over the next couple years, and that does remind you how highly attune the market is to head count and employment, a big number tomorrow. >> good news on inflows according to the ceo. we've got to start with the data in the u.s., because we got a highly anticipated spending income and inflation read today on pce. the big news, is not inflation, it's spending, which rebounded sharply during the month.

we knew it was going to be strong, it was. we did get 0.8% rise in july. that was up from an outwardly revised 0.6% spending in june. then when it comes to the price index, the pce price index, the fed's preferred gauge, less exciting, it was in line, 0.2% higher from the prior month. 0.2% higher on core which the fed is watching carefully. if you look at the change from last year, 4.2% higher in the month of july. it's not near the 2% target. we're more than double where the fed wants it to be. it has shown moderation and the bond market is taking it well because basically it came in line. it also, carl, shows how difficult it is for the fed right now, whether it should keep raising rates because we're above target, or because we're starting to see cooling of inflation, cooling in the labor market, cooling in the economy, wait to see how these lags play out because they've done so much

already when it comes to tightening. there's a split at the fed, split at the market. right now the market seems cool with the idea that they're going to pause in september and wait and see in november. >> interesting piece out of the boston fed this week. i don't know if you noticed it, looking at the time of these lags and they argue for u.s. corporates it's usually about five quarters after the initial percentage point of hikes. you would be getting to it about now. and maybe that's one reason why s&p had a report on u.s. corporate starting to cut back their debt loads and especially their debt margin ratios, especially noninvestment grade. >> it gets into the broader debate which we've been having for a dwhishlgs they have the right medicine for the problem of inflation? are these hikes -- we've been having this debate since they started hiking. going to really bring down the inflation that we're seeing, multi decade highs, because of

things like supply chain and post-covid hangovers. we're starting to see the data weaken, especially in jobs. you saw it in adp this week. we saw it in the job openings. adp not the most utrustworthy. expect a 10 nu-- 170 number. the question is, are they working enough and is this bubbling of inflation if we do see it, something for them to worry about or just part of the process of inflation calming? for instance, this morning, we saw -- and everything can be explained, we saw the number, the quarter services number ex-housing then you have the portfolio management asset prices have increase and getting paid more. >> in the eurozone, cpi comes in 5.3, a couple of tenths hotter than expected in line with the prior month. month on month 0.6, looking for 4. >> it's going to be a bigger

tossup on september for the ecb whether they're done or whether they have more to go. higher percentage odds than the fed that they hike in september, but still, less than 50% at this point because their growth slow down is more pronounced and the ecb could potentially worry more about growth. although i will say, after speaking it to a number of these central bankers, they're prepared for a growth slowdown. it's all about inflation. that is fight number one. that's why the inflation numbers like this one have to be overweighted more than some of the growth slow down fears. potentially september is on the table for the ecb. it gets into the bigger question, carl, about how much the economy is really slowing. we just had a strong read on consumer spending here in the u.s. pantheon macro says don't expect it to last, though. barren himer is part of the story. there's a great chart out of pantheon that shows how much more we're spending at the box office and how that correlates

to consumer spending. there was a big tick upped in the month of july. >> can that be carried into a school year, for example, where summer is over and we head into a seasonally slow period. >> and a period people have to start paying student loans which the retailers have warned about. the other thing we're watching is the sort of delinquencies rates for credit card loans and auto loans and home loans, a lot gets made of these numbers and we're back to pre-pandemic levels, but "the washington post" put out a good chart breaking down the delinquency rates on different kinds of debt and you can see on the right it is moving higher and we're going back above the pre-pandemic highs. the higher that goes the bigger problem you have for the consumer. nothing alarming at this point according to economists, but it is something we have to watch into the fall. >> certainly being backed up by micro commentary are you as well. our next guest does expect a recession in the first half of

