wti crude at $72.34. bitcoin, i don't know if we can look at it, it's going to be about $61,000 in total. $60,877. joseph, thank you, sir. nice to see you. >> thank you. >> we will see you all. make sure you join us tomorrow. "squawk on the street" begins right now. >> i'll be here. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. futures fairly steady. s&p within about a percent of all-time highs. jackson hole begins. jobless claims in line. the ten-year yield recovers a bit after falling to near one-year lows yesterday. our road map begins with the markets on this jackson hole watch day as the fed minutes yesterday do indicate a september rate cut is likely. on the earnings front, snowflake shares down sharply, despite the company raising guidance. it also posted results above

consensus. we'll also have the latest on paramount. that company's special committee confirming it is engaging with edgar's group over that new last-minute acquisition proposal. let's begin with the markets and the fed ahead of powell at jackson hole tomorrow. little bit of a relatively hawkish comment out of schmidt has the yields up a bit. >> then they went down. they go up. this day has become very important, and it's a sleepy august day, but we all know from last few years it does matter. you can be hawkish pretty easily, because i've seen a lot of retail quarters that are quite good. but the ones that are good are the ones that are discount. so, i tend to think -- i've been going on the idea of, forget about the consumer being frugal. the consumer's shopping where the prices are rolled back, and the pressure to roll back everything is pretty great, so anyone on the fed who is really, really worried has to recognize, david, that there are places that the prices have not come

down, and the most important one, because we saw from toll brothers, housing. not coming down at all. not. >> right. still not. >> no. still not. >> you talked -- we talked, obviously, a lot about retail in recent days and weeks, because of earnings from the likes of walmart or target. obviously, we always talk costco as well. they seem to be, though, the beneficiaries, walmart and costco, certainly, of this trend in terms of the consumer. >> well, and target lowered 5,000 items. walmart, 7,500 items. costco, everything. that's where the buyers are. i mean, it really is rather extraordinary how smart the consumer is. listen, you give me a good price, i'll buy. if you don't give me a good price, if you give me a fuller price, urban outfitters, williams sonoma, wayfair, i'm not buying. it's not that the consumer -- the consumer senses something that i think people don't understand in the government, which is -- particularly vice president harris, when they talk about price gouge. there's no price gouge when it

comes to the biggest retailers. they're very smart. and they rolled prices back, and they stuck it to the suppliers. that's what has to happen. you have to stick it to the suppliers who raised prices big, and the big -- target did it. costco did it. walmart did it. really, very, very impressive. >> you can see what's happening to urban, down 15% this morning as comps were down more than 9 at urban, although anthropologie was better. the mystery is bj and why that's not benefitting from the dynamic you're describing. >> they did the low end and the consensus was much higher. low end, 3.75, down 4%. i thought bj spent a huge amount of money on marketing, and i was surprised. s z sg&a, you look at costco, they get leaner and leaner. this is the quarter that made me feel like maybe bj's moved too far. david, i don't know about your bjs. mine, i'm just not impressed.

>> haven't been. i don't know if there is one that i would qualify as mine. >> to be honest, they're up against the greatest -- maybe the greatest -- second greatest retailer of all time, costco. i'm going to give walmart that, because i've been reading about sam's clubs in china. they've crushed it. they're the only retailer in china that's doing well. >> they don't need jd anymore. >> if i were the people at amazon, i would be saying, wait a second, how could they have done so much same day? sam's club same day. walmart is just -- i'm waiting for walmart to rescue those two astronauts. is there anything else they can't do? >> well, they're giving you -- if you're a walmart plus sub now, you get discounts at burger king, according to "the journal." >> walmart plus is one of the great bargains of all time versus, say, the black card. >> what does that cost? >> it's a secret. it's like the fight club. i don't know. >> they don't want you to know. >> but i just am -- i'm so impressed with some of these retailers, and then i -- look, i

happen to be a big fan of macy's. they don't grow. i'm a fan of bloomies, and that's where tony spring is from. but what you're looking at is growth via execution versus no growth via missed execution, and i think that's what people are focused on. macy's was a true disappointment. they were supposed to close 150 stores. where is that? and then tjx, again, not talked about enough. unbelievable quarter. some guy downgrades tjx today. i was going to -- >> i saw that. but he's like -- he downgrades it, but all he has to say is positive things. >> you read that? >> well, i read it. >> this is the greatest -- >> the narrative is intact, everything's great, and we raise our price target a little bit, but we're going downgrade the stock. >> maybe the bigger story is this upgrade of e.l., which we have been talking about all week. >> it's working. >> over at pipe erp. >> it's working. by the way, they feel that china is finally baked in. >> e.l. is like fight club. you're not supposed to talk about it anymore.

>> too late now. >> don't you know who you're dealing with here? >> dealing with disney and the new succession team. >> we can talk about that later. >> that's around the bell? >> i love the way your mind works. you think of all your losers. >> i did. i did do that. that's exactly what i -- see? that's really -- he knows. he's in my scerebellum. where are you? you're in my vagus nerve. it's v-a-g, not a v-e-g. and by the way, the citi heretic downgraded tjx. estee lauder was a great company, but it's trapped in a category that went down. it went down. big perfume category, the make-up category. >> you don't blame management? it's not an execution issue? it's just that they've been in the wrong neighborhood? >> i'm not exempting -- they did a terrible job, by their own

admission. terrible. and there's -- fabrizio is old enough to retire without any sort of explanation, but i have to tell you, when you look at that chart, that reminds me of -- if you look at jackson hole in the background, they got the grand teton. there it is right there. >> can we get to another name you know a lot about, which is snowflake? i'm looking at the stock. it's going to be down. i know you had the new ceo on "mad" last night and i like to look at the difference between nongap and gap. all these companies report adjusted earnings, nongap. they don't include, essentially, the cost of stock-based comp, and that's the case here. >> they have buyback. >> they have to have a buyback to have their done -- >> they flood the zone. >> exactly. the potential here is a pretty significant one. i'm not singling them out in the sense of, they made 18 cents in nongap. they would have lost 95 cents on gap. >> really important. >> and i just like to point it out. and i know you appreciate it as well. >> i was focused on something,

and i spoke -- do we have any film of what happened last night? >> i think we do have some sound of ramaswamy talking to you about future investments. take a listen. >> this is what happens. >> we are investing in our future, whether it is in engineering or in sales to go sell the product more. obviously, in investments like things like gpus, but all of these are going to create a better future for us in terms of driving more topline growth. >> okay, let me tell you the world that we're in. what that really says is that the gross margin -- the operating margin, nongap operating margin, david, in fiscal '24, 10%. fiscal 1 of '25, 5%. and right here, fiscal q3 guide, 3%. you're taking it from 10% down to 3% op margin and the reason you're doing that is because of all the stuff he had to add in order to keep up with databricks, which people think

has an analysis, not just a warehouse. so, like, can you imagine a warehouse with no analysis, uncurated? uh-uh. if you can get like databricks where it's unstructured data in a warehouse that it analyzes, you got to keep up with that, and databricks is ahead. >> they are. >> they are ahead. >> when did that happen? >> actually, between now and -- between now and last year's dreamforce. >> interesting. >> when i first saw it happen. and i know that sridhar is terrific, and he's got to do a lot more marketing, but the problem is that if you can -- by the way, a lot of the stuff, you can just -- i'm going to -- i know i'm going to shorthand this, but if you really want to see what's happening, you can go to claude 3. claude 3. you compare databricks versus snowflake, and it's there. i don't like to -- i'm the only person who admits that i use these things, but we all know that if you want simple, easy, understandable, you can go to claude 3 on this. >> we've been talking about this for months, the notion that a.i.

