as people digest that anticipation and try and figure out, okay, is this really going to be a strong cycle? so, i'm not sure this is up and to the right over the next few months, but i think if you're looking for something over the next year or two, apple should benefit from apple intelligence. >> okay. all right. we're going to end it there. thanks, toni. good to have you on. and that's it for us. make sure you join us next week. "squawk on the street" is up right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber at post nine of the new york stock exchange. cramer's at one market in san francisco, wrapping up this blockbuster week on the west coast. futures, mixed as we come off the 39th all-time high of the year for the s&p. bunch of corporate news today. nike, fedex, lennar, microsoft. fed speak resumes today, harker at 2:00 p.m. eastern. our road map begins with that shake-up at nike.

john donahoe is out, replaced by a long-time nike veteran. plus, fedex fails to deliver. shares of the shipping giant tumbling premarket, this after posting a significant decline in profits and cutting its full-year guidance. and the a.i. and datacenter power surge continues. constellation energy is planning to restart part of the three mile island nuclear plant, why? well, they want to sell the power to microsoft. let's begin with the changes at the top of nike in the wake of challenges in china and some heightened competition. the sportswear giant says ceo john donahoe will retire after nearly five years at the helm. he'll be succeeded by elliott hill, effective october 14th. hill has spent 32 years at nike, including a stint as president of consumer and marketplace. throughout the month, we have been talking about donahoe's future at nike. take a listen. >> so, you're on the record now calling for -- >> that's a factor. >> -- calling for donahoe to go?

>> i'm saying that if you look at that chart, you think that it does have a real starbucks-like feel before brian niccol came on. there has to be a bit of a revamping. how about a revamp? >> revamp. yeah. running out of time, one would think, donahoe. >> yes. he's out of touch. he's out of time. what's happening is that the erosion of nike matches the erosion of intel. these are companies that right now don't -- they've lost their way. what are you -- what? >> that's rough, man. that is rough. >> well, i play rough. >> isn't this enough to satisfy you? it's not good? >> snickers satisfies me. i always like to say, who's next the go? who's not cutting it? david, i'm getting nike over and over and over again because they think that a technologist, someone who is a consultant, is running the company and they're getting taken to by on, by new

balance, but adidas, and by vans. it doesn't stop. this is the drum beat, david. donahoe. >> you literally tweeted a picture of you wearing them this week. >> well, i know, but that was the air force one special bob kraft anniversary and those can be worn with formalwear. >> jim, investor day is coming up november 19th and some discussion of what they could put together before then. >> look, they're in trouble. now, it isn't shocking that they're in trouble, because you looked at the stock chart, and it says they're in trouble, but there were so many mistakes made by this man that you kind of wanted to figure out, did they think he had some sort of master plan that nobody knew? he didn't. i think that this is a welcome change to bring someone back in, but what they really need to do is try to figure out how to make better shoes, which somehow got lost in the shuffle. >> all i know is if cramer's just changes his tune on me,

carl, and starts to say faber's got to go, then that's going to be it. that's going to be it. >> i like faber. >> i'll start my exit negotiations immediately. >> faber's good. >> okay, good. thanks, jim. this is two now, and listen, i know i'm -- we're overstating it, and/or any real impact. obviously, you're reflecting what you're hearing, jim, when you listen to a montage like the one that we just heard, but it is interesting, of course, at starbucks, now nike. i don't know if there's more to come. i do know there's one more name on your list that you continue to go to as a particularly negative performer. i'm not sure a ceo change there is going to help. i don't mean to take us off nike. obviously, i'm talking about intel. but -- >> there's a vacuum there. >> these changes are significant. seems less clear in your mind, though, that the incoming ceo at nike is going to have the same effect, perhaps, that you think brian niccol will at starbucks. >> well, i think that the

chipotle model works really well at a place like starbucks, because it's about service, about hospitality, quality, employment. i think that whatever you try to do at nike has a lot more to do these days with new balance and with adidas and with hoka, with on on. i mean, these places are just doing so well, and i -- we have to spend some time on this notion of direct to consumer versus actually touching and feeling and putting on a shoe. i don't know who in that board thought it would be just a great idea to have a -- to have it out with foot locker. you may not like to go to foot locker stores, but now they're run by mary dillon, and you better start liking it because she's well ahead of the curve and is better than you. they forgot who their customers were. they forgot who their outlets were. i think they just thought about themselves and the fault was in themselves, not in the stars. >> stock may be moving to the upside today, jim, but of all

the sell-side reports we read today, only wells is the one that moves. they do -- they maintain overweight. they have some targets. i think it was cowen today that pointed out ebit margins since 2019, down a hundred basis points. >> there's so much that's wrong. what you would want to do, if you were this gentleman who comes in, elliott, i think, what i would do is call all the companies that have been great partners of ours. i know that they were trying to repair the relationship with mary dillon at foot locker, but say, look, we made mistakes, which, by the way, is okay to say. it's never a sin to say that you made a mistake. it's a sin to continue to do the same thing. and we made mistakes, we didn't judge how much you could be our partner. we want you back in. please tell us what we can do to be better partners. we know we can't just take -- we have to earn back the space that you have given to all these other shoe companies and we're going to try to do that. right now, i've got to tell you, they have lost space.

they were about to lose space to under armour. >> jim, i'm looking at a note here -- >> they're losing space to vans. vans are like -- they were like seven years ago, vans. >> i'm looking at a ubs note here, and the analyst, i mean, he is named jay -- >> he lasts. >> yes. but he says, you know, again, given these direct-to-consumer challenges and the company's recent commentary, the market is assuming nike will start to make a much bigger effort to regain momentum in the wholesale channel. interestingly, he writes, "mr. hill was part of the nike leadership team that set a goal to dramatically reduce their wholesale partnerships." and so he wonders and questions whether he will look to reprise or change that direct-to-consumer strategy. >> i think during a period of covid, you didn't want to go out of your house to go to foot locker or champ's, and that makes sense and i think a lot of people made judgments during covid that seemed to be lasting

ones that turned out not to be. i'm not talking about amazon and jassy saying, listen, you got to come back to work. i'm saying maybe you felt, you know what, direct-to-consumer turns out to be pretty good. we're doing better than we thought without all these different retailers who we don't l like to walk into. nike started thinking it was better than nike. the great thing about nike is it was a competitive company that always wanted personal best, and they got away from personal best. in the meantime, you have people like deckers, who spent a fortune and years on hoka and suddenly, it breaks out, you have new balance that never lost its tech change, that got reinvigorating and then you have on, another outfit totally out of nowhere that people didn't see coming and meanwhile, nike is trying to figure out how to get that shoe to you faster at home when they should have been trying to figure out how to stay at the top in the scrum, which is what they were. >> two things. one is this knock on nike that they've spent too much time

worrying about where they're selling stuff and not enough time worrying about what they're selling. and then, this notion of blue chip management shuffles at boeing and starbucks and nike. you could even go back to disney. >> yeah, but look, i think that all of these are places are if you look at their charts, they tell you, we are part of the stock market that people don't like anymore. we are just doing things, and people think we all pay ourselves way too much. every one of those companies, by the way. and all we do is win and the shareholders lose, and i think it's great that boards are waking up to the idea that, wow, we are really underperforming. maybe we got to shake things up. and by the way, maybe we should shake up the board members who got us here and shake up the other people who came in and recommended this strategy. this strategy -- the dtc strategy was a very good strategy, like walmart developed the dtc strategy, but walmart never took its eye off the stores, for heaven's sake, and when i -- i did a lot of work on nike behind the scenes, and what

i hear is so damning. it's that the product isn't as good as it used to be, and that was something that you never heard. you might have heard distribution, maybe not good, but the actual product -- and i have to believe that buck knight heard the same thing i did. >> how long does it take to turn around a product, then? >> this is multiyear. this is multiyear because you need -- because the other guys -- nike gave these other guys, in this small window that was this man's tenure, nike gave up a huge amount of shelf space. it's very hard to get that shelf space back, especially because the other companies are all really good at what they do. >> we're going to talk a lot more about it today, jim. let's move to broader markets as well after that fed cut-fueled rally which did result in record highs for the dow and the s&p. nasdaq, up 2.5%, helped by tesla and nvidia, jim. russell, seven days green. got bmo going to a street high 6,100. >> look, there was this weird