next year. bracketed by the upside of a soft landing. it citi's global chief economist nathan sheets is with us. great to see you again. have you been incrementally altered by the data this week? >> i can tell you that we continue to expect a recession, most likely during the first half of next year, but we're not seeing any evidence yet of it in this data. on the one hand you have a gradually moderating -- i wouldn't say slowing, but a gradually moderating economy and on the other hand gradual evidence of disinflation. frankly, when i look at the data, what would a soft landing look like, and i think it would look very much like what we're seeing. the mainp reason that we continue to expect that

recession is really based on history. when the economy has been this hot and the unemployment rate this low, the unwinding of that at some point in the process tells a recession. that's a pretty lonely call when i look at some of these kind of goldilocks, for lack of a better term, the goldilocks data. >> so which would be a bigger mistake, nathan, for the fed to stop hiking now with core pce more than double the target, or for them to keep hiking, as we've seen the continued step down in the monthly rate of inflation increases? >> i think at this stage, that fed has hiked significantly. monetary policy by most metrics is restrictive. what the fed needs to do is maintain the type policy it has, and let the data come to that.

if over time they see inflation is proving it to be more stubborn than, then they can hike a bit more. on the other hand it may be that that medicine they've administered proves sufficient. maybe they need to hike maybe another 25, but not much more from where they are. i think they can be empirical, i think they can be incremental, and i think they can be gradual at this stage. frankly, for me, that was the major takeaway from jay powell's jackson hole speech last week. >> nathan, big number tomorrow. what's your view for non-farm payrolls and are you of the belief you can start to see real disinflation, deflation, without unemployment rocketing higher? >> on the second part of your question, you know, historically that hasn't been the case, and our forecast certainly doesn't include that.

but we have seen core pce come down over the last 18 months. we've seen some moderation in wage growth. even as the unemployment rate has remained very low. and i think this is happening against the backdrop of a, what should i say, a gradually moderating, again i come to that word, gradually moderating labor market where job gains -- they're still solid. i think consensus is around 170 for tomorrow's number. we're expecting something a little lower because of the screen writers strike, which did take a little bit off, but gradually moderating labor market. if that moderation continues, then maybe we will be able to get out of this without a recession. but, you know, another aspect of this is the savings rate that we

saw this morning was low. it was at 3.5%. and what is the adjustment of that savings rate look like and mean for the labor market? >> right. which is sort of why i showed this delinquentsy chart which shows rates rising for credit cards and auto loans and nothing too alarming, nathan, but i wonder what's happening beneath the surface for the consumer as all those excess savings get spent? >> the way we're interpreting that increase is, we see it as suggesting that cracks are starting to emerge, particularly among lower income households. i think that is a vulnerability in this economy, that as these rates rise, that some parts of the economy and some parts of the consumer sector, particularly some in the lower half of the income distribution r quite levered and that could be a source of softening as the

ongoing effects of the fed's increase over the last 18 months kind of percolates through the economy. >> certainly sounding like bostic and harker. we'll see what tomorrow brings. good to see you. >> as we head to break our road map for the rest of the hour. commerce secretary gina raimondo with us this hour to break down the key takeaways from her trip to china and whether the country is uninvestable now. >> may the salesforce be with you. where wall street stands on the stock as it reports a beat and raise guidance. more on the state of the economy with the ceo of cummins as the shares underperform on the year. big show still ahead. don't go anywhere with the dow losing steam, but still up 82 points.

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. industrials higher in today's trade. up 2.25% for the week. seema moody joins us here at post nine with a special guest in the sector. seema, good morning. >> thank you. cummins ceo jennifer rumsey, welcome to cnbc. >> good morning. great to be here. >> good to have you back at a time where we are trying to better understand what's happening in china. latest data not painting a positive picture on the outlook, but curious with over 20% of revenue in that country, what are you seeing on the ground? >> yeah. so we've seen strength in a lot of our markets around the world coming off of record revenue in the first half. ginn has really been a real

