>> it certainly is. in the meantime, let's look at the futures before we hand things over to "squawk on the street." things are in the red, just barely. s&p is basically flat. dow is down by 12 points, the nasdaq off by about 22. that does it for us today. make sure you join us tomorrow when -- are we 40 days to the election? >> 41. >> almost. we'll see ryou then. right now, it's time for "squawk on the street." ♪ good wednesday morning, and welcome to "squawk on the street," i'm david faber with sara eisen and mike santoli, live from post nine at the new york stock exchange. carl is on assignment, jim has the morning off. let's give you a look at futures. we get started with trading on what we like to call hump day. you can see we're slightly lower open, perhaps, when we get started but we'll see what happens in the next half hour. speaking of which, let's get to our road map. it does begin with records, both the s&p and the dow are coming off closing highs, but of

course, does the rally have room to run? plus, apple shares under pressure ahead of the open amidst potential new signs of weak iphone 16 demand. and we're also watching auto stocks, moving lower, one widely watched analyst downgrading gm and ford due to china capacity concerns. let's start with the markets after another record-setting day. sara mentioned china capacity. china has had an impact, yesterday, overall, to a certain extent, it would seem. we did get a 30-basis-point cut as well from the chinese. >> another one. >> although, that market, not necessarily responding as positively as it did. i don't know where you want to go this morning as you paint a road map for the market. >> it was interesting. little bit of a jolt to the global growth story. they kind of executed the typical playbook, copper goes up, base maeetals go up, but i also do think that it is a little bit of a boost to this story in the u.s. of trying to figure out in the weeks since the fed decision what exactly

we're to make of the macro set-up right here because i think there was some sensitivity to that consumer confidence number yesterday. you see the labor market indicators within it eroding a little bit more. you had the implied chances of another 50-basis-point fed rate cut in november, and everyone's saying, maybe it's early cycle in china, even if it's late cycle here. net-net, we're holding on to the post-fed gains. the s&p 500 traded yesterday at the close at the high from thursday of last week, right after that post-fed reaction rally and now i think it's a matter of constantly testing for the fact that, soft landing or not, i mean, honestly, it's almost the entire game in the near term, in terms of those indicators we did get to a 20% year to date gain in the s&p 500 as of yesterday's close. it would be two years in a row of 20%-plus. >> china's stimulating. that stock market extending its gains overnight, and actually,

about to go even for the year. so, wiping out some of the losses for the year. china's been a deflationary pull on u.s. goods prices. so, i do wonder, you know, if china's starting to really throw in the big guns when it comes to monetary policy, if that presents a risk for the fed in terms of just how much cutting it can do. as we're all on alert for any potential flare-up in inflation, but there was a move overnight. the dollar versus the china yuan passed seven. that's a stronger chinese currency on a better outlook for chinese growth. now, it's clearly missing the fiscal ingredient, which economists say will -- is key, and there's two big problems with the chinese economy, housing inventory and household spending, and this doesn't necessarily get at either of them, but it does provide a boost to liquidity and potentially short-term growth and i think that's what the market's reacting to. >> yeah, i mean, it seems like we're a little bit past the point where, you know, china being relied upon as the growth engine, china kind of consuming

way more than its share in the way of goods, i do think it seems like more of an offset now to what we're dealing with in terms of deceleration, and maybe just a little bit of a side show, to be honest with you, in terms of the markets there. there have been so many false-start, violent rallies as that market has lost value over time. i do see all the indicators that the outflows have been extreme from the chinese market and maybe what it could be is a little bit of an excuse for a value rotation that's been called upon in the u.s. for a long period of time, because the non-u.s. markets are trading like u.s. value stocks, and vice versa, so we'll see if that does matter. look, i have to say, yesterday, you did get semis decide to support the market again, and so it's kind of like, you know, the market is deciding on a given day what it's going to rely upon to stay supportive. >> the semis -- i think the sox was up, you had a good day for nvidia. i believe you're getting micron results after the close.

how do you read that, mike, in terms of one day we care, and the next day, we kind of don't? i mean, again, for the part of the market that, for much of the year, was the driving force. >> sure, sure. i mostly read it as -- and this sounds really deterministic, but the market has kind of decided that we're comfortable with these levels. you don't have aggressive selling at s&p 57 and change just yet, and so, on a given day, if the macro cooperates, if we have to rely on the handful of semi stocks that look like their relatively oversold, you have this headline, not even a headline, just that jensen huang is maybe going to slow his sell plan or stop i want for now. that shouldn't really matter. it wasn't a huge swing factor in terms of the value of the stock on offer for nvidia, but nonetheless, it was a pretty good excuse for that to work. i think it's much more about, on a given day, it's either banks and small caps working, or it's

the magnificent seven. banks and small caps rworking really relies on soft landing and fed cutting rates. the rest of it just relies on the mood about the long-term secular growth story. >> the other thing that's happening that people are paying close attention to is the steepening of the yield curve. that has continued. we saw it for a fifth day in a row. we saw the curve go above 20 basis points for the first time since june 2022. you can attribute the move we're seeing lower in the two-year yield to that, but mike, it's important, people are watching it, it has implications for stocks, and also generally for a shot clock on recession, even though this time may be different on that front. >> look, i think that the fact that the ten-year yield has been steadily higher since the fed cut rates, one, it totally fits with history. after the first rate cut, usually the bond market anticipates it, and then you get a little bit of a move higher in yields. two, i don't think we should be wishing for much lower long-term treasury yields right now,

because that would probably suggest that the fed, still behind, and we still have recession risk rising. the ten-year yield was at 4%, a little bit higher, the day before that august 2nd jobs report that got the growth scare going. so, you were at 4% there. you went all the way down to the 3.6% area, and now you're just sort of lifting gently to 3.75%. i don't think it's at scary levels. the resteepening of the yield curve, it guess it means the fed is going to get moving on the short end. >> and the outlook improves in the long run. >> i think you can live with it for now, but it's definitely been a pretty clear message. >> or just the deficits are getting so large and the spending picture is not great. we're going to hear more on vice president kamala harris' economic policy today, but there's been a lot of scrutiny on both sides about what type of -- >> nobody seems to be talking a great deal about deficit reduction in a significant way. certainly, trump is not. kind of cutting taxes -- you

want a tax cut, you get a tax cut, everybody gets a tax cut in some fashion or other, but to your point -- although, a lower rate should maybe have some sort of impact over time in terms of interest costs or no? >> sure. >> yes. >> for sure, and now that interest costs are above a trillion dollars, bigger than the can defense budget -- >> everybody who was criticizing the treasury for leaning on treasury bill influence to fund the deficit, that's where you're going to get the best benefit. >> it's hard to see a big move for the bond market, i think, maybe until next week because jobs has taken center stage again as far as what the fed is watching most. we'll get a pce number on inflation on friday and that's the fed's preferred gauge, although the market is feeling pretty good about the inflation story as far as inflation coming down. it's gotten a lot of evidence, and so has the fed. fed's feeling pretty good about that story as well. >> let's talk autos a bit here. morgan stanley downgraded a number of companies in that sector this morning, including general motors.

