built on those gains throughout the session. you finally saw a positive session after four down days for the dow before that. treasury market right now shows the ten-year just slipped below 3.7% the two-year is at 3.65. okay, that does it for us today. tonight, you have that presidential debate. we will be watching that closely. we'll be watching the markets closely and the 30-year treasury is the only one hanging in above 4% right now >> 9:00 p.m., we might not watch closely. >> we'll see you tomorrow. time for "squawk on the street." good tuesday morning welcome to "squawk on the street." i'm david faber with jim cramer. we're live from post nine. carl has the morning off let's give you a look at futures. we get started with trading 30 minutes from now how are we looking what do you think, jim >> look, we were at 3.30 it looked like it would be another bad day.

>> turned around a bit our road map does start with stocks, as you see right there looking to continue a rebound from, again, that bad week last week worst week of the year in fact oracle is helping to boost the nasdaq we're going to spend time talking about the earnings from that giant company speaking of jigiant companies, apple unveils its first iphone design for ai. shares under pressure after the eu's top court ruled it has to pay billions in back taxes and a big board shakeup at southwest. chairman and former ceo gary kelly is set to step down. this, of course, amidst the pressure from activist investor elliott. jim and i have been covering that for a while we'll also talk about it it's not just kelly. it's six board members immediately. but let's get to the markets, jim, and sort of start there on this tuesday, after a rebound yesterday, given, again, what was a decidedly down week last week for the markets >> look, i think last week, the

tone was all right, we have had this huge focus on ai and the build-out, but perhaps we should be much more focused on a slowdown in the economy and therefore move toward owning the proctors, the colgates, by the way, the general mills, health care and that was the zeitgeist of last week. last night, larry ellison, i know we're going to get to -- let me go there now. larry ellison basically sought to redefine the whole era and said those who think that the data center and the build-out are finished, he said we have 162 data centers but they're going to have between 1,000 and 2,000 data centers. so maybe that's not -- we're not as far along in the build-out as we thought and i think that, you know, i don't know larry i know the ceo, but i would say

in the annals of betting against larry in any venue, big mistake. so i'm with larry. >> you and i spent a lot of time during many shows talking about data centers i want to do it there, want to share it with our viewers some of the sound from the call we don't have it quite ready yet. >> definitely not ready. we have to go to other things. >> we're working on it we're feverishly working on getting it for people. before we move into oracle and get into the numbers themselves, you can see what the stock is doing this morning any other thoughts in terms of the market you have gone to oracle initially because why? it's a tell for the market overall? >> there's a big belief what's going to happen eventually is that meta is going to be finished building, alphabet is going to be finished building, amazon, microsoft. he said you're never going to finish because he says you're never going to finish, suddenly, you can put a different price to earnings scale, and i haven't

mentioned it yet, but you know it's a big moment. >> nvidia. >> thank you for that. >> you're welcome. >> larry ellison basically endorsed the nvidia playbook look, i will tell you something. i know we're not ready to talk about oracle >> i want to talk about oracle we're going to talk about it because you made it clear why we need to talk about it. >> we're an oracle world, david. oracle world, thursday, they're going to up numbers because oracle was apparently a huge blast. but all right, so larry ellison is chairman and cofounder, he monopolized the conference call. he kept apologizing for it and kept monopolizing it, and it was joyful, though it was not dogmatic. he talked about my absolute favorite part is what is going to happen with medical we have been struggling with use cases. >> struggling with use cases for ai jim, by the way, let me set the

table a bit. you see the stock is up. we're talking about larry ellison's many comments on the call and we want to get to some of thosecomments about data centers, but they posted quarterly results that were above the consensus of analysis. and on and on from there >> there's a moment, and i'm going to quote it. i'm not going to speak in the voice of larry ellison, but he's talking about the future he goes i was at stanford with my son one time and it took three people, three different physicians to be able to find his x-rays stanford now, not a doc in the box. this is how you find the x-rays for larry ellison. you say oracle, please show me larry ellison's latest x-rays. its arer a voice interface you ask them for them. you don't worry about it how do you logon you look at the computer it recognizes your face. it recognizes your voice it knows you're the doctor and

you're authorized to look at that there it is, david there it is. that's the future. >> that's the future when is it getting here, jim going to take a while. >> he says the future is now >> you're also going to have to build an awful lot of data centers to get you there as well >> wellerse david, the reason i did this whole thing is because what is the fundament of the data center? power. >> power, without a doubt. >> they're going to be building nuclear reactors to fund data centers. >> it's funny you mentioned that because that's exactly what i wanted to focus on in terms of mr. ellison's comments on the call i do believe this is an important moment for our broadcast because we don't usually get these things right, but let's take a listen to larry ellison on data centers and power. >> you can't just build a data center you also have to account for the energy and the transmission of the energy from where it's generated to the data center

of course, the most efficient way to do this is to build the power generation plant right next to the data center. so you transmit over the shortest -- over the shortest distance and we actually have very senior people who actually come from the utilities industry, as strange as that sounds, that are expert in doing this and helping us build these gigantic projects. >> did i pick a good one for you? >> i think that's brilliant because what's happened is that the grid is obviously not capable of handling all the power. when you start hearing that there are small form nuclear reactors going to be built, when you hear the idea of a gigawatt. >> a gigawatt. we looked it up. talking about 750,000 homes for a year >> a year, for a data center data centers as far as the eye can see. now, i want to compare that to a lot of the chatter last week,

which says repeat data center. i did not feel that. >> the numbers they're using in terms of their build-out, they already have 162 cloud data centers live and under construction throughout the world. largest as you pointed out, 800 megawatts but they're talking about going to gigawatt data centers with huge 32,000 node nvidia gp clusters he said oracle, we have been proven to be good at building those, and they have a whole team that is full of utility executives >> no, remember, this is something that jerry parker used to -- was the great intel builder. every single foundry was exactly the same you could go to the israeli one, the irish, they were all the sime you could parachute people in. he's doing that with data centers but no people. >> he talked about it all having to be automated. >> people are corrupt and they get sleepy and they're no fun. in fact, he makes a reference to

elon musk's starlink satellites as well. those have to be fully automated and he makes the connection to data centers fully automated. >> does mention musk >> he also owns a lot of tesla, as we know remember that? by the way - >> how young does he sound doesn't he sound like he's 35. >> he's 80 years old his network today judging from the 41.5% we believe he owns, 1.14 billion shares, you can do the math just in oracle alone, so he's quickly moving up the ranks of world's richest people by the way, has a deal, of course, to acquire paramount, which he's contributing $6 billion. his network today has more than doubled his contribution from the paramount equity he has. >> look, i wish i could somehow -- there's this cohort of people who know him as part of his company that grows 2% to 4% that's a data center company and that is so far behind them

this is a cloud and very fast data center, and david, on thursday, when they raise numbers, there's going to be a second wave of buyers. >> i'm sorry, i'm not following. >> they haven't raised numbers they didn't raise number last night. >> on thursday >> oracle world. lara's world >> you need to fill in the blanks sometimes, jim. not just for me. >> look at that chart. that's a chart >> that's a chart. >> chart and a half. >> any read through for this via the competitive set? they're obviously different in that they're not developing their own large language models. they're just running everybody else's >> david, there's a lot of talk about who is the winner if you just want to open your system, and it's zuckerberg. it's meta. >> open source yeah >> and i saw him this week, he did not spit at me llama spit at you. >> i have friends who keep some llamas >> they spit >> they're very pretty, though

