On the final trading day of what has been a volatile August for stocks, David Faber and Wilfred Frost explored market reaction to the Fed's preferred inflation gauge: PCE held steady in July -- the data comes as investors expect a September Fed rate cut. Wharton Professor Jeremy Siegel joined the market discussion. AI also on the front burner: From Dell and Marvell shares jumping on results and guidance --to Apple and Nvidia reportedly in talks to invest in OpenAI. Also in focus: August's winners and losers, tech and retail movers dominate Friday's earnings parade.
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We're live from Postline at the New York Stock Exchange. Jim and Carl have the morning off. Let's give you a look at futures and get ready to wrap up the week. Wrap up the month of August, kind of wrap up the summer. Sorry to say that. You can see that we are headed for a bit of a higher opener. You're going to Provence next week. Yes, thank you for toting everybody on my travel plans. Wilford, let's get to our roadmap though. My summer's not over but there's maybe. Our roadmap begins with the FES preferred inflation indicator. The PCE increased 0.2% in July. That was as expected. We're going to discuss that with Board Professor Jeremy Siegel will join us in just a moment. Plus Apple and Nvidia reportedly and talks to invest in OpenAI. They would join Microsoft as well as thrive capital in what is a significant funding round. Of course, valuing that company at over 100 billion. Speaking of AI, Chezadell, they are up in the pre-market company seeing its AI server sales soar by some 80%. Let's start with that marker reaction to the PCE's. We head into the final trading session of the month. We'll look like it more or less came in in line so to speak with what the market had anticipated. Absolutely in line. That's why the market reaction is pretty muted. 2.5% year over year. The expectation was 2.5%. The core fractionally better than expectation 2.6% year over year. The forecast was 2.2%. The bottom line of this is quite clearly that inflation is not going to be a factor that stops the Fed cutting at the next meeting in a couple of weeks. A rate cut is coming. It's priced in. You could get a jobs number all to the size of that next week. If it's very weak indeed, maybe 50 basis points, but at least 25 seems priced in and you're not seeing much market reaction from this. As you said last trading day of the week, last trading day of the month as well. The only index that's down for both week and month is the next act. The only index that's up for both week and month is the Dow. The S&P split's up, which kind of tells the story really of the last week and the last month. It'll be interesting to see if there's much further action from here. Just mention a little bit as well on the inflation front in Eurozone. We got the numbers out of there this morning as well. Also in line with expectations. But a bigger deltron improvement there. So 2.2% coming in. That's down from 2.6%. It was in line with expectations. But it's a three year low now, the print that you're seeing Eurozone as a whole. The stock 600 euro hit a fresh intraday high during the session as well. So again speaking to the pitch of that, Germany and Spain had bigger falls than expected. France had a tad hotter number than expected but still at 2.2%. So again what you're seeing there is all of the data that the ECB needs to see to cut. They've of course cut already. They're at 3.5% their rate. Bank of England's already cut. But this theme with the PCE data coming in and what we expect from the Fed is now pretty much developed market club. Apart from Japan which is going the opposite direction as we all know. But it's certainly a very big change of turn to where we were a couple of months ago with all these people cutting. And the one thing I think is really interesting is what happens not so much in the next couple of months because clearly cuts are coming. But by the end of the year we start to see inflation pick up again which some have forecast. And there's two little balancing data points on that coming out of it. So from the European data the services side rose to 4.2% year on year. Last month was 4%. So even though the headline is looking good there's almost certain to cut in a couple of weeks time once again. It's the one factor you've got to look out for and I wonder about the same thing with the Fed. PCE is good. They're going to cut in a couple of weeks time perhaps 50 basis points of the job numbers terrible. Will they get all 400 basis points worth the cut done by the year end? We'll see. We will indeed we should mention elsewhere on the report. We also did have personal income up 0.3%. I think that was a 0.2% estimate and consumer spending up a half a percent that was in line as well. By the way I've always thought Faber Frost and company has a great ring to it. You do you like that huh? Well here we can try it out. We are trying. Can we rename the show today as well? Sure. You go ahead. You do what you want. You are here. We're very thankful for you making the trip. They're going to put me in Carl's seat or Jim's seat but I'm in Jim's seat which I quite like. You are. You can do your best if you want. Yeah well I mean I think it means I have to start a Friday by giving you a bit of grief for not wearing a necktie. Yes I don't wear neckties on Friday as well. I know. Which we've