will change the game for software companies in general. >> it will. and i think that you've got to spend the money. but you spend the money, you have the margin pressure. now, against that, they raise. take a look. if you look at the stock, you would say, wait a second, they beat and raise. but it's the margins, and i think david -- >> the margin was the one area where they did not raise the guide. >> that's what mattered. you had to somehow -- you now have a rule of 40 that went down very badly to a rule of 25. >> and he made the point, they got to invest more. >> rule 44 down to rule 25. >> right. >> and you can't do that. that's why we wanted to play that tape about invest. >> you can do it, but your stock is going to go down. >> you can't -- we're going to talk about microsoft and where they're switching stuff, but the fact is, microsoft invests constantly. by we accept that. we accept that. amazon, constant investment. we accept that. snowflake, we want them not to have to invest this much. >> there's the hyperscalers, and then there's everybody else. meantime, politics today, the dnc enters day four.

tonight, the vice president will take center stage, set to accept her party's presidential nomination. last night, her running mate, tim walz, held court. let's get to megan cassella in chicago. >> good morning, carl. from the united center, you can see people around me are getting ready for what will be the fourth and final night of the democratic national convention. last night, another packed house, there were celebrities here, stevie wonder performed. oprah showed up for a surprise speech, but the whole night was really about governor tim walz. he formally accepted his nomination for vice president, and he used the opportunity to introduce himself to the american people. he gave what was a very short speech, by historical standards, just about 15 minutes. so, the shortest vp nomination speech on record going back to at least 1984. he spoke about his small-town upbringing, growing up in nebraska, spoke about himself as a coach and a teacher, but he also spoke about economic policy, saying that he and vice president harris owe it to the american people to tell them what they would do, how they would govern if they win the white house. take a listen.

>> if you're a middle class family or a family trying to get in the middle class, kamala harris is going to cut your taxes. if you're getting squeezed by prescription drug prices, kamala harris is going to take on big pharma. if you're hoping to buy a home, kamala harris is going to help make it more affordable. >> now, that really sets the tone for harris' speech tonight. she'll be taking center stage to accept her nomination and to talk about her own middle class upbringing. the campaign says she'll be focused on connecting that middle class childhood to the policy agenda she has begun to lay out, but everything that has happened this week has started to pave the way for what will be the hardest stage of the campaign. the democrats have been in this honeymoon period. they have had all the momentum since president biden withdrew from the ticket just about a month ago. we know they've raised more than $500 million in that first month. but now they have to figure out how to deploy it most

effectively. we know they're now employing some 1,600 paid staff. they've opened 280 field offices with a heavy focus on battleground states, and just this week, the campaign committed to spending $370 million in advertising between labor day and election day. that's $200 million on digital and $170 million on the airwaves, guys, so a lot to come from them as they gear up for what is going to be a difficult road to november. >> megan, appreciate that. it's getting interesting. megan cassella in chicago. page one of "the times," jim, a look at the price gouging initiative and argues it's virtually impossible to say at this point what that would do. >> yeah. look, i think that they have to -- it's politics, so i tend to not want to intrude, but when you're in the -- when you're -- let's say i'm a linebacker, and you're in my zone, i have to comment on this stuff. price gouging, no. you have to look at the examples of companies that want to roll back the suppliers. they're not willing to ever talk

about companies. >> how do we even go about assessing whether something is a gouge or not? >> you have to just -- you take -- look. costco has the price of what everything was in 2019, they have it now. >> costco typically operates -- >> they're afraid to talk to companies. >> the margin is what it is for them. >> if they're seen talking to companies, it's heretical for them, and it makes no sense. talk to the companies that are pro-consumer. by the way, i talked to all the housing companies. lower housing? you want to lower housing, all you can do is low mortgage. it's so unrealistic, it's just painful. >> the party seems happy with that for now, given if momentum they have been able to get. >> i want to lower the price of everything. i want to just take it all down. >> well, there's other -- there's the other side, also, talks about lowering the price of oil in half and electricity in half too, which is equally -- >> everybody wishes -- unless

you're doug yearley -- >> let's have a depression. that will bring the price of everything way down. >> listen to him. a chicken in every pot. a car in every garage. that's you. >> that's me. yeah. >> that's my campaign slogan. >> when we come back, we'll get to the latest on paramount. where edgar's takeover bid fits into the picture. we'll get to zoom, advanced auto, disney in a minute. tamra, izzy and emma... they respond to emails with phone-calls... and they don't "circle back" they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety- clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours. your shipping manager left to “find themself.” leaving you lost.

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keep an eye on shares of paramount. going up to be a little bit today on, as we said, would likely be the case, the extension of the go shop period. it's going to be 60 days instead of original 45 because that ran out, but they got a bid from edgar bronfman and a large group of potential investors in his group, so to speak. very much unclear whether it can actually lead to or be

considered a superior proposal, but let's at least give him the credit of having gone from a bid that was worth about $4.5 billion a few days ago to one that's worth $6 billion. he keeps adding money along the way. if he keeps going at this rate, he may very well get close to where the skydance deal was an accepted deal is an accepted deal got to, which is about $8 billion in new equity coming in, $1.5 billion going on the balance sheet. most importantly, $4 billion being used to buy as much as 50% of the b shares at $15. the newest proposal from bronfman has $1.7 billion being allocated towards buying b shares at $16, so a bit more of a premium, but a lot fewer shares available to be purchased under his transaction. would pay, essentially, the same amount to nai, which has the control stake, and also would put money on the balance sheet. also have to pay a $400 million break fee that would be part of it if, in fact, it was found to be superior. remember, of course, if that were even to be the case, which

still seems unlikely at this point, you would have four days, a four-day matching period. that said, you know, if you're the skydance group, you're at least sort of getting to the point where, man, are we really going to have to come back and potentially be asked to pay more? is it really possible? it's a long list that bronfman has amongst his potential investors. he got rid of the guy from kazakhstan, the crypto guys, replaced them with some other well-known names. you do have fortress in there, although you have to wonder whether there's a cfius or at least an issue, not cfius, but -- because they are owned by mombatala and he's got a number of otherwell-known names, but that's a lot of different financing sources, all of which has to be proven by the special committee to be real. that's got to take place in a very short amount of time. and so that's one issue. and the other, jim, is the main one that i brought up any number of times, which is, investors may very well want liquidity at

$15 for a lot of their shares. this deal doesn't offer them anywhere near that number that the skydance deal already does. even with the argument that it's dilutive to shareholders because they're paying for skydance at an elevated price. i would make a quick point on that as well. they're accepting shares at $15 for a stock that's trading at $11, so really even though it was a $4.75 billion headline number, it's really about $3.5 billion, and then if you believe the ebitda numbers that they're putting up from skydance, when they include realized synergies, cost synergies, the numbers come way down. that's what they're saying. they've got a real line of sight to, for '25 and '26 on skydance, and again, at $3.5 billion, based on the fact that you're actually accepting stock that's worth 11, even though you're saying it's $15, 317 million shares, it's not nearly as dilutive as it would appear. so, i don't know.

>> okay, so, let's say you're them and they're watching the show. >> skydance? or bronfman? >> bronfman, bronfman. he watches the show. and he just hears you say, you guys are nowhere. does he say, let's be somewhere? does he say, david doesn't know what he's talking about? because you know what you're talking about. and their bid sounds just -- it sounds gossamer. >> well, it keeps getting better. >> well, true. >> every day that goes by, it keeps getting better. i don't believe, at this point, you've got a special committee that would be prepared to say that it is -- if it stays where it is, superior to the accepted proposal. >> here's what i ever to say. >> nothing says it's not going to keep adding financing sources. >> snowflake. right? kind of like rosebud. >> i'm here all next week. >> was that one of theirs? >> we'll be keeping this movie going. >> orson wells didn't work with paramount, did he? >> that is rko. >> you are so good, man.