>> my late mother-in-law got one in the face. i wanted to kill the darn thing. >> don't kill a llama. >> and llama, the meta system, is locked. >> a lot of different ways they're going to be able to deploy it. >> don't try meta ai to ask a question because it can be really hysterical. the wrong answer, but it's very polite >> i know you use any number of the different services in terms of generative ai >> we're all beginning to recognize the hallucination factor is too great. it can't be trusted. unless you pay the $20 to chatgpt. you can't trust the answers that you get. and the answers are often very complicated and wrong. >> okay. anything else you want to talk about in terms of the market before we take a quick break and come back and talk apple >> we have a lot yes, i have things to talk about. >> we have plenty of time. >> i was going to talk about the

under armour restructuring i was going to talk about the jpmorgan auto nation, the d bank -- oh, resuming coverage of tesla with a buy >> who was that? >> deutsche bank >> you see, teased what's coming up next. >> by the way, cleveland cliffs, citi cuts the number i think we should talk to lorenzo. >> i don't think lorenzo wants to talk to me anymore. he's going to come out victorious in this u.s. deal situation. >> find your music >> do i amuse you? >> noer but you amuse lorenzo, the man, the ceo by the way, there's man who watches the show he's worth like 100,000 households >> like a megawatt one gigawatt yeah 750,000 homes. man. all right, coming up, we're

going to discuss all things apple. the new iphone 16, and ai, of course, as well. we'll also talk about that setback when it comes to the taxes in the eu. let's give you another look at futures. we get started with trading 17 minutes from now a lot more "squawk on the street" straight ahead citi's industry leading global payments solutions help their clients move money around the world seamlessly in over 180 countries... and help a partner like the world food programme as they provide more than food to people in need. together, citi and the world food programme empower families across the globe. honey... but the gains are pumping! the market's closed. futures don't sleep in the after hours, bro. dad, is mommy a “finance bro?” she switched careers to make money for your weddings. ooh! penny stocks are blowing up. sweetie, grab your piggy bank, we're going all in. let me ask you. for your wedding, do you want a gazebo and a river? uh, i don't... what's a gazebo? something that your mother always wanted and never got.

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stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff. wall street continuing to digest developments from yesterday's big apple product launch event they show cased the new iphone 16 and the 16 pro with the first apple intelligence features that are set to launch in beta. that will be next month. new apple watches, and an airpod also unveiled. we talked about this yesterday and the days leading up to the big announcement stock was down, looks like it may be down again. give me your reviews >> all right, i think that once again, the big problem with a lot of people, i'm going to quote ben rice, who i think

is -- he and dan ives bring something to the party they bring humor, but they osbring irony. and he goes, you know, wow, if you had to read some of the overly critical media previews heading into this launch, you would have thought apple was going to show two tin cans attached by a string and call that the apple 16. now, i think it's all incremental and people do not want to understand if you have something that can help you with sleep apnea, if you have something that can be a hearing aid as opposed to the 4 million that are sold every year, you have these incremental people, 20 million worldwide, who just say wow, i have something here i have tinnitus. you want to block it with a hearing aid. it gives you noise but if your phone rings you're a dead man because you have to pull it out, pull it in. no, not anymore. and what i think that tim cook, i once showed him my problem with tinnitus and apple. i thought he wasn't paying

attention. he probably wasn't, but he was so delightful. he said that's really interesting. i was showing how if you could make a hearing aid that would blast noise but also allow me to make a call, and he said that's interesting. here it is i don't think he said hey, jim cramer wants, because my head could not fit in the door. what he does is try to find things that are incremental that add up to be millions of people, but it's not what wall street wants. they want the model. they want a model. >> they do, but they also want to see growth because it's been a while. in fact, we go back to 2021 for the last true model upgrade that had a surge, brought a surge in new purchasing is this going to be enough are consumers going to wait until the actual intelligence even though the phone can process that intelligence, they're going to wait until it's available with software upgrades >> no, because everyone trusted

apple's downloads. it says it's going to do it tonight, you go to sleep, you wake up, it's done it. apple is such a fixture in people's homes it is so easy to use and intuitive. david, people just say look, i'll do that and then i'll get the ai do you want the ai >> what do you make of the fact they didn't raise the price? >> i like that, but it's so clear the price is going to be dictated by mike seaver, by t-mobile, by at&t and verizon. here's the question. at&t's balance sheet getting better >> yes, it is. >> so they can be more - >> by the way, it's interesting you mentioned at&t because i'll be speaking to john stankey in the next hour of "squawk on the street." >> you have him on the show? >> i have john stankey, the ceo of at&t on the show. >> tell him i said hi. >> he's very fond of you >> i'm an acquired taste >> you are an acquired taste

remember what that llama did i think that's what he did when he saw, yes, when he spit. >> look out for lungers. that's what they call him. >> we do have other news on apple we should get to, which is, of course, they're going to pay a lot of money $14 billion. >> oh, david a billion here, a billion there. >> really? that's a real number >> they already paid taxes on it to me, it's the honey pot that is america that we're just honey pot. that's what they do to us. that's why i want tariffs everywhere >> a one-time income tax charge, in its fourth fiscal quarter ending up to $10 billion >> you think you're going to see it in it balance sheet >> you're talking about a company that generates so much cash it's hard to imagine. >> the analysts say it's just a nothing burger, david. get in line. i sure am. come on, you'll upgrade.

i have a 13. my daughter with the 5 the 5 is very small. >> our employer. >> who is that >> cnbc. i have been here so long, my first phone was a company phone, and i never got a personal one >> i pay for it myself >> they know everything about me i'm not going to put in for dinner either. >> you paid for dinner last night. >> i never put in for expenses if you never put in -- >> it made sense, but he did pay. a nice steak older men shouldn't be eating steak at night too much to digest these days. what are you doing to me >> we don't have the ability to digest that level of meat anymore. what am i going to do with that cow i just raised. >> think about your mad dash let's count down to the opening bell 8 1/2 minutes before we get started with trading we're lookg r hierpeinfoa gh on.

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wells getting a boost. >> they literally reaffirmed just now >> we got a bunch of conferences this morning so there's going to be ongoing news. jamie dimon speaking for example, some banking conferences and the like but oracle, of course, is our big story. we covered it. we'll cover itga ain so mane different things to take apart there. you can catch us anytime anywhere by following the "squawk on the street" opening bell podcast

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. all right, let's get to a mad dash with jim. saw johnson controls there amongst the s&p gainers. right before we get started with trading. why? >> okay, so again, i'm always trying to figure out the key to the market and it's this piece, believe it or not bank of america goes best in class data center assets upgrade to buy johnson controls. last week, this would have completely laid an egg if anything, they discovered it's really a data center. that's just a curse of a lifetime this morning if you believe larry ellison that there's going to be 1,000 to 2,000 data centers, then johnson controls which is the number two in

market share in what are known as chillers, people say that my name is dr. chill because i'm very chill this company is chill. if you think chillers are going to be big, which i do, you buy johnson controls >> the cooler systems used to keep -- >> data centers burn hot >> the power consumption, to keep them cool >> the air cooled or you can use water cooled as a super micro issue, but johnson controls is company in transition by the way, trane will be at dream course i'll be interviewing them, which is the big salesforce hoot and holler anybody involved with that, the number of companies involved in a data center is rather remarkable and they all plum lted last week now, they're coming back i mean plummet

