it is 5:00 a.m. here at cnbc global headquarters. i'm frank holland and here is your "five@5." it is all about the fed focus. they increase expectations for a rate cut next month. on top of that, investors are looking for the conference in jackson hole, especially remarks from jay powell. the fine print inside vice president harris' proposals is the most important tax on investors and you will probably not like it. and developing this morning,

two major labor unions are locked out in canada. and two top dogs fight for your wallet. which is best for your portfolio? it's thursday, august 22nd, 2024. you are watching "worldwide exchange" here on cnbc. ♪ good morning and welcome to "worldwide exchange." i'm frank holland. let's get you ready for the trading day ahead. take a look. in the green across the board. the s&p up three points. the dow looks like it would open almost 50 points higher. the nasdaq up 8 points. this pre-market action is coming ahead of the fed kicking off the jackson hole summit today. of course, yesterday, we got the minutes from the july meeting. they indicated a september rate cut is growing more and more likely. the fed row effofficials expr

confidence and ready to start the easing path if the data is trending in the right direction. more on jackson hole in a moment. let's look at the bond market. the numbers on the 10-year treasury bond is 3.812. we will continue to watch bond yields throughout the show. we will watch the continued pressure on oil. take a look right now. you can see oil bouncing back just a bit. wti, the u.s. benchmark, up fractionally higher. brent crude, the international benchmark, up almost .25%. we want to point out with the pull back in oil, brent is negative for the year. wti is barely holding on in positive territory. here is the chart. you can see that wti which

suppo is up .50% for the year. you see other issues in the middle east. for the year, brent turning negligence roponligence negativ. let's turn to our london bureau. who is there? my man. good to see you. thank you, frank. here is what is moving across europe. we see markets trading broadly higher here. we have seen the european equities moving up as investors look ahead to jackson hole. of course, a lot of attention to the united states because we have seen the dovish fed minutes and the job growth paving the way for chair powell signal a cut is coming in september when he meets his friends and buddies in wyoming later this week. that will be critical to watch. at the same time, we have markets moving higher here on the data deluge here.

we have services and manufacturing exceeding expectations in august. the french and german pmi up earlier today. a big focus for the market showing a bigger than expected contr contraction. that is important to watch for the ecb. when it comes to the markets, spanish ibex leading by .2. here is the sector breakdown. we have seen the retail sector rising to the top today thanks to a decent gain on jd sports on improving sales. energy stocks weighing with the contraction in oil you were talking about. basic resources were down .50%. oil and gas down .25. frank, back to you. >> glad i have my friend and buddy over there in london. dan murphy. turning attention back to the u.s. investors are turning to the big event this week, the jackson hole summit which kicks off today. investors looking for clues about a rate cut this month.

steve liesman is on the ground in wyoming with much more. >> reporter: the federal reserve annual meeting begins today with the market feeling comfortable with the rate cut in superiseptember. a key factor is how much concerns chairman jay powell and other committee members have about the recent indications of the weakening economy. that question became more important after the government announced that the payrolls were 818,000 lower than previously estimated instead of 2.9 million jobs, 2.1 million jobs were created during the period. as the fed hikes, it is likely to pay more attention to jobs. minutes to the fed's july meeting released yesterday say the vast majority said if the data comes in as expected, it would likely to be appropriate to ease policy at the next

meeting. going into the jackson hole meeting, futures priced in a 60% probability of a 25-basis point cut if september and followed by a 50 in november and 85% for a 25 in december. still, there's another employment report and inflation data to come before the fed meets in september. powell in his speech on friday, will likely affirm the market expectations. he is not likely to get too far ahead of the committee in setting out too much. steve liesman, cnbc business news. >> steve will speak with kansas city bank president steve schmidt and patrick harker. for more on the fed and markets, let's bring in janet mui at rbc. >> good morning, frank. >> janet, you are overweight on

equities, bond and gold. we will get to gold in a second. based on the minutes, we appear to be closer and closer to a cult. cut. does that change your thesis as all? >> frank, our view has been the fact the fed will be able to cut interest rates and it slickis l in september. the market pricing will probably price in a lot. more than we think it should be. the pricing for the 2025 is almost up 100 basis points below where the fed projections are and i think if we don't get a recession, it would just get a modest economic slowdown and that many rate cuts is not warranted. i would agree we are at the start of the cutting cycle. that should be beneficial for