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s&p is going to inch closer to 5,640 today. of course, all-time high, 5,669.

not that far away, but a lot on the line with jackson hole today and tomorrow. the opening bell is coming up in four minutes.

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leader in income, alternatives, and responsible investing. all right, let's get to a "mad dash." opening bell right after this. williams sonoma, plenty of earnings to get to this morning. let's start with this one. >> williams sonoma is one of the best-run companies, and laura alvarez, the digital first strategy, which is brilliant, but she also sells furniture, and one of the themes of this retail portion of the earnings season, david, hard goods, furniture, no. and pottery barn was weaker. >> and west elm. >> i hate to say it, but there are very few merchants as good as laura alper, but she did not deliver. west elm was not good and pottery barn was not good. what it says to me is before you shoot the messenger, like, wayfair wasn't good furniture either. if it's hard goods, it's just not selling that well. versus, say, soft goods like gap

stores that we're hearing right now. congratulations to them. their symbol is now g.a.p. not gps. >> i saw that when i walked in. gap. makes sense. >> let's get the opening bell here at the cnbc realtime exchange. at the big board is gap, celebrating its 55th anniversary and the ceo ringing the bell. at the nasdaq, it's als united greater new york, the tristate area's preeminent als nonprofit. you're a fan of these guys down here, though. >> richard, i spent the day with him yesterday. we were in the new banana republic store in soho. it was a thing of beauty. he is turning this back to the way we thought it was, iconic. that's the word they continually use. it's right. old navy's been redone. gap stores, better than ever. but banana republic, which is just -- went fallow. holy cow. it looks great.

look, i think richard has brought a level of energy to gap stores. it's been undermanaged for a very long time, and it's back. and the stuff looks great. >> we were paying a lot of attention to retail. i wonder, would you say the turnaround at gap or anf has been more impressive? >> anf has been this silent juggernaut because a lot of people don't go into the -- younger person style. i think that gap stores, because the stock hasn't really moved yet, we're not paying attention to it, but this thing is going to move. their tiktok strategy of advertising, eight up there with ralph lauren, which has unbelievable advertising. patrice, richard dixon, they understand where the people are. david, the people united will never be defeated. remember that when we were trotsky-ites. then we had to switch it to workers united will never be defeated. remember we were the spartacus workers? we were like the red army

faction. >> i remember the '68 convention when you and i were out there. >> that's what made me they think about it. >> we had some good times, didn't we, jim? >> now it's about gap versus williams sonoma. san francisco is back. laura alper, don't count her out. >> oh my god. >> what? >> will you tell them to stop cheering? i'm already half deaf. >> let them cheer. three cheers for capitalism, david. i'm no longer a workers. >> i up your three to four. >> who wrote "what is to be done". >> chernechevsky. >> no, lenin. >> no, chernechev before lenin. lenin took it from him. >> okay, lenin was a copy cat. he was also a mass murderer, what's worse? >> i'll give you advanced auto parts. it's terrible. stock is down 20%, losing 20% of its value this morning. two different things.

they sell world pack to carlisle for $1.5 billion and also report the results, and as you can see, not being well received in the slightest this morning. >> let's go there. what is the common theme? another common theme besides furniture in this retail period. do it yourself, uh-uh. get others. that's a do-it-yourself shot. do you know how hard it is to fix modern day cars? >> can't do it. >> i can't change a tire anymore. >> they're computers on wheels. comp is up 0.4. they managed to eke out a positive comp. >> people just feel this category -- if you want to be in this category, buy auto zone, because auto zone buys back stock, almost as well as toll brothers, which just bought back half their stock. >> yeah. yep. >> i'll give you zoom. >> let's talk zoom. >> what do you think about kelly stekalburg retiring and people like that? she's a good cfo. >> up 5% on earnings. of course, you always go back. it's funny. we had zoom and peloton this

morning in terms of earnings and it takes you back to the pandemic, these were the darlings during that period of time. >> yes, they were. >> this company had a value that exceeded, i'm certainly right in saying it exceeded $100 billion. it is now $18 billion. i mean, it's not nothing. and up 5% today on numbers. but obviously, when you go pack and back and take a look, it's quite startling. >> look, it was hard to keep up with what he was. i will say this. the contact center, which is what zoom is really trying to be big in, is the one that's most under siege by a.i. >> and what does that do? i mean, why can't they -- >> the bots are so much smarter than people. have you noticed, by the way, how smart the bots have gotten? like when you ask, my prescription is not working, i need a new prescription. get the right one. it will say -- it will talk with you. i'm really hard pressed to think it's not a human.

>> i'm glad you bring it up. we were talking about it, numerous times during the course of a show. we haven't been talking about the advance of a.i., but it doesn't mean that it isn't advancing every day. and by the way, the threats are still quite significant. none of that has receded. both the productivity gains and the continued threat, of course, as to what it actually means to humanity and everything else. >> well, you have to spend. again, that's the snowflake versus databricks. >> right. >> you have to have the up-to-the-minute a.i. a.i. in gap stores, let's go there for a second. >> okay. a.i. in gap stores. >> you can find out what people like, and then you can put more of it in your stores, so what they're doing is using a.i. to figure out -- to curate what people want, and so it's a very -- it's a much smarter store than it used to be. >> well, what was the figure walmart gave? using gen a.i. to manage their catalog, their product catalog? it would have taken a team of humans decades to do it in the same amount of time. >> there it is. now, doug mcmillon, her really

understands. i remember when he first set up his a.i. business in stanford. he knew that he had to seed that to the people who know. a lot of ceos feel they do know. no. these are technological marvels. walmart plus, that's all run on that. if they can do the same-day and come up against amazon, which i don't think -- amazon is still trying to figure it out. >> today, jim, opening in the red, bed bath, best buy, target, dollar tree, tapestry, giving back some of yesterday. >> well, i mean, yeah, today's a day where i think people say, we got a little euphoric. let's go back to the ones that were really light, like walmart. i just still can't get over that walmart's so good in china. i mean, everyone's doing poorly in china. >> it's funny. i remember visiting a walmart in china when they started -- first started there. my first documentary. i mean, it was early, early days, in terms of trying to understand the chinese consumer. took them quite a while, but to the point you're making and we mentioned as well yesterday, that sale of the stake in jb.com, almost 10%, which did

net them about $3.5 billion or so. >> did you notice the lack of liquidity in china? that they could do a $3.5 billion block and it could crush the stock? >> crushed it. >> what does that say if you're like msti and you're trying to figure out the weighting of china? right? >> interesting point. >> you're henry fernandez. unbelievably good ceo. does he look and say, wait a second, maybe these prices can't hold up under close scrutiny? >> it's an interesting point, jim. there is a lack of liquidity to a certain extent. our own market right now is typically not particularly liquid at this time of year. >> well, getting better, and that's been one of the bullish arguments lately, jim, is that a rise in liquidity is going to be a tailwind for the bulls, even though we're getting some warnings on leverage and treasury futures, people making some big bets on bonds this week. >> well, i have to tell you that in terms of august, i think we all have to recognize, away from the bond market, that the stock market is on fire. we have all these ipos. we have lots of news. and -- >> that's a lot of systematic

flow. >> you know, if you go back to '87 and the last week of august, you began to get the cracks for the '87 -- for the crash, where you saw, like, merck would have a bad quarter, and the stock would get crushed. we're not seeing any of that now. we're seeing a tight market. >> meantime, equal weight, all-time highs. mag seven is on track to underperform for the first time in several quarters. versus the rest of the market. >> how about the piece this morning that mag seven, they're underweighted and i think the institutions say, wait a second, if they're underweighted, large cap institutional ownership, mega cap tech, under ownership, this is a morgan stanley excellent piece. it tells you that these stocks are not overweighted anymore. i like this. >> really? >> yeah. >> not overweighted? really? >> yeah. it's pretty amazing. meta. oh, my. meta. meta, meta, meta. meta, david, people -- they're actually offering an actual

