Carl Quintanilla and Mike Santoli explored stocks on track for their best week of 2024, with the S&P 500 and Nasdaq in the midst of six-day win streaks. Fundstrat’s Tom Lee joined the program with his take on whether the rally has legs.
The anchors also discussed what to expect from Vice President Harris’ Friday unveiling of her economic agenda -- and how her plans to reduce the cost of living stack up against those of former President Trump.
Also in focus: July housing starts miss forecasts and fall to their lowest level since May 2020, Chicago Fed President Austan Goolsbee’s comments on recession indicators, Bernstein reiterates its "sell" rating on Tesla, luxury automakers go hybrid to reverse sales declines.
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Linkedin, the place to be to be. Market insight and analysis. You're listening to the opening bell of CNBC. Squawk on the street. Good Friday morning. Welcome to Squawk on the street. I'm Carl Keaton, here with Mike Santoli here at Post 9 of the New York Stock Exchange. Kramer in favor of the morning off. Pre-market just south of flat, global equities wrapping up their best week of the year. S&P now up 8% from last Monday's low, just 2% from some all-time highs. Robab begins with that winning week for Wall Street. Does the rally have more legs? Plus, the weakest housing starts data since May of 2020, as Redfin says the share of million dollar homes just hits an all-time high, and the vice president said to deliver a major economic policy speech today featuring new tax cuts, housing incentives, and price caps. Let's begin, though, with the broader market in the midst of a six-day win streak. Mike, I think it's the best six days going back to 22? Yes. It's been a good streak, obviously makes sense to digest some of that. Really, if you go back to the intraday low of a week ago Monday, S&P up 8% in eight trading days, and it's gained back about more than two-thirds of what was lost high to low. So, what does that tell you? I think it tells you a couple things. One, the extremity of the stress in the very short term, I think, cleared out so much in the way of accumulated exposure to stocks and positioning and risk assets and all the rest of it. You see it in all the hedge fund data, you see it in a lot of the sentiment stuff, and so that creates a little bit of a technical tailwind for that to normalize. One, something doesn't break as a result of that. And then the data have come in, as we've been talking about for a couple of days, that allows investors to rebuild some confidence in the soft landing scenario. So, relief across all those fronts. I think the strength of the comeback says a lot about the buildup of anxiety ahead of it through the numbers about July, softness and consumer, and all of that. So, what does it take to get you back to the highs in a hurry? Probably quite a bit. I mean, it doesn't take a lot in distance, but I still think you have to have a lot of certainty. So, arguably, we're going to have to be surfing from data point to data point, testing against the soft landing scenario. Very bullish, if in fact the Fed can signal it's going to start to ease and normalize policy and become less restrictive in a very deliberate, slow, orderly way. Because that's always to me been the bull case, not that they start to cut and slash rates, because that seems like a little more of a desperation move. So, all of that fits together pretty well. Earnings did their part. I would argue 10% annualized. And, you know, cities saying that the non-MAG 7 stocks up 5% or 4% or something like that in the second quarter, not wonderful, but it's doing some of the lifting. Well, first contribution from the 493 in six quarters. Now, we're starting to get some curtain razors on Jackson Hole. It was BMP Parabah last night saying that Powell's likely to indicate that cuts are imminent. Yes. And set the tale for September. JPM desk today talks about whether or not cuts do anything to interrupt the growth bullish scenario. In other words, do they know something we don't know? Yeah, I don't think we're close to that. Look, if September happens with a cut, it will have been what? For 14 months since they they've they hiked last. That's an extremely long time to be on pause. They've set up the set the stage for this. They've talked about how restrictive policy is at this level inflation by CPI and PCE going below 3%. I mean, there's a massive gap there. There's a massive gap between Fed funds and to yield. In other words, everything builds toward they should be cutting right now, not because the economy weakened appreciably beyond what they were expecting. So, I think that message should be taken OK. I guess the question is, does it have an actual effect aside from a psychological effect? It's much more about the gesture of we're no longer trying to hold the economy back. There's room to cut without it meaning there's something negative for the economy, at least in the short term. That's the win if it goes that way. But there are numbers between now and then. And, you know, ghouls be coming out and it's sort of changing. It's not changing, it's too, but maybe becoming more vociferous about, hey, we got to be careful about downside risk. It seemed like once you got past CPI and that didn't kind of interrupt the narrative about disinflation, it seems like, you know, the runway's clear. And then the word robust being used a lot on retail sales page one of the FT and the journal today. You speak about ghouls be who's been obviously calling for cuts for a while, but did tell NPR specifically about the labor market that when you start to see rises in the unemployment rate, it often worsens quickly. Take a listen. There are some various leading indicators of recession and some of those are giving warning lights, but there's cross currents, credit card delinquencies, rising is a warning. Small business defaults, rising, that's also a warning and rising unemployment rate is a warning. On the other side, you got GDP growth has still been pretty strong