it goes equal weight to underweight. ford, also now an equal weight, had been an overweight. this is analyst adam jonas, and he's citing what he calls a china butterfly effect when it comes to capacity. quick note apart from his note this morning, "credit losses and delinquencies continue to trentd upward. china's two-decade-long growth engine has not stalled. it has reversed in terms of profits flipping to losses and china producing nearly nine more more units than it buys, upsetting the competitive balance in the west, cutting estimates on china price/mix and lost share." this is a story, of course, and has been for some time. it's sort of the fungibility -- yeah, they're overproducing and not selling here, but it doesn't mean they're not selling in other markets where our automakers compete, and therefore, could suffer market -- >> and he argues, happening at a time when u.s. affordability of new cars is at a relative low.

the average selling prices have gone up. and therefore, it's not as if they're equipped to compete that well for volumes right now. did say to buy the dealer stocks. >> yes, i noticed that as well. >> the idea that there's a little more flexibility as rates come down and maybe get volumes moving or at least there's going to be enough working through the -- he also is, you know, been a big advocate for a while of the legacy automakers, they should just curtail their capex in terms of evs and everything else and they've done that, maybe he thought not to the degree they ought to and not as aggressive in terms of reducing their capital plans and maybe getting some partnerships and m&a going, so you know, i feel like it's almost the flipside of his general net bullishness towards tesla, feeling as if they have this prime spot, they have this optionality in terms of new technologies and everyone else is fighting over the volumes for what's left, and a global oversupply situation. >> obviously, mr. farley at ford is very much focused on and has been for quite some time the

chinese ev makers as they move more boldly into that market at ford as well in terms of being able to be competitive. i mean, it's not easy when you're paying your workers, obviously, multiples of what the typical chinese on the line is making. >> sure. and you know, meanwhile, they trade at five and six times earnings and they have forever, ford and gm, so it's like, you're kind of just essentially saying, there's no way out any time soon for them to, you know, have some kind of sustainable profitability that the market's going to pay up for at this point. >> there's some macro stuff in here too, on how cyclical the auto industry is. jonas looks at after rate cuts, usually autos outperform for six months and then six months after that, they're weaker. he's looking at some of the signals for the german automakers lately, bmw and porsche, all cautious on auto demand. >> i do wonder about tesla as well. i mean, and what musk really is -- how he thinks about his auto business. i mean, he's made it clear in

the last few conference calls, don't own my stock if you care about autos. you got to be a full believer in robo taxis and optimus, my actual robot. >> earnings this year and next year for tesla are half of what they were supposed to be a year ago. that's the auto business right there. >> do they ever introduce an actual new car? >> they're saying next year, lower-cost version. >> can he compete with the chinese, though? can they really compete? >> i don't know. >> they can in the u.s., because they're not sold here. >> maybe. when we come back, a closer look at the company dethroning nvidia as this year's top-performing stock on the s&p 500. everything you need to know about vistra. taking a closer lookat futures here as we head into the opening bell. looks like we're giving some back. i think 41 record-high closes so far in 2024. dow futures down two. we've recovered a little bit here throughout the session. "squawk on the street" will be right back.

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what an incredible run for vistra energy. this is the electricity and power generation company leaf frogging nvidia to become the year's top-performing stock on the s&p 500. pippa stevens is here with a closer look at vistra. yes know a lot about nvidia, not as much about vistra. >> and vistra is now surpassing nvidia as the best s&p stock this year as investors look for ways to play the a.i. trade beyond just the chips. vistra is the largest owner of restructured generation capacity in the country, meaning it directly benefits from growing power demand and higher prices. vistra also owns the second largest competitive nuclear fleet in the u.s., which is why the stock rallied on the back of constellation's announcement that it's restarting three mile island to power microsoft's datacenters. there's clearly speculation here that vistra could ink a similar agreement. the company also has a sizable gas generation portfolio and operates in ercot and pjm,

regions that are seeing power demand growth but with the stock nearly tripling this year, perhaps it has gotten a little bit ahead of itself now. >> that is exactly where we should sort of continue the conversation here. we do have -- stay with us, actually, for more. we're going to bring in steve fleischmann, wolf research utilities analyst. he has an outperform rating at $112 price target on the stock. pippa laid out that the regional benefits, the asset mix, the degree of regulated or not regulated businesses that vistra enjoys, and the question now is, has it been completely mechanized by the market? what do you say? >> so, we think it has not been fully recognized by the market. the data point last week was pretty profound from constellation's deal. the price of their selling power to microsoft is about $110 a megawatt hour, whereas the current market prices are only about 55 to $60, so if you were

to reprice vistra's whole nuclear fleet at a similar level, there's a really substantial amount of additional upside and we're trying to figure out exactly how we want to bake that in because it's -- you know, every $10 is worth about $17 a share for vistra on their nuclear fleet, so the question is, how much of that $10 might happen or not? but it's a -- it's very levered to getting a deal like this or deals. >> yeah, i mean, i guess longer term, the question might be, first of all, how many of those types of deals are going to be available as the, you know, the industry tries to clamor for dedicated generation assets to fuel the a.i. boom? and also, i mean, longer term, is it going to -- is it really going to be that the profitability flow is going to end up on the bottom lines of these utilities for this a.i. boom? is there room enough for those types of returns for the power generation piece? >> yeah, so, you know, that

remains to be seen. but every deal aside from benefitting the company who signs it, it also tightens up the market, because that capacity is not available, you know, either supply gets reduced if it's on-site of a power generator, or it just -- incremental demand, so the supply-demand tightening for the broader market happens, whoever signs the next deal, and so, you know, we're pretty confident that there's an upward bias to the pricing environment, and off thealen to lon deal and this most recent microsoft deal, suggests pricing, particularly for nuclear. part of the question is, how much will that also come for gas assets? but for nuclear, there clearly seems to be a willingness to pay a lot more than what the current

power price environment would suggest. >> but steven, one key difference here is that with three mile island, that was additive to the grid. with all these datacenters now coming online, is there any chance that we could see local or regulatory opposition to datacenter agreements with nuclear providers directly, given that would be taking power away from the grid as a whole? >> yeah, that's a great point. that's a key debate in the sector right now. and i think there is some pushback on that. on the other hand, the time to power aspect that the hyperscalers are interested in is just very hard to find scale locations for some of the size of datacenters they want. nuclear plants are really good locations for that. so -- and then we will likely also see up rates of nuclear to help in terms of the issue of

providing additional power, but that is a fair point and that's part of the question of, do you think these are worth $10 more per megawatt hour? are they worth $60 more like the constellation deal? we think they're worth definitely more. it's just a matter of how much. >> aside from vistra, steve, are there other names that seem like they're in a good position to exploit all this? >> you know, that's one of the interesting things. there's only really three companies that are meaningfully long -- net long power generation in the entire stock market. it's really just vistra, constellation, and talon, and so part of the reason the stocks are doing so well, besides some of these fundamentals, is there's just a scarcity of value to stocks at play. most assets are private. so, i think you continue to see, i think, money coming in just from a scarcity standpoint. there's a few others, like public service, enterprise group, and potentially nrg that

could be long power, but it's really these three that are net long power and have a lot of nuclear exposure. >> got it. we're familiar with the scarcity of a.i. plays, which helps explain nvidia too. steve, thanks very much. pippa, thank you. great time to be a utilities analyst. who knew? still to come, fanduel parent flutter entertainment is getting a lift after outlining its long-term growth strategy. also, perhaps more importantly to the stock, offering a share buyback program. we'll have the company ceo on in the next hour of "squawk on the street." we'll be right back. you'll find them in cities, towns and suburbs all across america.