return on investment when you spend at meta. i mean, here, this is what you're making. mark zuckerberg is a dream come true for any cmo who then will find their job eliminated because you don't need them anymore. >> yeah. >> mark is your cmo. >> meta has the stock price up 51% this year. far outpacing any name other than nvidia, of course. >> i've got the new ray-bans. >> meanwhile -- >> my wife won't give them to me. >> dollar index is almost back to 100 and change. talk about an fx tailwind for this quarter, jim. >> yeah, i mean, i saw unilever was upgraded today. no, you need procter. and colgate. >> which has already had a very good year. >> colgate's had an amazing run, but you can't get a word out of colgate. the oncologly colgate i get is toothpaste. >> pet food, also an important

component. >> i have to tell you that this is a halcyon moment for that. look at clorox. she's got it going, and she got rid of that bad supplements business that they spent a lot of money on. you don't even notice it. look at that comeback, clorox. >> yeah, staples, all-time here. >> lind rendle is so good. she had a hack that most people would have been just said, i can't handle it, help me. her hack was the worst. shut them down. you can't even see now what happened to that hack. >> we haven't mentioned the lockout at canadian pacific and canadian national. people are thinking about ag, and water plants and auto manufacturers, if this, in fact, a third of their freight crosses the border. >> it was amazing when i saw that, because it reminded me of when the trum administration was worried about the rails slowing down the u.s. economy. i didn't realize how important these two are to the u.s. economy.

much more than i thought. there's a backlash, too, costco, with the check off. it's easy to get union members and costco is fighting that. there are some small-scale fights involving labor right now that if they went large-scale would raise our cost. our president is a union president. >> national association of manufacturers has a released out today talking about what could go wrong. >> yeah. >> if this lasts. >> no, i mean, look, i think that everybody wants everybody to make more money, except for the -- >> except for who? >> the america oligarchs. >> who are the american oligarchs? >> we have billionaires in our country, and people don't want them to be richer. >> mark zuckerberg. >> he's a nation state. >> the size of these companies, i say this all the time, typically during earnings, but it has come up in the political debate on both sides, by the way. we talk about whether any of them are violating antitrust laws. that is going to ultimately be

decided in the courts and a number of different cases, as you well know, but jim, in your long career and in mine, i don't know that i've ever seen companies with quite the reach and the resources and the impact on daily lives of consumers -- of americans than amazon, alphabet, meta, and apple. >> amazon brought back prices 50% on prime day, which is incredible. but you're just right. just in terms of the sheer control these companies have over our lives, because i would argue of superior execution and superior product. >> and scale and globalization and all of the things that they've been able to benefit from. and you're right. incredible execution. >> when you go read the google case that google lost, the one that jonathan kanter came on and argued, there's this moment -- it's building up. it's kind of the crescendo, like "tristan and isolde." it's the love death, but he says, and in conclusion, they're

a monopolist. i mean, no. it's like, really, it's amazing. it's like, we have had enough. america's had enough with these people. >> and it will continue to be something we discuss, because it's going to be -- and again, it's both the republicans and the democrats in some ways who are sort of coming to -- >> all trying to figure out what to do. >> -- similar conclusions. you can talk to steve bannon on one side and on the other, i don't know what the opposite of steve bannon would be. and they'll say the same thing. >> you just know steve bannon's side of things. >> he hugged me once. >> navarro's hugged me. >> he said, my brother. >> you guys are alone on that front. >> my brother. i was like, is this actually happening? >> rene haas hugged me from a.r.m. >> that was very nice. let's quickly hit disney succession. can we do that? >> you bet. i'm getting the latest on that one. >> you can slag them as you always do. >> go ahead. >> there's really not much to say here other than james gorman is now running the committee on

the board of directors. remember, he was a recent addition to disney's board, having stepped down, of course, as the ceo of morgan stanley at the end of last year. we did a really fun exit interview. he's still chairman -- morgan stanley, by the way, has not performed that well this year versus many of its peers, but that said -- >> do i just do that to me? >> gorman knows his way around succession, having obviously put in place the succession plan at morgan stanley, and he will now be running that process to a certain extent at disney. bob iger will also be involved. he's still not stepping down for another two-plus years, the end of '26, but they want to identify his successor long in advance of his exit, and it's going to be a process we follow closely. >> did you see the powerhouses that are on the committee? >> that are on the committee? >> yeah. succession committee. >> yeah. >> mary. mary barra. but i got to tell you, david, you put parker together with calvin mcdonald, gorman, mary

barra, and if they come up with someone, i don't think that person is going to wait in the wings that long. i don't. i think that person is going to say, listen, you want me, you got to get me now. >> they got to get it right this time. that's all i can say. >> or what? nelson peltz files? >> no, jim cramer files. >> i was one of the first people ever to go to disneyworld. >> i went in '73. >> i worked there for six months. as you well know. >> as we know. the cruise. jungle cruise. >> great place to work. jim, schwab. td, selling a bunch to get some of these regulatory headaches out of the way. this name has been under the 200-day for more than a month. >> benter is doing a good job. i think this was directly related to the money laundering case that wrecked the acquisition, david, of first horizon by td. now, we know, and it's a gigantic fine. so, i think that by a very pristine -- from a very pristine organization, but carl's right.

i mean, schwab has underperformed, and it's underperformed because of this sweep issue, whether they're awarding their customers enough money, and wells fargo had it. wells fargo's kind of, you know, breezed. >> wells fargo -- i'm sorry. explain that. >> wells fargo. this was all like the sweep, how much you make in your account, and it was a very opaque issue, but remember, schwab should not be down. schwab is just a -- it's a stock sale, and i happen to think that bettinger's coming out of it and we don't want to hark back to that. i think we're fine in that business. the business is good. stock business. >> it is. >> they make most of the money from the bank. they use money from the bank. >> yeah. >> but i like schwab stock right here. i would buy it. >> it is a busy day today. we got existing home sales coming out of the top of the hour, but first, some flash pmis. let's get to rick santelli. hey, rick. >> yes, watch the market yields moving up. new highs of the session for tens, s&p global, pmi's hitting the wires for our august

preliminary look, expecting a number under 50 for the headline, and it delivers. it's weak. 48.0. this is the weakest going back to december, just as last month, at 49.6 was the weakest since december. now, you have back-to-back under 50. all the numbers up to last month and this month had been above 50. so, manufacturing, not looking so hot. but the service sector is. 55.2. 55.2 on the services pmi. this is well better than expected. 55.2, actually, is the best only since june, but do keep in mind this is now the 19th consecutive month above 50. it's a very solid reading, and if we look at the composite, it's also up above 50 for the 19th consecutive month. these are big numbers. 54.1 on the composite, much better than expected, and 54.1 fits in nicely with 54.3, so

these numbers on the composite, of course, juiced by services, is giving the market a reason to push higher in rates, and of course, pushing higher in rates is a dual sword. it isn't necessarily what stocks want to see, but the activity in the service sector should be welcome for expansion with regard to the economy. "squawk on the street" will return after a short break. investment professionals know the importance of keeping their clients on track.