>> they're going to take us to those comments you hear the cheers here we have an opening bell coming your way in nine seconds here at the big board, goldman sachs, economic opportunities. t. rowe price. >> very loud >> the eff is what you live for. i remember what you told me last night. there's a new deal coming. i didn't know it was the intermediate etf, which offers some value because the taxes are very good. we just talked about amazon for one second >> we'll start with amazon and then - >> the precipsis sell-off friday back to where they are i think amazon will have a great

quarter. people are underestimating >> i don't know whether to talk or let them keep cheering. >> it's your call. it's your show >> i want to talk southwest. this is unique unique unusual. unusual. why? well, remember, of course, southwest is in the midst of a significant proxy fight in which the activist investor elliott which owned 11% of the company shares is trying to seat as many as ten new directors so in the midst of this proxy fight, you get an announcement from southwest that says six of our directors are retiring, almost immediately after the next board meeting in november, and gary kelly, of course, longtime ceo, chairman, is going to announce he retires immediately after the 2025 annual meeting jim, interesting here because in his letter, in his very long letter, mr. kelly does reference the fact he met with elliott

investment management in the new york offices to meet in person, commence a protective dialogue but that's it. then they basically told him, hey, this is what we're doing. they didn't really have a dialogue leading up to this where you would have thought perhaps if they were willing to have six directors leave the board, they might have been able to come to a settlement. >> i think one of the problems is it was not gary kelly was the problem, according to my sources. >> tell me what you hear >> bob jordan. >> bob jordan. >> not gary kelly. >> they continue to endorse bob jordan as the ceo. now, obviously, if you're elliott, you have to view this in a positive light in the sense of southwest went out to its shareholders, they clearly heard something that said to them, this is not what we like they came back and now six directors leaving the board. >> i think that's really amazing. >> it is major they go on to say that -- let me go through some of the things

from the letter and who they were they anticipate appointing four new independent directors. they do say they will consider director candidates that have been proposed by elliott they have also done some corporate governance moves they eliminated the executive committee structure, creating a new finance committee. here's a quote from gary kelly we have been committed to engaging constructively with elliott since its initial announcement that was back on june 10th they proposed all the directors, southwest did, on the 13th of august and they go on and say they have solicited feedback from a range of other shareholders. on the issues elliott raised in its presentation of public communications as i referenced, they also met with elliott yesterday and shared a specific framework to address concerns about corporate governance and performance and they say they continue to engage constructively toward a collaborative resolution in the near term. >> now, let's say they got their

six people in. could the six people turn around immediately and say listen, it's time for bob jordan to go? >> would seem to be a key consideration here i want to look at the letter because it was very clear, the letter from mr. kelly, issue number one, ceo. the board and leadership of southwest unanimously support bob jordan as ceo. proven track record over decades and he has what it takes to lead southwest to a significant transformation and usher in a new era of profitable growth, innovation, and industry leadership those are gary kelly's words in the letter >> i think that the question will be does elliott think that jordan can really do that? why wasn't jordan doing it i think this was major and also a statement to elliott saying okay, look, you think you can do it come on in rather surprising because that board is very, let's call it a hometown board, and you have

these brigands who come in they have really good ideas about how to run a better airline. david, how many times have you sat down with people who are familiar with elliott and you look at what they want to do and say, yeah. that's a good idea because they represent a commonsense view they're not a mckenzie you don't have to pay for it i keep thinking about alcoa. in the end, you got how i met my mother it was one of the greatest -- what, that's what we call it i think it may be how i met my mother and they shortened it to howmet >> seven years ago, that was -- who was in that one? >> elliott is going to - >> no, i mean the sitcom, how i met my mother. >> jason segel, yeah neil patrick harris, thank you that's what we need them for >> kind of cool.

>> they haven't launched a proxy fight in seven years since arconic, elliott that's long time between proxy fights >> remember, they were not that happy. >> that didn't end well. >> that ended suboptimal >> don't answer emails when you have had too much to drink lesson to all you ceos don't do it. >> if you have to do an email, never put more than one line in it >> keep it simple, don't be drunk when you're answering emails, particularly when you're answering an activist. >> if you send an email to david, you get - >> list of things, don't do this drunk. >> that was an ill-advised strategy there >> worked out for them >> what a fantastic reorg. >> takee to the list what else do you want to talk about this morning go to the list >> so, there's a stock, i'm not ready yet to endorse it, but boy, am i ever getting close

it is under armour it's crowded because we have nike and they're faltering we have deckers, hoka, on and on, new balance, adidas, but i think that if you take a look at the charge that kevin plank took today, 140, 160 million. 75 million in cash, david. these guys are very, very serious. total restructuring is 220 to 240 million out. they thought they would do 190 to 214 this is kevin plank actually running the company. he had not really been running the company. various proxies. it's too early, but i'm close to saying it's time close. >> all right well, you said a lot just now, but it's close what's going to get you there then >> he will >> he will but it's too early to say. that leaves some doubt >> no, i think that -- i think

that kevin would say listen, i'm not done it's a work in progress, because david, look at nike. i mean, nike has to do so many things and you can only imagine how under armour, which is kind of an -- hoka, it took them 14 years. took them 14 years to develop hoka on and on, obviously, adidas is a famous brand new balance is the one that's really in ascendance but it's private. under armour is close. nike is no thank you a lot of people think nike can be the source of some activism >> that would be interesting >> good balance sheet. >> i don't think it's going to happen he's got -- phil knight has board control. he's got the ability there >> is he happy >> i have checked on it, as you might imagine, i don't see at this point when i made calls, he

has support. he has support of the most important person >> does he have the support of the people who work there? >> you think phil knight knows what people want >> well, i don't know. i think they want a stock price that periodically goes higher. >> you're on the record calling for donahoe to go? i don't want to put words in your mouth >> i'm saying that if you look at that chart, you think that it does have a real starbucks like f feel notice that trade has not been diminished people are very interested in hearing what he has to say as between a boot, boot barn, and a sneaker from nike, i would take a boot from boot barn >> keeping an eye on it. knight has some rights there in terms of the board >> when you have a stock like

nike and the stock goes down, down, down then you have deckers and it goes up, up, up. and you have on and on, and it goes up and up under armour is too small to matter, but i say if you still think that nike, the sneaker business is horrible, why are all those companies doing so well >> it's a good point i hear you >> i think, yeah, plus i think nike has done a deal they did a deal where they gave away very valuable property to michael rubin, philadelphia. i don't understand look at that see, that's a good - >> thank you, guys that's an instructive chart. explaining why jim and other shareholders may feel that way that said -- >> you don't think we have together stocking about it >> no, i don't know that there's any real chance for activists. >> because of buck knight's position all i can say is buck knight

made me very happy with the way the company is run, but when you read his biography, this is the kind of thing he would not tolerate, at least in the book if he wants to be true to his own preseps there has to be a revamping. how about a revamp >> yeah, running out of time >> he's out of touch, david. he's out of touch. he's out of time >> let's talk bmw. not a stock we typically do, but important certainly in the european market. >> beamer. >> let me tell you why bmw has cut its guidance for the year related to two topics one is supplier recalls. the other is china >> did you pronounce it the way i thought? were you preparing for the debate china? >> i said china. i didn't say china >> it sounded like the ai version and you snuck it in. >> i said china.

>> i want to check to see if it was you or it might have been a data center glitch >> adjusted guidance for 2024. slight decrease in deliveries versus previous year ebit margin 6% to 7%, previously had been 8% to 10% return on capital employed between 11 and 13. previously had been 15 to 20%. and again, they are as well citing the ongoing competitive situation across four markets including china and the u.s. having a major impact on volume and price realization. jim, not an unimportant stock in europe >> this is the most important story we have talked about people underestimate that europe is based -- their autos are -- david, you said yesterday what would happen if we let the chinese in unfettered. and the answer is that ford and gm would experience exactly what bmw is experiencing, which is forget it, jake.

it's china >> i know i brought that up yesterday. we had an interesting conversation around it, just as an idea, again, nothing in any way that is going to happen or that i'm endorsing personally. everybody gets a car, $13,000, and by the way, they're all electric i don't know what happened to the oil. >> it's a tyson chicken. >> you would have an enormous amount of sales. the chinese would benefit, but we're subsidizing their industry by lowering our own emissions. >> we could put a tariff that is literally double >> all the power we need, we could buy more solar panels than ever again, they subsidize it to such an extent it's so cheap. >> you're calling for a surrender to a country that has become an albatross for the globe. >> i am not in any way doing that i'm just posing the other side of something that will never happen >> no, but i do think -- >> if you bring up the debate tonight, it's the one thing that was a carryover from the trump to biden administration, the

antipathy toward china and the tariffs. >> tariffs are bad we know that from history. they're bad. the free market is good, but we want fair trade. as peter navarro used to talk about, who may be back, david, working with trump after a little kind of a hiatus there, hiatus of appearances. >> yeah. >> he got -- he was at yale? >> no. well, you know - >> peter is very -- he would like to have major tariffs on the chinese. he may get his wish. >> we embrace all of our graduates equally. i think andy also went to tufts. okay, oracle let's end there. not end, but let's at least come back to it >> what, end i'm not going anywhere >> let's put up a one-year >> this stock was up 7 and then