been back when you were here I think I started that. You did start that friend. I know. Which makes me feel really old actually that I'm with Jim's camp on that. I still wear a necktie on Friday. You do yeah. Well I like that about you. So many things. But you shouldn't feel old believe me. Well. You're a young man. Yeah there we go. Anyway it's great to be here. Good fun. So we're going to continue this conversation now and bring in the Wharton School Professor of Finance Jeremy Segal. Jeremy great to see you. Happy to see you. I'm older than both of you and I always wear a necktie. I guess it's the old generation I don't know. Well you're older and wiser and that's why we're looking forward to hearing your perspectives on all this. Bottom line on this PC data. Are we definitely going to see a rate cut and is it almost certainly going to be 25 basis points? Well I think whether it's 25 or more really as you mentioned depends on what we see next Friday. And there's even you know some more reports coming before that September 18. So you know it's definitely going to be a cut. I think it's open between 25 and 50. I think it was really interesting well for you mentioning about what's going on in the euro zones lower. You know they have a different method of computing the housing. And I've been on the Fed for so long saying their housing measure is lagged so much that it keeps on feeding in even though we have rental prices that have stabilized. They don't have that problem in Europe and that's one reason I think it's further down. And when I actually put you know on the ground housing prices and I actually get 2% or even below on year over year inflation. I think the Fed is there and you know I think you know to stay at 5.33. Well they're not going to go down but you know my feeling is is they should move much faster towards what they say is the neutral rate. In that June meeting they say it was 2.8% we're going to get a new read new dot plot in you know in two and a half weeks. It may go up to three but that's still you know over 200 basis points lower than where it is today. Are you saying that Professor Segal because you think in fact the inflation numbers give it the room to do so so they may as well do so. Or is it because the economy is also weakening at a faster pace than than they're perhaps appreciating. Well I am worried I mean you know certainly you know I got worried with the last report and then it looked like those claims were heading way up. I get worried when they go above 240 now they've stabilized down on 230. You know we shouldn't get too excited you know we saw that 3% print. You know but that was April May June where you know just on the verge of September. I was a little disturbed for instance the trade report yesterday didn't get a lot of you know press because it was you know overtaken by everything else. But the Fed they Atlanta Fed and several others are going to come out with the report later today. Believe it or not I think this quarter might have a one handle on GDP. So yeah now that's not recession and I'm not saying recession but it is a slowdown. And I think that you know given that slowdown given that the unemployment rate rose 4.3% that is above the Fed's long term target. Given where we're within one half percent on their own measure of their inflation target. My feeling is they should be closer to what they say is the neutral rate rather than tiptoe down you know well quarter one year in there will get there eventually. Why take that risk you know be bolder they were 75 basis points on the way up for sure they were way too late but and I'm not saying they should panic but you know lower I think is the better. Although Jeremy I mean you got a lot of attention not that long ago when you were on our air talking for an emergency rate cut right everybody's like oh my god what. And you do seem to have backed off a bit from that what was it you were seeing then that you maybe aren't seeing now. Well what I did see was that labor market and the and as I said the claims report going considerably up and I said oh oh I saw the Psalms rule being triggered I saw a number of other rules being triggered. And then I said to myself well you know why is the Fed at 5.3 when they say you know it should be at 2.8 when it's long term. Now I will absolutely admit things calm down the economy looks good but you know let's put it fine even if the GDP is at 2% which is you know let's say the long term target. That doesn't argue to stay at 5.3 when you're that close to target. Some people are saying oh the economy's fine leave it where it is. That's not the logic of the Fed that's not what they say unless they really think the Fed funds rate should be you know 4.5 to 5 so they can tip toe down. I don't hear that from anyone so my feeling is I'm not quite sure why being so close 80 to 100% there on unemployment over 100% there. They are tip toeing down so slowly and get fun. So Professor tell us what this all does for your view on the S&P 500 if we've got 100 basis points priced in by the end of the year we're probably not going to get more than that. With that in mind do we also have to see the economy land softly. If it worsens will rate cuts do enough to prop up the S&P 500 or do you kind of need a bit of both with where we are at the moment. Well as you know the long bond is saying the Fed is going to be more aggressive than a lot of people think and