and there are pockets of strength throughout the economy. So that's the job. The watchpot may never boil, but the Fed's job is going to sit and watch the pot and to figure out is it boiling or freezing or what's happening. Meantime, we've got Tony P over a Goldman Sachs note today saying that we are in a period where we'll be watching every data point. There's no one path or the other that you're looking to ratify. Keep trying to, you know, reiterate that that soft landing doesn't mean everything's comfortable all the time. It means things look like maybe it's late cycle and maybe we're tipping it to something more worrisome and then you get rescued by a data point and it just sort of moderation is moderation. And you know, if there is some kind of a of a landing, it's not just the Fed landing, it's tightening policy. It's also the economy kind of normalizing back toward trend. So I do think that's kind of where we are. You know, girls be giving voice to this idea that you don't want to be late in moving in this direction. If you kind of go back and say what was the big mistake in 2021, everyone will say the Fed didn't see inflation coming or at least downplayed its initial search. So is the lesson from that that you always want to be mindful of where the turn is ahead of you? Or is it inflation is this uniquely noxious beast that you could never be comfortable about? I think it's probably the former. You want to look for the next turn in the narrative. The market's been very impatient to set the inflation side aside. Almost exactly what Bostik told the FDA yesterday, you really cannot afford to be late. Here to break down the road ahead for stocks as we head into the sometimes tumultuous month of September as funster at Global Advisors co-founder Head of Research Tom Lee joins us here at post nine on a summer Friday, Tom. Thanks for coming in. Great to see you. Was it last week? Was it difficult to keep your bearings in the midst of that crazy price action? Without question because the market had been which sought by data point to data point as you guys were recapping. You know, the job support raised for session fears, big risk off. Then we got inflation this week which was pretty tame and I think markets suddenly went back to thinking about liquidity coming into markets. I think that the data dependence of the markets and the Fed is very tough for investors and I think if you look ahead, I'd say we always know the summer is tough. Summer probably runs through October but I don't think that anything's changed into year end which is should look pretty good. But are you lower conviction now than you were two weeks ago? No, no change in our conviction but it is just recognizing August historically is a tough month for markets. I mean one thing that maybe investors can get being encouraged by is since 1928 the most common month for the summer low is August and the most common week is the first week of August. So I think maybe the worst is behind us but it doesn't mean we're straight up from here. Right and I guess the question is I keep going back to that moment in mid-July when we were at the highs you were just shy of 5700 on the S&P 500 and everything was a go. It was the AI earnings path was kind of unquestioned. In addition to general soft landing expectations you kind of didn't have a lot of painful trade-offs to worry about in terms of policy or growth. Can we get back to something like that? I guess the idea as you say maybe summer lasts through October. Do you expect that we're going to have to continue to reset around these levels? Yeah I think if my best guess would be it's still going to be a struggle but we're climbing the escalator again. You know I think Jackson Hole is going to set a positive tone on balance just because the evidence is growing FOMC members want to be forward looking as you guys are pointing out data dependence is dangerous at turning points and then we get the job support for August which I think should reverse some of things that could be temporary. I mean that's a guess and if it is then recession risk is sort of reduced but now we have real rates are too high and that means investors will be comfortable with cutting. I'm thinking back to some of the notes you wrote after the last jobs number and you looked at Hurricane Beryl and the number of companies in Texas that had no power for two weeks and yeah you do think August will be reassuring on the NFP print. Yes I mean in some ways that weekly claims is telling the story. We had a surge in claims on you know multi multi-month high that have come down since then and so even if someone says there was no effect from the hurricane how do you explain claims really improving so much especially in places like Texas and you know yeah I mean a million homes without power for two weeks how could that not affect the local economy and the jobs market. This rebound that we've gotten from the lows of early last week initially certainly is till yesterday it was back to the first half winners it was a lot of the mega cap growth stocks and and you know the eco-weight S&P really didn't have that much of a pullback and it's closer to its highs but small caps definitely got a flush and yesterday they rally big on that on that retail sales number but it seems like that's still been a complicated attempt at a rotation. That's right you know they always say bottoms are tough and bottoms are a process and small caps are really in the process of a multi what we think is a multi you know multi-year bottom and so conviction is not going to be as strong as things that have been working I think most people's toolkit is to buy the the triple cue you know the NASDAQ or the AI names when they they want to get back in the markets but cutting rates at a time when small caps trade at ten times four PE better earnings growth and then a really a visible path to easing I would say it still makes sense that the risk reward is in small caps and then you know we had a miss on housing starts this morning and so it's it's funny is the