delayed reaction. we got a 50 basis point cut, it had been telegraphed. as long as something like that is telegraphed, given to "the wall street journal" so we knew in advance, you know it's just good news coming and you get the good news, i'm used to seeing the good news being sold off. well, that did happen for the first two hours. but then, i think people realized, let's take a look at what's come down a lot. let's buy some tech. tech has come down a lot. there's a lot of tech companies that i think are viewed now as being part of the a.i. joke, and i'm -- they're in on the a.i. joke and you're not, and i complete completely disagree with that. i think a.i. is incredible. i feel like other than marc benioff at salesforce this week, i didn't see anything that's made me think it's going to set the world on fire. >> i continue to hear similar things now, which is that in the enterprise, there's just -- they're not finding, at this early day, and this will change, but right now, not finding a lot of use cases. and in fact, interestingly, i've been told by a couple of consultants at least that it's making employees who are trying to work with it less productive

or at least those who are trying to implement it, less productive right now as they search for applications. >> david, one of the themes of dreamforce, the main reason why i came out here, is that copilot is not doing what we thought it would be. copilot's not as helpful. copilot, the novelty has worn off. i don't know. this is microsoft. they're going to figure out something, but david, you're right. i mean, i think there's a sense of, is that all there is? and if that's the case, then there's a big rebellion within the whole food chain that leads up to nvidia. i think that it's the failure of the imagination of people who have a.i. rather than the fact that a.i. is not doing something great for them. you have to figure out what to do for it. it doesn't just wake up and change your brain. you don't get new cerebellums. it can youdoesn't work like tha. >> while we're on microsoft, jim, this headline that crossed about an hour ago, the owner of the shuttered three mile island, going to spend $1.6 billion to

restart it by 2028 and refunnel to microsoft. >> they've been talking. when i first heard it, i heard from utility executive, and i said, no, that's the worst nuclear accident. but of course, there was -- one of the towers, one of the units, was working until 2019. this makes a ton of sense. these things take forever to build. the ones that are being built right now are 2032, so this one, you know, shortcut, and david, nuclear power, you know as well as i do that nuclear power is the cleanest, safest power. >> yes. and we talked about this a lot lately. >> no one listened to us. but not now. >> we mentioned this briefly as well. >> nike, three mile island, we be kings. >> yes. recommissioning of nuclear power plants, which is occurring, and to the point, and carl just shared that news, it's all of the power is going to go to the datacenters that microsoft is using to run, by the way, the gpus and the large language models that power, for example,

its -- its copilot. but again, back to the idea -- nobody seems to question, jim, that at some point, this technology will be transformative for all of us, including the enterprise. it may not be there yet, but there's nobody questioning, oh, it's a fail. not at all. it's the opposite. they're like, oh, this is going to change everything. it just may take a little time. >> i was at an excellent -- and we do these really great things. we had this absolutely great cfo at dinner last night, and when i get around and talk to cfos, here's what they say. it's like, they all try, and they try gemini and claude and they go, you know, they try chatgpt and they find that every single time they go back to it, it is better. work in progress. it's kind of up to where, like, eighth, tenth grade, so david, i think it's going to get a college degree, gets into a good graduate school and has a fantastic time and makes a lot of money.

>> yes. and then -- right. and then we get into the big existential questions. i was at an a.i. dinner last night where they were entertaining some of those. what is identity? what is personhood? can a.i. have consciousness? >> well, a.i. wears a tie. >> oh, really? it follows your lead? >> it wears a brioni tie. make yourself look better. >> all right. >> what is that you're wearing there? >> not a tie, my friend. it's friday. all right? this is not -- news flash, i've been doing this for years. >> i'll go to tjx with you. >> david's bitter about working that five days, because that fifth day, there will be no tie. >> i'm going to have to be here, no tie. fedex tumbling on earnings and guidance. also a big day for apple. we'll get to lennar, skechers, macy's, as futures are now uniformly in the red.

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fedex is tumbling in the premarket. company says it was hurt in fiscal q1 by reduced demand for its priority services and on the call, raj subramaniam took on that subject. >> it's clearly weighing on b to b volumes and it was definitely much weaker than we expected. and we have to make adjustments accordingly, and you know, as you know, shipments linked during production are highest yielding and most profitable. at the same time, e-commerce is resetting and starting to grow again, and we're also seeing some modest improvements in global trade, so the dynamics of the profile of our traffic changed. >> u.p.s. down in sympathy, jim, as but as we talked about yesterday, sometimes their guidance runs on the cautious side. >> it amaze you realize why the fed was within bounds to do 50.

the industrial side of this company is just much weaker than any of us thought would happen. some of that was because truck rates have fallen, and so we've got competition all over the place. some of it, they are losing a post office contract, but that's not in the numbers. i will say this. david, i thought this was painful. i think that raj subramaniam has done a great job, but there's an analyst, and i'm going to mention his name because i thought it was outrageous. brandon from barclay's. he goes -- he talks about, literally, in the question, he goes, "reality is, this is one of the lowest profit first quarters that we've seen since maybe 2009. eps is very much run rating, well below your full-year range here, so i think it's really hard to get credibility with investors with these types of numbers and the costs that are actually up, even though supposedly draw, their expense program, is under way." i got to tell you. there are so many executives out there that we could call out.

not this one. this guy's done a fabulous job, particularly when it comes to the equivalent of what you get from amazon, when you have delivery at home, and i thought it was very unphyfair. the fact is the economy was slowing pretty dramatically for some companies and fedex was one of the first to feel it. >> that may be the case, but it does feel as though -- and i spoke to an investor this morning, saying, i'm not sure they're capable of properly forecasting and managing their business. you know, they have a good quarter followed by a not-great quarter. there's been some inconsistency here. yes, without a doubt, a large fixed cost transport network, you know, you need a good economy for that, and you can print money when things are really strong, and to your point, the industrial economy in particular has not been great, jim. neither, by the way, they operate overseas, and you know, europe and things of that nature have not been great either, but are you really not willing to sort of take them to task in any way here for this inconsistency

in terms of delivering on, you know, and integrating the networks the way they really need to , to get to that profitability that many investors are hoping for? >> the numbers are not good, so i can't give them a pass. what i can say is this. you're absolutely right. it was the prediction business. they got it very wrong, and i think if you listen to the -- if you've been in a lot of those trucking transport conference calls, you would have seen what was happening, particularly with the rail. fedex turned out to be more a part of the rest of the transportation index than i thought. i stand by the fact that i think raj is taking costs out, and if the fed rate cuts work, this is a coiled spring down here, and you would buy it, not sell it. >> one last point, carl. they are still conducting an assessment of the role of fedex freight in their portfolio structure. it's about a third of revenues. assessment's well under way and on track to be depcompleted by end of the calendar year, so that's an important thing as well that investors are watching. >> it's cool, the sooner the

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. "mad dash" time. you know, jim, i just looked up the market cap of lennar. it's $52 billion. >> well, it's the biggest and the best. well, i guess people could say that horton is, but i think that stewart miller has done a remarkable job, like his dad, leonard miller, before him. it's a fantastic builder. used to be florida, now it's national. you'll see the stock down, and you'll be thinking that something is wrong. that would be incorrect. there are actually people who are -- who want to get out of the stock simple ly because it' had such a good run, and yet i will tell you, every number was good the fact that the gross margin's going to be flat with this quarter is a good reason to sell

it, that's stupid. so, i just come back and say, let them come in and buy it. this is a good company, and i think it was an excellent quarter, and i congratulate them in a tough environment a la what we were talking about with fedex. they actually delivered terrifically, because remember, in the end, they had high mortgages, and they're doing okay. >> jim, let's get the opening bell. at the big board, it is innovex, a provider of engineering equipment for oil and gas, celebrating its recent merger. at the nasdaq, voyager acquisition corp. celebrating its recent ipo. as we should mention, got some quad witching going on today, might make the close interesting. >> i don't know. i was struggling to try to figure out the impact, and not sure. i had to kick that one to david. >> wait, you got to kick that one to me? >> yeah. because i'm trying to figure it out myself. what? >> head and shoulders, baby. head and shoulders.