9. when larry said we need 2,000 data centers, that was it. that guy, again, how do we impress upon people when he says 1,000 to 2,000, he's not joking? >> i know. he's not joking. take a listen to what -- >> by the way -- >> excuse me >> he is an island they didn't like each other. >> he is an island, he owns an island and he's a very young 80 years old. his network today is skyrocketing he's moving up the ranks i think he was number five >> it's simple >> although she was left out of the call because larry talked so much >> he did talk a lot he was very excited. here's something else from the call that ellison had to say in terms of ai models and the like. >> i mean, these ai models, these frontier models are going

to -- the entry price for a real frontier model from someone who wants to compete in that area, around $100 billion. let me repeat, around $100 billion. that's over the next four or five years for anyone who wants to play in that game this business is just growing larger and larger and larger there's no slowdown or shift coming >> 40% of that goes to nvidia. and yet nvidia is acting as if it's done. as if it's kaput, david. i think that's wrong and a lot of it because of the chart. a lot of it is they're going to have zero dark 30 options. and what i find really repulsive about this is people say until it retests the $90 level, it can't go anywhere. larry williams says it can't go anywhere until october be aware that the check goes to nvidia somewhat to johnson controls,

somewhat, but nvidia gets the big check, yet it doesn't matter for the stock? >> again, to the number he was talking about, $100 billion. that's going to be spent by only a handful of companies microsoft, amazon, it's meta, and it's alphabet. >> that's it >> that's it >> and that is, i think it's perfectly realistic to expect there could be four companies that are in this remember network tv, nbc, abc, cbs, and fox remember that? >> yes apple is not spending that they're the free rider here. >> the great free rider. who knows if they're even done what happens if they announce a deal with another one of these companies. by the way, gemini and google were very -- they did not bring home the bacon so to speak when i used them. >> no? >> no, jim is testing out all of the large language models, all the generative ai. >> they're so apologetic when

they screw up, it's incredible >> i wish i had been that apologetic early in my life. >> soon enough we'll be replaced let's head to a break. >> okay. >> we have contracts, but then we're done we're going to be replaced by -- >> i told you -- >> ai robot whatever >> jenson had me i was even an eagles fan >> get to our bond report. we, of course, have been coming down in yield on the ten-year for some time, but you can see today, we're hanging right in there at 3.7%. and we do obviously have a bit of inversion there with the two-year below it at 3.658%. we're right back

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know daniel pinto. that's what should give you comfort. we'll do the how, why, when, where, will be done the right way and orchestrated and orchestrated by the board. i am comfortable with that it's the last and most important thing i want to do we want to get that exactly right. i'm not going to worry what to do after that. >> that was jamie dimon te council of institutional investments talking succession took over in 2005. longest serving ceo of a bank. 68 years old so still a young man. >> young man i will tell you that jpmorgan was up very big yesterday, so don't look at the stock now. >> why was wells up today as well >> because they guided in line and a lot of people thought they were going to be short. >> that was at a conference. >> it's what matters to me it's charlie sharp, ten times earnings are you kidding me ten times earnings and charlie sharp, maybe the smartest mind

after jamie dimon in the entire banking business makes no sense to me doug bronson. >> what about him? >> number two there. >> yeah. vice chair number two >> doug bronson, very smart. >> i had him on like a month ago. >> i didn't watch it, sorry. >> i should have followed. i was watching my fantasy league >> all right. >> hey i got at&t, john stankey coming on next hour. stay tuned for that. all right. we're going to take a quick break angehitoay ode.d t m s 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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good tuesday morning welcome to another hour of "squawk on the street. i'm david faber live from post nine at the new york stock exchange and there you see sara eisen, she's at the barclays global financial services conference ahead of some big interviews and a big day for the banking sector we're going to get to her in just a moment. first, let's give you a quick check on the markets and treasury yields as well.

you can see we are up on the two indexs that i care about and there's the 10-year a bit below 3.7% on its yield. now let's get to that breaking news that is crossing from the fed right now. it involves the banks and leslie picker has the headlines for us. >> it does involve the banks, david. in prepared remarks at the brookings institution michael barr is recommending a reproposal of capital rules that cuts in half the additional buffer the largest banks need to hold barr said capital requirements under the reproposal for the eight largest banks in the u.s. would increase by 9% the initial plan outlined last july, july 2023, had that metric going up by 19%. banks with more than $100 billion in assets that are not the eight largest mid-size banks won't be subjected to the changes which i'll detail in a second other than to recognized unrealized gains and losses in their securities in regulatory

capital, a nod to what happened with last year's turmoil barr estimated that will be a equivalent to 3 to 4% increase in capital requirements in the cohort in the long run the reproposal waters down key points that were met with fierce opposition from banks and other bedfellows including small business, farmers and the naacp. one of the more contentious areas capital treatment for trading and derivatives activities the reproposal allows for banks to use models for so-called market risk alongside a multiyear implementation period for tests that ensure the model is working with regard to credit risk which protects against bank loans that won't be fully repaid, barr says the new will reduce risk weights for residential exposures among other charges and barr would like a reproposal to decrease risk weights for tax credit equity financing structures and no longer adjust operational risk based on lost history and tweak the calculation to produce more consistency on how

operational risk is measured the question now that we've gotten this kind of preview of a reproposal is what the response from the banking community will be, whether the changes satisfy their many complaints and whether the fed has consensus with the fdic, occ, and its own members. guys >> so the fed is going to back this presumably and the occ. and the question the fdic, chairt is a democrat, but there are a few key republican board members and there are questions about whether they would back this, right, especially if the bank lobby tells them not to. >> the initial proposal was definitely met, drawn by party lines, and fed chair powell has said throughout this entire process that he wants consensus. what consensus means is the big question here. you know, two members in opposition on the fed does that warrant consensus? we don't know exactly at this

time and then the question about a reproposal versus editing. there was some contention among the agencies this has to be brought to the floor from an interagency perspective, but some of the agencies, the fdic and occ were kind of in disagreement with the fed on how to put this forward, whether it be a reproposal that would require a significant comment period, which can take, you know, months, if not even, you know, well into 2025 to see this actually take effect, or is it something that could be just some simple edits. sounds like some extreme edits without a full repropose a.m. comment period and the like. we have this presidential election in a few months time. >> i have to think the presidential election factors in here, lessy,lie and the fact th kamala harris' chances have increased versus a few weeks ago when it looked like donald trump had better chances, more willing

to fight it. fascinating. i'm excited to talk to bank ceos about it today and wonder how this stacks up against some of the competitive banks over in europe and in the uk because that was one of the big arguments from the u.s. banks it was going to hurt their competitiveness because the rules were more onerous than what their counterparts faced overseas. >> actually. i think this is something goldman sachs' ceo david solomon mentioned when speaking at that conference you're at, sara he said when the initial basel concept was brought to the banking industry, the idea was to put everybody on a level playing field, and what these latest proposals, according to solomon showed, was that, you know, this actually makes it more difficult and more costly for u.s. banks to compete in a global financial system, and it also, this is something that's been expressed by a lot of bank ceos, it has the risk of pushing a lot of lending outside the regulated bank system into the nonregulated bank system, and has the potential of increasing

the costs. that's something that barr also notes in his remarks, that they want to make shoe yure their stg the right balance. they don't want to drive up costs for small business and farmers and those cohorts putting in commentings criticizing the initial proposal from 2023. he's definitely been poring through those comments as well as the other officials and it's clear from these remarks he is give them a nod he sees the initial proposal may have been increasing costs and may have hindered bank competitiveness. >> and now what? it goes through another comment proposal on the new rules? >> it appears that way a reproposal indicates that it would go through a comment period unclear how many days that would be, but the norm is 60 days. the original proposal they had to extend that comment period because they had such an onslaught of comments and then, of course, they took a lot of time to make sure they were reading through all of those comments yes, that would be the process.