bonds and equity. at the moment, we don't want to be more overweight on equities over bonds because of the priced in situation already. >> again, you believe we are on path for a soft landing, but at the same time, recession odds have increased. on friday, jay powell will speak at jackson hole. big potential market mover there. less than a week away, we have nvidia earnings. we don't talk about nvidia as much as we once did, but still, huge influential stock. 6% of the s&p 500. more than 7% of the nasdaq. the implied volatility after earnings is plus or mine uus 10. is this something you have to prepare for coming up? >> i think it is always very hard to position particularly for one earnings result given it could move either way. what we think is we generally

like the semiconductor sector. we think this is a very strong cyclical and structural thesis. nvidia is, obviously, the biggest stock in the semiconductor value chain. i think, you know, it is important to have a position in that in your portfolio. obviously, it is just not sensible to overreact to these earnings season. more importantly, if you have a few these companies are likely to do well in the long term, stay invested. if there is an occasion like two weeks ago with the market selloff, it could be a big opportunity. we could see that again with how volatile the nvidia stock is. >> we have seen that with other data points and earnings. definitely big reactions. one last thing, you are bullish

on gold. gold is up 22% year to date. trading close to a high. if we are evntering a rate cutting cycle, why are you bullish on that? >> i think that is the combination of the structure story and fundamental story. i know we know central banks have been buying gold. i think that trend will sustain. if you track the surveys from the world gold council, emerging markets are still expected to keep increasing gold as part of the reserves. previously, gold prices have been detached from the fundamentals at a real bond yield. we are starting to see the realignment again. as the fed is expecting cuts, it is right to be positioned for an overweight in gold given they can benefit from the structure tailwind i described. >> janet mui, good to see you.

>> thank you. we have more to come on "worldwide exchange," including the one word investors have to know today. first, the latest on the developing story and rail workers off the job in canada delivering a massive blow to the economy. and the snowflake shares are melting and what they are telling jim cramer. we have a very busy hour still ahead when "worldwide exchange" returns. stay with us.

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welcome back to "worldwide exchange." let's get a check of the top corporate stories with silvana henao. silvana. >> good morning, frank. nearly 10,000 workers at canada's two largest rail companies are off the job. canadian nation and pacific have shutdown after the talks with the labor unions. their routes within the u.s. will continue to operate. a prolonged shutdown could have severe prepercussions. paramount global is extending its go-shop period with skydance by 15 andays.

this as it reviews an offer from edgar bronfman which he upped to $6 billion. bronfman argues his offer is better because it would eliminate the risks and costs associated with combining paramount and skydance. we are seeing shares up about 3% in the pre-market. disney tasking board member james gorman with leading the search for iger's successor as ceo. he will chair the executive planning committee to vet the candidates. internal candidates include disney co-chairs and espn chairman and head of disney parks and experiences. frank, a big pool. >> a big saga. silvana, thank you. see you later on. time for the big money

movers. three stock stories of the morning. snowflake reported better than expect expected earnings as raised guidance, but the bears are look looking for the deceleration for the rest of the year. the ceo spoke with jim cramer on "mad money" last night. >> it is in the product philosophy of making technology simple, not more complex. we are very, very confident this is the formula for long-term success. urban outfitters down sharply despite higher second quarter profit. revenue came in above estimates. same-store sales dropped 9% at stores. some of the declines were offset somewhat by a 7% increase at the other brands. you see shares of urban outfitters down 10%. zoom on the rise after q2

beat. it attracted more revenue from the customers and online business is keeping up. separately, zoom is announcing the cfo stepping down in november. shares of zoom are up 4%. coming up on "worldwide exchange," building momentum for the industrial and materials. how an infrastructure spending boom could fuel a lag in the sectors. and a new episode of the cnbc podcast series "the crimes of putin's trader." you can listen to this where you get your podcasts. we're back in just a moment. with the women's tennis association to remove boundaries... ( ♪♪ ) because this game is for everyone.