that's what i'm focused on. i have no idea. i don't feel -- quad, triple, i leave that to carl. when he hears those words, i literally phase out. >> you were talking about gamma yesterday. >> but i was talking about it because i was like, i don't know what the hell is going on. >> i figured david might know. to me, this the not a seminal moment in the market. i don't see it. i will say this. i think that if you take a look at the a.i. complex once again, people keep thinking, when will nvidia move? when will nvidia move? is nvidia's chart bad? i had somebody ask me if nvidia's chart was bad last night. >> what'd you tell them, jim? >> i said, i don't know. i think the company is doing a really good job. that often plays a role in the chart. >> yeah, jim, yesterday -- by the way, russell, year on year, 26.4%, biggest annual gain in several years. it was yardeni yesterday, jim, who argued, small caps not doing as well as megacaps, argues maybe this rate path is not

going to be as dovish as the bond market thinks. >> ed is absolutely right. that would be the conclusion you would reach. what i think is happening is different things occurring at this very moment with some of the mags, not the others. i feel like tesla's reaccelerating. i think that amazon, if you go through the fedex lines, you'll see that e-commerce is stronger than they thought. stronger. that reads very well for amazon. remember, they're not clients, but amazon, that is a one for one tell, and i really like it. so, i see some things that i really think are good. i think the apple launch is going to be very, very effective. tim cook looked really good this morning. i always thought the fact that people want selfies with him and he talks to them, but it's a company that's absolutely loved. david, best for last, okay? >> yeah. what do you got? >> david, waymo. waymo. >> waymo. >> i don't want a human anymore. i want a waymo. >> why is that, jim? >> because they have no emotion. they don't want chitchat.

they don't want to ask me how i'm doing. they don't talk about the eagles. they just drive. they don't hit anything. they don't seem to be tired at all. >> they don't ask you about nvidia. >> they don't put on the eagles either, so you sit there and go, not the eagles, man. >> other than if i jumped into the trunk, which they'll find you, by the way, because they have cameras everywhere, i think it's such a more pleasant, safe experience. i'm all in waymo, which makes me not want to hate google as much. >> interesting. okay. so, if you had an opportunity to order an uber without a driver in, what was it, the two cities there in austin and -- what was the other city? >> atlanta. >> atlanta. you would do so? you would do so. >> oh, without a doubt. i'm tired of humans. i am. i want a.i. agents like salesforce gives me because they're really polite and they treat me like a human, and waymo treated me like a human. i want to be treated like a human again. the only thing that can treat me like a human is artificial intelligence bots. they treat you with respect,

david. the way it was when we were growing up. >> yeah, remember those days? oh, yes. >> the bots are raised by really good moms and dads and were very thoughtful and know about manners. >> don't worry. your hope for getting rid of humans, it may very well be embraced by a.i. as well. who knows? >> we can -- we could still play a critical part in the infrastructure. >> we can? what would that be? little pods where we provide energy? >> no, but they -- they may have to bring us coffee in the morning. a lot of people are really talking about the humanoid robots and what that's going to mean. >> no, they're not. just you. you're the only person that talks about them. >> they're really important because i need friends. i get up really early, there's no one to talk to. my wife tells me to shut up. can you imagine you go downstairs and there's a robot that says, have you seen boeing today? and he says, do you know how much donahoe got? can you believe it? that's what i want. i want a robot who gets me at 3:00 a.m. not like going downstairs and

listening to beethoven's seventh. >> how about a robot who can stretch you and work on you, get you ready for the day? >> i have this guy, jim, who's really great, but yeah, i need a robot. other people can have robots. jensen huang, don't forget, because i haven't mentioned his name in the show, jensen says they're going to be human-looking, which means they could come in, wear a white shirt, no tie, wear a flammable jacket, go in there, talk about how your friends are saying that jeffries is doing well. >> meanwhile, right now, they can't figure out applications for the enterprise that get anybody particularly excited. that will -- that very well could change very, very quickly. >> david, health. you remember you're always supposed to say health when that happens. but david, health. >> it's going to help us with drug development. >> but it takes a long time. >> and the call centers. and the call centers, as you say. that's -- it's changing those right away. >> absolutely. you have to -- when you call,

you remember how you used to say, i want to speak to a human? that day is over. i want to speak to an agent. >> that's for sure, jim. speaking of boeing, that's some fresh year to date lows. going to take you back to november 2022, jim. the strike, finishing up week one and it looks like furloughs are going to begin today. >> well, they have to do that. they have to conserve cash. boy, from the old, long, long, long ago days, boeing -- boeing and intel were two companies that you have to pull for. you have to just say, these are really important for america. and they have to be able to get through this morass. and i include intel there, david, because it was, at one point, a really important company. >> it was. it was the pride of the country in many ways, what they were able to do. obviously, the forefront of technology. you know, we talked about nike earlier. i mean, i know that you continue, though, to be very -- i don't want to put words in your mouth, but i do listen to what you say. you're very negative on intel and its future, jim.

>> well, yeah. i mean, if you're not, then you drank some sort of kool-aid that i think is impermissible in the workplace. i think that everything seems to be done, robbing peter from paul. they put pause to germany. germany was counting on them, you know, if you were in germany, intel was going to be a savior. in an era where mercedes has a tough number, vw, intel was going to save you, but intel said, guys, we'll come back to you. we'll give you a jingle. and than they left. 10 billion euros right there, germany, ready to give them and nope. so, yes, i think they're in trouble, but i'm going to be -- i want to be a kind man, a la "apocalypse now," ibm -- >> i'm aware of it. >> christian is doing a great job. he is making that company very relevant, and look at how that stock is doing. >> it's had a good year. >> it's a quiet turn. he's pulled it off. nobody's talking about it. it's great.

>> okay. really? quiet turn, nobody's talking about it, and it's great. you want to give us a little more behind what the great means? >> all right. when you do your thing, it's actually written by watson. >> watson? i haven't heard watson's name in a long time. >> i think watson's -- i think somehow ibm writes our fantasy football league note now. i don't know how that's possible. ibm is just somebody you bring in, honest broker, tell us what to do. and they're back in that critical role, a copilot. >> right. guys, you know, it's ten years since alibaba went public. >> that was it with ibm? >> that was it. i'm ending that conversation. we're moving on with this one. >> david tepper never changed quarterback on this one. >> that was a good time. i remember that day so well. i can't believe it's been that long. jack ma joined us here. so did masa, if you guys recall, came up and joined us. the enormous crowds outside the

exchange of chinese journalists. different time. stock has not done particularly well over that period of time. you can take a look at a ten-year. of course, yeah, not ideal. >> that capitalist phase. >> 30% for ten-year is not going to quite take that. obviously, for a long time, it did really, basically, the hopes and dreams of the chinese consumer. now it has competition in that market. we talk about it all the time. and around the world. whether it's temu, shein or pinduoduo and/or ten cent in their own market. so many different competitors in different areas for the company. but did want to point that out, guys, because i know we all remember it well. >> kind of takes us to some macro news on china, guys. i don't know if you saw china did not cut lending rates as expected last night. youth unemployment, david, i know you have been watching that number. 18.8% for people between the ages of 18 and 24. that's going to be the highs of the year. >> i thought they stopped