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we get started with trading in less than five minutes. you can take a look at at least the laggards heading into the open trade. pdd yesterday, a very strong day on the back of the stimulus the chinese added to the economy, a bit of a give-up so far, it would seem, at least when we get started in the early going. obviously, that stock's been trading in china. amgen, fastenal, nxp rounding out the laggards. catch us any time, anywhere, don't forget, follow the "squawk

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google filing an antitrust complaint with eu regulators against microsoft, accusing the company of using unfair licensing contracts in its azure cloud computing business to stifle competition. no shortage of either companies and/or regulators accusing companies of stifling competition these days. >> it's really true, and it also strikes me that all of the charges -- so, we talk about this one or, you know, visa. >> visa from yesterday. >> or s.a.p. >> yes, s.a.p. >> it's almost as if you could take all the bullish analyst notes and start with the premise for why this is a great business, switching costs are really hard once they got you, you're in, their network effects are really powerful. they have, you know, in some cases a tacitly legal duopoly. all that stuff is why these companies have such great valuations and are loved by investors.

obviously, doesn't mean they're doing anything illegal or wrong, but there are these moats and they are the toll-takers to cross those moats and they have to go out and say, actually, we have a ton of competition and we're a vulnerable business. >> i think this one is funny in particular because the eu has been targeting google for so long, itself, on antitrust, and in fact, google just won a challenge against the eu for nearly $2 billion fine. google's flipping the script here, complaining about microsoft. whatever we know about this, it's going to take years. that's what we know about eu antitrust. >> you just heard the opening bell. here at the big board, president of the european commission, ursula von der leyen. over at the nasdaq, bicara therapeutics, focused on treating tumors. it's celebrating a recent ipo. >> sara, to your point about google being the one to be the accuser in this, this is the one business where google is kind of the underdog, right? they don't have dominant share

in cloud. >> cloud computing. >> it's like microsoft's the big bully here, as opposed to alphabet. i do think it's interesting, too, recently, we had this meta event going on later. meta has been the one magnificent seven stock that just keeps racing to new highs, rebuilding its valuation. its premium, versus alphabet right now, is pretty much at a recent record. it's like a five pe point premium meta has relative to alphabet and that's alongside all the regulatory pressure that google has been under and all the rest of it, but it is interesting that people all of a sudden feel like meta's the safe one, meta's the one that's free of a lot of the regulatory stuff and has that leverage to the ad demand that's still been pretty strong. >> since you brought meta up, they have their meta connect beginning today. i think it's a two-day event. keynote today, 1:00 p.m. from mark zuckerberg, of course. a.i. use cases, a.i. agents, meta a.i. adoption, ar, vr

innovations perhaps also going to be discussed. the smart glasses, the ray-bans as well. any number of other -- we'll see. other potential tools. maybe we get something on capex, you never know. >> yeah. >> i'm looking at the best-perform best-pe best-performing stock right now besides vista. it's hpe, which we don't always talk about, but we do talk to the ceo because it got an upgrade from barclay's today, clearly making the rounds, tick taking it up because they think it's a great way to play a.i. servers and barclay's analysts expect the server revenues to improve in storage and it's one of the best ways to improve in this emerging trend. dell has been a big beneficiary of this. >> there's questions about the margins there, and then, i think, getting access to the chips and who's actually putting the servers together in the datacenters and where is the chip demand coming from? i've been trying to figure all

that out because you constantly hear, well, amazon's ordering the chips and tesla and microsoft and alphabet, and meta, and yet, hp and dell are also ordering the chips, but yes and no. >> who's just packaging them and reselling them? >> storage. >> exactly. >> installing them. >> it's sort of the nvidia chips, where is the order coming from? >> it is very true, but that is the game right now. it's kind of like, you know, what companies that are not yet given a crazy a.i. multiple still have some upside to it? and meta, i do think, is one of those situations today with their event. well, apple's wwd, you know, d.c., all of a sudden, it gets the stock going just because they said, yeah, eventually, we're going to have a.i. capacity. >> and alphabet had one yesterday with thomas curry in terms of gemini and all the things you can do. of course, people come back to the fact that meta trades at 22 times, something like that. >> probably 24. it's gotten up there. >> has it gotten up there?

>> 23, 24. i mean, alphabet's, like, 19.5 or something. >> sticking with a.i., did you see this hollywood squaring off against silicon valley over california's first-of-its-kind a.i. safety bill. more than 125 hollywood actors, directors, producers, adding their names to a letter urging the governor to sign the bill, which would implement safeguards on the technology, saying the industry needs to be realistic about the risk. so, james cameron, the filmmaker, joined "closing bell: overtime" yesterday to talk about the role of a.i. in hollywood. here's what he said. >> can we make our output, you know, faster and cheaper by incorporating a lot of these new generative a.i. tools? absolutely. absolutely. we just don't quite know how to do it yet, which is why i sit at that tectonic interface between the cg world that i have lived in for the last three and a half decades and the new generative a.i. world, which promises wonders, but as of right now,

you can't make a movie with gen a.i. it's not iterable enough. it condenses images out of vast data sets, which seems magical until you get under the hood and look at the algorithms and the models required. >> interesting. really interesting. >> but also interesting that now hollywood is joining this fight, just showing how polarizing it is. trying to get this a.i. bill signed into law in california, sag-aftra, the prominent union, definitely on board will help. >> the idea behind that is there will be a time when it will be a reasonable facsimile and even though a.i. is just building off stuff that's already out there in the world and it's going to look a little bit less fake as cameron is saying. if you talk about the way they arbitrate who gets writing credit for a film. if four writers touched it, there's a whole process for you

get this percentage of credit and you get a story by, not a screenwriting credit. the whole system is built -- excuse me, sara. >> throw your pen at me. >> this time, it was unintentional. the whole system is built on, like, which particular people had this idea and executed it, who deserves credit for it as opposed to, oh, this is pretty good, and let's put it out into the world. >> at some point, it's just going to be, who did the prompt for this movie? >> exactly. >> i wrote the prompt, and then -- >> that's why you see they're threatened and backing this bill. >> of course. but it would seem hard to imagine that they're going to be able to withstand this threat. i mean, he has been at the forefront of the technology, obviously, when you go back and see what he had been able to do with computer-generated, as he said, for the last three decades, so that was interesting to hear. >> at some point in hollywood, there are people who painted the set backdrops, and you know, they were disintermediated by cgi and electronics and whatever else.

you can make your peace with it, but it's pretty interesting. it's where it's going to come from. >> it is coming, baby. of course -- but you do hear, when you look under the hood, as cameron said, it's not quite ready for certain applications. but it doesn't mean that a year, two years, or certainly a number of years from now, that will be very -- a very, very different for the use cases. >> that's why utilities are at the top of the market again today. >> who would have thought this year? >> constellation and vistra. >> that utility analyst we had on, he's a celebrity right now. getting calls from accounts you'd never have anticipated, because i know plenty of hedge funds who are thinking this trade has been the best trade of the year. >> not since enron. >> have utilities been so hot. >> nuclear capacity, what do i need to understand about this? who's going to sign up the next nuclear-generating contract? mike, you mentioned s.a.p. we should go back to it. it's down a bit, not as much, perhaps, as had been initially seen. bloomberg reporting they are among companies being investigated by the u.s. for

potentially conspiring to overcharge government agencies. that's s.a.p., of course, that we're talking about, as you take a look at the gainers there, and they include the likes of constellation and vistra. there's s.a.p., down about 2.5%. >> service now also down about 3%, i think, on the news. >> as well. and there's no shortage -- you know, yesterday, after the show, of course, we got the news in terms of the doj and visa, but it's worth coming back to. some of this coming, arising out of their investigation of that -- when they did not allow visa to buy plaid. that's a while back. >> sure. >> but apparently, they took a deep dive into the debit card business at the doj, and said, wait a second, what's the percentage that you guys have of this? what are the fees that you're actually getting paid? and obviously, they are quite large. i would -- by the way, anybody interested in visa, take a listen to the acquired podcast, great four hours if you want to spend it on how that company came into being and where it is right now.