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welcome back to "worldwide exchange." industrials and material stocks are making a jump. could the spending turn the tide for the sector? we have pippa stevens here with more. >> good morning, frank. we could be on the verge of the old school boom with stocks tied to infrastructure spending. not only are instrudustrials an materials are trading at a broader sector, but it is trading at the largest to the tech sector in more than a decade. in the last six years, for every $1 invested in u.s. tech companies, just 12 cents went to

industrial and commodities funds according to bof a. security and better control over supply chains and the new economy which includes a.i. and data centers. not to mention the average age of non-residential structure notice in the u.s. is older. analysts see upside for mosaic which has an average street target which is 20% above where they currently trade. eaton and ecolab is trading ate discount to the five-year pe. investors could start to look a elsewhere for opportunity. >> we have the election coming up later and jackson hole. how could that impact the cap ex

boom? >> there is no question the macro picture is dragging the market themes. cyclicals can do pretty well when we see a rate cut because that can rev up the economy and also makes borrowing cheaper. these companies do tend to have high up front cap ex plans. on the political side, we have seen by pbipartisan support. it doesn't seem like we could see any type of repeal of the inflation reduction act no matter who is in the white house. i think also, frank, one thing that is worth noting is we have seen this run in tech and a.i. data center stocks this year and all that momentum is now being priced in for what could still be years away. before the tech companies actually realize the benefit of all that spending, who is going to be the one actually building

the data centers? you have to look at johnson controls or eaton as the names on the frontlines building out the infrastructure. >> pippa stevens. thank you. as we head to break, td bank revealed it sold more than 40 million shares of the brokerage. that lowered its stake from 12% to 10% as it expects to pay ntg s over the money launderin corol failures. we're back in a moment.

it is just before 5:30 a.m. in the new york city area. there is still more ahead on "worldwide exchange." wall street looks west to jackson hole with the fed and rate cuts in the spotlight. shares of walmart and target are higher in the past year, so no blue light special. with the consumer feeling pressure, which stock is better? we will look. and as vice president harris gets set for the biggest speech of her life, we will like at ceos who are excited about a potential harris presidency. it's thursday, august 22nd, 2024. you are watching "worldwide exchange" here on cnbc.

welcome back to "worldwide exchange." i'm frank holland. thank you for joining us to start off the day. we will pick up the half hour check of the u.s. stock futures. you will see right here in a second, they are in the green across the board. s&p up fractionally. the dow would open up 55 points higher. hitting the highs of the morning. the nasdaq up fractionally. this is ahead of the fed preparing to kickoff the jackson hole summit today. we got the minutes yesterday from the july meeting suggesting a possibility of a september rate cut. the benchmark at 3.82. close to the lows of the year. the two-year yield is back below a 4% yield. the 30-year is a read on inflation expectations. we are watching oil coming off four straight negative sessions. right now, oil prices are up fractionally. wti is up fractionally. brent crude is up .25% of 1%.

let's show the upcoming chart. brent is now negative for the year. the international benchmark. wti is barely holding on in positive territory. wti is up under .50% for the year. we are also watching gold prices on the back of the fed meeting minutes. they are hovering around a record high. gold is pulling back in the pre-market. down .25%. again, trading close to a high right now for the year. that is the money set up. let's get a check of the top corporate stories with silvana henao who is back with those. silvana. frank, good morning to you. the is opening an investigation into the tesla truck crash after the engine caught fire closing off a highway for more than half a day. no injuries were reported and

there is no word yet from tesla on the matter. meanwhile, microsoft is looking to revamp how it reports results and guidance. the tech giant is moving search and news advertising revenue under the azure cloud computing unit. this shift is offering investors a better look at the contributions from artificial intelligence. former ftx executive ryan salame is asking a judge to void his guilty plea. salame says prosecutors are going back on the pledge to not investigate his domestic partner for campaign finance crimes. salame is due to begin a 90-month prison sentence in october, frank. >> silvana, thank you very much. we'll shift gears and turn attention to the retail sector. target may be on point again. closing up 11% yesterday after the retailer reported better than expected earnings in growth

in same-store sales for the first time in several quarters. customer traffic and spending picking up a bit. walmart was mostly positive with the health of the consumer and gains of 11% for target and 40% for walmart this year. is there still upside for the stock? we have lindsey bell and malcolm ethridge with us. great to have you both here. lindsey, you're in studio. let's start with you. >> good morning. >> you are hear to talk about walmart. walmart has benefitted from the trade down. wealthy people going there as well as grocery. is that a trend you see continuing? a compelling reason to buy the stock? >> well, i do think walmart has a compelling story right now. what we did learn from the earnings report is they are seeing a trade down not only