probably even than the dot plot. I mean if you look forward to the June of next year you see quite a number of cuts so in some ways the bond market is sort of doing the Fed's job for them bringing down that mortgage rate which is due to the 10 year. However we should remember that a lot of small firms as well as individuals you know they don't finance at the 10 year if you're not buying a house they finance at the prime rate. And we used to be called the LIBOR rate now it's called the SOFR rate short firms finance at that short term rate that's one reason why small firms have been hurt so much more than the large firms by the rise of interest rates is because they are much more short term oriented that lowering of rate I think would really help those smaller firms and would help the dividend paying firms. I think both I think a lowering of rates aggressively is really needed to turn that scenario around. Yeah so does that mean you want to stay away from sort of the mega cap part of the market so to speak and kind of lean into this broadening theme we talk so often about. Well I mean I would I would I certainly think there's a reason for that and I like those relative valuations. I just don't want the Fed to go down too slow so if the data looks weak and they only go down 25 basis points then I get more worried. Again slow down to maybe 0 to 1% for two or three quarters I mean we've got to be negative for a recession actually even more a little bit than that we had two quarters actually a couple years ago we had negative we didn't call it because the unemployment rate didn't go up. But now we have that unemployment rate I'm not calling a recession I'm just saying the Fed if it goes down too slow is taking a risk that I don't think it has to take. Professor Segal thanks so much for joining us great to see. Absolutely have a good Labor Day guys. YouTube we are by the way expected to open high by about 0.3% on the S&P as things stand in Aztec. By the way David if it opens up 0.7 would put it just in positive territory again for the month. Yeah well components of that that report earnings at least that we're keeping an eye and certainly include the likes of Dell. Marvel as well Dell is up in the pre-market this after a lift until your guidance posted quarterly results that were above consensus server and networking revenue said this earlier up as much as 80% demand growth across AI traditional servers Marvel also raises guidance as well as having a beat at least of what analysts that anticipated due to what it's calling AI demand. That's not by the way is amongst the biggest pre-market gainers on the NASDAQ at this point. I mean Dell is to a certain extent of sort of that second tier of AI bell weather at this point. Wilford and they did have operating income 1.3 billion non-gap operating income 2 billion up 15% 3% year over year and diluted earnings per share of a buck 17 non-gap diluted. And I'll get to that later on Mongo because the differential I like to focus on that sometimes if the non-gap and gap is enormous at some of these companies given stock lease comp. Coming back to Dell though generally you can see being responded to at least in the pre-market of course we get started trading 16 minutes from now positively. Yeah 80% revenue growth in the AI related to server growth so as you're saying for a second derivative part of this boom it's really quite striking the pace of growth there. They weren't yet seeing a rebound in some of their other more traditional hardware the more traditional servers and PCs but were quite optimistic about the PC upgrade cycle to come. We'll see if that materializes it's a sort of promise that never quite materializes. Oh see there's this idea that of course AI related components and or whatever you want to call it in terms of the ability of the PC to sort of respond in ways that it doesn't currently. That people believe will drive an upgrade cycle. The two other little things that stood out for me in this clearly this is a hardware company. It's not like there's a debate in the way that we've been having this week with Nvidia that it's sort of hardware but with such innovation protecting it and software bolted on. But they did guide down the margin and I think you know with such a AI exposed theme they guided it down by 180 basis points. Of course it is a different type of product. If you do want exposure to AI this is a cheap stock. I mean this is nothing compared to what you see for Marvell which had a strong beat as you said high 40s even more expensive than Nvidia for next year's P. The Morgan Stanley note price target 136 for... But there are a lot of businesses that fairly can be fairly low margin business and that's why you may not be here. But there's a lot of businesses that have been able to operate in multiple. Nvidia has got 75% operating margins pretty nice. AI momentum though they do say accelerated in the second quarter and they have seen an increase in the number of enterprise customers buying AI solutions each quarter that a quote from Jeff Clark who runs Dell Technologies. Alright coming up we've got a lot of movers this morning by the way. Also we'll be talking Apple and Nvidia at least some reports have them investing as well in open AI. We've experienced the performance of Lexus Racing the thunderous V8 engine. The black and day glow yellow Lexus RCF GT3 a blur of speed and adrenaline. The sheer force of acceleration. The physics-defying grip of the tires the intensity of every corner the precision of each maneuver. The sound of victory. Visit Lexus.com/motor sports to keep the thrill going. With the Wells Fargo active cash credit card you can earn unlimited 2% cash rewards on purchases you want and purchases you need. That means you earn 2% cash rewards on what you want like season tickets to watch your favorite team and 2% cash rewards on what you need like paying for parking. That's the beauty of the active cash credit card it's ready when you are with unlimited 2% cash rewards. The Wells Fargo active cash credit card that's real life ready terms apply learn more at Wells Fargo dot com slash active cash. 