parts of the economy you thought you could rely on for a while maybe you're giving way as other other ones maybe start to bottom but what's your thought there in terms of the flow through to the rest of the economy? I think housing auto sales and durable goods are essentially in recession it makes sense because cost of money is so high I mean it's super expensive and hard to afford a home or to buy a car with these rates these are also directly benefiting from fed cuts because adjustable rate mortgages adjust business loans adjust auto loans credit card they they're sensitive to short-lived builders loans too I mean if you have a building that's right cost of money for builders yeah and so I think these really benefit from an easing cycle but a market that believes there's an easing cycle underway what sure how many cuts you think we get this year? I am looking at consensus which is somewhere between four and five. Before the end of the year? Yes. So about a hundred basis points? Yes I think that's right but it depends on where inflation prints the next couple months but I you know our base case is that we're on a glide path towards two percent that's better than consensus so I think four to five still makes sense. And you've been part of your thesis has been that elements of CPI have been falling in your words like a rock yeah I actually saw that phrase repeated in another desk note yesterday so that's that's spreading but are you as assured of that and when you look at things like car insurance or some of the the coincident costs of owning a vehicle as you point out? Yeah I think one of the things that surprises us still is that two things are keeping inflation high on a weighted basis shelter and auto insurance auto insurance adequacy is there now if you look at the results from these auto insurers they don't need to raise rates so I think that's cooling and that'll come in the second half and for housing rent is stabilizing and I think housing is going to cool it just needs to get to three to four percent and then markets will be comfortable that we're back at two but median inflation rate is still one percent that's below that's well I think as Greg Ip said this week rents are inertial takes time for those new new rents to cycle in. Yeah that's right Tom good weekend thanks for God and great seeing you as always seeing it Tom Lee when we come back this morning and today is the day the vice president is set to outline her economic plans for tackling the high cost of living we're going to take a look at how they stack up against those the former president Trump take a look at the pre-market here as we try to get some of the pre-market out of the red although their off the session lows still decisively below the flat line stay with us support for this program is provided by chevron demand for energy is projected to continue rising in the future to help keep up chevron is increasing their us oil and gas production and they're innovating to help do it responsibly across their operations including their Gulf of Mexico facilities which are some of the world's lowest carbon intensity operations helping supply energy that's affordable reliable and ever cleaner that's energy in progress learn more at chevron.com slash meeting demand my dad works in b2b marketing he came by my school for career day and said he was a big row as man then he told everyone how much he loved calculating his return on ad spend my friends to laugh at me to this day not everyone gets b2b but with linkedin you'll be able to reach people who do get a hundred dollar credit on your next ad campaign go to linkedin.com/results to claim your credit that's linkedin.com/results terms and conditions apply linkedin the place to be to be earning your degree online doesn't mean you have to go about it alone a cappella university we're here to support you when you're ready from enrollment counselors who get to know you and your goals to academic coaches who can help you form a plan to stay on track we care about your success and are dedicated to helping you pursue your goals going back to school is a big step but having support at every step of your academic journey can make a big difference imagine your future differently at cappella.edu the vice president is set to outline parts of her economic agenda this afternoon at a rally in north carolina the focus will be on lowering the cost of living making cassella joins us this morning with a look at how the vice president and the former president each plan to tackle high prices hey Megan hey karl good morning so that's right Harris is unveiling what what looks like a four-part economic plan today focused on taxes health care housing and food on taxes she wants to restore and expand the child tax credit to provide up to six thousand dollars for families with kids under one she'd also expand the earned income tax credit and reduce taxes on health insurance premiums also in health care she wants to cap the cost of insulin at thirty five dollars and limit spending on prescription drugs to two thousand dollars for everyone so not just seniors she's also vowing to increase competition in the pharmaceutical industry and to cancel medical debt for millions of people then on housing she would use tax credits to incentivize construction of three million homes in her first term and provide up to twenty five thousand dollars in down payment assistance for first-time buyers she also wants to ban corporate price gouging in the grocery industry so overall guys this is really a left-leaning populist agenda it expands on some of president biden's ideas to spend them even a little more progressive and in some ways it pulls directly from her twenty twenty platform including that six thousand dollar child tax credit so for all the talk of her moving to the center and she's doing that on some issues but she's definitely not doing it on economic issues right now and all of that comes in contrast to trump's proposals to lower costs those include cutting energy costs in half by drilling for more oil