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let's get to jim. >> stock down 50%, do you say thanks a lot to people who say lulu is going to have problems? that's what i felt when i read this stiefel piece, the fact there's been a negative rerating, but maybe it's overdone. that's their point. maybe you can sneak in here and start buying lulu. even if they, as citi said, give you an estimate cut, maybe it's bottoming. it's been a horrible run for lulu. i point that out because they report on the 29th. very significant. >> are you willing to take what piper said about el in china, the bear case, and transfer that out to nike, lulu -- >> no. too early. it's not clear to me at all that

estee lauder has cleared up. >> tonight? >> i have a lot tonight. viking didn't have the numbers i would expect. the cruise kind. >> cruise, yeah, yeah. >> intuit, every small business loves. and fortune brands, people don't realize they're involved with no mold, shutting water down, high-end stuff. insurance companies are demanding you buy their product in order to stop flooding inside their house. i love that. what a nice business they have. by the way, china, horrible for them. horrible. >> jim, we'll see you tonight. >> absolutely. >> when we come back, philly fed's harker live from jackson hole. don't go away. this summer, there's no better time

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good thursday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber live from post 9 of the new york stock exchange. in just a moment we'll take you live to jackson hole, wyoming, for an interview with philadelphia's fed president, patrick harker, as all the fed presidents meet ahead of fed powell meets. we have a rally, the s&p up 0.25%. 1.50% gains for the s&p 500. 2% for the nasdaq. today it's communication services in the lead. you have names like meta, alphabet all higher. and industrials are lagging.

we're 30 minutes into the trading session. here are three big movers. snowflake shares sliding despite a q2 beat. analysts citing a deceleration in growth in reasons for the stock drop. another name moving lower, urban outfitters, same store sales fell 9.3% in the second quarter and also watch peloton, nice jump after they reported their first sales increase for the first time in nine quarters. the stock is still down more than 40% over the last full year of trading and way off its pandemic highs. let's get some existing and head out to diana olick. >> hey, carl. existing home sales in july broke a four-month losing streak rising 1.3% month to month to a seasonally adjusted analyzed rate of 3.95 million units, along expectations. sales still down 2.5% year over year. i would note these are closings. sale contracts signed in may and

june when mortgage rates were still over 7%. we're down to around 6.5%. the good news is supply is rising. 1.33 million homes for sale at the end of the month. that's up 0.8% month to month but up a whopping 19.8%. we're still at a four-month supply, though, due to higher sales pace. a six-month supply is considered balance between buyer and seller and low spri is keeping prices on pressure. the median price was $442,600, up 4.2% year over year but no longer the all-time high price, if that gives you anything. but it is still up year over year. we do have a lot of all cash buyers in this market, though. 27%. that's up from a year ago. and the sales continue to happen on the higher end of the market. sales of million dollar plus homes up 26% year over year. and that's because the supply is up over 30% in that higher price range.

supply is down on the lower price range. that's why sales are skewed toward the higher end. sara? >> diana, thank you. modest tick up on the back of that report. the other report to mention of the day was jobless claims. we get them every thursday. a number of americans filing for unemployment claims. ticked up a little bit. but to 232,000. i mean, it's still low. it speaks to a labor market that hasn't produced a lot of layoffs, which is good news. especially because we're really on guard for weakness in the labor market. now, the trend has been a little bit higher, so we obviously watch that. but no real stress or all-out stress to talk about in the weekly unemployment claims. it was a 4,000 increase from where we were last week. also monitoring some of the comments from the retailers, especially on the consumer today. and, again, there's talk of softening, but not collapse. here's urban outfitters' coo.

while consumer traffic has remained consistent, overall purchasing activity has shown some softening. customers appear to be exercising more discretion in their buying decisions. that jibes with what we've heard from some other retail ceos. advanced auto parts ceo, we expect consumer related headwinds related to maintenance deefrls and lower discretionary spending to impact our trajectory in the short term. with respect to quarterly trends the pro and do it yourself businesses have started off weaker driven by overarching macro pressure on the consumer. a lot of this, david, talk about discerning, value, softening, but not a collapse. and that's pretty much what we got from target earlier this week as well where the traffic increased because target was able to give the consumer value.

cutting costs -- >> they lowered some prices. they brought people in and benefitted as a result of that. >> that's where we are. >> i wonder with some of this language how much is an explanation that may be true but not completely true because some of it has to do with other trends as well or a lack of execution on the part of said company. >> everybody can blame the macro. >> always. why not? >> you do see a separation of winners and losers. i think it will be really interesting in the coming week to get some of the stronger names like an abercrombie, which has not talked about softening of the consumer and not talked about consumer being more choiceful because they've been nailing it on trends and speaking directly to the consumer and social media ask getting everything right. so, you look -- you have to look for the stronger ones. i think also nike is an example, right? they blamed some -- they took ownership of some of the weakness they've seen but they also blame the macro consumer. we've seen really strong results from some of the competitors likehoka or on.

absolutely, that's what happens when -- a rising tide doesn't lift all boats, that was the story in 2021 and into 2022. since we've been taking on inflation, this idea of corporate greed and price gouging. you hear a lot about it from the politicians. vice president kamala harris's big economic response to inflation is that she wants a federal ban on price gouging, particularly for food and groceries. so, i went back and looked at a chart. here's a jpmorgan chart of some of the companies i cover, the package food companies. and what's been happening with their margins. and here's the industry grew, right, all the packaged food, campbell's soup, pepsi. if you see at the end of the chart, the margins in the first quarter of this year are 34.5%. that's about where we were in 2021. and if you go pre-pandemic, it's

pretty close to where we were, in the 34 range. and we've been a lot higher in 2017, in 2018, on margins. the bottom line is that there's not a lot of evidence that these companies are juicing their margins by passing on extraordinarily high prices to consumers more than they're paying on input prices. so, as far as a federal ban on price gouging goes, i think it's going to be very difficult to implement. and perhaps maybe based on nothing. >> and how do you implement it? where's the line? >> first of all, it's not there, whether it's happening. secondly, do you want the government setting fair prices on things? >> it's not going to happen. a lot of economists are panning it. even -- forget the republicans for a second. democratic economists like a jason furman who was quoted in "the new york times," obama saying this doesn't work, moody's, mark zandi,

particularly people on that side of the aisle going after this policy. >> front page of the "times" discusses it as a notion. there's no way to tell exactly what the law would do and argues maybe the democrats are happy with that right now, simply riding on the momentum they have after the convention. >> it's a gimmick. >> on both sides. cutting energy prices in half would be the same thing. let's get to jackson hole this morning. our steve liesman sitting down with philly fed president harker. >> good evening from jackson hole. i'm here with philly fed president patrick harker. you just reminded me, this is our last jackson hole interview with you as president. >> yes, it is. >> he's done this for almost a decade. >> almost a decade. >> thank you for joining us in the cold. i want to start off knowing that philly is known for its expertise in macro and micro when it comes to employment and the jobs market. sara was just talking about

this. do you see weakness in the job market, a softening? how do you judge it? >> do we see softening? we see softening from a very high level. we were doing a lot of catch-up after the pandemic. it seems to me we're heading back to what would be normal. take the revision we just looked at. that was not a surprise to us. we do early benchmark revision research at the philly fed. we knew the number was going to come down. it went down a little more than we expected but not by a lot. things seem to be getting back into balance in a way -- the number average -- we were talking about this, the average -- >> 174,000. >> go back to 2018, 2019, that was a really good number. i don't think we're in a place right now -- you can't just look at that number. look at claims today, other measures in terms of job transition rates and so forth that you look at. the labor market has definitely softened but from a place it was difficult to get workers. i've been out and about in my

district this summer. what i'm hearing from contacts is, it's easier to get workers except for those things they were having -- positions they were having a hard time with back in 2019. nurses, machinists, you can go down the list. >> skilled workers. >> skilled workers. >> does it change your view on -- assuming there's a risk management approach where you're balancing the dual mandates, does it change your view at all of the risk the job market may be weaker now and you have to guard more against such a weakness? >> sure. it was all inflation, inflation, inflation for a while. now we're starting to see things -- the balance of risks getting more equalized. we do need to take more into account when it comes to the labor market, for sure. >> what does that mean, taking more into account? >> i think it means this september we need to start a process of moving rates down. >> how aggressively do you feel you have to do that? >> that's a good question. >> i've been out talking to a lot of contacts this summer. and one thing i heard from them, bankers, business leaders,