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 dot com slash results to claim your credit that's LinkedIn dot com slash results terms and conditions apply. LinkedIn the place to be to be. A pair of tech titans are in the AI spotlight this morning. The Wall Street Journal is reporting in Apple and Nvidia both in talks to invest in open AI. They of course would join Microsoft and thrive capital as well part of a new fundraising round. It would value the Chachi PT company at about a hundred billion dollars. Of course we had Deirdre with us yesterday well discussing this as well. Such an interesting company given its profit nonprofit arm a lot of sort of questions around it to a certain extent but nobody questions at least Chachi PT. And it's important and if you do get an apple in there or an Nvidia that's just another layer of obviously incredibly important companies that are at least in some way tied. Into the ecosystem in the future of this company. I always find it funny with these private investment rounds exactly what we're saying when it's a hundred billion. We need to know more the details to know exactly what they're talking about. More so than ever with this company as we know with the Microsoft round it's an exposure to their future profits as opposed to a formal stake in the company. But clearly it's on the app Microsoft would be above water based on their investment round one way or another. What I think is really interesting here is whether any other AI developer will be looking at it and see this as a blow because it probably means apple is more committed than ever to using open AI as its provider for all things going forward. That would be very important obviously as we say and give it. Yeah, it's potential prominence to a certain extent in what has become a more crowded field since the introduction of Chachi PT in what late 2022. Exactly I think it's more of a sort of long term punishment. Nvidia has been doing other sorts of investments of this kind and sort of throwing it out there more so it doesn't necessarily mean an exclusivity part of that. But then that brings me to the other point is open in our AIs one of the biggest buyers of Nvidia chips. And there's this sort of love in here of everyone kind of doubling down on the same thing. As we've talked about before it's not like these companies are about to run out of money in any way. So it's not a sort of question mark that it's over leveraged in terms of the demand in this space. But if you were kind of about to buy or if this was a public round inviting other investors to take part. You'd look at it and think well there's quite a lot of insiders in this part of like you give me money I'll be the customer here and then you reinvest in my company. And all that sort of thing. So I just say that with the valuations are kind of hard to sort of go by. When IPO is one day fine but at this point. If it actually does. Well it probably can't. Exactly. I mean given the profit non-profit sort of nature of the very unique organizational structure of the company that remains I think unclear. But to your point a lot of the money that they raise is actually used on compute power that they spend with Microsoft. So that's my point I didn't articulate it well but this was the last private round before it was about IPO and the bankers were about. Oh well it was a hundred billion dollars and now we're going to IPO a hundred and fifty. You'd have to look at it and take that with a massive pinch of salt because if everyone's a customer everyone's a partner they're all investing in each other. So I don't think you can take those valuation multiples in any kind of true sense. Alright we got a lot coming up we'll have a closer look by the way one of this month's top performing sectors whether there is still time to invest in that sector. A lot of earnings to get to as well whether it's Lulu or Ulta or Mongo Autodesk we're going to cover them all when we come back. Experience the performance of Lexus Racing the thunderous V8 engine. The black and day glow yellow Lexus RCF GT3 a blur of speed and adrenaline. The sheer force of acceleration. The physics-defying grip of the tires the intensity of every corner the precision of each maneuver the sound of victory. Visit Lexus.com/motor sports to keep the thrill going. 