extending tax cuts and slashing regulation and neither of these plans guys is what most economists would ideally like to see it's mostly aspirational campaign politics and most of it would have a hard time getting through congress but there is a common thread here and that both parties are offering voters someone to blame for high prices that pulls well for Harris that's corporations and for trump it's the government guys meantime last night Megan we did get this report out of goldman taking a crack at some of the universal tariffs that the former president has been floating their argument is that it's not their base case in large part because they think unlike china tariffs the universal ones have less support because in their words it would have meaningful negative effects on the economy absolutely i think that's been really clear since president trump's first term there's been so much economic analysis on this that the costs are transferred directly to consumers and they drive up prices the politics of trade have really evolved in the past few years that both parties now endorse what they call targeted tariffs and we've seen president Biden imposed some of those but there's not a lot of support as you say for universal tariffs president trump may look for ways to do that in a second term through various uh trade statutes especially depending who he puts on uh u.s trade representative um but you're right that there's not a lot of support for that on capitol hill what are you i was going to say Megan you mentioned that a lot of this of course is sort of political gestures and and messaging uh but it also wondered to what degree uh vice president harris has the ability to say you know based on some of the fiscal measures we've actually ramped up uh factory construction for example in this country and so a lot of the things that the trump administration had had talked about doing have been done you know donald trump talks about uh raising oil production we're at record oil production so it's almost like as a defensive way of of approaching what the alternative message might be definitely i think that's what she wants to lean on and i think we'll hear some of that this afternoon by saying yes some of these are progressive ideas but we're also doing the pro growth agenda and look how strong the economy is in this first term she she doesn't really want to distance herself from president biden's policies because on the whole the economic fundamentals are really quite strong what she does want to do is say to americans i sympathize with you about high prices and that's where we're seeing these ideas come from but you're right that she can lean on what's happened over the past four years say that oil production is up say that growth is high say that we're like we're maybe not likely but we're looking at the moment like we might be headed uh for a soft landing and because of that uh we can move towards some of these more progressive ideals we will see uh how granular uh they get this afternoon make and appreciate that curtain razor making cacella uh joining us with harris's speech today still to come this morning more movers to get to including some chip names going in opposite directions take a look at the pre-market here as we wrap up uh this interesting week of trading in a minute want a website with unmatched power speeding control try bluehose cloud the new web hosting plan from bluehose built for wordpress creators by wordpress experts with 100% uptime incredible load times and 24/7 wordpress priority support your sites will be lightning fast with global reach and with bluehose cloud your sites can handle surges in traffic no matter how big plus you automatically get daily backups in world-class security get started now at bluehose.com my dad works in b2b marketing he came by my school for career day and said he was a big row as man then he told everyone how much he loved calculating his return on ad spend my friends still laughing me to this day not everyone gets b2b but with linkedin you'll be able to reach people who do get a hundred dollar credit on your next ad campaign go to linkedin.com/results to claim your credit that's linkedin.com/results terms and conditions apply linkedin the place to be to be got a couple of different stories in the chip space one is uh Texan uh now getting about 1.6 billion in funding from the chips act the other is amat you'll see it down there down about three and a half percent pre-market revenue in line they guide q4 in line although some discussion about the china mix and sequential declines in china related revenue we'll talk more about it after the bell which is coming up in five and a half minutes by the way quick programming note be sure to watch a special edition of taking stock with santoli that's coming up tonight six p.m. eastern time it's another day in which we're watching some data out of china for example a foreign direct investment down almost 30 percent year on year kind of brings us to est a lottery which gets downgraded today over at b of a in large part because they think their china thesis was wrong exactly that the comeback of that business is not necessarily taking hold as they had thought this been i guess a consistent message out of china you keep expecting the turn hasn't happened and of course that's a lot of you know in this huge drop of the past you know in a year and a half or so has been a real recognition moment for just exactly how dependent uh EL was on those businesses and it is kind of a similar equation as investors look at this stock to what we're seeing with Nike and Starbucks which is always had a premium multiple it was always these great durable brands and they've fallen on some kind of hard time a lot of china dependency in there that was part of the growth story that has faltered in all of those cases we obviously saw what happened with Starbucks Brian nickel goes there the stock pops Nike similar thing so i don't think the the necessarily the fix is going to be the same but it is interesting relative to the