community leaders, is whatever you do, do it methodically and signal it well in advance. give us time to absorb the change. they understood why we did what we did to bring rates up quickly, but they're saying, please, don't do that again to us. barring something we don't anticipate in terms of the data, we need to start bringing them down methodically. what they say to me is we don't care that much whether it's 25 or 50. start the process and keep it moving. >> do you care if it's 25 or 50? >> no. in the sense what matters more is we commit to start bringing rates down back to a neutral rate. >> so, this brings up at least two questions. the first one that gets me is, this notion of the fed being well positioned to respond to weakness. if you're too far from neutral, you're not all that well positioned which argues for a more aggressive rate cut to a position where you are more well

positioned. >> we need to let the data speak to this. i'm not in the camp of 25 or 50. i need to see a couple more weeks of data. but i think it's, again, a -- what people are asking for -- we're seeing this with the longer end of the curve right now. the markets are already responding. that's what matters. it's not the fed funds rate that matters as much as the overall curve. >> i'm going to skip a question and go to that one right there, which is this notion of the market has priced in 100 basis points through the end of the year and 200 by this time next year. is that too aggressive? is that appropriate? >> i'll let the market speak for the markets. for me i don't know what that exact number is right now. >> that gets back to the question i was going to ask, which is how restrictive is the fed right now? if you wanted to provide stimulus to the economy, where would you need to be? >> i think we're appropriate right now for our policy stance. again, what matters is we start to bring rates down. that sets the expectations. this is all an expectation game,

monetary policy. it's not about the rate today. it's about what the rate is going to be in the future. that's what matters most, we commit to bringing them down. >> when you get to that point -- first of all, are there lingering concerns about inflation given you're still above target? >> yeah, it's interesting. again, i've been talking to contacts, shelter. that's the big one we continue to worry about. what i'm hearing from bankers is, they're back in the mortgage business. they're now writing mortgages. the longer end has come down. what we'll see, in my estimation, is the lock-in effect as mortgages come down, people will start to move and free up housing. second, i've heard from bankers, developers, they're sitting on projects and are not willing to put a shovel in the ground yet until they start to see some sense that the rates are going to get back to where they can pencil it out. we're getting close to that point now. i think you're going to start to see some development. now, this does not overcome the structural problems we have,

zoning, you name it. >> so, you feel like reducing rates will bring more housing supply to the market, which will put downward pressure on housing inflation, which will put downward pressure overall? >> that's the theory. we'll have to see how this plays out but that's what we're hearing. >> you've been making inflation worse by making rates higher. >> this is one where our understanding of monetary policy transmission -- >> we're talking about here? >> yeah. the typical textbook model. take rates up, things slow down, et cetera. that -- there's a lot of nuance to that. housing is a great example of that. we'll learn a lot coming out of this period in history about monetary policy transmission. that's why this topic is so important. >> fascinating. if you tighten into housing shortage, you may make inflation worse. >> the shortage was here before the pandemic hit. >> right. we do have this, i guess, canadian rail lockout. we've just been through a period

of supply shortages and then restoring supply. are you worried, again, you could get some inflation from the supply side? >> potentially. just like we are with shipping, global shipping. so, those things will affect the economy, but you know what's amazing if you step back, and i've been doing this now for almost ten years. how resilient this economy is. these things head off, but we react, we respond. >> let me ask you two quick questions to close out here. what are the biggest risks that keep you up, that concern you? >> one is just the geopolitical risk we're facing. we don't know what's going to happen. there are lots of conflicts in the world. they can affect us pretty significantly. i worry about those. i worry about those not just on the economy but from a humanitarian issue. >> when it comes to changing rates in september, are you concerned about the optics of that related to the election?

>> no. i'm very proud of being at the fed where we are proud technocrats. that's our job. our job is to look at the data and respond appropriately. when i look at the data as a proud technocrat, it's time to bring rates down. >> it's a pleasure interviewing you now and over time. we'll see you again soon. carl, sara, back to you guys. >> thank you very much for that. steve liesman, going to be in jackson hole for the next couple of days. interesting to start to put together the waves of dovishness and hawkishness. schmidt and bowman more on the hawkish side, goolsbee, and harker saying, let's get this rolling. >> there's not a lot of mystery. they're on track to cut in september. that's what the market expects and that's what thaur saying. the minutes from july's fed meeting had one surprise, to me, which is that a number of fed

policymakers were ready and willing to start cutting in july. >> several. >> there you go. and so i think the former new york fed president op-ed where he said, cut now, potentially made an impact. they see bigger risks on the unemployment side than higher inflation side. what they're all saying basically is we're gearing up for a cut. we'll go steady and methodically from here. there's a question of whether they would go 50. we do get a jobs report on september 6th, which comes before the meeting. if it's shockingly weak, then maybe the odds go up for 50, but it doesn't seem that's what they're leaning toward today. >> schmidt saying the revisions yesterday really didn't change the equation. goldman was out yesterday afternoon saying they thought that revision was exaggerated, more like 300k. >> 818,000 fewer jobs between march -- april 23 and march

2024. so the government totally overstated the number -- what i think, and renaissance put out a note last night. it just shows we obsess over these monthly jobs numbers. there are a lot of errors in them. and they're not necessarily accurate and so maybe the fed doesn't need to place as much weight on every single one. taken all together, it's still a picture of a strong and solid jobs market. maybe not as solid as we thought. which ads a little fuel to the fed's view that they feel comfortable cutting rates. nothing more dramatic than that. also the politics that come with that, overstating jobs. the administration by 800,000. >> right. was over what period of time? >> one year, basically. through march. >> yeah. biggest revision up or down since '09, biggest revision ever. >> they have to get their methodology better. >> it's a confusing time. we'll get some reaction to harker's comments from jeffries

as the markets lose a little steam. meta, first all-time high since july. we're back in two.

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>> i think it means this september we need to start a process of moving rates down. >> that was philadelphia fed president harker moments ago with our steve liesman in jackson hole. joining us this morning, jeffries' chief market strategist and cnbc contributor david joins us from chicago. good to see you. i'm wondering if you're hearing any surprises either way in this pre-powell commentary? >> not really. i would agree with what sara said in the last segment, there's not that much division here. this is division. i thought schmidt was a little more hawkish, pat was a little more dovish. the differences aren't big and we're trying to get to neutral. we are talking about the path to neutral. i think steve pressed on the path a little bit in the last interview with the philly fed president. and he didn't budge on it. he said we need to tell the market how we see that path but we haven't decided on what that path is. that, carl, is what the market wants to get to the bottom of is

how quickly are we heading back to milestone, give us landmarks, talk about the data requirements or not, that get us back to something probably inth mid-3s before we can say we're at neutral and things are normalized. >> right. the minutes, i wonder how stale do you think they were and what did you make of this line where most saw increasing risks to the employment mandate? >> again, i think we're lined up perfectly for a fed that is something to start a process of rate cuts. that process could be expedited for a number of reasons. and i think the market is starting to price that as we all know. i think steve said it, his comments were about 100 basis points priced in through the end of the year and that's only through three meetings. that means at least 150 is priced in. we got another 100 going into the late summer of next year. then we're sort of at ee