exception for us. that market has been depressed. this year we're seeing some improvement compared to last year where they had covid lockdowns. we're projecting the market to be up slightly for the year, and cummins is positioned well with new products we've launched there. for us, while the economy is slow we're seeing some outgrowth in the market with new products that we've launched on the back of regulations there. so we're project something slow recovery. we'll see if they do anything more substantial in terms of trying to stimulate the economy. it is slow. >> you're planning to launch new products, so you're not by any ch chance trying to reevaluate your position? >> china is a big market, there's a lot of people that live there, and we see it as an opportunity for cummins to be a big player. we've been there for decades, and we're continuing to look at how we grow across the markets around the world and creating jobs and allowing the company to

have strength here in the u.s. >> secretary raimondo has been in china, along with -- prior this three other high-ranking officials from the u.s., good dialog but not many deliverables. >> we'd like to see continued dialog and finding common ground, working through the issues that exist between the countries recognizes there's a lot of interdependency between our economies. it creates jobs for us here, and we want to continue to see progress in that space in terms of the political environment. >> as to where you're investing, a billion dollars of investments in the u.s. talk to us about the growth you're seeing in this country, specifically in clean energy as you try to make that a profitable business? >> cummins is serving commercial and industrial applications around the world, and we see an opportunity to grow even as our industry degonizes. we're investing in engine based solutions, billion dollar investment for our engine plants is our next generation, so they will be best in class, high

efficiency diesel engines with fuel flexibility to allow our customers to start to move to these alternate technologies they look to degonize. >> there's demand for that? these are the commerce -- >> what we see is customers across these applications are trying to figure out how to meet sustainability goals and regulations that demand improved co2. we're investing by zero emissions technologies, but those technologies require a lot of infrastructure investment and they're more expensive. the bridge solutions are also important to our customers. we'll launch the natural gas version next year in the u.s. >> we're seeing a bit of a down turn in the trucking market and you guys are all over this. what do you expect for 2024 in terms of production given the industry and what we're seeing across freight, basically in recession? >> it's been an interesting time for industry. we saw such strong use of those trucking products through the pandemic and the reality was, we

could not meet our customer demand. we had supply constraints for the industry. we've seen continued strength in the market, even with inflation and some of those softening indicators. we are projecting that we'll see some softening, though, in particular in the heavy duty market in the u.s. as we go into the second half of the year we think we'll see softening in heavy duty. medium duty has remained strong. we haven't given guidance for next year, we're expecting our normal cyclicality may be softer than what would traditionally be seeng. >> do you think that's why the stock has lagged? >> our investors know we're in a cyclical market and waiting to see what's going to happen with this cycle and that is impacting that stock price for us. >> nvidia's ceo jensen huang talked about the opportunity in data centers, people don't know, your fuel cells power the data centers. what's the outlook and the role your company could play if that market does continue to grow? >> we all expect the data center

market to stay strong with the continuing investment in data and analytics and computational capability, data center sxlers strong demand. we provide backups for them today and have an opportunity in fuel cells as well. it is one of the markets we expect will stay strong for us. >> cap-ex, has your view changed? we're talking about cycles. >> yeah. >> there's so much commentary about the reasons why capex, the guidance for capex, is so strong. >> as i talked about that billion dollar investment in our u.s. he engine plants we are investing record levels of capital in research and development because we see the opportunity to grow the company in the future in particular through this decarbonization. we are continuing to invest. as we see some softening in the market we're prioritizing those investments and looking at where we need to continue to invest for the future and grow and also where we slow down our stop some things in response to those market conditions. >> can you give us your take on

what's happening in india? a market you are seeing growth quarter on quarter. is that at some point going to surpass china in the next five or it ten years? >> i think there's a lot of opportunity in these and other markets cummins has been in decades since the '60s, i made my first trip there in three years a couple weeks ago and there's a lot of optimism and excitement about that country and the opportunity to grow, and i think they're looking at how they make investments to play a bigger role for their own domestic market but also on a global scale. >> you're headed to china next month. >> yeah. >> new deli as well? >> i was in new deli a couple weeks ago. >> jennifer rumsey, ceo of cummins. >> thank you. more on china later this hour when the commerce secretary joins us off the headline-filled trip to china. more on how to play a.i. here as salesforce becomes the latest name to raise guidance. some of this operating margin guidance has the sckto up almost