market Estee Lauder Nike Starbucks have basically fallen to lifetime low valuations now doesn't mean they're cheap means they're low relative to the market compared to their history i mean you could even put a disney in there uh before this latest pop so it's kind of interesting is the market looks for i think more idiosyncratic situations as opposed to just either we buy the ai profit stream or uh you know we're we're betting on a macro move well that was a theme that came out of the 13 F's yeah we're getting a Berkshire Ulta out of nowhere and then some argue that on the activist front where they're getting more aggressive in names that are non-tech right southwest yeah no i feel like look we've got the market has had a very good multi-year run um are we late cycle in a lot of ways it looks like maybe and it's sort of if you're an investor if you're an activist and your CEO or your stock hasn't really participated or done anything it's kind of a you know now or never or you have to you know the low hanging fruit has been picked you have to shake the tree is the way we think of how activists think about it we'll see a lot of those uh discussions and strategies remain unresolved yeah our southwest has a big one this fall is going to be interesting to see how some of their new model boarding seats boarding private teams change the equation on low factors let's get the opening bell here and the CNDC real time exchange is a big board of digital banking company Q2 and at the NASDAQ it is smoking bear and the New York state of the department of environmental conservation with the message of preventing human cars wildfires by the way we are getting some haze yeah this week in New York because of the i'd smoke from Canada and of course in California talking about the constant alerts that that they're getting as well so see if that has any you know knock on economic effects there as far as levels go 55 30 here um is the 50 day interesting to you i mean how how much interesting that we shot right above it in a relatively quick way i mean doesn't mean it's game over actually the pullback we had back in April you also did get five or six percent down climbed right back above the 50 day and then you had to fight out that battle a little for a little while so it's it's interesting i think the NASDAQ 100 is is just at the 50 day it hasn't really cleared it so it's one of those benchmarks to say okay are we going past an obvious level where you where people might sell or take profits or consider resistance and and not paying attention to it that's probably net bullish if that's the case you have some room to work here though the low intraday was uh just about 5100 on on monday uh the first monday in the month and uh you know so obviously you have a little bit of room here to just chop around interesting tidbit out of the goldman desk today it feels like this fast snapback they argue does make any gross-up post-labor day a little more of a climb right look at what nvidia's done the last couple of weeks totally and they've got earnings coming up on the 28th does that make sense to you given a given sense unpredictable september's conveying it just seems like it's been a very compressed process i think that's what they're getting at where you had this complete flight from risk liquidation moment i right back at the around the yank carry trade-on it was a yank carry trade-on one but it also was every strategy based on continued calm and very low correlations among different assets and all these build-up of of sort of like things are fine type strategies they all got cleared out and then now the market didn't really do a lot of work retesting the lows and then you have to chase nvidia maybe or don't fight it into the into the earnings i do agree with that at the time that's something you were looking for maybe to see a little bit more of yep more of a little of an overshoot to the downside i'm always looking for that i'm always looking for the fatter pitch or looking for that that thing that says um you know you kind of ring the hope out of the out of the short-term tactical community but you know a lot of work was done you know the national association of active investment managers these are market timers short-term trend followers things like that they really cut back from very elevated exposures down to pretty low neutral in a week you know so it just seems like it happened in a hurry what i do find interesting a lot of folks supporting this alex jeff to graph over at renaissance is that bond yields haven't had as much of a move yeah they didn't bounce that much now it could just be look if the fed's going to be cutting the direction of surprise maybe is going to be weakness in the economy not strength um it's just sort of not confirming in a vociferous way uh this move we've seen celebrating the resilience of the economy from retail sales right the other you mentioned the carry trade there are a couple pieces on the tape today looking at a bit of a comeback for that trade given what's happened to the end since august right if you're just looking at the market clues and saying well it looks like people are willing to reload sure i guess that's the case i tend to think it's usually not sort of the same snake that bites you twice in a way you get really fixated on that dynamic and certainly it hasn't gone back to where we thought it was i was looking at the the uh i mean this is real wonky but the the implied correlation index for the cboe basically says how much are stocks moving together as one or how much are they kind of doing their own thing and they were record lows in terms of correlation right before the shock shot higher and then we've receded back toward normal levels normal not extreme lows so you know i think i think we can sit here for a while and be fine uh as we as we await the next sort of macro turn you know you mentioned we were mentioning the china weakness and how it's impacted some bellwether retail names it's also getting we mentioned amat and so did their their china mix and the