equil equilibrium, we're at our star level. there's a lot priced in and the fed is telling you, they want to do this. it's now a question of speed, timing, and in many ways, i'm not sure, as we started this conversation, i'm not sure that it matters that much whether we go quickly or we go fast. it will matter for rate traders that want to bet on individual meetings. for the economy, i think it's a very healthy side. and for the market, i think it's a very healthy sign we have a fed that's ready to accommodate here or remoove the tightening we've been under to get this inflation back into check. >> that's what the fed is going to do, you think they'll pull it off, preserve the economy, the soft landing? >> sara, everything indicates all the haters out there that we're talking about, jay powell being the reincarnation of arthur burns, this was the worst fed in modern history. it was all wrong. i think he pulled it off. i think he's nailed it. and i think we're going to see some tomorrow, some victory lap

type discussion which says, you know, hey, we got this, we're ready to go and we're getting back to neutral. i don't know how fast. in my hearts of hearts, i think there's a cogent case to get there faster. i don't know whether they'll be biased that way. the minutes gave me a little taste of that. and i think we'll see, as the election gets out of the way and they cannot look political, i think we might start to see a case that says, let's just get to neutral. by the way, guys, if we got to neutral faster and inflation went down to fast, we could go up. >> what is neutral? you keep using neutral. i feel like nobody actually knows what neutral is right now. >> i think you're right, sara. it's debatable. we can at least agree the r star has come up, we'll see if it comes up in september when they release their latest stocks. my personal number is probably closer to 3.25, 3.50. i think the fed is 3.75, as a

committee. a lot on those committee have moved their long-term rate projection higher significantly over the last year or so. i think that's right. i think that comes back to our discussion about a bigger balance sheet. a larger balance sheet at equilibrium allows for a higher rate. even though president schmidt thinks they'll be taking that down. >> steve got to it with harker. we got our first monthly gain on existing since february. got the 30-year fix down to 6.5. are we in the process of unlocking? >> i think there's a little bit. there's a lot more to go. it's a pretty important part of the equation. if we get back over the next year to that neutral level of

3.25 to 3.50, i think that's incredibly positive. being here, listening to the democratic platform on -- from all the harris folks, there's a lot of focus on housing. i don't know whether the trump camp is nearly as focused. i don't think it is. there's going to be a lot of focus on housing in the next year or so if harris wins. that could be a tailwind as well. we look at that and we'll see on housing. a lot depends on the election. jackson holeis important, the pace is important, rates are coming down, but this election is crucial. what's going to happen in the next 75 days is going to define a lot of those specific questions like what happens in housing, what happens in energy and what happens overall on the regulatory landscape. it's a big, big deal on the outlook for these financial markets. >> markets certainly working hard to price all of that in. hope to get your guidance in the next 48 hours. thanks, as always. >> thank you.

still to come on the show, a closer look at, speaking of, vice president harris' tax policy and why it could have a dramatic impact for investors. back in two. less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley >> at university of maryland global campus, getting a bachelor's degree doesn't have to mean starting from scratch. here you can earn up to 90 undergraduate credits for relevant experience. what will your next success be?

welcome back to "squawk on the street." i'm contessa brewer with your cnbc news update. a source tells the body of mike lynch has been retrieved from the wreckage of a yacht that sank off the coast of sicily. his daughter remains unaccounted for. lynch had reportedly invited friends and family to join him on the yacht to celebrate his recent acquittal in a major u.s. fraud title. delta air lines is following in american airlines' foot steps, us spending flights to israel. delta is currently due to resume travel to the country at the end of october. while american is halting flights until march 29th of next year. a new u.s. government report finds drinking water that contains twice the recommended limit of fluoride is linked to lower iq in children. the report marks the first time a federal agency has determined

with what it calls moderate confidence that such a link exists. the report did not quantify how many iq points might be lost. the u.s. started adding fluoride to water in the 1990s because the mineral strengthens teeth and prevents cavities. carl, that's the news. back to you. >> thank you very much. watching some retailers open up here in the red today following some quaut early results. you see wsm, urban, advanced auto with a much sharper decline, although off the early session lows. we'll take a closer look when ckhetrt"om t see ces ba. orate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

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opened with a small gain, have lost most of it. s&p down 5620. dow holding onto 40,800. bob pisani here. >> momentum is not as strong as

it was recently in terms of advanced decline line but it's still good. we have a flattish open, as you heard fromcarl. very broad support overall in the markets. breadth has been very strong in month. the s&p is up 1.8%, nearly 60% of the s&p 500 up for the month. loweredship is very broad. i noted this every day. we've had notable strength in consumer stocks. there's been lots of new highs in consumer staples in the last few days, interest rate sensitive stocks. utilities and real estate are strong. tech also has hung in very well. most big cap tech with the exception of amazon are all up this month. the laggered include the banks which got very hard on the disappointing jobs report, august 2nd. have not quite recovered yet. energy due to a notable drop in oil in the last week and consumer discretionary is weak as well. there are some clear concerns here about a slowdown in travel with cruise lines, for example, casinos down this month, airbnb was down. we heard disappointing earnings

report and commentary from them as well there. you see amazon now down as well here, down about 4%. that's one main reason the consumer discretionary has been weak. david and jim were talking about trying to understand the china consumer. something interesting is happening here. chinese main land stocks have underperformed this year due to the weaker economy in china. that's the main land china. now msci, one of the main global indexers, has removed dozens of chinese securities from the global benchmark. this is the third consecutive quarter it's done this. why? these are weightings based on minimum market cap. as the china market, the mainland market has come down, some stocks are getting kicked out of the main indexes. this is the msci china index, which are used as a benchmark by many global etfs. this includes ishares china etf, this is one of the big global etfs as well as emerging markets

etf. these are two really big etfs. the effect is that china is going to see a small reduction in its weighting in certain etfs like the eem, for example, while india, whose market has been surging is going to see an increase in its weighting. what this all indicates is the continuing dominance of global indexes, the dominance of the etfs tied to them. an example, china underperforming for the year, mainland china underperforming. >> very interesting, bob. thank you. >> bob pisani. still to come, the rise of a.i. is fueling a boom in data centers and, therefore, the demand for energy they have. that could threaten grid reliability. we'll talk to the man who runs texas' power grid about those risks. that's next.

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but he is an "i can solve this in 4 different ways" person. and that person... is impossible to replace. you need clem. clem needs benefits. work with principal so we can help you help clem with a retirement and benefits plan that's right for him. let our expertise round out yours. the electric reliability council of texas, manages the state's power grid. the recent combination of historic heat waves and the rapid buildout of data centers in the state to power a.i., well, that has its ceo seeing grid capacity needing to rise by over 75% in just the next six years to meet that state's consumption demand. joining us with his view is president and ceo pablo vega. good to have you this morning, sir. i think it's safe to say you stunned a number of people early in the summer when you

significantly increased your expectations of demand for the power grid in your state. why did you have that increase and what was the metrics behind it that led you to these numbers? >> good morning. it's great to be here with you. so, what happened is there was a piece of legislation that was passed in the 2023 session here in texas. that essentially opened up the doors for us to be able to evaluate all of the expected demand that's expected to come to texas. as you know, the texas economy has been absolutely booming and growing over these last five, ten years. and the growth in data center, artificial intelligence data centers, it's happening here in texas as fast as it's happening anywhere. with the new legislation allowing us to look at any potential growth vector across the state, all of a sudden that growth picture went from where we are today, we'llpeak this here around 85,000 megawatts. we thought we would be at 125 megawatts by 2030.

like you said, 75% growth in demand, which is incredible and reflects the great economic growth potential that we have here. >> of course, we talk a lot about the growth of data centers overall, given generative a.i. and the power needs for them. are you going to be able to meet those needs in your state? >> yeah, texas is uniquely situated compared to some other grids where the ability to interconnect power generation resources and large customers like data centers can happen much faster here in texas than anywhere else. in fact, berkeley national lab just this year published an interconnection study that looked at what does it take to connect a resource in texas versus everywhere else in the country. and on average, over a year faster you can connect power generation resources here. we have a queue that has over 150,000 megawatts wanting to come on line. a lot is solar, batteries, and natural gas and wind in there. we have one of the most

competitive energy markets out there. supply meets demand, power prices drive that supply. and we're seeing that market for us work here. >> i know a number of the legislators are concerned that ultimately it's going to be the citizens of texas who pay for all this in terms of significant increases in rates. if you are able to meet this increased demand, enormous increase, are rates going to have to go up to do it? >> the good news about having to build infrastructure to meet growing load, the way it works in texas, we allocate the cost of that infrastructure to the customers, as you know. what that means is these new customers coming online, new data sterscenters, they'll pick the lion's share of this infrastructure investment that's going to be added to meet them. the supply and demand, those will get met and it will be done in a fair way for all consumers.