reporting it for quite some time. listen, you know, we talk about it every so often, jim, the chinese economy is in no way strong. it is still the second largest in the world. the exports of the country are, though, really an issue, in part because that's where they are focused, and that's where the leadership seems focused. whether it's solar panels or evs or any number of other things, they are an export powerhouse. of course, as we know, and that's where they really are seemingly putting the pedal to the metal, as opposed to, perhaps, trying to bail out their property market and/or giving significant fiscal stimulus inside the country as many say they need to as they're facing deflation, which can be a really dangerous situation. >> yeah, well, they're exporting deflation. that's their number one export. if you want to antagonize a country, if you want to make it so leaders hate you, then you take over the car business from the people who work in the car business in your country. this is the kind of ill-fated,

still, one more ill-fated initiative where if you want the world to turn on you, then start selling $10,000 cars when your country is making $70,000 cars. i think that the chinese, once again, have a very weak hand, but we revere them. we think they're smarter than we are. our inferiority complex is always on show. i heard it last night from people. when will people realize? i'm not saying they're a paper tiger. i'm just saying they have become the second-rate economy that we thought we were. >> wow. >> it hasn't been close, lately, that's for sure, in terms of growth. meanwhile, we're tracking 3% for q3, real gdp per capita now, record high. retail sales, jim, i don't know if you saw, the real core control last six months is annualizing out at 4%, looking at 3 to 4% consumption at a time where we were so worried about the consumer. >> well, look, our consumer,

great balance sheet, did really well. i hate to say did well during covid, but saved a lot of money during covid. our productivity is amazing. we have costs that are -- that we know are coming down. we have rates coming down. we should be -- i know it's not good to celebrate when you have a number like a fedex did, but man, we are doing it right. and we are -- we just had such an inferiority complex, it's repulsive. it's repugnant how much we think that we're losers, and it's kind of tiresome. look, both parties say that the other side, we're a bunch of losers. if you listen to these guys, we're all losers. we've created so much, we're so good at what we do we are such a strong country, but somehow, everybody thinks we're losers and china's winners. i'm not buying that narrative one bit. i think that narrative is a false narrative. >> meantime, speaking of consumer spend, apple's new phone, as you know, hits stores today. we want to get to steve kovach at the flagship in manhattan. he just spoke to tim cook. hey, steve. >> hey there, carl.

yeah, i just caught up with tim cook. he was actually out in front of the apple store here. he was filming a sketch with jimmy fallon, our colleague at 30 rock, for the "tonight show." i caught him on his way out and asked him the most important question of the day, which is, what iphone demand is looking like so far? take a listen. >> today is great, and very exciting. >> better or worse than last year? >> i don't know yet. it's only the first hour. we'll see. >> preorders good? >> it's amazing. >> everything is enthusiastic. >> so, too early to tell, but this is something we've been hearing, guys, from wall street analysts, kind of picking apart the preorder data we've gotten so far, looking at the ship times and noticing, basically, that the ship times have kind of narrowed compared to last year, leading some to believe demand is weaker than it was a yearing a. but we also heard from the t-mobile ceo this week as well, saying that demand or that

they've -- sales so far are greater than they were last year. that's one data point we have. i will say the line is around the block today. lot of people out there buying iphones, but you heard from cook what they're seeing so far as far as demand, guys. >> steve, have you been hearing criticisms or concerns about limitations on memory and what that says about the kind of tools you're going to be able to use on apple intelligence? >> well, all the phones that they're selling right now, the iphone 16, the entire lineup, it doesn't -- is going to be able to run apple intelligence when it launches in a month. as far as older devices, it's only the 15 pro from last year that's going to have it. plus some macs that -- recent macs that came out in the last three or four years will also be able to use it, plus some ipad models, but obviously, everybody really cares about the phone. i was talking to so many people waiting in line. these are the top-tier apple fans are here every year no matter what. almost no one said they're here because of artificial intelligence. they want the new phone.

most people pointed to the camera as the number one reason they're here, not headquarters, despite the fact that they decked out the store behind me in this new look for siri, all talking about a.i. and artificial intelligence. that's just not going to be ready yet for another month or so. >> do they -- did the camera get appreciably improved, steve, in the new model? >> i'm sorry, say that one more time. >> sure. did the camera get appreciably improved in the new model? >> yeah. yeah, that's the big thing people are talking about. it actually has this new shutter button, like a dedicated camera button, so not only are the cameras improved over last year, it's these more dynamic controls that you can do. i talked to one person in line, a 25-year-old youtuber, who is really excited about these new camera controls, almost more than what the camera lens and the quality of the picture itself. so, this is almost like an influencer phone, if anything, guys. >> you know, steve, if you take a look at what's going on, say, in the sports betting world, if

there were people who were constantly saying, look, take the over, or, you know, go with the dog, and they were wrong each week, i mean, wrong, we probably would not be willing to pay for their services. we would dismiss them. all these different little services that we have that we get that tell us how apple's doing seem to be equally as wrong as a bookie who tells you to take the over or the dog every single week. but why do we still pay those brokers, and we shut down anyone who doesn't know how to do a fantasy league? >> yeah. look, i'm not a gambler. i only know what people -- people are reading into any data they can get, and right now, jim, the only data that we have is what those ship times look like, and of course, the analysts will be out there doing their channel checks today, talking to folks like those people behind me, why they're buying the phones, which features they're excited for, so i expect, over the weekend and early next week, to get even more clarity on how well the phone is selling compared to last year. look, basically, everyone's

saying the same thing. it might look a little muted at first today. ubs analysts used that word, muted, but that doesn't mean this isn't going to be a longer upgrade cycle. i'll point to what wamsi at bank of america has been saying, that this is going to be a multiyear cycle, just because of the way apple intelligence is rolling out. it's going to take a month or two or three into next year, more countries, so it's not going to be a one-off, you know, that's the bull case right now, jim. >> makes sense. >> yeah, jim, your point has been, watch not just the preorders and the opening weekend and hardware in general, but keep in mind the underbelly of that enormous installed base and what services revenue can do for earnings in the long-term. >> absolutely. service revenue and people just obviously want to start a business, they have to go to the app store. i don't really like to quote stalin very much because he was a pretty bad mass murder rer, b he did once question how many divisions the church had.

i would question how many divisions all these other people have versus, say, t-mobile, because i prefer them as someone who can give me better data than anybody else. >> apple shares are up, guys. 44 cents. mega cap tech, generally in the green. microsoft is down a few cents as we head to a quick break here, carl. >> yeah. little bit of selling at the open here. dow down 82. s&p, holding 5,700. watch bonds. we mentioned fed speak resumes today. we're going to hear from waller, and then harker at 2:00 p.m. eastern time. get some reaction not just to the decision but all the data that led to it earlier in the week. stay with us.

take a look at this week's top performers on the week to date. ndx, constellation energy, the news about three mile island a moment ago, crowdstrike, airbnb,

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when you look at the landscape it really underscores how determined these adversaries are. >> time for jim and stop trading. >> you heard george talking, one of the foremost people in credit suisse. he's crowdstrike. crowdstrike had a mishap in july that shut down a lot of computers. george lost almost no clients. he said that yesterday. just a couple percent which is remarkable given the fact that a lot of people were angry hp he did touch basis with everybody possible and said i'm sorry. satya nadella joined him, listen by zoom, or by teams or whatever, but what matter ts is that george had been very critical of microsoft. those days are over. they're working together. that is very threatening to the rest of the industry. it's positive crowd ststrike ha bottomed. >> that's incredible given the sentiment around the name during that crazy week.

congratulations again on an amazing week. viewers are richer every time you go out there. what about tonight? >> we have hp. everybody knows hp. people use the pcs at work, but the stock has been okay. a major breakout, gary hasn't spoken in ages, how big the -- really the inflection is. i like that stock. and then okta, you heard what george said about cyber security. it's still hot. todd mckinnon does identity software. all of us keep getting hacked. we're sick of it. but maybe the bad guys are winning. let's find out from todd. >> i don't know how he does this, david, and manages to have fun out there, too. >> i don't either. he doesn't sleep. he -- >> great -- >> a little time off to recharge, which -- >> yeah. you know -- >> i would have needed on by tuesday, i think i would have needed that full vacation. >> well, i -- maybe i'll take a nap and be ready for next week. >> congrats, jim.