implied i think uh the well's destiny says it implies sequential decline of the china revenue 24 would be the worst and since we had some of those restrictions announced and the others on a will pressure we got below 76 today yes a lot of that's on as china continues to export deflation pressuring steel pressuring iron ore exactly and you know it's basically gold and every other commodity is going totally different directions gold driven by it's you know obviously its own dynamics yeah amat is you know one of the biggest losers uh near the open up for the uh for the exchange so it's it's in a way a similar story you know in the sense that you know china as the swing factor in terms of you know marginal demand raw goods and all the rest of it i guess we're probably past the point of wishing for that disinflationary wave to help us out you know it seems like that the inflationary dynamics are more tame than they were for a while but you know i think we've kind of done okay without it that's the other piece of it i mean company by company you're struggling but in aggregate uh it feels like we've stopped relying on that right speaking of china uh one company with a lot of exposure is tesla and today uh Bernstein toni saginaki where he iterates his underperform keeps his 120 his argument is they've lost share uh in all categories uh and that loss has been most acute in north america yes uh tony what are you and i'm sure will it again in person that uh the valuation here is getting further removed from the fundamentals right so if you're just doing the what's in front of us you know units times price and profitability you can't really get to where the stock trades and you never have been able to at least not in the last few years um the plan so to speak was always that they were going to seed market share over time because they more or less had a quasi monopoly on battery electric vehicles and everybody else was going to get involved and and so just the fact that they're no longer as dominant i don't know if if that's news but it is stark when you look at the implications for the numbers and the reminder that there hasn't been a real refresh of the model slate very much one that's taken hold the pricing isn't look is uh as great relative to some others you know it's 177 uh the the price around around there in mid june when um shareholders backed the must compensation package and the the collective conclusion there was he's not leaving and we're fine and so you still have to have some kind of assumptions in there trading above 200 bucks for non-car businesses obviously and self-driving and you know what last week was supposed to be the event it didn't happen eight eight forced all that and so you know you're always in that zone with Tesla of how much value do you put on the what if parts of this business down the road right um a little media here there is a double upgrade of fox over it wells they argue that it deserves a premium to wbd uh they're above consensus on 25 and 26 eva dot and then you got pair out yeah this go shop which expires in just a couple days uh and these reports about broffman too yeah i mean i i it's sort of fascinating i you know names from the past who tried to make a play before it is uh you know worth i i guess repeating that of course the deal that's now been agreed upon is not a sale of a whole company right so there is in theory if somebody came out and said we have uh a premium for all shareholders and it's a clean deal and it can be financed i guess you have to listen don't think the market's putting a tremendous probability on top of that um i think the other argument you have to make is if their balance sheets in a little bit better shape after the capital infusions of the you know uh of this deal it's on the table sky dance deal um are we bottoming out in terms of just the general cash flow dynamics for the legacy businesses and and then you just sort of go from there whereas fox i mean more targeted a narrower company not as burdened by a lot of the uh you know this the sort of cord cutting uh specific risk even though they're obviously big and cable and it seems as if it's a cleaner story uh in general you know what's interestingly week today are some of the travel names airbnb uh one of the worst performers expedia um we've heard i mean it's been discussed for a while now the journal piece about travel trends uh budgets softening obviously the companies themselves have issued some cautionary words in the last couple weeks it's hard to separate that from what it's back to school i mean people are i mean summer travel season is ending so is it a con is it about seasonality or is are we seeing it does seem as if there was just too much of a pile up of disney airbnb the hotel change everybody essentially saying there's more slack in demand actually just this morning um rbc lory calvesena uh has a proprietary gas station visits like gas station traffic and if you look at just it accounts for seasonality and we're running below the last three years this time of year slightly and now even though gas prices are lower than let's say last year all right and the argument there is just less domestic road tripping uh it could be a little bit of you know weakening demand because of you know higher mileage cars and electric and all that but i don't think that would change uh that much so the point is there's just been a a little bit of a cooling off it's not you know it's not stark it's not like you know anything close to 2020 or recessionary it's much more just you know we went there we did it and uh and we don't need to do it again right we'll see i mean we we know airfares have been one of the components that have been friendly yes uh to a disinflationary thesis for sure uh we'll see you know it's it's probably worth revisiting walmart to some degree uh TD Cowan great note on how the great they beat on gross margins so so handily it's a it's about a net it's a drop in their net cost per delivery right some 40 percent right and it's really become um kind of an execution