but they're basically saying, listen, you had 60% market share, and it's even more profitable than your credit card business. >> yeah. >> and visa saying, it's very competitive, and there are new entrants that are thriving. >> we do have their response to the antitrust lawsuit. let me read it for you. "when businesses and consumers choose visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide. we're proud of the payments network we have built, the innovation we advance and the economic opportunity we enable. the lawsuit is meritless, and we will deft ourselves vigorously." as i always say, one of the quietest 500-plus billion dollar market cap companies out there is visa. >> for sure. there is an argument that there are certain businesses that will naturally tend toward concentration, if not monopoly, and arguably, this is one of them, building a network, having all the relationships with every bank, being able to instantly

credential any transaction, all that stuff. you couldn't building it today very easily, and that's why they have pricing power and they take a little more every year and that's been a great story for the stock, one of the higher margin stocks, and s&p was smart. they put visa and mastercard into the financials when it seemed like banks were in trouble, and now the financial sector is very non-bank. >> it also jives with what we've gotten from this justice department when it comes to antitrust and targeting middle men, especially, on fees. i'm thinking of livenation, thinking a little bit of apple and the credit card fees it processes on the app store and some of the other suits we've seen come about. >> using your established leverage to muscle out other side and get pricing power in that way. want to hit kbh. it's down 4%. results seem they were short of most, pretty much on target, but margins, a little bit of pressure, and you know, these stocks have been phenomenal over

the last couple of years, up 150, 250% if you look at dr horton and lennar and kbh and it seems as tif that affordability equation has been tough for them. massive refinancing volumes off that, not yet on the purchase side, and when you had such a tight market with no supply, that was considered to be really bullish for the builders, because obviously, they're creating the supply, but also they can buy down the mortgage rates, and they could, therefore, kind of sidestep some of the macro pressures within the housing market. you wonder if the market loosens up a little bit. you get more supply, more turnover if they don't quite have that advantage. everyone loves them. jeff degraaf over at renaissance macro keeps what's called a buying frenzy indicator and dr horton tripped it yesterday just in terms of the momentum stampeding into these admittedly very strong -- >> i think we have some sound from the conference call where a ceo of kb home describes what they're seeing in the market. have a listen.

>> with a lower rate environment and given that the consumer has been a little more conditioned on the entire rates for the past, you know, couple years or so, we could -- we're expecting to see a pretty strong spring season given the right conditions. >> optimism, clearly, on the lower mortgage rates, and by the way, that refinancing is going strong now. we saw another big jump last week we got this morning, but the lowered housing gross margin outlook, i guess, is what has people a little concerned. that and just the run-up, you said, that these stocks have had. it's similar to reaction to lennar that we got. >> they've been cutting price and trying to keep volumes up, and that's been hitting the margins. >> it is fairly rare that we get the vitriol that has come to the fore between southwest and its large shareholder, elliott, and so, i like to spend time on these things, but bear with me because i got a lot of reading to do here in terms of the various back and forth. yesterday, southwest -- excuse me -- elliott saying, hey, we're

going to call a special meeting, and make sure you take control of your shares if you have them on stock blown, get them back. they keep putting out these false record dates, they say, of southwest, but we're going to go with october 7 th and make sure you own your shares, in your record, in your name by october 7th. and they say a lot of different things as well. let me share that, and then we'll get southwest's response, which came out later yesterday. unfortunately, they say at elliott, "southwest's management and board have chosen a go it alone path with the goal of obstructing a leadership change that's urgently needed." they talk about a poison pill, his hastily recruited directors, and almost half the board is going to resign in november, and gary kelly, one-time ceo, is going to step down as exec chair in may. "let us be clear. whatever difficult decisions

management has decided must be made, they are the product of a failed management team that has delivered years of deteriorating performance and is now taking any action no matter how shortsighted they believe will preserve their own jobs." that's pretty strong language. elliott is running ten directors in that proxy fight, and was not -- was not satisfied by that move that southwest made where almost half the board announced their plans to leave roughly a month, month and a half from now, and then kelly in may. they did respond, southwest did, saying, "southwest made every effort to reach a constructive resolution, including over a dozen phone calls with elliott representatives, several in-person meetings, and an offer for elliott to participate in the company's board refreshment process and understand its views" before even speaking with ceo bob jordan or hearing about the company's plans, "elliott predetermined its position and has remained entrenched in demanding a super majority of the board and ceo change."

>> ugly. >> they want him out. >> yeah. >> it will be very much interesting to see if they do actually get to a vote here and not to some sort of a settlement. it doesn't appear they're close right now. >> if we assume, let's just say, elliott gets its slate in there, what's the move? what, specifically, is, like, the one, two, three strategic, you know, priorities that they're saying this company ought to be pursuing? >> mike, it's a good question. in fact, i've asked elliott to make john pike, who's leading this fight for them at the firm, available. maybe he will join us at some point for an interview. and i can ask him that, because i think those are valid questions, other than, of course, saying, you're out of here. >> new management. >> exactly. >> they also accuse -- southwest accuses him of public ambushes to disrupt investor day. >> who? >> they're accusing elliott of that in this whole thing, just going through the whole three-paragraph statement. >> it's been a while since i've seen elliott -- certainly, they have not engaged in proxy fights very often, and then this level

of public vitriol. interesting and fun >> i want to talk about u.s. steel because we did hear from the ceo yesterday for the first time on the network, talked to us on money movers about this deal, so the current, what's happening right now is that it's in the hands of the u.s. government. cfius. that's the committee that has to decide whether it's okay to go through based on national security. it's headed by the treasury secretary, janet yellen, so we talked -- >> it includes, though, commerce and d.o.d., representatives from many different parts of the u.s. government. >> clearly, investors have been excited about the deal. the union, not so much. they've opposed it. politicians from the state of pennsylvania oppose it. at the national level, biden, harris, and trump all very publicly oppose it. >> the reason the stock is down today is because trump came out yesterday and said, i'm going to stop it. >> i'm going to stop the -- so, wouldn't comment on necessarily

the cfius process, but he did very strongly and through a number of my questions and challenges, defend the merit of the deal. here's what he said. >> we strongly believe the deal closes on its merit, you know? if you think about what it does, it checks all the boxes for all the stakeholders. it's not just great for our stockholders. but it's great for our customers, our employees, the country, and as i just said, even the planet. it checks all those boxes very nicely. >> you know, and he didn't talk about this very much, but he's on the board of lockheed martin as well, so just interesting to note, given there are questions about the national security -- i don't know what they are, because he wouldn't go into necessarily what -- how cfius is thinking about it while this process is ongoing, but japan, very close ally of ours, so it's -- you know, you wonder. >> it has to do with access to steel for military use and things of that nature to a

certain extent. now, the unions and/or their ally in cleveland-cliffs, which was the cover bidder here, will say that the japanese continue to dump and not appropriately penalized for that. >> i asked bert about that. he said that hasn't been going on for a long time. he said, look, the competitor is china. china controls half the market and they've been dumping steel and that's where the capacity is, so why not team up with an ally to fight that? >> also seems to be a belief that ultimately, nippon's intentions, despite that they announced another investment on top of what they were going to do, that they will idle the capacity so they can have the capacity they have in japan be mur productive. that seems to be the concern of the unions. >> and of the competitors. they say, we'll only do it for a certain amount of time. >> it's been punted until after the election, so it's given them some time. >> three months. >> you start the clock again with cfius, which they did.

let's look at the bond market, check out how treasurys are doing this morning. sara, you really should be doing this. you know a lot more about the bond market than i do. >> well, yields are higher, again. that's -- -- >> that, i could have said. that much, i might have been able to share. >> get new home sales, pce on friday, but post-fed, we've seen this slow creep higher in yields, the steepening of the curve as well, something that people paying attention to, reflecting, more cuts coming sooner and potentially more debt in the long run, but also a better economy. we'll be right back.