looking forward to getting you back. >> david, robots. >> everybody is talk about robots which means i'm talking about robots. >> mannerly. >> go to sleep you think of robots, wake up, you count robots to fall asleep. i know. >> well, i have a great wife. i'm not going to go around and do that with the robot. >> you're not. no stepford wife for you? >> no. no more interchangeable parts. it doesn't work like that, david. >> we'll see you at 6:00. >> trust me. w wn:00 p.m. eastern time. dodo 72. we're back after a short break. g 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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good friday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with david faber and leslie picker is here with us at post nine of the new york stock exchange. sara eisen is on assignment. just off of all-time highs today. s&p, of course, coming off of record highs yesterday and holding on to gains for the week.

up five weeks in six. russell was going to try to go for eight straight but down just a touch. >> what a week it's been. we're 30 minutes into the trading session. er here are three movers. nike a top gainer on ceo john donahoe is out and replaced by 32-year nike vet elliott hill. what it means for investors and the struggling stock in just a moment. those shares up nearly 7%. fedex the shares are slumping, missing estimates and cutting its outlook, because of weaker than expected demand particularly in the u.s. the shares down 14.7%. and check out shares of constellation energy soaring this morning. the company planning to restart the three mile island nuclear plant and sell power to microsoft for ai. constellation expects the reactor to come back online in 2028 subject to approval. three mile island was the site of the biggest nuclear accident in the history of the u.s.

nuclear power generation back in 1979. shares of constellation up nearly 14% at this hour. >> let's get to one of the big stock stories of the day, nike. john donahoe stepping down with elliott hill coming out of retirement to take over as ceo. in a statement donahoe said it became clear that now was the time to make a leadership change. shares have been an under performer on the year to say the least. joining us this morning is stifels jim duffy, has a hold rating, cut his target from 88 to 79. good to have you. i'm curious to know why you think we haven't seen a lot of rerating on the wake of this move? >> yeah. well to start, i will say i like the appointment. we're pleased to see the ceo role returned to a nike insider. elliott hill is someone who we are writing about as a potential [ inaudible ] to mark parker in 2018. he's known as a character person, a people person, and a

good leader, and we think job number one for nike is restoring the nike culture rejuvenating that culture and we think he's a good man for that role. having said that, in the marketplace t the brand has a decided lack of momentum and they're losing share. we cut numbers recently following a back-to-school survey that we did. this is a big company. you know, there's 80,000 plus people that work there. this turnaround is going to take some time, so we're enthused about the change. you know, not seeing the rationale to change our recommendation on the stock. >> a lot of intentions turning to the investor day in mid-november and some discussion this morning about whether or not fiscal '25 will be seen as a transition year? how quickly do you think they can turn this engine around? >> i think it is going to be a transition year. so typically with nike's investor day you see management reshuffling. they're very good at developing talent and shuffling people between roles with the ceo

change, we think you're going to see additional leadership changes in the executive level. and they've got a lot of work to do. we think in recent years, nike lost its focus on what's made them such a great company for so many years, and that's innovating, can designing great product, bringing newness to product with great frequency and stories in the marketplace. the product cycle for nike is 18 months. this isn't a quick fix. >> how do you see kind of them regaining that share? how permanent in other words is the upstart competition whether it be from on running, adidas? i saw in one of your recent notes you flagged them as a huge competitor based on your channel checks. how do they kind of ninevate and recapture that share? what is the playbook there? >> yeah. it's a great question. a lot has been made about on running and hoka as share

gainers. i would encourage you to look at the market in two different segments. on hoka gaining share in the age 35 plus segment, historically nike's sweet spot has been under the age of 35, younger consumers, and currently they're losing share there to new balance and adidas. simplestly, i think nike grew complacent with their product newness. consumers lost interest and turned to other brands. i think the key to them is to increase the frequency of newness and regain the excitement of the young consumers. we think nike has the organizational wherewithal to do this. this is a great american company that still has a lot of talent. what they do best is design and innovate and we think under the right leadership that's the opportunity. >> what about the direct-to-consumer channel? my understanding mr. hill actually embraced the move away from wholesale into direct-to-consumer and yet i think there are a number of your

peers who look at that be and say it may have been a mistake and they have to get more towards the wholesale channel again. what are your thoughts? >> elliott hill's background is in sales. he joined in 2018 as an intern in the sales organization, rose through the ranks to lead the north america organization, and so he knows wholesale. he was most recently president of consumer and marketplace with global pnl responsibility for the nike and jordan brands, so he has relationships in wholesale. look, the investment in d to c, we think was well placed. i think taking the eye of the ball on wholesale was the innist take. as consumers return to stores, that's when nike kind of lost its mojo coming out of the pandemic. we think there's good opportunity for them to get that back with wholesale channel partners. >> quite a story. one we'll be watching closely with your help. thanks for that. have a good weekend. turning back to the markets

our next guest says the broadening out of the rally has legs to run on here, but likely in fits and starts. charles schwab chief investment strate strategist liz ann sonders joins us now. thank you for being here. >> thank you. >> there's much commentary out there about today's action in particular, do you worry that the rally following the fed's rate cut could be indicative of a bubble, as boofa has suggeste and got ahead of its skis? >> i'm not sure we're at bubble level. you could argue in mid-july when you had tsevere concentration problem and at that time marginally more valuations down the cap spectrum. the last couple days was interesting. it was almost a, you know, buy on the fed statement, sell through the presser, and then buy on the open the next day, and i think that kind of

day-to-day volatility is likely to persist. obviously, it's not just uncertainty with regard to fed policy, even though we've now started the easing cycle, but a lot of other uncertainty as we head into third quarter earnings season and then, you know, the big elephant in the room being the election. >> the election. and, obviously, the economic data in between there too. when you see things like fedex's earnings, for example, often seen as an economic bellwether missing estimates, cutting guidance, does that suggest to you that there are potentially greater issues under the surface and does that change the way that you're kind of collating your view on what's happening in the market and what's happening in the economy? >> i think that there are leading indicators pointing to a weakening growth here particularly in the labor market and that is why i think the fed did this recalibration of starting with 50 basis points and maybe shifting a little bit more of their focus to through the windshield as opposed to the rearview mirror and having that focus on the labor market in

particular, the hiring rate. we're not seeing a huge increase in the unemployment rate. the flounemployment rate going because of labor force pargs. we saw yesterday healthy trend in initial unemployment claims and it's the hiring rate and what fed is keying off in their cutting soil is the growth side of the evacuation, the labor side, the complete opposite of the hiking soil when they were solely keying off the inflation side of their dual mandate. i think there are signs of cracks in the labor market maybe veering into the consumption side of the economy and i think to some degree the fedex announcement picked up on that. >> i had this journal piece liz ann looked the fed in the wake of the decision. fed aiming to repeat greenspan's

1990 masterpiece by staying ahead of the curve. i wonder if you think that's the neighborhood they're in? is sort of repeating really good economic chapters like that one? >> i think they would love to repeat the mid-1990s. soft landings are less prevalent than recessions, and what we know in terms of fed policy is a cutting cycle accompanied by a soft landing is much more rewarded by the equity market than a cutting cycle accompanied by a financial crisis. what's also interesting with regard to market behavior around sort of full fed cycles, is, you know, it's -- i sort of bristol when i hear comments like typically the market does and fill in the blank with some average percentage performance number for the s&p in the call it six months after the fed starts cutting rates. there have been a wide range of outcomes and where there is consistency is the mirror image of what the market did during the pause period and then what market did once the fed started

cutting. the best performance in history once the fed started cutting in the six months in subsequent to the initial cut, was in 1974. that was in part because of the carnage that preceded that. the market was weak during the pause period leading into that initial cut in 1974. it was a complete opposite in 2006. once the fed started cutting in 2006, the ugly stuff was still ahead of you, but there were record at least in the pause period, gains for the market in that pause period. for what it's worth, this pause period we completed, the period from the final hike more than a year ago to the first cut, that is the best performance in history for that pause period. i'm not saying we're going to automatically get the mirror image, but history may provide some guidance there. >> yeah. history may not repeat but it does rhyme. we'll see what the poetry usually entails.

liz ann sonders, thank you for being here. >> thanks. >> our road map for the rest of the hour. is it time to bank on the financials as the fed begins to cut rates. the sector inches from turning positive in september. we'll talk top picks with one analyst forecasting more gains from here. >> what do the ultra rich pay in taxes? those surprising numbers later this hour. >> apple launching its latest iphone, watches, ipods. a live read from the ground when "squawk on the street" continues after this.