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news in the retail world. fast fashion giant shein facing

increasing scrutiny in the u.s. ahead of a potential ipo. 16 attorneys general writing to the s.e.c. this week asking them to audit the company's supply chain and prove that shein does not use forced labor ahead of any market debut. shein executive chairman donald tang told me last week that he's taking steps to follow the compliance rules. he was sitting down with an interview fresh off of making a deal with the head of simon property and authentic brands. here's what they said about the specific issue of forced labor, the uyghur population and using cotton in the shein products. >> the cotton is the biggest issue there. so on that particular issue, number one, we do not source cotton from china. we use the imported cotton to make products on china. cotton-based products is about 4% of our entire business. the way that we are taking steps

to make sure that we comply with the law, is number one, that we have a code of conduct at every single factory who is a subcontractor of ours, they will have to sign. that's one. the second step is, we have the international independent renowned auditors to come in to do and announce audits to make sure everything that they say, they actually do. they have no supply chain factories or sourcing materials from the region. so the third step that we're taking is we have the proprietary technology, tracing where the material is coming from, from operational line, from invoicing, financial, the invoicing line and also the logistics line, those three lines that we trace all of the materials, raw materials, where they're coming from.

if they see something in the regions, we take them down right away. number four is the testing, we use the leading testing agency or company, which congress and the cbp uses as well, to test all of the materials coming into the united states on a random basis. every single mill we have. >> i imagine you're doing a lot of explaining of this to the u.s. lawmakers? >> yes. then i think the better way, you know, mr. simon, can we do it better, so we're now just proved today the cotton video. >> what i would add, we have rigorous compliance rules. right. because not only -- >> you've looked into all of this? >> not only did we look into it, but we have rigorous rules for us because, you know, we do

wholesale w dough retail, and we do e-commerce. so we're selling to lots of other retailers too. they have to follow our compliance rules. it's that simple. there's lots of boxes their suppliers are going to have to tick to put product in our stores and online, and they are going to follow all those rules. at the end of the day, they're going to learn from us, we're going to learn from them, but, you know, we got -- >> that's a big vote of confidence? >> 100%. but i can tell you the consumer votes, the consumer is voting for shein in a big way in the united states. >> shein, my take, carl, is all over the issue. they say they don't source any cotton from china, and they have contracted the supply chain tracing firm to track the cotton fibers to firm firms. cotton, like everything is a globalized supply chain to make sure they are not sourcing it from the uyghur region because that is a sensitive topic for

them clooerm. the attorneys general would be wise to watch this interview, now they're partnering with simon and authentic brands, and you heard in the joint venture there's going to be strict compliance rules about these sort of supply chain issues and sourcing issues, and that is a step sort of ahead in preparation for what could potentially be an ipo in trying to convince investors this is not a big risk. >> are they getting more scrutiny than any of the american giants who do a large amount of manufacturing in china? it. >> no. that's a good question. they're getting way more scrutiny. it's not equal, that's because the roots of this company are in china. they've moved over to singapore and they're going to great lengths to explain to people they don't sell to china. the only way they're exposed to china is through the manufacturing but so is everybody else. that's something that jamie said in that interview, so is nike and authentic brands, all producing in china china, getting more scrutiny because the founder is chinese, the whole model of shein, you know, fast fashion, made to order,

seven days produced, seven days shipped, it's all this very unique model that is sourced in china, but, yeah, if you look across retail who isn't sourcing in china? they're trying to diversify. so is shein outside of china. after the break, the salesforce breakdown with one analyst who calls it a buy from here. consumer names on the move after report cards out of dollar general, sig net and more. we'll discuss it. don't go anywhere. from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too.