>> okay. leslie, well, we appreciate you bringing us that breaking news ahead of this commentary from vice chair barr at the federal reserve announcing the reproposal of basel iii endgame. leslie picker. it is a great day for me to be here at the barclays global financial services conference where i will interview the ceo of barclays next hour, they're going to be subject, they have a big u.s. credit card and consumer business to some of these rules and later in the day, brian moynihan, bank of america ceo what he makes of the new basel iii rules and what he sees for the economy and the changing interest rate environment that's going to be at 2:30 eastern. that's one of the big discussion points beyond the bank regulation, what we're looking at in terms of an economy that has softened but thought to be in a soft landing and an interest rate environment thought to be changing toward easing but not a typical easing

cycle. we heard on stage a few minutes ago from jpmorgan's president daniel pinto who said the economy is still doing okay, just behind me, but it's interesting to contrast that with what his boss jamie dimon said at the institute of financial, sounded a little more cautious listen. >> the worst outcome is stagflation. recession with higher inflation. i wouldn't take that off the table. i know everyone thinks inflation is coming down and we won that victory. i caution that a little bit because if you look forward, there are a lot of inflationary forces out there huge deficits, the green economy, remilt tarization of the world, restructure of trade, the ira act, chips act, infrastructure needs they're all inflationary basically in the short run the next couple years. so it's hard to look at that and say we're out of the woods i don't think so. >> david, we're going to get an

inflation report tomorrow. wall street kind of acting like we're out of the woods and so is the fed about to pivot but when jamie dimon warns us, you have to pay attention. >> i guess but he's been saying the same thing for a long time. i mean, we could have taken those same words i believe from him at any number of different conferences or presentations over the last, i don't know, what do you want to call it a year are more, and, you know, it hasn't happened yet. he, obviously, is jamie dimon, so to your point, you have to listen, but that said, his caution does not seem to be shared and has not been borne out as yet, has it >> no. remember, when he was warning about the hurricane and the storm. >> of course i do. >> when the fed started embarking on the rate hiking cycle and we weren't hearing that negative doom and gloom commentary from people like bank of america's brian my into han who has a look at american deposit and credit card flows. i will be interested in talking

to brian whether he shares the same enthusiasm that we don't hear from jamie dimon. the inflation saying is newer, david, because jamie's not warning necessarily a recession but the idea everyone so excited inflation rates have come down, maybe they're overly enthusiastic because of all the government spending going in that is something that resonates. >> without a doubt. >> a debate tonight -- >> i know. to that point about the debate -- >> no one talking about deficit -- >> the possibility of another trump presidency, i mean, i'll defer to you, but tariffs, deporting millions of people, conceivably that would be inflationary as well, wouldn't it >> potentially yes the idea is, when you tax overseas companies to do business in the u.s., then they will then raise the prices and american consumers will pay for that that's typically inflationary. it wasn't overly inflationary

when he did it the last time around it wasn't a blanket tariff that's one of the tougher questions that president trump will get tonight, i assume, when they're talking about the economy and some of the policies just as far as other bank commentary, david, that we're getting is that news worthy at the conference, mark mason, cfo of citigroup, talked about consumers shifting spending to pay for staples. definitely a slow down theme going on david solomon speaking here last night, said the economy is still in pretty good shape he said, broadly speaking when you look at the economy there has been a little bit of slowing with the consumer on some fronts but still the economy remains he said pretty durable. because this is our -- this is what we do at the top of the 10:00 a.m., i made a chart which just shows, you know, that the consumer in focus back to school spending we haven't talked a lot about back to school i'm dealing with it, as a lot of parents are, and, you know, it's typically a big moment for retailers, and the bank of

america chart shows that, you know, you could see the purple line it is trending lower than this time last year lower than 2019 levels as far as that overall spend looking at the credit cards wallet spend. that's something notable as we talk about a slower consumer and how the banks are looking at what it means for delinquencies, for loans, and, of course, for rates. >> yeah. so interesting, sara i'm glad you got a chart in there. wouldn't be the top of the 10:00 without a good sara eisen chart. >> exactly. >> we're going to get to more of this on the banks. get a reaction of the news that leslie brought us at the top of the hour joining us at post nine is mike mayo, banking analyst at wells fargo securities curious as to why all the bank stocks are down, other than wells fargo, which is barely up, mike, given i would assume what we heard from leslie and from vice chair barr is a positive, right? >> well, capital under the new basel iii proposal was originally going to increase by

19% to the largest banks, but we just heard it would increase by 9% we were looking at 5 to 7% even that cutting in half is a little bit more than i think some people had expected this was expected. we have a little bit of buy on the rumor and sell on the news. >> okay. >> and the devil in the details. regulatory risk is out there again. >> right give me your overall take then when it comes to capital, capital adequacy, and resiliency of our banking system and whether you believe it should be a lower number than what we've heard? >> well, i think what's -- as, you know, i was negative on banks for 15 years. >> i know you were. >> banks were not resilient. i would give them a failing grade. right now i would give u.s. banks the gold medal for resiliency i would give -- >> why >> i would give regulators a gold medal for resiliency a decade ago for everything they

did, dodd/frank and everything they related to that hence my gold medal. the pandemic, how the banks stepped up operationally look at the regional bank mini crisis last year the big banks were fine. just by all the naysayers and front pages of the papers. look at this year's fed stress test that stress test was more stressful than the global financial crisis itself and after running the model banks still had plenty of excess capital to support the economy by the fed's own data as the banks are as resilient as they've been i give a gold medal to the bank industry for their resiliency. recession, no recession, higher rates, lower rates, whatever hits you, i think banks are able to weather it quite well what the stocks do, the earnings do, maybe not as, you know, that's always can fluctuate, but in terms of what's being evaluated now by public policy, look at the big picture. >> sara has a question.

>> do you think they're going to fight this, mike, as hard as they fought the last round >> well, the devil is in the details. i mean, for the last proposal, it started off saying, the regulators would like to make, you know, bank regulation more simple and they said that in a thousand page document i imagine there will be a few hundred pages again. on the one hand banks can simply, you know, take the win hey, capital, will be half as high as they thought before or they could say, you know, we're going to fight it. so look, i deal with the outcomes as opposed to whether or not to fight or not, and so right now i would say there's a little regulatory risk it's not as bad as before. the big picture takeaway, peak bank regulation has passed it's a question of how far that regulatory pendulum swings back a little bit in the other direction. by the way, this is the month, for the 25-year anniversary of the introduction of national banking in the united states and national banking, 25 years

ago, was perceived to create safer banks with more sighers havefication by geographic regions and products it has done the trick. another measure to the resiliency of the largest banks, the $7 trillion bond market. the largest banks aren't too far from the regular corporate bond as opposed to the regional banks perceived more risky the largest banks, regulation has worked for the largest banks. there's a question of how much more you need to pop above "p" i want to get to sara you said you need resiliency and efficiency, when jpmorgan says they have 80,000 pages for the fed stress test, 80,000 pages for the living will, there must be a more efficient way to ensure banks are resilient. >> you mentioned the stocks as well, they're all down other than wells fargo, you can't talk about you work there, but i remember what you said at the beginning of the year you picked citi, good pick for some time, its performance has come down as the year has gone along,

underperforming the big banks, still your favorite? >> citi is still my favorite i don't have that short-term catalyst like it's going to happen right now if i come back 12 months from now, the stock is under $60 right now, and i still think citigroup stock can double over the next two and a half years, simply by going back to tangible book value david, you remember back in the old days it used to be you go to tangible book value in the middle of a recession, we're talking about them going back to tangible book value by not messing sglup although it's been a really long time for them. we talked about it endlessly in terms of how much of a discount the stock has traded at. >> if they meet the targets this year they should have among the best relationship between revenue and expense growth in the industry and we expect earnings to double for the three years ending 2026. we'll see if they execute. the bar is low i'm not giving them the gold medal yet, but in their category, you know, they have a shot in terms of the stock price. >> all right we should point out that gold medal was for power lifting.