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caroline ellis has been sentenced in new york federal court to two years in prison and been ordered to forfeit

$11 billion. mackenzie joins us now with more. >> that's right. ellison, who was formerly the ceo of ftx investment arm received a stiffer sentence than the federal probation department recommended. their suggestion of three years of supervised relief wasn't enough of a punishment in the eyes of the judge who said the ftx case is probably the greatest financial fraud perpetrated in the history of the u.s. and because of the that he couldn't agree to a literal get out of jail free card. he previously sentenced sam bankman-fried to 25 years in prison in march. they were charged with the same seven crimes carrying a maximum sentence of 110 years. while sam bankman-fried maintains his innocence, ellison pled guilty in december of 2022 and has been corporating with authorities to locate assets.

the judge requested she do her sentence at a minimum security facility as close to boston as possible and ordered her to surrender to authorities on or after november 7th. this is the third exexecutive of ftx to get a harsher than expected sentence as the judge looks to deter other bad actors in the space even if they're willing to work with the government after they're caught. two other scheduled to be sentenced later this year, like ellison they pleaded guilty instead of going to trial. >> thanks. coming up we have the ceo of flutter entertainment, those shares are up on the news of the share buyback plan and also a decent long term outlook. keep it here.

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good wednesday morning again welcome to another hour of "squawk on the street" i'm sara eisen with david faber. live at post nine at the new york stock exchange. carl is on assignment. stocks have turned higher here in the early action. the s&p 500 up not a lot but technology is gaining. and that's going to help the overall index. information technology and utilities at the top. the two best performers all yearlong. nvidia is higher, that's helping. it's all the chip names look like they're rallying today. br broadcom. energy is not. financials, consumer discretionary, materials all weaker today. the treasury yields are higher. higher stocks, higher tresh yields that's what we've seen post fed. nothing extreme, still well

below 4% but again higher than pre-fed. the two-year yield has remained lower, that's why we're seeing a steepening of the yield curve 3.45%. here are some movers we're watching. morgan stanley downgrading a number of the auto make ers including general motors, ford, rivian, on china concerns. warren buffett's berkshire hathaway selling more bank of america. and shares of kb home are falling today. the home builder missing estimates, net orders coming in flat due to softening demand in late june and july. also want to mention flutter entertainment because it's soaring. the company kicking off investor day today announcing a $5 billion share buyback plan saying it expects profits to double by 2027.

stocks up almost 9% and the ceo joins us live this hour ahead of that investor meeting. >> sara mentioned kb homes. let's get to new home sales out just moments ago. rick santelli has those for us. rick? >> yes, david our august read. expecting a number around 700,000 better, 716,000 seasonalized units. and from last month revised to 751,000. first time we had back-to-back 700,000 pluses since january -- excuse me, february and march of '22. and that revision takes last month from the best level from may of last year all the way back to february of '22, and if we consider that what sara just said, the yield curve continues to steepen, many of the benefits

that were going to aid the mortgage market aren't happening we're up a dozen basis points since the cut. and to dig deeper into the d dynamics of housing we head to diana olick. >> rick, you're right. the nurms are muddy because we see the comparison month-to-month as the sales came down but number is higher than expected. but this is based on signed contracts. people out shopping for a home in august when mortgage rates were falling. we heard from the home builders than june and july were soft you saw it in kh homes and lanars but they said sales were soft because people were sitting on the sidelines saying i see mortgage rates come down, but what if they come down more, i can do better. that may be why there's softness there, we saw the median price of a new home sold down 4.6%.

builders are doing what they can to get people in the door. 6 is considered balanced between buyer and seller so that's still high. but the builders are offering incentives and trying to get people in the door. but rates have come down this month, not as much as people expected due to the fed rate cut but they are on a downward trajectory at least. >> where are we? like 6% or so, a little above that in the 30 year? >> 6.15 around. >> you also -- i wanted to ask about interesting new data on office leasing. >> that's right. we're doing double duty here at the sales force building in midtown manhattan for the climate and a.i. event. we'll have more on that in money movers but we just got a new report interesting on new york office, it says that since new york passed the energy act five years ago which set a goal of generating 70% of new york state's electricity from renewable energy sources from

2030, firms involved in solar and wind infrastructure have driven record levels of real estate leasing in new york city offices. leasing between 2020 and 2024 up 175% compared to the decade proceeding the climate legislation's passage. the year to date in 2024 up 18% above the five year average. so interesting stuff from climate week. >> diana olick, we look forward to more on that from you in the next hour. consumers in focus when it comes to the overall economy especially after the weaker confidence number. i went through a lot of the research and was diving in. i wanted to see if it was giving us a weaker tell on the consumer, especially ahead of the income and spending numbers we get on friday. here's the chart from high frequency economics. confidence has been persistently

low since the pandemic. you can look at the blue line, that's consumer confidence. it really has not recovered. the orange line is expectations. which have been even lower. so people just have not been feeling good about the future. current condition on the other hand, okay. right. they've been stronger. but they haven't really moved that much. the reason i show this, if you look at the next chart. it hasn't really affected spending. so watch what they do, not what they say. because spending numbers have been pretty robust, especially lately. as you can see on that bar chart about spending. and then they do on the blue, the real spending and services. which has also been quite strong. >> is it inflation that keeps people's confidence low? what is it. >> could be politics, could be inflation, could be the idea that rates are high and therefore they don't think the economy will sustain itself. how long have we been talking about recession.