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. Welcome back been an interesting month of August as we wrap up the trading day get started about a minute from now. Of course we've seen we're going to end potentially the month up on the broader markets with S&P gaining as much as 1% again. We'll see how the session goes today. And yet remember the jobs report we got some time last when we got that jobs report and then suddenly we were talking about the potential for recession. We had Professor Siegel on it can remember that time and he's like whoa we need an instrumenting cut. The market was spooning and then we come back strongly. Those first few days of August certainly didn't end up representing the rest of the month. It is interesting as well to see what has led the bounce back clearly. The likes and video bounce back very very strongly but are still below their lows where it's other sectors that have come back to all time high. So there's been that threat in the bounce back albeit everything is benefited for sure in the latter weeks of the month. There was the opening bell of course you can take a look at the real-time exchange back at our headquarters here at the big board and Juliet celebrating 750 performances on Broadway. Over at the NASDAQ entrepreneur shares that's the first ETF investing in private equity. Kind of interesting. All right not sure where we want to start this morning but we got any number of earnings movers both up and down whether it's lulu up, ulta down, mongo up, del up as well, auto desk. I'll give you a shot here. Intel's at the top of the S&P as it settles down. It's a 5.8% of course there's a story that might spin off some parts, break things up but also just bouncing off the back of some strong peer results as we've been talking about over the last couple of days with Nvidia and Marvell and of course Intel have been slammed off late. Intel is one of the worst performers for the month in one of the year. I mean there's a lot of questions there about just in general sort of the future of the company or at least the near term and by that I mean years to come in terms of which it's trying to work its way into a more profitable so to speak longer term position. There are some stories about hiring bankers. I think that we're reporting here at CNBC and what that might actually mean for the company in terms of any review that it might do. I find this talk of activists and Intel somewhat interesting in the sense that it's not completely clear to me why an activist would get involved. Typically you want to at least have some sort of underlying feeling that there is positive momentum regardless of what you may do and or at least that the prospects for the company are such that yes there are things that can be done to seize on opportunity. Intel's such a long turnaround wealth that it's not clear to me an activist would actually get involved. There is reporting that they are at least thinking about activism defense. It's been a long turnaround for a long time already as well but it's second highest on the S&P at the moment at 4.7%. Top is Autodesk 5% gain which will come to in just a moment. Otherwise there's a lot of beneficiaries to those two key earnings reports that we talked about a little bit earlier. You've got quite a lot of the semi names up there, NXP, Broadcom as well on semi-conductive corporation as well. All of those names up to 3% of course off the back of Marvell's numbers will come to the NASDAQ in just a moment. You've also got HP up there 2.5% Dell's of course not in the S&P 500 so we're not seeing it on this particular list of names. The NASDAQ does lead the charge today with that tech led bounce back of course that we were talking about earlier. The NASDAQ is higher by about a percent just shy. That the Dow's up 0.3% the S&P is up by half a percent. So it does look like it's going to be a positive day to end the week and the month. At the bottom of the pile on the S&P, Ulta Beauty down 5%. I want to get to all of these. Let's actually hit Alta since you mentioned it. We were encouraged by many positive indicators across our business but our second quarter performance did not meet our expectations. That's a quote right at the beginning of the press release, the earnings press release. Driven primarily by a decline in comparable store sales. The CEO going on to say we're clear about the factors that adversely impacted our store performance and we have actions underway to address the trends. You can take a look. About a 5% loss. If you want to go back and take a longer term look as well at Ulta in terms of its performance. Net sales were up 0.9% to 2.6 billion but that's largely new store contribution. Again, same store sales for stores open at least 14 months is typically or often the case down 1.2%. So is that a reflection of the consumer as well as certainly a question and their willingness to sort of spend? On the consumer I do think the story of the week which I know you and Jim discussed yesterday but it's worth just touching on again. It's dollar general and what we heard from the obviously got slammed yesterday it's near the top of the S&P 500 today but a small bounce back in terms of its move yesterday. And again just to reiterate what the CEO said on the earnings call that the majority of their customers quote feel worse off financially than they were six months ago as higher prices, softer employment levels and increased borrowing costs of negatively impacted lower end consumers. What I think is so striking about that is the timeframe. No worse often six months ago in a period of time when inflation readings have been improving and I think it'll be really interesting to see whether it broadens out if it's just dollar general, whether it broadens out into other consumer cohorts and indeed whether