i saw the pictures, wow. >> friday, salt lake city i got the gold in power lifting. >> congratulations. >> that was my goal. the key to that, by the way, was simply not getting hurt. the key to my citigroup call is for them not getting hurt or messing up. >> thank you always a pleasure and good to share that insight as to why the stocks are down this morning in part because there was an expectation in the market that you might get a lower threshold. mike mayo, from wells fargo. let's talk a little southwest if we can and sara love to get your take here as well, because we've had a significant proxy fight under way at some time with a large shareholder there, elliott, of course the most prominent activist, i think in our capital markets. owning 11% of southwest. essentially wanting to replace the entire board with ten nominees the important news that we got from southwest airlines, involved six of its directors saying so long going to be retiring, stepping off the board, i should say, after their next meeting that would be in november.

then gary kelly, of course, the one-time ceo, as well, retiring immediately after the 2025 annual meeting as the company's chairman they're going to be looking for four new directors you saw some of the names that are stepping down. and they are engaging elliott in dialog of course one key question is, perhaps, why they hadn't done that prior to making this announcement and perhaps might have given them more leverage with elliott it is interesting to note, sara, that the stock is actually down. we have a statement from elliott as well talking about or responding to really what is pretty significant move here it's not often that you see six directors basically resigning immediately. they say listen, we learned about this yesterday nearly half the board isgoing to be stepping down. unprecedented, they call it. they're pleased they're beginning to recognize the degree of change that will be required at southwest and they do hope to engage with the remaining directors to align on what they say are further

necessary changes from there goes on from there as well as you see, sara. we'll continue to monitor this and potentially the dialog that will take place after this momentous announcement from southwest. >> i guess there's going to be more changes, david, than just getting rid of open seating which was a big change for southwest, that they announced, which kind of gets to my bigger question what elliott wants here the shares have underperformed, but i do wonder how much of it is first of all the boeing delays, they were a key boeing customer, the fact that we've seen an over capacity problem in the u.s. as we've gotten out of this weird cycle post-covid on the boom, and just how much is in southwest's control and what elliott would be advocating for as far as strategy once they get potentially some of the big changes here. >> yeah. well one of the key changes, of course, would be in the ceo role and i think it is worth noting that gary kelly, in a long letter that accompanied the press release this morning, talks about the plan for the company and issue number one

being the ceo and saying the board and leadership of southwest unanimously support bob jordan as the ceo. so much of it, obviously, starts there and it is an interesting reaction in part in terms of at least this announcement in the stock price. >> yeah. down more than 4% right now. not doing a whole lot for confidence yet all right. as we head to break, here's our road map for the rest of the hour apple unveiling its new ai powered iphone but a legal setback for the tech giant could cost it billions of dollars. what it all means for the stock. we have a great apple debate coming up next at&t's ceo john stankey will join me this hour. we'll talk about those new iphones and what that may mean for an upgrade cycle. and speaking of boeing, shares under pressure right now. an interview you will not want to miss with the ceo of boeing's biggest rival, air bus big show still ahead stay with us on "squawk on the street." we'll be right back. ife, i'm reminded that it's not about the destination.

it is truly about the journey. (cheering) (♪♪) (♪♪) (♪♪) (♪♪) (♪♪)

welcome back to "squawk on the street." apple unveiling a slew of new products at monday's big product event including a new ai-powered iphone here with the reactions to the announcements we've got wedbush's dan ives who raised his target on the stock aas long as with cnbc contributor joanna stern. joanna you tried out all four iphone models and, quote, why

you understand why the ai software is still in beta. explain what you mean. we need the full joanna review >> well, yeah, the full joanna review this is still in beta i got to test out a few of the features in the software running on these new phones. there's some good. definitely some good the writing tool is quickly summarizes some text translated a note i was writing to my mom to be more professional definitely what i want but i tried out this image editing tool where you clean u the background and edit out someone in the background, and it was a little -- not the best. not the best. >> i'm going to take over. sara may have issues with her audio. what -- we all want to understand what the upgrade cycle is going to be i read your column this morning. interested in terms of the buttons and different things you're going to be able to do, but what is your sense, having done so many reviews through the years in terms of how motivated consumers are going to be to go out and buy this new phone

>> look, apple used to do their s models, incremental change from the previous generation they stopped doing that and going to the full numbers. this is an s model when you look at the hardware changes this is not a significant hardware this is important to look at in terms of how important the software is. sure, they're not going to have the ai-features on day one i think that's actually okay i don't think that many people -- i know we're going to have dan on here -- i do not think that many people are running out to buy these phones for ai they are running out to buy these phones because they need to upgrade from an older phone so when you look at what they're upgrading from, if that's a two, three, four-year phone they're getting significant hardware improvements they're not running out to get software improvements. >> battery life improvements as well, from your coverage this morning. >> that's right. they're getting battery, getting better processors and screens. a few generations, better designs. they're not running out for ai

dan, you tell me you tell me what you're thinking >> no, no, no. i get to do the interviews, joanna. >> that's right. >> this is not "the wall street journal" what do you have to say in terms of her belief that consumers are not going to run out there for this ai powered phone. >> look, i think it's two fold what she talked about in terms of the upgrades, 300 million iphones have not upgraded in four plus years of 1.5 billion iphones. i'm in asia today. i'm in the second trip in the last six weeks everything we're seeing in the supply chain builds have been increasing up 10 million from where it was to begin with, so that indicates, that trajectory continues. apple intelligence in terms of everything that gets rolled out this will be a historical year for apple. i think it will be their biggest unit year ever and it's a drum roll to what i view as an ai-driven super cycle that now starts to take place.

>> dan, it's sara. what is a super cycle? what does that look like what's the difference between a super cycle and typical upgrade cycle? >> a super cycle i would view as anything above 230 million units. and i think this could be 240, potentially 250 million units from what we're seeing joanna is -- hits it, you know, on exactly in terms of the upgrade cycle, part of it is the most pent up demand we've seen for an upgrade given how many have not upgraded. when you look at apple intelligence, ai will now, i think 20% of consumers around the world, they will access ai through cupertino. that is ultimately the key to really what's going to be a multiyear upgrade cycle. iphone 16, iphone 17, speaks to a $300 price target, this is a $4 trillion market cap opportunity. >> dan, what about the ruling by the european court against apple this morning puts a damper on it? i mean, the $13 billion back

taxes? i can't remember how long i've been following this case, it's been going on so long, and apple has fought it so hard. >> eight or nine years they've allocated money for that they'll just take a charge in the quarter, as insane as it sounds, it's actually not a big deal i think investors actually expected probably they would lose this. they're going to continue to have these issues in brussels in the beltway, but i think investors will shrug it off. it all comes down to this, the renaissance of growth is now ahead for apple, and i think many of the doubters, back to wwc, have been against this story. they will continue to prove wrong. the ai revolution begins in cupertino. >> joanna, let me end with you in terms of apple intelligence when do you think consumers will be motivated to go out and get the phone because of what is being offered in terms of

generative ai on that device >> i think we're looking at least six months, maybe a year, for all of the features that apple showed off at wwc to get the phones look, i think there are going to be a lot of nice to haves with this, with a lot of the ai tools, the writing tools, the camera cleanup stuff once some of that stuff gets out there into social media ecosystem and people can see what you can do, that's going to be more of a motivation than, hey, apple's marketing this with ai and you're going to get those features, you know, maybe soon >> well, as i said, guys, i just needed more battery power at this point i put myself on a wait-list. thank you both very much for your first takes really appreciate it dan ives and joanna stern. oracle a top gainer after its earnings beat ai demand helping its cloud computing business look at the stock up 13% ceo larry ellison speak on the conference call last night about the growth in the ai market. listen