>> that first chart if you're the harris camp you're looking at that, not feeling great about it. >> people have been doommy and gloomy the last few years despite the economy, wage growth, real wage growth. inflation rates coming down. tight jobs market. >> s&p at new highs. >> stocks at new highs and people have been feeling sour. that's maybe why she and biden don't get great remarks when it comes to the economy. so don't be so down beat on the consumer when you get a weak confidence rating. that's my takeaway. >> they keep spending despite the fact they're not confidence. >> the trend is interesting it was a big drop and that jibes with the fact we're seeing a job market that is softening so no doubt there's risk around the next jobs report. especially if you go through the components on job expectations. but on the spending time i wanted to add a few more data points to the mix we got today.

so adobe puts out the holiday forecast for online spending. looks good. according to the adobe numbers. 240.8 billion is what they expect for this year. that's an 8.4% increase. that's online. so it reflects, one, a shift towards more online spending which we have seen a lot in the last few retail sales reports. but also reflects a consumer that is not gone into recession and not all that soft. and it reports according to adobe some of the discounts we are starting to see. >> this is just a forecast for them. i'm not sure what they're using to get to that forecast. >> data. it's adobe. >> i'm sure it's data but are they doing -- survey? how are they measuring what people are going to spend? >> they look at intentions, spending going in. they look at discounts, for instance and what people have been spending on. that paints a nice picture.

bank of america did an ecommerce survey where they asked a thousand consumers what they're going to do this holiday season, and the upshot of that one is that ecommerce should grow share, the economy and election are driving consumers to value, which we clearly know. and that online grocery is gaining the most traction in terms of where people are spending. but it was another sort of solid read on what consumers are doing. again, not hard data, but interesting to note just given some of the weaker confidence signals. >> holiday spending is already coming into focus. >> master card, michelle myers was on last week, she's also optimistic based on the data they're going to see. i think when companies discount and they think value and they try to match the consumer's perception of value, that should bode well. >> as i mentioned in our conversation, the s&p is coming off the 41st record close of the year. hitting new highs right now.

oppenheimer's chief investment strategist has a target of 5,900. there he is, smiling as always. your latest report was titled what a difference a rate cut makes. john, why and how big a difference? >> well, david great to be on the show. i think the thing that makes it really a big difference is it actually happened. we had 11 rate hikes. we had nine pauses, 20 fomc meetings and a fed funds hike cycle. this is a down payment we see by the fed for wall street and main street. and by down payment, sort of a good faith deposit on the thought that indeed the fed is getting ready to cut rates further as needed and if needed. and i think the market is reflected that over the course of the last week since the announcement of the rate cut. the fact that it's been a bit

muddled. so we see days when defensives do better and those stocks that haven't outperformed and we go back to see the tech lead and the semis heating up and hitting a 41st record high for the year, for the s&p 500. it -- just in this type of -- based on where we've come from, not surprising and based on what you all were just saying, related to the consumer, the consumer has shown remarkable resilience, and so have earnings in terms of corporations based on the second quarter earnings that just ended a few weeks ago. >> so does that make consumer discretionary stocks appealing? it hasn't been that great. the sector is okay but it has tesla in it. but would you want to be exposed to discretionary stocks going into the holiday? >> it's one of our favorite sectors sara and for this year it has underperformed but

performance has improved decidedly over the course of the last few months and i think that's as investors recognize the fact that the consumer has indeed been resilience. it is within consumer discretionary, it's going to be select names so it's not a broad type of rally within consumer discretionary that would all would float but the better retailers, whether it's using -- using the internet for sales, ecommerce, or a combination of bricks and clicks, that seems to be the way to go. we say it's management that you want to look at in terms of the availability for a company to move through transition period, which is never easy and do it successfully. >> but i also mentioned discounts which is one of the reasons adobe is so optimistic on the forecast, they see

discounts in areas like electronics. do you worry about that? >> i think without a doubt that the word dajour is value and we've seen it within the services that the consumers are buying versus goods. but i think it's part and parcel of the process of seeing an increase in competition which gives the consumer room to buy and it's a necessary movement here. in terms of how much margin pressure, i think it depends on the buying power of the particular retailer. but also keep in mind that within consumer discretionary, there's a lot of other businesses, other than retail merchants that provide experiences and things where the margins are likely to be well preserved. >> john, always appreciate it, thank you. >> thank you.

as we head to break, here's our road map for the rest of the hour. one crucial area of the auto market flashing warning signs. and flutter rallying on the buyback news, the company's ceo joins us ahead of the investor meeting. meta shares hovering around all-time highs. the company gearing up for a big bet on hardware. we sakpe to an analyst who said there's more gains coming for this stock. the dow is down 100 points, but the s&p 500 is positive. we'll be right back. and you might be thinking... can ai make it all work? can ai help your people work... without all the workarounds? feel better. make customer service work the way customers expect? that one. make your old tech work with your new tech?

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shares of meta hovering near record highs, the best performing mag 7 stock this year up nearly 6%. they're turning to the connect conference this afternoon as the next potential catalyst for a rally. joining us is josh beck who currently has a buy on meta, $600 price target. has driving the recent momentum in the stock? >> thanks for having me on. if you go back to the last earnings report there was a lot of skittishness on behalf of investors on the guidance and outlook and what the company had to say is that the macro is not really impacting their business, probably more importantly, their use of a.i. for recommendation

models, driving more time spent on the platform is actually helping them drive a greater than expected share of digital ad dollars. so that's really been the primary driver of outperformance here. if you just kind of look recently, over a longer time period, though, we still think that meta is under appreciated with respect to what they can do in a.i. we have a dark horse thesis with respect to meta a.i. for consumers, llama for enterprise and also their meta a.i. for business. we think there's almost 10 billion revenue in each of those that is not really in the stock or the numbers. >> josh, what are they going to do today or what are you focused on in part trying to get some answers to if there are going to be any from today's events and tomorrows? >> you know, zukerberg has been

out there on the interview band wagon and he's excited about the glasses saying it could be one of the largest products of all time. so he'll excited about it. we'll learn more about the viegs today. i think one of the key elements will be including the meta a.i. assistance into the glasses. so they can be a little more intelligent. so they can make sense of what's going on around you. they're one of the few elements of reality labs which is probably costing the business 5, 6, $7 hit to eps that's starting to work. so if this starts to play out, the glasses get traction, and investors start to feel like this could even be, you know, a break even business, it would be very additive to the eps at meta

and would make it look much cheaper than the s&p. >> what would the multiple get down to if they get to break even on the glasses? >> if you look at the multiple right now, the total business is a touch over 20 times earnings for 2026. if you were to strip out these losses from reality labs, it would go down to about 17. the s&p for 2026 is a couple of turns higher than that. so it's one of these areas where if investors can see a little bit of momentum, i think they can pretty quickly get credit for this. so it's a pretty important debate for the stock and if you start to get any glimmers of hope, i think it could help the shares. >> josh, thank you very much. with the bullish call, josh beck. >> i keep wondering why you would by s lore shares i think they make the ray bans.

>> the glasses. have they been moving on this? >> yeah. meta is talking about buying a 5% stake. >> hasn't worked out well. in the past with these connected, the fit bits and the glasses. >> you don't -- >> i don't have them. maybe i need them. do you have them? >> i have ray bans but they're regular p ones. i like wearing ray bans. what would it tell me about you if i click it? >> it would be good we have dueling ray bans. what's got the street worried here today, after this. 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