they actually benefit or not when rates come down or if this is an inflation factor, we're not going to see, you know, prices fall we might see inflation moderate itself but it'll be really interesting to see if that broadens out from here. But dollar general bouncing a bit today after a big decline. I want to get to Lulu if your old anchor partner and my current one Sarah was here. I'm sure we would have led with it. And the fact that Nike is one of the few declineers on the down? Yeah but Lulu I think being responded to fairly positively despite what you're looking at there. Let's take a look at the stock itself this morning. No it is down 1%. I had it up earlier in the pre-market. We're talking about a quarter compared to net revenue up 7% wealth to 2.4 billion about 8% on a constant dollar basis in an international up 29%. But there have been, I mean you can see what's been going on with the stock price over some period of time now. What had been of course for a long period of time a high flyer benefiting enormously from the fashion trends that it introduced. I think if we can get the intraday by the way it did start higher. It did. It was higher this morning. Not just in the pre-market at the open itself. So we've seen quite an interesting turnaround in the last couple of moments there. It was a couple of percent higher at the open and now a little bit lower. And as we mentioned as well, Nike is one of the few Dow constituent declineers as well. And maybe that's slightly in sympathy. Nike is down 0.4%. Only three of 30 stocks on the Dow lower. And again coming back to that point that for the week and for the month as a whole the Dow has been doing pretty well over the course of the month. I wanted to come to MongoDB. We saw those shares leading in part the NASDAQ. Total revenue $478 million for the second quarter. That was up 13% year over year. Subscription revenue as well, a 13% increase. And clearly being responded to positively in the marketplace by investors. I do oftentimes now look sort of at the difference between gap and non-gap wealth. Because in some companies it's very small and others it is quite large. And here it is certainly notable. Will it matter at any point? That remains very much unclear. These companies are based on their adjusted numbers on free cash flow to a large extent. The stock based compensation is often the biggest key in terms of the size of the variance between gap and non-gap. And here you're talking about a company that would have lost 74 cents a share in terms of gap. But obviously made 50 over, let's see, sorry I'm just making sure I have the numbers here. 70 cents a share, excuse me, on non-gap. And that's always interesting. Both of these gentlemen are going to be guests on money movers. So I certainly can ask about that. But does stock based comp ever become an issue for companies is a question that any number of investors have had over time? If you go through a very difficult period in which you can no longer be paying in your stock because perhaps it's only going straight down or for any number of other reasons and you actually have to replace it with cash that obviously would impact profitability in a significant way. We have seen that before. I do remember it nearly odd certainly happening with so many of the names in what had been the high-flying tech sector. That said the stock is responding very positively to again numbers that were above what had been anticipated. Big jump, 17% as you said and as you mentioned the CEO will be joining us a little bit later. As will the Autodesk CEO who will have an equally big smile on his face there. Autodesk near the top of the S&P. Don't forget our Autodesk is what you do have an activist. We were talking about lack I think what may likely not be activism and intel but we'll see. But you do have Jeff Smith there, starboard. Most recently putting a press release out on the 22nd of August saying or at least criticizing the board saying there's an urgent need for significant change in the company citing what he says is at least under performance poor financial results and troubling disclosure and governance practices. And then he was seizing on some recent public reports that spotlight parent links he said to which Autodesk leadership went in order to mislead shareholders. So some strong words there again that's a little over a week ago from Jeff Smith and starboard. But having a fairly strong response to its quarter. Second biggest gain on the S&P 500 only behind intel which is up just over 5% crowd strike having a decent session up 3.7% so far and Lulu as we mentioned it's now that 1.2% so it's really turned around. About 4% or so of a swing in the first moments of trade now down almost 3%. Worth having a quick check in on Marvell and Dale both of which we talked about quite extensively of course before the open with their results out overnight. Dale is if we can bring Dale up but up about 3 or 4% in the pre-market Marvell has paired back its gains it had been up 10 to 11% in the pre-market now in the up 6 or 7 and there's Dale for you up 2.2% and itself pairing back some of those pre-market gains David but the markets as a whole looking pretty good where we stand up 0.6% on the S&P to Dow up 0.3 and the NASDAQ pushing to nearly 1% of gains. Yeah can end here on Alibaba as I work through my various pieces of paper here. They finish what they I guess call a sort of