>> you don't seem concerned overall. >> well, it's always a challenge. when you see the kind of growth that's ahead of us, it's a challenge to make sure we can ensure that everybody's needs are met at all times. i really do believe we've got the kind of processes that will enable us to rise to meet that growing demand. i do believe we have a fair allocation process for the way costs are shared throughout the state. so, i think overall compared to what a lot of other regions in the country are struggling with right now, i think we'll see it done pretty well. >> i'm curious to what you may hear from colleagues in other parts of the country. we're talking about the eia expects global electricity usage from data centers to increase to the tune between '22 and '26. i'm curious to what you're hearing from others in terms of the ability for our country and others to meet this demand? >> this is a critical issue. being able to support this digital economy and the growth that comes with it is absolutely essential for the united states

and a critical part of texas' -- >> power didn't go out, though. just a freeze. >> they need more power out there. >> we'll try to get him back if we can for one moment. it's interesting because i did want to follow up with him. it's also crypto mining still. we talk so much about data centers and how many are being built but there is still a lot of crypto mining going on that consumes a great deal of power as well and putting a lot of pressure on the grid. pablo, i think you're back. i want you to finish your point and then i did have a question on crypto. >> absolutely. the point was that there are some stresses and strains in other parts of the grid. it's not as easy to connect in large power generators and large loads based on congestion that other areas are seeing. so, it is a challenge but it's a challenge that i know the united states is working hard to be able to meet.

and down here in texas i think we're ahead of the game. >> you think you're ahead of the game because of all the reasons you mentioned? anything else that puts -- so-called puts you ahead of the game? >> well, we also have kind of a lighter regulatory touch here when it comes to our power markets. they are run as a policy set by the texas legislature and the public utility commission of texas. we can be a little more agile, a little more responsive when things need to change and we need to adapt. we can do that without having to go to ferc and without going through a federal process. that helps us with speed as well. >> i mentioned this while you were sort of -- we were dealing with our connection problem. crypto is still an important part of demand as well. is that expected to continue? i'm curious how you think of crypto mining in general in terms of the pressure it's putting on the grid. >> crypto mining is different from your traditional data centers or generative a.i. data centers. they're price responsive load. that means they're responsive to what the price of electricity is. so, even though they're very

large consumers of electricity, when a grid gets tight, that signals typically higher prices and the whole crypto mining process, the bitcoin mining, those shut down when prices go high. so, effectively they don't typically strain the grid when the grid is at its highest conditions because it's not using power. >> interesting. an issue we'll be keeping a close on in the years ahead given these constraints as well. pablo, appreciate you taking time. thank you. >> thank you. good to talk with you. when we come back, vice president harris' tax proposals could have a massive impact for investors. we've got the details next. okay! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories

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wsm, williams sonoma is losing 8.5%. the company reports earnings. the company behind west elm, pottery barn, and the focus is on weaker sales than expected. look, we know it's a tough environment for buying stuff for your homes. that's been the story with this industry for a while now. there were expectations that things were improving. they didn't improve quite as much as the street expected and the company reset revenue expectations. now expects minus 4 to minus

1.5% for the year, versus the previous forecast, which included some potential growth. there are some bright spots here. that are margins continue to shine at williams sonoma and the company actually raised the margin guidance for the year. so, despite a tougher economic environment and tougher environment for their products, pottery barn comps were down 7%, west elm down 5%, they are managing to squeeze out profit and that's why the stock has done really well. it's up 110% in the last year and outperformed a lot of the competitors like an rhaas or rh. they maintained profitability even though sometimes the street decides to focus on sales. that's what's happening today in an environment -- we've heard from home depot, anyone exposed to the housing market that they're waiting for rates to come down, for people to spend again on their homes and to buy new homes. >> now seen full-year revenue down 1 to 4.

we'll see what the year brings. meantime, the vice president's tax proposals might have a dramatic impact on investors. robert frank has some numbers for us this morning. >> good morning. vice president harris proposing to double the tax on capital gains and taxing unrealized gains for the very wealthy. endorsing a plan that calls for increasing the top tax rate on long term tax rates to 44.6%. that would be the highest in u.s. history. if you're in new york, you're above that income level, the combined city and state rate would be 55.5%. if you're in california it would be just under 58%. she's also calling for a tax on unrealized gains for those with a net worth of more than $100 million. that would call for a minimum tax of 25% on unrealized gains. so, even if you didn't sell something and it gained in value during that year. so, they would be taxed on any annual increase in the asset or value, again, even if you different sell. nontradeable assets like a

private company, very illiquid, they would be taxed at the last valuation event plus some annual increase. illiquid taxpayers would be defined with less than 20% of wealth in tradeable assets. they could defer payments until their death without any interest payments attached to that. some models show it would raise $500 billion in revenue over ten years. when you look at the tradeable versus illiquid rules on this, there would be a lot of unintended consequences. on the deal side you would get a ton of take privates because if you're a private company or a liquid asset, you would defer those taxes over the life of the asset whereas if you have tradeable stock, they could be marked to market every year, you would pay that tax. lots of questions, lots of complicated details that would still need to be worked out, but at least we have a revenue raise from the harris company. >> yeah, it's revenue, that's

true. you've gone down this road before with this tax on unrealized gains, which just seems basically unworkable if not also bizarre. is it possible this could actually happen? to all the things you raise and things you haven't discussed, it seems very hard to implement. >> what the harris campaign would say and tax economists would say that are promoting this plan in the senate, and biden for the past four years, we do it with the estate tax. estate tax where you're not valuing, not every year, but the irs has the ability to value illiquid and liquid assets. doing it every year, could the irs do that? yes, but it would take a lot of resources for them to do that every year. >> by the way, robert, we should point out, this only applies to those with a certain amount of net worth, over $100 million and a certain amount of your net worth in assets that are liquid, as you point out. >> $100 million, that's less than 0.1% of the american taxpayer. the bigger issue is that higher

ordinary -- the higher capital gains tax, up to 44%, when you include the nit that would attach that. anyone having a combined income or more, that affects much more in terms of the tax base. >> no doubt. that would be a number we would never -- i don't believe we've ever seen when 2 comes to capital gains. a lot more as we go along here. at least there's some deficit reduction. >> live market coverage ntuerit teth.s iti custom cash® card automatically adjusts to earn me more cash back in my top eligible category... suddenly life's feeling a little more automatic. like doors opening wherever i go... [sound of airplane overhead] even the ground is moving for me! y'all seeing this? wild! and i don't even have to activate anything. oooooohhh... automatic sashimi! earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise]

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good thursday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live at post 9 of the new york stock exchange. today are the fundamentals driving last week's volatility still present? that's the question deutsche is asking this week. the firm's macro strategist will join us in a minute. with crude oil at the lowest level since january, how is the reversal of the yen carry trade impacted the oil market? one question we'll take on with carlyle's jeff currie. synopsis is with us, the company behind nvidia's chips. we'll talk earnings and the impact of a.i. on the sector. first off, though, in the market,