from the upper income consumer, but lower and middle income consumer. they didn't mention them in the first quarter earnings report, but they did this time. across income classes, everybody is going to walmart to shop. i think grocery prices have a lot to do with it from my own personal experience. is it a better stock than target? it has run more. it priced 29 times versus 23 times historical average. when i look at target, it is up 11%, mostly from yesterday and from the valuation, it is trading 16 times versus 18 times. >> it is like you are reading my mind. you can see my notes. malcolm, i want to come over to you. these are similar businesses. the real difference is grocery. walmart is the biggest grocer in the u.s. target is more leveraged. there is a big valuation difference here. we have a bit of a different

number than lindsey. target at 17 times. walmart at over 29 times. does that valuation consider how similar the businesses are, does that make target more compelling? >> good morning, frank. i think lindsey was staring at my notes, too. i think walmart is more compelling. walmart is, if nothing else, fairly valued at the all-time highs versus target, up until wednesday, wasn't a story to be talked about, but they did have the underlining business fundamentals to back investors deciding to suddenly look at this name. i would throw another name into the mix which is costco which is up 60% over the last 12 months compared to walmart and target which was near zero in the same time period. if you take all of those together, we are really talking about discretionary spending

being flat because of inflationary response and bring that forward a year. all three of those names, target, to me, has a lot of room to run. if i were a target shareholder, i would look at adding to that position. >> malcolm, while we're in the weeds, you are bullish on target over walmart. margins was a big story. is that something you are looking at ps especially at the retailer? is it important we are seeing margin expansion in target? >> that's really all that matters for a retailer. target's big trouble was overbuying inventory and buying the wrong things. it seems the inventory management system has been improved over the last four quarters. that's what's helping drive the margins. that trend, that underlining fundamental for target, special potential improvement going forward. for a share price that hasn't really moved, like we said, up

until yesterday, says target is the better buy here for an investor looking to put fresh capital to work today. >> lindsey, coming back to you. target is levered to consumer discreti discretionrema ary. is that also a compelling reason? we look at the valuation, 29 times forward earnings. in your mind, the possibility of growth is that worth paying up for? >> yes, i actually think that is true. that is a really important point you are making. they are actually shifting the business mod model. the contribution of ecommerce in walmart and target is playing a huge role in that margin expansion. i think that is understated and not looked at by the street. i do think it's an opportunity and it says these two companies are probably taking market share from amazon. amazon did not talk about that in the earnings report.

it caught my eye to see the business and impact on margins. >> also that bulk business with sam's club and target doesn't have. we're almost out of time. the last point you want to make why walmart is a better buy than target? >> i actually think target is a little bit of a better buy. i think they are both good buys. i think consumer spending is slowing and it will stall out in the third quarter. i think these are both going to be winners at this point in time. as you saw, earnings season with macy's and tjx and ross stores. the discounters are the winners. >> malcolm, coming over to you. i don't think lindsey can see your notes anymore. last case for walmart over ta target? >> i actually think walmart earnings helped make the case

for target and something you mentioned with discretionary spending. small home appliances and clothing are back in a strong way. i think that actually bodes well for target as well who has its own private label goods that consumers will come back to and add to their shopping carts going forward. i think that trend alone, the discretionary picking back up because inflation is down and as soon as we get a cut to interest rates, that will have an impact on consumer spending. i think that bodes well for the target story setting up going forward. >> when i was amazing, it was generics and now it is private label. thank you, lindsey and malcolm. coming up on "worldwide auchange," one bank seeings bety of shares of estee lauder. we'll looking at the call in just a moment. stay with us.

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welcome back to "worldwide exchange." time for the morning call sheet. bank of america out with the double upgrade from unilever. the separation of the ice cream unit is better for growth and valuation. wells fargo raising the price target on sentinel one. it is gaining share at the expense of crowdstrike. and piper sandler moving

estee lauder to buy. they see a lot of positives ahead for the beauty company. coming up on "worldwide exchange," the one word every inve investor needs to know today and the hidden proposainl the harris tax plan. stay with us. energy fuels, a leading american uranium producer, is ramping up production to supply expanding nuclear markets and diversifying into rare earth elements, key ingredients in many clean energy and defense technologies.