conducted a review over a long period of time. Where is that? I'm not going to find it but the stock is up you can see. You want to help me here? Well I don't want to get involved with your notes. I got lots of stuff here and I can't find the darn thing. Bob of course has not been a great performer for quite some period of time after I mean God it's a long time ago that I can remember that IPO Jack Moss sitting right here. Those were interesting times. What year was that 2016-15? Was it 15? Yeah. Then I went over there and interviewed him. The Chinese consumer of course has been the key here and really what has been the emergence of significant competition in the domestic market in China. Whether it is Tindo Duo although we saw what happened to that stock earlier this week after they said they have to continue to invest a lot in their team lose service which has helped drive a lot of that. But whether it's a 10 cent or any number of other companies that certainly have presented significant competition to Bob it is far lower than its highs. And in fact I think if we go back to the IPO I'd be curious to see there's PVD on Bob but where it is judging that. As you know I'm having some technology issues this morning so I'm not capable of putting that up on my own. It's funny when you snapshot though back to the IPO on company specifics aside the overall headwinds for that company are vastly different to back then. The demographics now pretty unattractive in China there's still the argument of a growing kind of GDP per capita in a consumer that can move up the value chain. And then the political point I mean you said you went over to interview him you wouldn't be able to do that now. No I wouldn't. Yeah we did a number of interviews that Jack Monty. You can see the stock is actually down since its IPO right here and it was 2014. This time of year though I do remember it of course. Man I'll never forget the hundreds of Chinese journalists that were outside the exchange. I don't think I've ever seen the floor quite as electric as it was on that given day. You have Moss the Sun over there you had Jack my here you had all the titans of sort of the underwriting banks that were here as well. Was it more electric than for the debut of Faber Frosting Company? I'm not sure how this yeah I think I might have been all just a little bit more before. All right let's get over to Bob Bassani now. You know it's funny Bob speaking of IPOs I know you want to get to the general market. I mean this year we're working through this year we're still not seeing this tidal wave of IPOs. I certainly would have anticipated that we would see more activity given the market itself. You know I am baffled by the lack of activity because the markets at new highs the overall market is in good shape. Yields are trending down and theoretically it should be a great time. I hear a lot of hesitancy because the elections are coming up it's like what kind of endless number of excuses you're going to have. We're going to talk about the IPO market a little bit more next week. I just want to get to what we're doing right now. We're ending August in the same vein as we had in the last few weeks which is broadening of the market. Three to one advancing to declining stocks. That's the big story many many more stocks advancing than declining and tech is basically flat. So take a look today at the markets. Most of the sectors are all on the upside. Tech's leading a little bit today but consumer discretionary has been strong. Starbucks and McDonald's and GM they've just had a great month after lagging for so long. Real estates having a great month, industrials are good, financials are having a great month. So this broadening of the markets theme there's a lot of ways to slice and dice it but basically the SAP advanced decline line is at a new high. That tells you many stocks advancing here. About two-thirds of the S&P is up this month here. If you look at the major indexes we've noted for days now that the equal weight S&P 500 is outperforming the overall S&P 500. The NASDAQ is basically flat. The Russell 2000 dropped 12% in the first couple days of August and it never recovered but it's been doing better recently here. If you look at the sectors, look how much the sectors are broadening out. Tech is basically flat on the month here. And you see staples in real estate and healthcare and utilities all significantly outperforming. These are just different ways to slice and dice the broadening out of the market story. If you look at mega cap tech just call it a lackluster August. It's not a bad August, it's just a lackluster August. Look at the movement here here. So here's your major indices with the equate the S&P and the Russell 2000 but look at mega cap tech here with apples just up most everything else in the mega cap tech area like Microsoft, Nvidia, Alphabet and Meta all not doing much at all. By the way on the earnings front Nvidia has put the S&P 500 earnings over the top here. We've had a terrific second quarter. Look at this up 13%. We started the second quarter. 