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welcome back to "squawk on the street." we are keeping an eye on shares of trump media. former president donald trump the biggest shareholder in the company and other insiders can finally sell their stakes in the business as the lockup period expired last night. it comes as the stock hits new lows. shares surged after the company's public offering in march. reaching $66 a share and giving the company a valuation of more than $9 billion. djt shares down 80% from their highs. >> let's turn to another name that is under pressure this morning. that would be fedex. the company's stock is slumping after some tough and unexpected numbers, also cut guidance. let's get over to dom chu who has more on what the street is saying about this stock this morning. >> a lot of unexpected at least numbers coming out and the reason why analysts are taking a lot of action today, either for

commentary on certain parts of that report or outright maybe movement on some of those ratings and target prices as well. let's start first of all with one of the more kind of bearish tilted reports of the morning so far. i can't go through all of them but it will give you an idea and sense of what's happening. morgan stanley analysts are now downgrading that stock to an underweight rating it was equal weight before. the target price cut to $200 from 215. they think the expectations need to be ecalibrated for this stock because of structural challenges and parcel, things like the mix, the volume, pricing as well. keep an eye on that particular move. that's one of them. another one that's maybe a little bit more kind of on that even-keeled side of things is wells fargo maintaining their equal weight or hold type rating. they keep the $300 target price as well. they see some longer term opportunities in their operational improvements, things like margins, maybe better operating leverage, maybe some better earnings trajectories going forward, and fedex freight's strategic review process which could become a

catalyst at some point later on this year. what do they do with that business. >> do they keep it? do they possibly spin it off? that sort of thing. that's a view from the middle ground. and then another one that's tilted a little bit more towards the positive side and a number of analysts are reiterating their buy rating. the price target does get cut modestly to 328 from 332. they're citing things like weaker business to business trends in that particular environment and an ongoing mixed trade down. some of these corporate clients moving to less expensive parts of the market for logistics and shipping. they do say it has an attractive valuation even more so given the selloff and the potential for cyclical recovery that they're also kind of a little bit more positive on. so leslie, if you take a look at the charts one thing the traders are focusing on right now is the out performance of fedex over ups during the course of the last year and because of that, whether or not there is any kind of a mean reversion aspect of

this trade. i'll send things back over to you, leslie. >> that's a good point. thank you very much. another bellwether to watch, home builder lennar pulling back from all-time highs despite a top and bottom line beat. the company saw home deliveries and new orders rise in the quarter. after the break the iphone 16 hits stores shelves today. we'll head live to apple's flagship sto imaatn r ren nhtafo a read from the ground. don't go away. all across america. millions of americans who have medicare and medicaid but may be missing benefits they could really use. extra benefits they may be eligible to receive at no extra cost. and if you have medicare and medicaid, you may be able to get extra benefits, too, through a humana medicare advantage dual-eligible special needs plan. call now to see if there's a plan in your area and to see if you qualify. all of these plans include doctor, hospital and prescription drug coverage. plus, something really special,

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apple officially launching its latest iphones watches and ipods today. steve is live in front of the company's fifth avenue flagship in new york city after talking to tim cook last hour. hi, again, teev. >> hey there, carl. i did talk to tim cook. he was right in front of the apple store here filming a skit with jimmy fallon for the tonight show. i asked him how is iphone 16 demand stacking up compared to last year. take a listen to what he told me. >> today is great and very exciting. >> better or worst than last

year? >> i don't know yet. it's only the first hour. we'll see. >> preorders good? >> it's amazing. >> everything is enthusiastic. >> so enthusiastic, but too early to tell, but that is also kind of what we've been seeing from the analysts over on wall street trying to pick apart the preorder data as best they can looking at the ship times and how they compared to last year. you know, earlier in the week we got the signals that maybe demand was less than it was last year, and then yesterday we saw the stock go up nearly 4% on just comments from one carrier t-mobile's ceo mike sievert saying that sales are better than they were last year, at least the early preorder sales so far. we're going to have to wait through the weekend and in the coming weeks to get more and more color on what the demand looks like and what that demand picture looks like. in the meantime i will tell you, the last two years i've been standing out here on iphone launch day, line around the block. that line around the block has kind of diminished.

not sure what to make of that. most of the people are crowded in front, not a spillover area like there has been in the years past. people trickle in throughout the day. we'll see how the line kind of ebbs and flows throughout the day. i will also note this is all happening as the apple intelligence, that's the ai platform that apple is working on, is not going to launch until next month and even then only limited number of features. despite that, the -- you can see the store behind me decked out in the new look for siri that's going to be the more yasds vanced version of siri you're seeing. apple heavily marketing but not necessarily -- it's not going to be available on the phones today. everyone back there buying an iphone today are not going to get apple intelligence and i talked to a number of people in line today and they actually don't really care about that. they're mostly excited about the camera, guys. >> why do you think they structured it that way, though, steve? why not just wait a month and then wait until the features are ready and release the phone at that time to get a sense of, you

know -- and be able to sell that true upgrade technology? >> yeah. there are probably a million different answers to that. part of it could be that, you know, the features aren't just ready. even, by the way, when these features launch they're going to call it beta. a test version of the software. apple is not claiming this is going to be the final version of their ai platform. i'm sure they would have preferred to have it all ready to go on day one, but it's clearly not going to be there. then, of course, the really important markets like china, they're going to have to go through some regulatory approvals, european union, apple has already said it's going to have trouble launching there because of regulations. but, yeah, it's going to be a kind of slow and measured rollout. competitors i note, google, samsung, all those ai features were ready on day one, guys. >> yeah. we'll have to talk to you off line about the air pods. i lost my case this week and i need to know if it's worth the upgrade. we'll talk about that off line.

thank you. time for a cnbc news update. let's get to contessa brewer. >> the israeli military today carried out a strike on beirut that it described as targeted. that attack came after hezbollah fired a barrage of rockets across the border. hezbollah's leader has vowed reveenl for what israel is calling a new phase of the conflict. eli lilly asking people who took knockoffs of its weight loss drugs to give the company access to its mel records. bloomberg reports they're building a case that allows them to make knockoff versions of zepbound and mounjaro while there's a shortage. macy's plans to hire more than 31,000 full and part-time employees for the holidays. the department store gears up for a busy season about 7,000 fewer than last year. retailers in general anticipate hiring fewer people because there's a softer labor market and consumers are tightening their belts. holiday shopping is crucial because it accounts for more

than half of store's revenue. we'll keep a close eye on the numbers as they come in to us, carl. >> that time of year. thank you. contessa brewer. when we come back shares of constellation energy soaring leading the s&p. we're going to tell you why and look at other energy related names also moving big on the back of constellation when "squawk on the street" continues. when it comes 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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constellation energy is a top gainer on the s&p this morning. take a look at the laggards. those shares officially have doubled on the year. pippa stevens joins us now, of course. there is a lot going on in terms of the provisioning of power, particularly for data centers. >> that's right, david. this morning constellation energy said that it will reopen the three mile island nuclear power plant selling all of the power to microsoft as a part of a 20-year agreement to power the tech giant's data centers and