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welcome back to "worldwide exchange." we turn to the 2024 race.

vice president kamala harris set to speak at the democratic national convention tonight days after being formally nominated as her candidate. she is speaking about her proposals. robert, this is an every day thing now. >> reporter: frank, great to see you. vice president harris proposing to double the tax on capital gains and taxing unrealized gains for the wealthy. her campaign endorsing the top tax rate on long-term capital gains from 20% to 44.6%. that would be the highest rate in the history of the united states. now, if you are in new york, the combined city and state federal rate on capital gains would be 55.5%. if you are in california, it would be 57.9%. she's also calling for a tax on unrealized gains for those with a net worth of over $100

million. that would call for a minimum tax of 25% tax of all unrealized gains. you pay that tax on the value of the asset of stock even if you never sold anything. like a private company, that would be taxed at the last valuation event and set increase. the liquid taxpayers, those with less than 20% of wealth, in tradeable assets, they could defer until their death, but with interest charges. some charging $500 billion of revenue over ten years. frank, like any tax aimed at the wealthy, they would find a lot of ways around this. unclear if that estimate would really hold. this would be a very complicated tax and a new type of tax since right now, of course, we don't tax capital gains until you actually sold something. >> a lot to think about there. robert, great to see you. robert frank, great reporting.

thank you. we stick with vice president harris. her allies in the business community are making a pitch to ceos why they should back her over former president trump. the pitch is the harris presidency will help the middle class and the businesses would get certainty on public policy that would not exist under another trump administration. let's bring in michael sonnenfeldt. jeff, great to have you here. >> thank you, frank. >> i want to pick up where robert just left off talking about taxes. one of the reasons is ceos are happy about taxation. let's lean in on this. i know you wrote about this before the capital gains taxes.

what are ceos saying from the harris administration if they wins? >> frank, very well zeroed in. i was hoping you would not make the segue back to robert's excellent report. that is an area vulnerability. it is hard to realize the gains. it is hard to believe that would pass as legislation and that would be challenged in court. that, i admit, is not a willing quality of the package. why would ceos support the harris-walz campaign, and they do, by the way, for other reasons. the tax policies we're hoping will get revised or not ever get passed on these grounds. you take a look at the past century of ceo support. overwhelmingly, ceos sugop supp

the gop candidate. there are only two ceos who supported donald trump. we are back down to the elon musk where he is and you hear steve schwartz's name. >> jeff, one of the things you say ceos are worried about is the growing debt. why is the harris administration better equipped to handle that and why are they concerned about it? >> they are very concerned because the federal debt increased 100% under the last trump administration. under biden, it has gone up 15%. 15% is better than 100%. the deficit was tripled under tr trump. they reduced the deficit by one-third. we saw it just two weeks ago, when another one of trump's

temper tantrums created havoc in the market as he took on attacking chipmakers and concern about support for taiwan and things we just saw. >> we did see chip stocks fall quite a bit. another one of trump's proposals is a tariff. 10% tariffs. what are business leaders telling you about that? >> great point. they hate that. it was 10% tariffs all the time. now he is talking 20%. 60% for china. 16 nobel prize winners in economics said it would be highly inflationary. that's just on what we're pulling into the country and making it very hard to bring product in. it would be devastating with the reciprocal trade barriers. harley-davidson had to shutdown --

>> according to your research, they are concerned about retaliatory tariffs to raise inflation in the u.s. as well. last point, immigration, what do they believe with immigration policy that kamala harris can do differently that will benefit the u.s. economy opposed to donald trump. donald trump is more of a protectionist. >> one of the most conservative legislators in the senate, was the author of what became a bipartisan gop and democratic immigration package. donald trump very publicly tanked it because he thought it would help, of course, the democrat campaign. that's pretty upsetting. this is the second time he did it. the dreamers act, lindsey graham and others, trump destroyed that in the last campaign. this is an active sabotage. i am mmigration is very importa. a quarter of all tech companies that are over $1 billion in

revenue were created by immigrants. >> jeff, your new article, thank you for being here. you have a great day. >> thanks, frank. coming up on "worldwide exchange," the key areas of the market our next guest could face short-term exhaustion. if you miss us, catch us on your favorite podcast app. more "worldwide exchange" coming up after this. n stories to shar. (vo) the key to being rich is knowing what counts.