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shares of apple are down 37 cents. off the lows. multiple firms across wall street calling out wait times for apple's latest iphone. let's get to steve kovac with more on what that's saying about demand. >> these are troubling signs on the iphone 16 demand we're seeing here. ubs and morgan stanley noting that the wait times are shorter

than the iphone 15. ubs calling this, quote, an increasingly concerning wait time gap. and morgan stanley saying 50% chance apple will cut the builds based on the soft demand signals. ubs is focussing on the u.s. and china. you can see in the chart we're showing you here, the gap from a year ago with the iphone 15. there is one caveat here, supply does appear to be better this year thanks to working out some of the covid issues and expanding production in india and we're all waiting for apple intelligence to launch next month with a software update. the most advanced features of siri that you see apple advertise that's not until next year, most likely and waiting for other signals to approve the

lineup. we'll have to wait a few more weeks for that, guys. >> i've been enjoying the longer battery life on the new phone. >> which one did you buy? >> 16. it came in hot pink. >> how was the wait time? >> i got it right away. it took a while to set up and transfer text messages. because i have a lot of them. >> steve there are so many people looking at this, trying to understand it. how accurate are the predictions based on any of the data points you're looking at? >> imperfect. but they have over the last several years, david, looking at the preorder times looking at after the pre-order cycle when it's actually on sale, when you see those windows shrink and you see compared to the year before or the year before that, that is what these analysts are looking at and it's causing concern that maybe demand is not up. we don't know what the supply side looks like. again a lot of the analysts are noting the supply does appear to

be better but that doesn't explain the discrepancy we're seeing year over year so again it's a couple of more weeks before you get something clear. end of next month expecting apple to have the earnings and we should get guidance on how the i iphone 16 is doing. but for now, the bullish analysts are raising red flags here. >> but the apple intelligence could prove importance in terms of bringing the new wave of demand. >> it's a funky cycle, so much is tied to the apple intelligence. if you watch any sporting event the last couple of weeks, nfl, mlb, you see the commercials ands and talking about the advanced series, if you go out and buy a new iphone 16 today you won't get that and probably won't get most of those features for a few more months, sbo next

year. so are people waiting for the a.i. features, upgrading now because they want the camera or the hot pink color like sara. those are all interesting questions that makes this cycle kind of unique from years past. >> that's the point there are millions of people due for a new upgrade because they had old phones. >> the last super cycle was eight years ago. flutter adding to big games on the year announcing ambitious growth targets and a massive buy back plan as well. the ceo is next. don't go anywhere. risk of stroke. symptoms like irregular heartbeat, heart racing, chest pain, shortness of breath, fatigue, or light-headedness, can come and go. but if you have afib, the risk of stroke is always there. if you have one or more symptoms, get checked out. making that appointment can help you get ahead of stroke risk. this is no time to wait. [♪♪]

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welcome back to "squawk on the street." the senate homeland security committee out with an interim report today on the assassination attempt on former president trump in butler, pennsylvania. the bipartisan report says the secret service made a series of foreseeable and preventable

mistakes in the leadup. the responsibilities at the event weren't clearly defined and that after the fact the personnel responsible for the original planning deflected blame. hezbollah launched a missile at tel-aviv earlier today saying it was targeting the headquarters of mossad, israel's intelligence agency. the military said it intercepted the missile and there were no casualties. starbucks's see said he's committed to bargaining in good faith with the union representing workers at about 500 stores in response to a letter, he said he deeply respects the right of the coffee chain's workers to choose to be represented by a union. earlier this year the two sides began talks about collective bargaining agreements and a path to a fair process for union organizing, sara, back to you. >> that was -- that was one of

the challenges he didn't have to deal with at chipotle. thank you. just over an hour into trading and stocks are pushing higher. nothing extreme. we're up less than, i don't know, .1% on the s&p 500, but tech is rallying, 12semiconducts are higher. let's look at the areas of the market that have been up double digits this month in what historically is not great for stocks. >> if you look at the month shaping up so far for the major indices and how they play out in the market narrative. the s&p 500 is up a respectable 1.5% in this seasonably weaker part of the market. the nasdaq 100 trade, qqq is up 2%. and the small caps is up about a third of a percent. but there are areas of strength playing out because of the new flow and momentum catching up to the maybe more beaten up areas

of the market. check out these names on the chinese side of things we know with the stimulus but the k web is up 14% this month a lot coming in the last week or so given the med lines over the past week. jd.com. alibaba. another place to keep a close eye on is the nuclear renaissance trade that people have been playing up. two of the bigger plays that we've seen so far are up this month. even chemical, is up about 16%. so that's that uranium and nuclear trade and miscellaneous areas, silver miners have seen a catch up trade over the course of the last couple of weeks and airlines, some depressed levels in the course of the last couple of months manifesting itself in an 8% gain but cooling a little bit. and cannabis as well, up 13%.

so some areas that have seen some real momentum. some off lower levels, some high er, some playing catch up like silver. back to you guys. >> dom, thank you. meantime, bets is up 2% today. flutter is giving the gaming sector a boost as the company kicks off its investor day today saying it expects profits to double by 2027. contessa brewer joins us on set with flutter's ceo. >> thank you, peter jackson joins me fresh off the plane. investor day today. the big story for me in the release you filed is the $5 billion share buyback at a time when investors are pressuring your competitors to show consistent profitability. you're in growth mode. you're investing in and launching new markets around the

world. why was now the right time to demonstrate that sort of commitment to returning capital to shareholders? >> good morning, contessa. lovely to see you. we have got our investor day this afternoon and i've never been more excited about the business and the prospects we have ahead of it. flutter we own fan dual, the number one business here in the u.s., sports betting and i gaming. we're growing fast and pulling away from our competition. it's not just that. we're number one globally. we have the leading position in a large and fragmented market gloen globally and performing faster than the market there. historically we've invested a lot in our business organically but also been pursuing iing m&a. we're expecting a 25% ebitda margin pafacilitating the big

share buyback. >> part of the reason why the whole group is up is because you issued new estimates for the total addressable market one and a half times greater than your previous estimates for u.s. of $63 billion globally looking at this, you know, more than -- it's almost $400 billion in the regulated markets alone. so that cuts out gray markets. tell us how you get there and how do you take advantage of that greater total addressable market in trying to maintain your market share lead? >> you're right. we are forecasting the aggre addressable market about $300 billion outside of america. we have the best product and the best pricing for fan dual. that's why we're winning and helping us grou grow the market. average player values are increasing and that's helpful in terms of boosting that tam. outside of america we're seeing

countries regulate like brazil and seeing people switch from retail to online and online penetration is growing and that's supporting the $300 billion outside of america. >> if you look at your market cap it's greater than las vegas, greater than mgm, caesars and wynn put together. and so you're making great strides on that front. the interesting thing is that bricks and mortar casinos, the profit margins have been far greater than the sports betting operators but you're talking about even your profit margins increasing. >> we expect with the growth we're seeing in revenue, 14 billion this year to 21 billion by 2027 we should get to an ebitda margin of around 25%. scale helps us but we have the best product, pricing for customers here in america and we're pulling away from our competitors and that's supporting our business. >> can i ask a question about the u.s. as well. there may be some skepticism

when you say you're going to maintain your 80% access. there are those saying how quickly can you move into states you're not in and why maintaining that against analysts say we want to see about your state launch expectations in the presentation, are you going to answer those questions? >> this afternoon we are going to talk about what we expect to see from a state launch perspective. in the next two to three years we anticipate a couple of p percper s -- percentage point increase. for i gaming we're expecting 25%. if you take the existing states we're in today, we'll talk this afternoon about the level of ebitda that business will generate by 2027 and it's around 2.5 billion of ebitda. that's because of the quality of our product, our pricing, fan dual is pulling away from the competition. >> so much attention is being

paid right now to a.i. and the way it's changing businesses. how is it going to change the online sports betting, i gaming world? >> we use machine learning a lot in our business. it's helpful for us from a customer servicing perspective. one thing we'll talk about this afternoon in the investor day is our generosity strategy. and increasingly we're personal liezing that. when you open your app they are specific to you. dave you will have a different set of offers. that's driven by our machine learning capability. which figures out what is the right thing to do for each of our customers. >> what are you seeing in terms of consumer habits as people have now been doing this for a longer time. is it repeat, betting bigger? are they doing things differently than you expected? >> the thing that's really taken off in america is the parlay product. and the narrative around, you know, players and fandom is something that is very important. i was here on monday watching,