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welcome back. i'm sylvania hen no. tropical storm idalia is expected to move offshore today after battering florida and dumping heavy rain to north and south carolina. the once hurricane will weaken tomorrow and saturday and head to bermuda as a tropical storm. the white house says it is concerned about new intelligence

that shows north korea and russia are actively advancing arms negotiations. washington is worried about potential weapons deals from pyongyang to supply the kremlin's struggling war in ukraine. a potential arms deal would violate a number of u.n. security council resolutions. and a women's volleyball match in the midwest drew a crowd of 92,000 fans last night. the university of nebraska says the game at lincoln memorial stadium broke the world wrecord for women's world attendance. that was more than the taylor swift concert at metlife. >> way to put it in perspective. >> exactly. we're watching shares of salesforce results as you might know beat estimates with the boost from a.i. our next guest says there is room for gains arguing benioff needs to switch gears to revenue re-acceleration and put the a.i. hype into revenue reality.

joining us today, a buy rating on the stock target of 275, up from 250. good to see you. i guess how impressive is not just the margin guidance but the timing of that margin guidance? >> yeah, carl. it was long overdue on the margin. they were significantly trailing their peers in the software industry, so they're merely playing catch-up on the margin side. now that margin is back up, we need to see the revenue growth sustained and potentially reaccelerate. all the a.i. hype really is not in revenue. we think ultimately some of the a.i. excitement could filter in in the next several quarters into '24 to have a bigger impact, to accelerate revenue growth from low teens into the mid teen mark. but make no mistake, they still have a lot of margin improvement left. the company getting close to 30% operating margins. this company should be

generating 35 to 40% margins, generating close to mid teen revenue growth that's going to put you back, again, you know, near the peers where they should be at that point. >> right. does the macro environment feel like it's rich enough to get revenue reaccelerating again? they did talk about sales cycles that continue to be elongated? >> not yet. i think we're still kind of caught in this spending vortex and this optimization play. you're going to see hopefully that break open a little bit as we head into next year. you have the a.i. tailwind and comps will get easier, so that should help the overall economy. again, great victory on the margins. they need to take an m&a, they put their m&a checkbook away, and now they've hinted maybe perhaps they come back. we think they now have a hall

pass to come back, given the m&a they did, digested that, put up the margin, showing decent revenue growth. we think they now have that hall pass to come back to the market and say look we're ready to do a a.i. deal and i think the market would be receptive to them going back to that at this point. >> yeah. i go back to starboard's jeff smith, who has been impressed with the improvement a lot more to come in stoalesforce, so a gd call for him. how much is the next lag, the a.i. montization at this point priced in? >> a lot of the hype is here. there's no revenue. so this is all hype. and again, every company is gilt of this, right, from microsoft all the way through the rest of the software industry. today, it's really shipping. it's a low single digit it percent impact. over time we think it could be

larger. it could certainly help stimulate overall demand. again, i think that's more of a 2024 event, than it is a 2023 event for a.i. >> brent, interesting. obviously, it's been a pretty fascinating couple weeks for software earnings prints. we'll talk more about it in the days ahead. have a great weekend. >> you too. still to come this morning, the commerce secretary, her first live interview since getting back from china. she joins us next. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

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broadcom after the bell. what a week it's been. >> it's been a week with nvidia rising and a few others, versus last week with marvel down. you mentioned the stocks index. i was looking at the constituents. almost every one is lower, wolf speed down about 28%, stm, qualcomm not far behind. only like we talked about nvidia, and broadcom, applied materials in the green. that shows cyclicality is a thing for the sector. you bring up broadcom the last chip maker to report earnings this season. after we saw muted stock reaction to marvel post earnings last week there's a lot of worry about how good earnings need to be for chip shares to climb higher. fortunately for broadcom, ownership is high on the buy side compared to marvel, about 20 times to 33 times and larger revenue contribution from artificial intelligence. broadcom makes the ethernet and custom silicon used in a.i.

infrastructure. it has a.i. exposure that goes just beyond the processors that nvidia makes which was the case for ambarella. there was a revenue contraction and the stock plunges, up today, but plunged 0% post earnings. another positive for broadcom usually considered a little less cyclical than other chip names in five of the last six quarters, the business segments grew year over year. there is a concern the ceo had previously warned that revenue growth for the second half of this year would be flat. we could see lackluster results as it's exposed to data centers storage and that segment has seen weakness. investors will want to hear about the vm ware deal over a large amount. it needs to pass through china's regulatory hurdles, which there's a lot of positivity around that, and we'll see what that means for the results going forward six months from now. >> we'll pick up there on the china angle for semiconductors very important one.