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welcome back to "worldwide exchange." time for the "wex wrap-up." 10,000 workers at canadian national and pacific are off the job after unsuccessful negotiations with the labor union. both companies say their routes within the u.s. will continue to operate. paramount is extending the go-shop period in the merger agreement with skydance by 15 days as it reviews an offer from edgar bronfman which he increased to $6 billion. and shares of snowflake profits are up in the second

quarter. urban outfitters are up sharply. r revenue is above the estimates. and shares of bavarian nordic is up overseas. it will hit the top end of the guidance after orders for the mpox vaccine. here's what to watch today. jobless claims and existing home sales data. earnings from peloton and advanced auto parts. the ecb releases the minutes from the recent meeting at 7:30 a.m. the fed's annual summit at jackson hole begins today. cnbc is speaking with kansas city fed president jeff schmid. the fed is signaling a rate cut is likely next month if the

data keeps coming in as expected. for more, let's bring in katie sto stockton. she is a cnbc contributor. katie, good morning. >> good morning, frank. >> let's start off with how you see today shaping up with the fact that we're getting jackson hole kicking off and the minutes yesterday. how do you see the markets reacting? >> so far, we've had a really impressive relief rally from the major indices. we have come into these events pretty overbought from the technical perspective. i think that create s a challene that it can sustain this momentum and now as of mid week, we have some signs of upset exhaustion and the nasdaq 100 and most of the larger constituents. we feel the leadership of the market really has sort of a proof point to make here. nvidia, apple and others do show

signs of exhaustion on the charts. >> we will get to some of the stocks you are looking at specifically with the upside exhaustion. i think overall people are trying to figure out what to do with their portfolio. stocks have broken down. we've had a rally, but some plays this year have broken down. what advice would you give to investors that are seeing declines in stocks. what would you do or have them do if you are advising them? >> our recommendation is to sell stocks on the strength that have broken support levelins. there are quite a few over the last few weeks that have broken down. we would use this to reduce exposure to those stocks in particular and more opportunistic or higher beta positions that have had nice runs. we're not yet recommending top-down hedges, but we expect to do that fairly soon in the

top-down correction. the correction effects every stock and the last several weeks, it is accurate to suggest we have weakness in september that carries over into october. that is what we are anticipating this time around as well. with that in mind, we're not recommending adding exposure except very specific the catalyst. fundamental or technical. otherwise, stay with the core long positions for now given the sicyclical up trend is there an it still has momentum. >> i want to get to the charts. i'm going to do your wex word of the day. aegs. it is an etf. we're going to show the assets and chart. why is this a good buy in your mind? >> it is interesting in part because we are we areexpecting

correction in the equity market. it makes us creative in the new ey ideas. they had a down draft. for dba, it looks like a big corrective phase of the long-term trend. the etf got above its 50-day moving average this week. that's a nice catalyst for it. that comes after the 200-day moving average. >> almost out of time. i want to hit the short-term upside exhaustion. what are you seeing here if you don't mind quickly with upside exhaustion? >> nvidia and large-cap tech in general are indicators designed to indicate exhaustion. with the moves that they have seen with nvidia up more than 40% off the recent low, i think

it makes sense that we should see these up trends stall here. short-term and potentially long-term. >> katie stockton, thank you. have a great day. one more look at futures before we let you go. in the green. that's going to do it for "worldwide exchange." "squawk box" starts right now. have a great day. good morning. there you go. the fed is in focus. central banks gathering for the annual symposium in jackson hole. not too shabby if you have to pick a place. we will talk about the odds of a rate cut and new payroll revisions that were released yesterday. that's all straight ahead. minnesota governor tim walz f formally accepting the vice president nomination. we'll take you live to chicago. and microsoft plans to guide the new a.i. feature to take

snapshots of everything you do and see on your screen so you can go back and search for it later. we'll talk about the the security concerns with that which it seems like there are many. it's thursday, august 22nd now, 2024. i think it's 75 days. i have to look. "squawk box" begins right now. ♪ good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen. becky's off. it's just the two of us. >> it is 75. >> 75 days until the election day. >> we'll show you how it's done. respectfully. >> we'll talk politics. >> more fed. >> markets. >> you know, we're