story and in incremental like a largeing of their market any commerce and then making that more efficient getting to scale so it sort of complicates walmart as a macro tell a little bit you know it used to be like uh oh to trade down or it's it's value led and some of that is certainly going on but because they have their own things going on and they're kind of enlarging their pie and advertising and all the rest of it it's to me a little bit less of oh you have to worry when walmart starts to outperform this much walmart Costco just owned you know anything in terms of mainline retail uh year-to-date terms of stock performance so people just feel like that's the whole game but because of their um internal bellwether or internal fly wheels advertising all those new silos that even with their size it's hard to move the needle you think as a pure consumer bellwether it gets muddied i think it gets muddied in the sense of on a relative basis if walmart is outperforming by that much compared to the meat you know the targets and everybody else it isn't just about oh no that's a pre-recessionary signal because that used to be the the the textbook you know play yes you'd say oh it's a walmart economy or it's a dollar store economy we have to worry about the rest of it yeah uh we'll see that we we're going to get target in the coming days obviously a lot less reliance on grocery finally uh speaking of names that are getting uh a second look today sisco hsbc goes to buy they argue that the guidance um is actually stronger than it looks because in their words it was politically tactful to issue guidance on a day where you're obviously cutting another uh swath of employees it is plausible i think the general message is this is not a stock where the valuation requires you to have heroic assumptions about growth rates i guess you also have to point out i mean sisco has had times where they've missed their own guide so it's not like they're just completely sandbagging here but you know this is one of these uh yeah eight percent free cash flow yield i mean it's valued like kind of runoff legacy type web 1.0 business like an ebay or something like that right now and so if you think that um the guide's achievable their faster growing segments can start to actually make much more of a difference and be a bigger part of the whole uh you know ai levered type stuff then it's easier to make the bull case at these valuations yeah we'll keep an eye on that uh for the most part most sectors are mildly in the red energy by the most dows down 60 let's get to bobsani this morning morning bob morning carl uh so sort of a mixed open right now uh tech is lagging again but that's sort of been the case for the third quarter uh interestingly real estate and financials particularly banks are leading and that's a very interesting phenomenon here uh we are halfway through the third quarter right now and i just wanted to give you a quick review of what's going on i think it's very interesting that the leadership so far still remains the small caps despite that uh terrible week we had in small caps last week the rustle 2000 up 4.3 percent the s&p 500 equal weight up 3.7 percent and they're outperforming the s&p 500 this is the first six weeks here this is halfway through the third quarter s&p is up one and a half percent the NASDAQ is down 1 percent here so if you look at the leadership groups here um they're interest rate sensitive sectors uh so far real estate is leading utilities are leading uh that makes some sense because we've seen interest rates uh the trending down uh and that's a good sign uh financials are also leading and i mentioned banks as a leadership group here it's good to see them rallying because in a sense they're interest rates sensitive but they're also uh economically sensitive so uh it's good that the financials are in the leadership category as well and then we have some defensive sectors consumer staples and health care perhaps not terribly surprising the laggards are growth and cyclical so tech's been a real laggard uh it's very interesting tech was the big story in the first half of the year but not so much uh in the second half of the year energy is also a little bit down oil is lower this quarter perhaps that's understanding uh and consumer discretionary and communication services are the big laggards down almost 4 percent of communication services and that's because alphabet and disney have been big laggards they're so big that they've been dragging down that particular sector both of those stocks are down about 10 percent uh in the third quarter um so if you look at mega cap tech um with the exception of apple all mega cap tech stocks are essentially uh down a little bit here and video microsoft amazon alphabet as i mentioned down about 11 percent met us down about 6 percent so big cap tech has not been the story the major story uh in the third quarter so so far and it's really remarkable really dealing with two different months july was fantastic and august has been uh horribly choppy right now as far as the earnings which is what i follow very carefully they're holding up very well the third quarter expectations were up almost 6 percent that's a little bit lower than it was a month and a half ago but that's very typical as you finish the first month of the new quarter they lower the numbers a little bit the the third quarter of last year was very very strong so the comparisons are difficult uh so we're up about 6 percent in the third quarter and the rest of the year this is what i was i'm saying they've not dropped the numbers up 12 13 14 percent when you get into the fourth quarter first quarter of next year second quarter of next year up 14 percent those numbers have been very very stable over the last several months so i guess guys what i what i look here is for me as the stocks guy looking at the earnings is there a fundamental reason for the downturn that we saw last week i don't particularly see it i see inflation trending lower i see cuts expected and interest rates i see slowing