9% or 10% expectations. Now 13 and Nvidia helped that when it finally got over. We're basically done with the second quarter but look at the rest of the year. Q3 and Q4 strong. We're going to do 10% earnings growth this year. The estimates were 15%. This is why the stock market keeps holding up overall. You see generally good earnings numbers and decent economic numbers. So people ask me whether we're too bullish right now. I'd say sentiment is on the bullish side but not wildly so. If you look at the AAII weekly numbers here the important thing is we're seeing here some bullishness well for it but not I'd say overly enthusiast or not overly effusive here. Bottom line here we've got a week September and October but the numbers are on the side of the bulls. Back to you. Bottom line here is always thank you so much. We've got some data crossing Chicago PMI. Let's get to Rick Santelli. Thanks Wilf, yes. Chicago PMI for the month of August. Expected to be a bit under 45. Comes in much better than expected. 46.1. It's not only sequentially higher than the 45.3 in the rearview mirror. It's the best level since June and it's the second best level of the year. We all know that the last batch of numbers was mostly as expected on the inflationary front solid income and spending. We see that yields. Well yields are down on the week by one base point on a two year as we sit at 391. If you look at 386 and a 10 now 387 that's actually up 7 basis points on the week. The curves had some movement. Last week of course we were hovering around minus 10 minus 11. We've shaved that basically in half. Squawk on the street will return after a very short break. This interview is so big we're already teasing it for next week. Squawk on the streets going to have Steph Curry join them. That's got Sarah Eisenhower in all over it. It does doesn't it? I know I won't even be here. That also has Sarah written all over it. Of course he's I mean you know was a Olympic gold medalist of course a four time NBA champion. 10 a.m. Eastern on Tuesday. I'm going to set the clock for that one. Not that I don't for Squawk on the street every day of the week back up but especially. Especially you'll make sure to be awake. Yeah although it is 3 p.m. It is the afternoon. I'm always awake. Back after that. The AI boom fueling a big race for cooling technology certainly when it comes to data centers. Peppa Stevens is at HQ and she has the details on the story. That's right David there's not just an arms race for chips but also for the equipment that cools them. Specifically liquid cooling. On Nvidia's call CEO Jensen Wong said the number of data centers that want to go to liquid cooling is quote quite significant. That's because traditional air conditioning systems just don't cut it for gen AI chips like those from Nvidia. Given how much heat they're generating liquid cooling can also lower data center operating costs since it reduces power consumption. RBC's Dean Dre telling me we've crossed the Rubicon in the sense that there's no going back to traditional cooling. Currently about 5% of data centers have liquid cooling with the firm anticipating a 40% compound annual growth rate ahead. Now right now there are no pure plate liquid cooling companies but there is a lot of interest given the potential market size. Vertiv has the highest revenue exposure to data centers with Envan and Schneider electric other key players and then there's also the legacy HVAC names. None of them have made a big splash in liquid cooling but it's a natural extension of their business model and companies including Trane, Johnson Controls and Carrier have all indicated they are interested in a piece of the pie. You also cover the energy markets, obviously when it comes to data centers we're talking about power consumption but the numbers are going to be enormous percentage wise in terms of how much power is going to be consumed by all these data centers. How important is this advancement in liquid cooling going to be in terms of reducing those overall consumption numbers? Well the power consumption particularly with electricity prices on the rise is a huge cost for the data center operators and so anything they can do to make their systems more efficient is going to lower their operating costs. And so one of these liquid cooling systems it can have a higher upfront capex cost but it does reduce the operating costs longer term. Also a lot of these big tech companies have net zero goals and so anything they can do to reduce their power consumption make the systems a little bit more efficient. They are going to want to do that which is why we're also seeing momentum behind liquid cooling. Yeah that's an important point those carbon neutral goals of course to some of the biggest companies in the world. They can't just rely on natural gas or certainly not coal as well to power those data centers. Peppa thank you Peppa Stevens. Coming up, NEC Director Brainerd from the White House with reaction to this morning's PCE inflation data. Keep it here. You've been listening to the opening bell on CNBC's Squawk on the Street. 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On the final trading day of what has been a volatile August for stocks, David Faber and Wilfred Frost explored market reaction to the Fed's preferred inflation gauge: PCE held steady in July -- the data comes as investors expect a September Fed rate cut. Wharton Professor Jeremy Siegel joined the market discussion. AI also on the front burner: From Dell and Marvell shares jumping on results and guidance --to Apple and Nvidia reportedly in talks to invest in OpenAI. Also in focus: August's winners and losers, tech and retail movers dominate Friday's earnings parade.
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