thank you very much. despite businesses expressing concerns over economic ties with china, our next guest says the u.s. does not want to decouple from china. fresh top meetings, back in the state, u.s. secretary gina raimondo joins us now first on cnbc. mad tam secretary, good to have you. welcome. >> thank you for having me. >> everybody is coming out and commending your visit. we're hearing from the chamber of commerce, from the travel association, american airlines, mgm resorts, everyone is encouraged you're talking. do you expect to see results as a result of the dialog you just had? >> well, i certainly hope so. you need to put it in context. i'm the first commerce secretary to be on the ground in china in more than five years, so the lack of contact and discussion has certainly not been helpful to solve problems. i was very clear with my chinese

counterparts that, you know, action speaks louder than words and although some of their recent, you know, rhetoric and their 24-point plan has been positive, we need to see action because right now it's getting tougher to do business in china, not easier, and i'm hopeful, privately, i was able to be a bit tougher in my conversations, and i was very clear, u.s. business wants to do business there, but they need a predictable transparent situation on the ground. >> so what types of actions do you expect and hope we'll see? >> well, for example, recent raids on u.s. businesses without any explanation, obviously, be put a chill for our entire business community. t the recent regulatory actions without any explanation,

transparency or due process, you know, these are the kind of things that i hope will stop because they just make it very difficult to, as i say, continue to do business in china with confidence. this is an issue of confidence. you know, having been in business myself, i know that, you know, business, american business, wants to compete. they're ready for a competition. quite frankly they're used to the traditional issues of doing business in china as it relates to ip and joint venture requirements, but the recent actions, the counter espionage law, et cetera, have made it an unlevel playing field and that's what has to stop if u.s. business can compete there effectively. >> you mentioned micron. the semiconductor issue does highlight how tricky it is for you to repair a commercial relationship at a time where the national security relationship that we have is increasingly confrontational and tense.

i mean they might argue it's retaliation from the export controls and advanced semiconductors that we put on them? >> it is certainly complicated. this is a complex relationship that we have, and i was crystal clear that on matters of national security, there's no room to negotiate. my counterparts asked that i relax the export controls, and i was very firm in saying that would not happen. that being said, one of the deliverables in this visit was that we opened a new information exchange about our export control enforcement, and, you know, certainly there's no room for negotiating, but we want to be transparent. we are forward leaning as it relates to transparency, and we, you know, export controls are about national security. they're not about economic competition. it's our job to make sure they're narrowly tailored to just deal with the most emerging it technology and national

security issues. we can't have our most sophisticated artificial intelligence find its way into the chinese military to enhance their capability. but beyond that, even in the semiconductor industry, there's a lot of commerce to be done, and that's this isn't decouplin. it is -- it is derisking. there's plenty of business to be done across industries. which is in our interest. i mean, that's the important point. we're never going to do anything not in u.s. interest. >> it does raise the question, madam secretary, if you're not going to negotiate the export controls, what are the aspirational carrots that would entice them to change their behavior? is it tourism and direct flights or something broader than that? >> it's much broader than that. we have a $700 billion trading relationship with china. it's one of the most consequential -- the economic

relationship between china and u.s. is one of the most consequential in the world. it's dynamic, it's growing and we want to continue that. it's to our mutual benefit to do that. look, all of the $700 billion, only about 1% isaffected by expt control. as i say, there's a lot of work to do be done and commerce to be done. at least from my meetings, which, again, are the first, you know, first face-to-face meetings, so we have to be realistic about this. i felt that they are receptive to that message. again, we'll see what happens. the proof's in the pudding and the action to follow. >> did you talk about the trump tariffs, which are a sticking point for them. they want them removed, the biden administration has kept them on. is there still discussion of removing them? >> they did bring that up, the ask from them was to get rid of the tariffs. what i conveyed is what i