>> i mean, these ai models, these frontier models, are going to be entry priced for a real frontier model from someone that wants to compete in that area, around $100 billion. let me repeat, around $100 billion over the next four or five years for anyone that wants to play in that game this business is growing larger and larger there's no slowdown or shifts coming. >> again, hearing it from larry ellison the chairman and cto, founder, david, to hear him excited about that, clearly investors jumping on board today. >> yeah. more than excited as jim and i discussed earlier, sara, he in some ways dominated the conference call with those comments not just on generative ai and the money that will be spent for it, but as well on data centers, saying really some amazingly interesting things in terms of what they're doing there, their plans and how you will power all those data

centers. they have a -- a bunch of senior people who come from the utilities industry, he said, as strange as that sounds, this is him, that are expert in doing this and helping us build these gigantic products. it's fascinating, again coming from -- >> utilities are -- >> yep. >> one of the best performing groups along with tech this year. >> we like to point out they are regulated. all right. at&t is not a utility much at least not anymore. john stankey is the ceo and he rnops e live from goldman' coucia conference. take a look the that joins us next. tober 11th.

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welcome back i'm silvana henao with your update the american woman who was killed during a protest in the occupied west banklast week was, quote, likely hit unintentionally by israeli fire. an early statement said troops

opened fire on a male instigator throwing rocks. russian officials say one woman was killed at a high rise apartment building in moscow overnight in a ukrainian drone attack kyiv launched more than 140 drones into the country. and the north carolina supreme court ruled that robert f. kennedy jr. can have his name removed from the state's ballots. the former independent candidate is fighting for removal from the ticket in ten battleground states to help former president donald trump's campaign. david, i'll send it back to you. >> thank you well, if you're keeping track it's day two of goldman sachs' conference in san francisco. top executives joining throughout the day one of them is at&t's ceo john stankey, and he joins us now, this on the heels of apple's new iphone release and his company's announcement of a fiber expansion deal it's good to see you been a while sorry we're not together in person but thank you for being

here >> good morning, david thanks for having me on. >> my pleasure let's start off with apple, because, obviously, i would assume, like many, we've only seen the recent features very quickly, but i am curious, given its importance to your company, what your expectations may be at this early stage in terms of what it will mean for the upgrade cycle for apple customers? >> well, i think ultimately the consumer is going to drive the decision making on what the upgrade cycle is you've, obviously, been discussing it all morning, having some viewpoints on what the pros and cons are. my intuition is this is going to be what i call a major cycle as we see the 5g, 4g dynamics and volumes it's going to be meaningful, but i would be surprised if it hits that level. i could be wrong ultimately the consumer will understand what they want to do with it. my sense is, frankly, that we're ready, either way it goes. i was looking at the offers in

our industry that popped up yesterday after the announcement they looked similar to last year, so i'm not expecting this thing is going to go crazy, but if it does we'll be ready to go. >> yeah. i want to ask you about that you and i talked a year ago in presence are person at this conference, apple coming out with a new phone then. you, at the time, talked about, you know, these things get very expensive and the consumer, at least from your viewpoint, i look back, might be hesitant they kept the price the same i don't know if you think that's going to in any way bring people more, you know, to the floor in terms of perhaps considering an upgrade? >> i think it was smart that they kept the price the same obviously, they are expensive. it's a significant investment. but there's -- as we talked about last year i think there's other things driving how long consumers are choosing to hold on to their devices. you discussed the fact that the changes are sometimes a little bit more incremental i think software in this case over time is going to make a big

difference the question is whether it's big enough right now to drive a huge cycle. the other thing that we have is we're doing a much better job of managing the life cycle of these devices. we have insurance plans that allow people to hold on to them longer, repair them, use them. they're more durable, more stable people are accustomed to doing things like protecting them i think there's a certain dynamic similar to maybe a laptop or a pc where people are extending the life cycles because the product is better and manages to do things very effectively for longer. >> yeah. and in terms of your competitive stance in the marketplace in terms of subsidies and, obviously, things that make sure people stay with you, do you have any expectations? >> look, we've been winning in the market with various stable and consistent play, which is we treat all our customers equally. it doesn't matter where you are in our plan continuum, where you are in your history with the

company. if you want a new device we have something for you to be able to do if you would like to come over and work on america's largest network and be part of the at&t family and take advantage of opportunities, for example, to bundle fiber with wireless, which is a new dynamic of one of the offers we have in the market this year, we'd love to have you come in and we have incredibly effective and competitive prices to do that. >> yeah. well, you mentioned fibe and bundling let's talk about that. it's been notable in terms of how much you're spending to increasingly be able to offer fiber to your customers and wireless services. john, there are a number of critics who would say, listen, your combined footprint in terms of what you can do is still not big enough to address much of the country. so why is this convergence something that's a positive strategy for at&t shareholders >> well, first of all, we're in an infrastructure business, and an infrastructure, it doesn't all get built in a day

i think anybody who's looking at circumstances today is missing the point that just as you have heard earlier on your show, we're in a generational movement right now where software is going to take us to the next level, workloads that have to flow across networks are going to be more demanding and more significant, and there is no better technology to do that on than fiber so we are now making that bet at at&t i'm making the bet that fiber at the edge, where it's harder to get to, is, in fact, over time going to be a very defendable and sustainable franchise, and i don't think the question is where are we today the question is where are we going to be five years from today? at&t is going to be the leader in having more fiber throughout than anybody else and it is fundamentally a better product and a better technology than what anybody else is offering in the market who may have a larger footprint today. >> okay. how do you compete, though, in terms of do you just continue to build? i mean verizon, obviously,

buying frontier. got that news last week. but t-mobile is buying metranet, did a lumos deal your competitors are scrambling to get bigger footprint. do you guys need to buy more, or can you just continue to build >> our competitors are chasing us we have the largest footprint in the united states, david, and we've used a variety of different tools to get that done and we're going to continue to do that. of course we're building organically and parts of the country where we've operated for a long time, we have a joint venture set up of blackrock called gigapower where we use additional capital from outside of our company as a partner to go in and do that. that model has shown great promise. we've been at it for about 18 months we've got great results coming out of the market. they actually look like they're closer on par to how we operated within our footprint than what we had expected, which we thought maybe the brand wouldn't do quite as well outside of our traditional wire line operating

footprint. and we announced yesterday that we're working with a variety of open access providers to be an anchor tenant and wholesale on top of their network we're a preferred player in that case because we're not out trying to sell fixed wireless access over the top of their footprint. we have a great model from gigapower that we can help them use to grow and we're going to continue to do that and we also may have some success and public-private partnerships where we do more outside of our core footprint to support what i would call government subsidy low penetrated areas we're going to use it all and that's how we keep our sgleeds i followed the company for a long time and followed your long road to getting to two and a half times leverage you're very close. well done. but when i hear you talking about this i do wonder, any expectations that shareholders might have for, you know, buyback of stock or things of that nature? how are you thinking about capital allocations given the needs in terms of spending for this fiber.