yes, you did hear that right. we are talking about three mile island, the site of the worst nuclear accident in u.s. history in 1979 which sparked a backlash against nuclear power. but this site has two reactors, up with that was shut down after the accident and one that was active until 2019 and that is the one that they're reopening. it comes as the nuclear industry is getting another look because of power demand from ai which is surging. now constellation said it will spend $1.6 billion to revive unit one and aiming to have the unit back online by 2028, although it is subject to approval by the nuclear regulatory commission. the company owns roughly 20% of the u.s.'s nuclear capacity and shares are up 102% this year as electrification, reshoring and data centers all increase power demand. now uranium stocks are on the move. the ura and urnn are both up more than 2% each and cameco and

next gen are the biggest gainers. constellation's jump is lifting the utility sector as a whole. vistra, nrg are on the move. carl? >> you've been all over this phenomenon of restarting and building nuclear energy this year. i wonder, though, if this particular bit of news came as a surprise even to you? >> yeah. you know, there had been some rumors that maybe it would be restarted because remember it was shut down five years ago to the day and so it is still, you know, functional in the sense that, you know, the operations the plants haven't changed all that much. there had been rumors. i think the speed with which we've seen these announcement comes, we've also seen palisades in michigan, also being restarted, kind of set the blueprint for other reactors to come back online. i think it speaks to the fact that this ai power demand story really did take the market by surprise, and it keeps accelerating and so there is this kind of need to secure power and there's nothing more valuable than energy

infrastructure that is built and hard to build new plants in the u.s. takes so much regulatory approval. if you have an asset sitting there that could be brought back online it becomes very attractive and so clearly there were a lot of people swirling around to try to lock this one down. however, it does still face an uphill battle to coming back online. i mean, constellation has a lot of credit in the industry because it is the largest nuclear operator in the u.s. still, there is local opposition and three mile island for a lot of people does create a kind of visceral reaction. >> we'll see whether microsoft's political muscle makes a difference. amazing story. pippa stevens today. meantime stocks are hovering just off of record highs. our next guest is seeing more opportunity in value stocks and abroad. harris oakmark cio for international equities and portfolio manager david herra joins us this morning. >> thank you, carl. good to be here. happy friday. >> same to you. so much discussion this week about valuations and elements of

the market that are expensive after that fed cut. i was a bit surprised to hear you're seeing value. is it mostly overseas? >> there's huge valuation differentials both in the u.s. and overseas and what we're seeing are certain sectors which are trading at nine, ten times trough earnings. trough earnings. normally we don't find value, it's low valuations at peak earnings, but we're getting towards the bottom of the cycle and agriculture and some of the automobile industries and companies we're seeing very good opportunities in these sectors. even in health care, for instance. you know, we own stock in a company called buyer, with i two of their three divisions are consumer health and pharma. and these companies are trading at low valuations in terms of trough earnings, which to us represents great value. >> we did take note of some of the guidance we got out of mercedes and we got some pretty ugly ev auto sales in germany

and france in august. i wonder what you think of autos internationally right now. >> it's an interesting sector because the market is split between those two are sole ev producers and have to rely on this and compete against the chinese competitors, whether china it or happens on foreign soil, and then there's the premium producers, look at mercedes b and bmw. these are companies struggling in china. that's not necessarily because of the ev competition, but because of the chinese slowdown. these companies are struggling and made low profit warnings as a result of their chinese operations. however, these companies do business all over the world and the u.s. auto market in particular, a major, major market for these companies, is not only near its trough, but it should perk up as a result of the lower interest rates. don't forget people, even in the

premium end, finance or lease 50 to 60% of these vehicles and the market's been slow in the u.s. it hasn't been bad, but it's been slow. and so the lower interest rates in both europe and the u.s. should help the sales of preium automakers. and then you have to look at their valuations. they trade at three or four times cash flow, have billions of net cash on their balance sheet and more importantly, they are still doing massive shareholder distributions in terms of high dividends and stock buybacks. so this is why we see value proposition, despite or maybe because of the ugly headlines in the premium automakers of mercedes and bmw. >> i feel like whenever you come on you talk about how incredibly cheap these stocks are and the low multiples, free cash flow. it makes sense. they never seem to get any less cheap. >> yeah. this -- best example could be some of the european financials as an example, bnp, is, you

know, one of the biggest european banks, it trades at about six times earnings, you know, 8 or 9%, has excess capital on the balance sheet, but trades at a discount say to its u.s. peer jpmorgan which trades at 1.6 times book value. the stocks have done already because the earnings have been going up double-digit and so have the share prices, but the valuations remain muted. i think a lot -- >> what's going to change that, david? what's going to change that? >> i think they have to continue to demonstrate earnings growth and then the enough has to come off with companies that are priced to perfection. when you see that, you'll see a rotation and when that rotation does happen, i believe it will be quite explosive. >> but -- >> david -- >> i get the same -- i get the same questions from my clients. we know they're good value. we know they're throwing off lots of cash and paying it to their owners, but what's going

to change? i think eventually the value of financial asset is the free cash which it generates. if you want to pay a low price for good quality businesses, this is how we measure it. >> we've been having that discussion with you all year long. it's good to get it again today, especially on -- after a week like this. talk soon. david, thanks. >> thank you for having me. have a good weekend. >> you too. do want to take a look at shares of apollo. our viewers may know we had a long sit down with the company's ceo, apollo global ceo marc rowan aired last night. we had a long-ranging conversation, focused on what he believes are going to be the significant, seminole changes in the market in terms of public and private. i asked him something apollo shareholders were also interested in, are you ever going to get added to the s&p? >> it's not a popularity contest, david. if we have the opportunity for our investor base, our investors

would benefit from having additional liquidity in apollo stock. this is a decision in the hands of s&p. >> right. >> i'm told flowers and candy and champagne are unhelpful. we'll go about our business and the s&p will do what they do. >> it can be helpful. we saw dell shares and a couple of others recently added and performed quite well. but that does help, despite the fact that he is one of the bigger critics of the public markets in terms of how they are basically run by, let's call it ten companies that represent 35% of the overall market cap. he would like to still be a part of that s&p 500. >> yeah. it is quite ironic. you've seen these publicly traded private equity and asset managers reconfigure their corporate governance structure to make them more appealing for those indexes in recent years, so -- >> the coming c corps, for example. >> so make them eligible. always witty too, hearing from

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welcome back to "squawk on the street." warren buffet's berkshire hathaway dumping more bank of america shares. berkshire sold more than 22 million shares from tuesday to thursday or nearly $0 million worth. dropping the company's stake to 10.8% of outstanding shares. the latest sales couple days with dividends earned since 2011 have officially covered berkshire's initial investment costs leaving them with a more than $34 billion stake that is

pure profit. can you imagine? $34 billion in profit. >> well done. well done. i mean originally it was during -- wasn't it back to the financial crisis when they got those warrants, enormous amount of warrants as well for doing a deal that only warren buffet could get. >> yes. >> because, of course, you need his endorsement. $34 billion not bad. >> buy low, sell high. the buffet way. financials one of the best performing sectors this week after the fed's rate cut and our next guest says those gains can continue given lower recession risks and higher net interest income. ahead, gerard cassidy, managing director, rbc managing markets, head of global financial research joining us now. you've done research looking at when you have a rate environment couple days with no recession how banks perform how are you looking at this given the overall evolution of the banking system over the last 25 years

really the only historical comparison that we can make? you've got larger banks, more competition with nonbanks, do all the same rules still apply? >> thank you. i would say that many of the rules still apply. more importantly is the fact that banks, obviously, have deposits. that's what sets them apart from anybody else. what we're likely to see as the fed starts to lower interests their funding costs are going to start to decline. when you think about their assets many of the banks have put on billions of dollars of loans in bonds from 2020 and 2021. those assets are going to mature over the next two to three years in a higher rate environment. their funding costs are going to fall faster. that hasn't changed from the comparison period we wrote about which you referenced as 1995. that's the only time period that the fed was cutting rates under greenspan and we didn't have a

recession. banks were up 55% that year. credit is kritsdsc critical for banks and if we don't have a recession and they're cutting rates stocks should do pretty well. >> what do you think is going to happen with loan demand now that we have 50 basis points versus 25. we know the magnitude of these cuts. is that going to accelerate loan demand? do we need to wait to see more deeper cuts? a greater magnitude of easing? >> i think we need a greater amount of cuts for magnitude and the magnitude of easing has to come in. when came into your studios i was talking to your security guard, and he asked what i was going to talk about and i said rate cuts, and he said they have to fall a lot more before i start borrowing. we need to see rates come down at least 100 basis points before people i think borrowers step up. that may start happening in the first half of next year.