conveyed to you. those tariffs were put in place by the last administration in response to a long and clear record of china's subsidization and nonmarket practices, which have hurt american workers. so, right now the u.s. trade rep, ambassador is undergoing a four-year tariff review to see how effective they've been. at the end of that review, you know, the administration, the president will look at that data and, you know, decide then what, if any, action to take. >> it's clearly front of mind for them. did you talk about boeing at all? i thought it was notable you held your press conference at a boeing hangar at a local airport. and they've essentially halted all new orders because of trade tensions and other issues. >> a little bit. the focus was less on individual companies and more on treating

all u.s. companies fairly and giving us a chance to compete. certainly we want the chinese government at a bare minimum to, you know, take delivery of the planes they've ordered. you know, boeing makes some of the best planes in the world. china has a huge and growing demand for our planes. and we hope that they will continue to make those purchases, you know, over time. >> i wonder what you make of these reports that president xi is not going to go to india for g20. obviously, i guess you could assume they're threatened by india's growth. does that allow you to have additional leverage in your discussions with china? what do you think of companies that are migrating their chains over to india? >> you know, look, every company has to make its own decision. i think covid was a big eye-opener for everyone, government and us in business. it's an untenable risk. so, companies are looking for

ways to spread that risk and diversify. i was candid in my meetings with china that insofar as they continue to make the business environment unpredictable there, the regulatory environment somewhat arbitrary, that gives incentive for u.s. companies to consider alternative countries and, frankly, it's my job to help u.s. companies do what's in their interest, which is to diversify so that they reduce the risk. but again, this isn't decoupling. our economies are deeply intertwined. so, it's in our interest to just improve the business climate there so we can do business and compete fairly. >> you know, you end at an interesting time for china. we've all been monitoring the data. their economy is weaker. a lot weaker than was expected coming out of their covid

lockdowns. i'm curious how much you discussed this and whether -- you were quoted as saying the u.s. wants china to have a strong economy. is that true? >> it is true. prior to my visit i spoke with president biden to, you know, obviously hear his direction. and what he said in that call, which is what he has said time and time again, you know, the chinese people deserve a good economy and prosperity. we have no interest to hold china down, to hold china back, to hold the people down. we have an interest to protect our national security, first and foremost. china's military fusion strategies, very troubling. we have an interest to have a level playing field so that our companies and workers can compete. so, that was my message. and i think that message was well received. a few people commented they had not heard that before from a u.s. official recently on the ground in china.

>> because isn't the problem, though, if china's economy is strong, they have more resources to devote to their military, which we don't want. >> that is true, we don't want that. their military capacity, if used against us, is a huge problem, which is why, sara, to your first point, this is a complex relationship. it's -- they are -- we are in a fierce competition with them along many fronts, but it is in our interest to manage that relationship. and it's deeply in our interest to communicate with them and have direct dialogue because it reduces the risk of miscalculation, misassessment and kind of a downward spiral to greater tension and conflict. >> on that point -- sorry to cut you off but in the limited time, i wonder if taiwan came up at all? when you talk to businesses here, that is the real issue they worry about.

>> it did not come up at all. >> can we break a little news and say that xi and the president will meet this year? >> i cannot break that news here. although certainly that would be a great outcome. >> you're the fourth high-ranking official to go to china from the biden administration. have any of them come to the snus. >> my counterpart, did. yes, i met with my counterpart, mr. wong, the commerce secretary, several months ago. he came to visit me in the commerce department. he invited me on that visit to china. so, i took him up on the invitation. >> it's good to get all this color. thank you for joining us and the candid comments around be your trip. secretary raon. imdo >> thank you. >> "squawk on the street" will continue after a quick break. help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley.

good thursday morning. i'm carl quintanilla with sara eisen. the late august comeback marches on as investors digest the eco data. is this the beginning of a broader rally into september? an exclusive interview with campbell soup ceo mark clouse.