you know, the jags game. and, you know, the number of, you know, of our customers betting on parlays, six out of the top ten parlays clicked on a monday night. there was a lot of touchdowns scored. it was a very expensive day for us. but the excitement you get watching a game and tracking what your players are doing is pal palpable. people have leaned into that and we've been delivering a great experience to them. >> you probably know more about american football than an anti anticipated. draft kings told me they were leaning into touchdowns as the primary bet. what are you leaning into? >> we'll show in our investor day this afternoon, we're making big strides from a parlay perspective and ultimately we need to have our customers choose what to pick and the selections we'll make available off the back of our new pricing

algorithm is exciting. we'll show it this afternoon and i can't wait to see what customers makov it. >> i'll be at the capital markets day which is what they call investor day for flutter. peter jackson thank you for spending time with us here at post nine. >> thank you, contessa for bringing us the interview. when we come back, u.s. auto loan defaults surging to 15 year highs. is it a reason to panic about the consumer? we'll discuss this industry and how consumers are faring next.

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you people are (guitar noises). hand over the air guitar. i've got another one. welcome back to "squawk on the street." some street calls on the auto

sector this morning. piper sandler raises the price target on tesla to $310 a share up from 300 saying the third quarter could be the best ever for deliveries in china. meanwhile, morgan stanley's adam jonas downgrades ford, gm and rivian. lowers overall the view they have at morgan stanley of the u.s. autoindustry. he's citing the, quote, china butterfly effect saying they're overproducing way more than they need domestically to consume in terms of evs and that's upsetting the competitive balance mt. west. >> remember when janet yellen went there a few months ago was warning them about. it's a problem because these auto makers have to compete in

europe and everywhere else. >> it's the markets outside the u.s. where it's a fundable product and they're taking larger market share of prices. they're so price competitive, the chinese and more competitive in terms of quality. 's . >> it's interesting it changes the whole view. autoloan defaults surging to 15 year highs. some are calling it a canary in the coal mine when it comes to the consumer. our next guest said take it with a grain of salt. matt misch joins us now. how severe are the delinquenc delinquencies? >> i think certainly you've seen two things that are notable. one we're not talking about sub prime abs delinquencies anymore. we're talking about prime. and about 80 to 85% of all auto loans or financing for an auto purchase essentially are prime. the second thing i would say is

again the levels have been certainly elevated relative to the last call it three to five years. but what we've really seen is an uptick. approaching 2009 levels. having said that we think investors should take this with a grain of salt, particularly in terms of the read for the overall consumer health. there's a few reasons for that. one is net losses are not keeping up at the same rate as the delinquency surge you're seeing. a lot of this we believe is due to something called churning. when consumers miss a payment or two on an auto loan and then start to repay. so there's underlying fragility but ultimately consumers want to keep the car and are basically making payments after missing a few. the second i would say is nonrevolving credit growth remains strong through july. it ticked up a couple of percentage points to about 5% year on year. and resolving credit growth as

well is also fairly stable. and the last point really is that overall, we believe that auto loans account for about 9% of household debt, 4% of bank loans in the u.s. so this is an area where, obviously, you know, crises you crises don't strike twice, so to speak. housing is not going to be the problem. the areas that are of concern are really consumer loans within household credit. and autos is certainly, as well as credit cards, you know, in focus right now. >> and those aren't as bad. is that what you're saying, in terms of ddelinquencies, defaults? >> those are not. mortgage delinquencies are increasing, but still a standard deviation mobelow average. and keep in mind mortgage credit is about 70% of total household debt. from our side, what we did was downgrade our view for high-grade and high-yield auto credit to underweight. but we didn't necessarily change

the overall softish landing that we have on the consumer, because i think it's too early. there's enough data points that suggest that this is not necessarily, as you say, a canary in the coal mine, that investors should seize upon. >> still, it's a risk. and i wonder, matt, if you see it priced into the financials at this point, i remember that ally warning a few weeks ago at the barclays conference of credit challenges, especially tied to autos is in the banks. >> yes, i think from our standpoint, we downgraded the high-yield financial sector to neutral. i think you have to separate banks from the rest of the financial sector, but i do think that there'll some challenges going into third quarter earnings. you know, we've seen that with some other cyclical names like kb home overnight. and so, you know, i do think that if this is a credit cycle, as it normally plays out, where those areas that are more vulnerable start to deteriorate and deteriorate first, certainly

higher beta or lower quality credit or names in the stock market. and those areas that people are looking for more pressure, again, within household debt, we would say, it's not going to be mortgage credit this time, it's really going to be consumer credit. these are areas that you would expect, and i think we will see some pressure as we go through the next few months, particularly given while the fed is cutting, interest rates are still restrictive. >> ubs head of credit strategy, matt mish, thank you very much for that update. my favorite segment of the day so far. at 11:00, we'll talk all about utilities, because they're at all-time highs. power demand surging alongside the ai trade. the ceo of edison international is with us on how the grid is adapting to keep up. that's coming up in the next hour on "money movers." we'll be right back. that makes their clickety- clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy and emma. they need a retirement plan.

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welcome back to "squawk on the street." vice president harris is set to unveil more details on her economic policies today. megan casella joins us now with more on what we may hear later. >> harris has two main goals for her speech today. she'll be explaining her own world economic view, while also setting out a new set of proposals for manufacturing. on the first, a senior campaign

official tells me that harris will be describing herself as pragmatic and realistic on the economy. not bound to any specific ideology. she'll also call herself a capitalist and says she believes that government has to work with the private sector in order to grow the middle class. you can see a clear appeal to business there. and she'll paint herself as the candidate for the middle class and trump as the candidate for billionaires. the second part of this speech will be a new set of proposals focused on building u.s. manufacturing in what the campaign is calling industries of the future. so i'm told there's likely to be a focus on ai here, as well as quantum computing, with the goal really being making sure that those industries are creating american jobs. trump this week has been rolling out his own ideas to boost u.s. manufacturing. he would do that primarily through steep tariffs on all goods not made in the u.s., but also wants to expand r&d tax credits and reduce the corporate tax rate to 15% for companies producing goods here in the u.s. so we're starting to see some differences of approach here, guys. even as both candidates are pretty narrowly focused on manufacturing right now in a bid to win over swing voters in the

rust belt. david? >> megan, thank you. we'll be watching, obviously, later. heard from some of her supporters on "squawk box" earlier, as well, in the financial community. megan casella. taking a quick look at the markets before we finish up this hour of "squawk on the street." certainly, the s&p barely in positive territory, but positive territory nonetheless. i would point out the chips sector led by nvidia continues to perform fairly well. that stock up another 3% powering the nasdaq to a bigger gain than the s&p. our live market coverage continues right after this. (vo) now, every phone can be the new iphone 16 pro at verizon. just trade in any phone in any condition and get the iphone 16 pro, on us. only on verizon. you'll find them in cities, towns and suburbs

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good wednesday morning again. welcome to "money movers." i'm sara eisen with my friend brian sullivan live from the floor of the new york stock exchange. today, setting the table for a renewed tech rally. how china's stimulus measures have reinvested measures both foreign and domestic. >> my one analyst says we have the worst sentiment for oil since covid. and where he sees prices likely heading. >> plus, speaking of energy. the utilities sector hitting a new all-time high this week,