historically, our loan growth in this country mirrors nominal gdp growth. if we have nominal gdp growth next year of 4 or 5%, loan growth could come up from 1 to 2% today, possibly 3 to 4%, with a wider margin, revenue growth for the banks could be pretty impressive. >> is there a sense that the recent commentary about trading activity and fees could have been better and if so, do you think it's just a pause here or do you think it gets better in light of what happened this week? >> yeah. good point, carl, and the commentary on trading, particularly, has been not as positive as people would have liked. part of the reason is, the comparison to last year is a tough comparison. so i do think that in a falling rate environment, if we can get the investment banking business, ecm, ipos to come back, that will bring along trading activity as well. trading activity is linked to volatility, so that's the other area that you do need to really lift trading. it was really a comp comparison

that made it difficult for trading. >> finally back to bank of america which we were talking about. they would seem to be a beneficiary of those rates coming down given the large bond portfolio that concerns so many investors during the mini banking crisis of march of '23. warren buffet keeps selling stock. i'm curious to your thoughts about the performance and/ortu ? >> you said it well. they did get penalized during the small banking issue in march of portfolio. but it is odd. obviously, i don't have a call in to warren buffet and i don't know what his thinking is and as leslie pointed out he made an enormous amount of profit in that investment. if we are correct in that we don't go into a recession and the fed continues to gradually lower front-end rates, you get a steeper yield curve, loan growth picks up a bit, that's setting bank of america up very well. they've got -- they have the best deposit franchise, them and jpmorgan, in the country, and

that will really benefit them in our opinion. >> can i ask, how steep do you think the curve can get? >> that would be a positive is all we're asking for. it's been so negative. if we could get 50 basis points by the end of next year, that would be very good. >> wow. >> the contours of this environment are interesting for banks. appreciate you breaking down all the complexities for us. >> you're welcome. thank you. >> still to come next hour on "money movers," fed governor waller with his take on powell's decision to go 50 and what that does mean for potential cuts ahead. after the break a look at what the ultra wealthy really pay in taxes. we got some numbers. stay with us. i can't believe you corporate types are still at it.

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gains from the fed's rate cut with the bitcoin up 5% this week, hitting the highest level since late august, but still 15%. crypto exposed names like coinbase, microstrategy and mining names mixed on the week but bitcoin is outpacing all of the major indices. morgan stanley chairman jamie dimon discussing the fed's rate cut. >> i think it's a -- it's a lot of chatter, a lot more talk. they did it. i think they should have, 50 basis points, hopefully on the way to a soft landing. i wouldn't count my eggs. one thing, hoping it has no effect on the election. >> he agrees with the fed's decision to cut 50 basis points but goes on to say there are still inflationary forces out there, which is something he's been talking about for a long time with regard to geopolitics and the idea that a soft landing

is possible. he hopes for a soft landing. it may be a lot more difficult. >> he's been dubious to a certain extent and his voice has been more of an outlier in terms of warning so many times about the continued threat of a resurgence of inflation. seems somewhat surprising he would have said 50 makes sense to me. >> i do believe we have another sound bite about his exact comments on inflation. let's listen to what he had to say about the state of inflation. >> i hope we have a soft landing. i'm a little more skeptical than other people. i give it lower odds. but i hope it's true. i'm a little more skeptical that inflation will go away so eisley. not because it hasn't come down, it has. it might come down more. it might. because there's a lot of things in the future which is inflationary. i'm not talking about next year. but the deficits are huge. those are inflationary. the green economy is inflationary. the remilitarization of the world is inflationary. the restructure of global trade is inflationary.

demographics is inflationary. i don't see massive offsets to that. we may have gone from a lower rate, lower inflation to a slightly higher rate, higher inflation down the road. whatever it is, we'll deal with it. >> leslie, interesting listening to that, because marc rowan, my chat with him said similar things. we really haven't seen a lot of spending from the chips act, infrastructure, making its way in, not to mention $2 trillion deficits so i would put him more in that dimon camp -- >> lag effects. >> yeah. we have to be careful. we're not quite seeing what they may be seeing. >> another thing banks are paying attention to is the maturity wall that's set to take place. in commercial real estate there's a lot of debt coming due, especially in the fourth quarter of this year, the first quarter of next year. and that's something that the fed's been taking a lot of attention to as well. so, it's this idea that if you're able to refinance that debt at, you know, let's say, 50

basis points lower, then you may have two weeks ago, then those conversations are easier between the lenders and the borrowers and may create less stress on those borrowers and, therefore, less stress on the financial system. there's a lot of different factors that play under the surface. that's something bankers have been paying attention to as well. >> something else we're taking attention to, former president trump, vp harris and their tax agendas. one question we always ask, just how much do the ultrawealthy really pay in taxes? who better to answer that than the man at our desk, robert frank. what do we think, robert? >> vice president harris making the tax rate of the wealthy a pillar of her campaign. >> billionaires and big corporations must pay their fair share in taxes. because here's the thing, here's the thing. it's just not right that those

who can most afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters. >> in fact, according to a new analysis from the nonpartisan joint committee on taxation, the highest earners pay the highest tax rate. in fact, the top 1% pay an average federal rate, that's all in federal taxes, more than 16%. that compares with a rate of 5% for the bottom 90% of americans. half of americans pay a negative rate of 2%. that means they actually get money back from the federal government. the very highest earners pay even more. the top 0.01% make an average of $13 million a year and pay a federal rate of 30%. that is six times the rate paid by the bottom 90% of americans. yeah, the wealthy have a higher share of income. in 2021 the top paid 40% of federal income tax.

the tax code is progressive, at least 40% of americans paid no federal income tax. for more on what the wealthy really pay, you can head to cnbc.com/insidewealth for my latest newsletter. >> robert, who are these 99% level that are only 16.4%? >> well, that's because they make a lot of their income from capital gains. and pass-throughs. the other interesting thing about this report is it breaks down where the top make their income. the number one source of income for the very wealthy is pass-throughs. it's not wage income. the second is capital gains. capital gains rate, 23.8%. pass-throughs get the 20% deduction. it's less. what was surprising to me was that it was for the top 0.01%, it was 30%. and i would think almost all of their income is capital gains. but it was much higher than i expected. >> go ahead. >> no, you. >> "the times" has a piece up

just now saying two of her top policy lieutenants, tony west and some others, meeting with financial executives in manhattan these last couple of days. as "the times" says, a sign that her camp intends to have a more open dialogue with wall street. >> the big question there on taxes is what she does with that unrealized gains tax. david, i know you talked to donors as well. a lot of pushback from donors, especially from silicon valley and wall street, if you're a startup and pay taxes on the unrealized appreciation of your company, that could be very costly. i guess -- i bet that's going to come up in tseho meetings. >> we'll try to find out more. robert, always appreciate it. thank you. our live market coverage continues right after this. wall street forecasts over $100 billion in sales for weight loss drugs known as glp-1. even with disliked and inconvenient injections. dehydratech processing of a glp-1 drug demonstrated improved blood sugar reduction and reduced side effects. study results are arriving monthly.

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coverage options. and, if you're eligible, help you enroll over the phone. it's that easy! call today and we'll also send this free guide. humana. a more human way to healthcare. good friday morning. welcome to "money movers." i'm qcarl quintanilla with lesle picker. today fed governor waller on the rate cut and the path forward for the fed. he'll join us exclusively this hour. the impact