>> david, we've been disciplined over the last five years to your point. thank you for recognizing the balance sheet is in a very different position than it was four years ago we are going to have choices of what to do with our capital and i think we're very mindful of the fact that shareholders deserve to be rewarded for sticking with us we've made great progress in improving the operations of this business you're seeing it consistently show up. every quarter in our operating results, we think by combination of these capital smart approaches of what we're doing with fiber, continuing to invest at the aggressive rate that we are and getting our balance sheet to where we're going to have choices about how to allocate our capital differently, and i'm excited next year to actually be talking about that conversation, which seemed a long way away four years ago when we started talking about this. >> it did. i look forward to having it with you. you mentioned fixed wireless there's also starlink, for example. they will be able to start putting up more satellites i just wonder why do you or do you dismiss them as really

effective competitors to fiber, and if so why? >> i don't dismiss anybody as a competitor i think the portfolio, there's so much demand for bandwidth and there's so much demand for connectivity no matter where somebody is. everything plays a part in the portfolio. satellite constellations are going to be great to fill in white spaces where there's no coverage today, so people have always on connectivity we're doing what we're doing with asd space mobile to make sure your device can be connected no matter where you are. you're going to see fixed wireless that plays a role in part of the market not a big part of the market but for a small individual living in a studio apartment that might be the most effective way for something like that to happen. there's nothing that beats fiber in terms of the marginal cost of carrying the next unit of traffic. as a result of that it's always going to be more cost effective and better performance than any other technology out there and

it will carry the lion's share of workloads and that's why we're making the bet on that infrastructure investment. >> finally, john, i want to get you on the economy because you typically do have an interesting view both on enterprise, but also the consumer and their ability to pay their bill. what are you seeing right now, you know, when it comes to sort of overall your customer base and how strong they are? >> the business is till doing great. you know, we're -- customers are paying and they're still buying. obviously, we've got a big purchase decision coming up, as apple releases a new device, and i think we'll see demand for that that moves through. i don't think we're going to see necessarily what i would call economic malaise move into that cycle. we see it as given the essential nature of the business we provide as being pretty healthy. i'm well aware that i have peers in other industries where consumers are making some choices to create some space, given challenges in the environment, maybe trading down to premium brands to buy more

generic stuff in a variety of other things but our product, fortunately, is kind of viewed as a critical stapler day as how people go about their life and we see it being pretty strong right now. >> all right john, i could go on for a while but we have to leave it there for now. look forward to talking again soon thank you for taking the time. >> good seeing you again, david. >> and you john stankey, ceo of at&t. sara >> all right david, struggling to build on yesterday's strength here in the markets where all the major averages gained more than 1% coming off of last week which was the worst since march of 2023 we're unchanged on the s&p 500 m mixed picture in technology. nvidia higher. ten-year treasury note yield lower. maybe some of the weakness coming out of the conference like the one i'm at with the barclay's, look at the banks, goldman sachs, for instance, warning of a 10% decline in

trading for q3 jpmorgan talking about high expectations for net interest income we got that new basel iii endgame update capital requirements get lowered to 9% increases from the original 19% proposal. maybe that was a little bit higher than expected we're going to talk to a lot of bank ceos all day from here to get their reaction and take. wel rhtaconsqwk'lbeig bk "ua on the street. s to amgen's life-changing medical breakthroughs, every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. so our client can keep investing in innovations for patients around the world. without pause. for the love of moving our clients forward. for the love of progress.

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ceo of airbus. we just had a chance at chamber aviation summit to talk on stage. i want to ask you, when you come to this event, this is an interesting time for airbus. you lowered your guidance earlier this year. your stock really took a hit and it has a lot of investors saying, where's the next catalyst where's the growth where's the excitement to say, i've got to get back in on shares of airbus >> this is coming from the size of our backlog we have more than 8,000 planes in the backlog it's one about the prediction and deliveries last year we were targeting 720 planes we did 735 so, there's been an excitement as you said earlier this year, we had to lower the guidance for this year. we're still working hard, but it's not going to be a linear ramp-up because some suppliers have challenges. that's what we're working hard on so, it's all about the speed of ramp-up. we're targeting rates 75 for an

amazing prediction rate by 2027. it's very exciting. >> what's the biggest challenge within the supply chain right now? >> we have issues with engines of availability and cfm have had their issues, mainly on the single line. we also have issues on landing gears, on seats, on interiors. so, these are limited number of suppliers, but they are holding us back. and then we have to slow on everybody when we are limited by some bottlenecks like this. >> with the interiors, one of the concerns i hear from airlines is, we can't get these planes fast enough because the interior companies cannot adjust to all the different demands that are out there fair way of portraying it? >> yeah, that's true there's a strong demand for upgrades of cabins for the airlines directly, for their existing fleet plus the needs to put in new planes this is a very large demand that went from almost zero during covid to a very high level today. so the manufacturers of interiors are really working

very hard to deliver that ramp-up, which is actually much bigger than our own ramp-up. >> how much will opening a second a-320 line in alabama, which you're close to doing, how much will that ease the backlog, allow you to really increase that production? >> that's important for the rate 75 by 2026-2027. especially as we ramp up faster on the a-21. the backlog is much higher than it was earlier we will have by '27 system that will enable a-321 manufacturing all around the world so, it will be very important for us on the short term we're limited by supply chains that's not something we debottle neck the engines of the interiors. >> as you look at the world, and we don't know what's going to happen with the u.s. election, but we may be entering a period here where there are more tariffs in the u.s., more tariffs with other countries around the world how much does that potentially slow down growth, economic growth worldwide >> i think there is an impact on

economic growth. there is a sort of deglobalization that is at play. that's not positive for gdp and for growth but it's not too much. actually, i don't see it we continue to have a demand that is much higher than the supply, including for the airlines all planes keep flying, even if they are less competitive because there is so much demand. so, we're not at the point where aviation is limited. now, would we have tariffs here and there for aviation, which is not the case today i think that's not a good idea, we would have to pass the taxes to the passengers. at the end, someone has to pay for it >> ceo of airbus, love getting together, whether here or in europe we're here at the u.s. chamber aviation summit. guys, i will send it back to you. we'll be talking with a number of aviation industry ceos throughout the day >> phil, it's dave we have another minute or so i would love to get your take on southwest, given how closely you follow the company it's a remarkable thing to see six directors say, we're out of

here >> that's true and you also have the executive chairman, gary kelley, saying he will step down at the annual meeting in 2025. here's the main question, david, is that enough to satisfy elliott? elliott has been emphatic that bob jordan has to go you saw the statement from southwest today. they are committed to supporting bob jordan they believe he is the person to lead them through this transition does their commitment to have changes in the directors but not bob jordan, is that enough for elliott to say, okay, we're good for now, we're not going to call a special shareholder meeting? we'll find out over the next several weeks. >> yeah. very good point, phil. we will -- i mean, they are just beginning that dialogue. very hard to say where that will end up your point is a central one. they're still saying they fully support bob jordan and elliott has clearly indicated otherwise. phil, thank you.

phil lebeau. that's going to do it for this hour join sara and i in the next hour we'll have the ceo -- she will have the ceo of barclays joining her for an interview later today as well she'll be speaking to brian moynihan from bank of america. our live market coverage will continue right after this. [sfx: wind, rain and rolling thunder] with the vision to see what's possible and the grit to make it happen, morgan stanley can help create the future only you can see. [crowd cheers] [music out] icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot.

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and welcome to "money movers." i'm sara eisen live from the barclays global summit in new york city. david faber with me at the new york stock exchange. today the ceo of barclays on the strength of the financial sector, the outlook for the fed. of course, his reaction to the revised basel iii regulations just released last hour. then we'll head to the opposite coast and goldman sachs conference in san francisco with robinhood ceo vlad tenev. ahead of the presidential debate, key moments candidates will be paying attention let's take a look at markets right now. you ca