growth but no recession out there and i see earnings holding up guys uh there's a reason why the market's holding up very well and and most the indicator still point to uh to the economy holding up reasonably well back to you all right Bob thanks for that bopasani this morning as we go to break let's check bonds as well we mentioned uh Goolsbee's comments we got housing starts under our belt really uh on a friday it's about you miss and we'll get that in about 15 minutes at the top of the hour for the time being 10 year just south once again of three nine don't go anywhere proper frank live here in monterey it is the super car summer with both classic and new super cars rolling into monterey we're going to talk to the CEOs of lamborghini and ferrari about why hybrids are now driving the upper end of the super super car market that's coming up right after the break on squawk on the street the 30 billion dollar classic car market has seen sales fall double digits from their peaks in 2021 and 2022 but a number of luxury auto brands are looking to reverse that trend by going hybrid or robert francs in monterey california with details morning robert morning carl good to see well this is the biggest classic car event of the year in the world and right now in the classic car world the hottest segment are 80s and 90s super cars like these two lamborghinis both at around a half a million dollars but when it comes to the new super cars it is all about hybrids right now lamborghini just in a couple of hours expected to launch its latest hybrid so all of its lineup will now be hybrid bugatti recently launching a car they're calling the terbion that has a 16-cylinder combustion engine combined with four electric motors 1800 horsepower 0 to 16 under two seconds that is a four and a half million dollar car already sold out now why are hybrids so popular with the wealthy well they get the benefits of the emotional engine combined with the performance and virtue of the electric motors without a hybrid powertrain in the supercar or hypercar world you cannot achieve the full performance so with a purely combustion engine car you can have an emotional car let's say but you miss the performance aspect and it is an arms race and you need to have basically at least a hybrid powertrain to keep up right now and guys so much talk right now about what's happening with the high end consumer we spoke to both the CEOs of lamborghini bugatti about whether they're seeing any slowdown in orders in traffic at the dealerships even in pre-owned and right now whether you're looking at the used supercar market or new they are seeing absolutely no slowdown with orders stretching out two and three years for many of these cars despite price tags of starting right now four or five hundred thousand dollars guys what do you think it says about the pure play ev's ability to pull in drivers with some kind of emotional pull that's going to be the challenge Ferrari is going to launch its first all electric Ferrari next year and they promise that it will have the emotional connection of a Ferrari which of course they're famous for that roar that sound of the Ferrari engine they say their engine will have a sound but that is the big reason why these supercar makers are sighing a breath of relief right now because the hybrids give them the benefit of lower carbon emissions but really better performance so they're electrifying but they're giving their customers really what they want the question will be does anyone want an all electric supercar remack of course they're the owner of Bugatti they do make an electric supercar that latest one 2,100 horsepower so you might have buyers who love the performance of the ev's they buy it for that reason but they're never going to have that emotional feel of engines like these yeah and Robert you know obviously it's not a cost thing right for people who are buying these cars before the mileage for pure internal combustion is like you know 10 or 12 miles per gallon but I do wonder I mean for the companies they have to probably be thoughtful about their production levels on all these different types of models because they make so few cars in the first place what's their bet on enlarging the market away from gasoline engines well and that's why they're all trying to stay very flexible with production they're trying to say look if we're going to continue producing combustion engines we want to make sure we can still do that we're going to produce hybrid engines and we'll have the flexibility later to produce some ev's but they want to be able to do all three because no one knows especially at the high end what that demand is going to be like so they're going to for now provide and make all three but but the production for all these companies is still fairly limited so they they can have that flexibility pretty interesting watching that high end of the market robert in a great live shot once again that's our robert frank this morning watching the markets here s&p down about five still holding gains for august by about 15 points you've been listening to the opening hour of cnbc squawk on the street all opinions expressed by the squawk on the street participants are solely their opinions and do not reflect the opinions of cnbc nbc universal or their parent company or affiliates and may have been previously disseminated by them on television radio internet or another medium you should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of an opinion such opinions are based upon information squawk on the street participants consider reliable but neither cnbc nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such to view the full squawk on the street disclaimer please visit cnbc.com forward slash squawk on the street disclaimer imagine earning a degree that prepares you with real skills for the real world cappella universities programs teach skills relevant to your career so you can apply what you learn right away learn how cappella can make a difference in your life at cappella.edu [BLANK_AUDIO]
