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Learn more at Wells Fargo.com/ActiveCash. It's Jim Kramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action. Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Kington, a way Jim Kramer, David Faber, and post-9 of the New York Stock Exchange. Today does mark 23 years since the September 11th attacks, and memorials are being held. Around the country today, you were looking at a live shot from the 9/11 Memorial in Lower Manhattan, as well as a ceremony at the Pentagon, and we will have a moment of silence here at the NYSC this hour. Meantime pre-market is red. August CPI comes in as expected, although Core runs a 10th hot, our last big print before next week's Fed meeting. Our roadmap begins with inflation. Watch markets digesting CPI with the decision on rates just a week away. Also, Ed, we'll have a look back. At last night's Harris Trump presidential debate, both candidates is square off occasionally on issues that included the economy. Plus mortgage rates falling for a 6th consecutive week. Told brother CEO Doug Gerely is gonna join us right here at post-9. We're gonna talk about the state of the housing market. - Let's begin with some reaction to CPI. We mentioned Core running 3/10, Jim. Is there some disappointment that you might not get 50 as a result? - But I gotta tell you, we play this game all the time, and it's a little, I think, debilitating, 'cause there'll be people who come out and say, oh, not 50, well, let's sell. And then the other people say, oh, if we got 50, it would have meant that there's something wrong, particularly with what we had yesterday in the banks. I mean, David, when you see something like JP Morgan going down, really big, and then you see the whole bank move go down, you start thinking, okay, what is out there? Every time we have that. And then when you see this close to the Fed meeting, you start saying, what do they know? And I think that that's another bad game. The idea that if they did 50, they know something. I think we just take, just take it as it comes. - Yeah, I mean, we're gonna get 25, right? - Right, but then this morning, there was a lot of commentary about 50 or 25, and I thought that that was-- - Well, we gotta talk about something. - Oh, geez. - I mean, by the way, on the banks, which we can't talk about and we'll get to, 'cause that was an interesting day yesterday. - Well, that's what I thought was-- - But not necessarily related to things like this, but much more about investment banking, revenues, trading revenues, just not coming quite in, where at least the analysts who follow JP Morgan, for example, had expected based on what we heard yesterday from Doug Pinto at the Barclays-- - Can I just talk for a second about Doug Pinto? - Sure. - Okay, I don't know the van. - No, but-- - Nor do I. - But he sowed a lot of worry and concern that may not be accurate versus the bank itself, because when I listened to him, I came away and said, cut numbers, JP Morgan. I mean, quote, JP Morgan is doing probably well. I do not know where Doug Pinto wanted to play a little bit like Jamie Diamond, who always says something that says, listen, be careful, but I, every time anyone said anything, the, he was asked questions. He came up with a negative answer and he's either a negative person, or he's far more concerned than I thought. And I came away thinking, don't touch that something. Don't touch that one. - Isn't the bigger story ally worst day since 2020? - They have sub, you know, they've got the suboptimal bar and the one thing that Pinto did say was, look, we don't have any of those, but they do have a very well, much better clientele. But I was shocked that this man could be as negative David as he was, given the fact that they have a fortress balance sheet, they're doing quite well. And I came away saying, okay, what do I not know about JP Morgan, what was that? - Well, the stock did get ahead. Of course, there was a lot of things buffeting the banking sector. Carl mentioned LA in terms of consumer credit and worries there. And then you also had the rollback of certain capital thresholds for Basel, but not perhaps as much as had been hoped for. And so you generally had a sell off in all the banks. Wells Fargo was the best performer of a bad bunch. - Well, that stock had already been crushed. But look, when you have something, when you watch JP Morgan, which had been the leader, and that had been the essence of the so-called broadening out, well, a fellow just crushes it, Pinto crushes it. And again, I don't know, maybe he's Peter and naturally negative. I've got to know more about him. They put him out, and the guy really has to do a little bit more of kind of an optimist, you know, like confuse some of his thinking with optimists because that was one of those things where I'd just said, what's the matter with JP Morgan? What's the matter with JP Morgan? What's the matter with JP Morgan? What's the matter with JP Morgan? What's the matter with JP Morgan? - It's one of those. The high-pitched Philadelphia-lil repulsive screaming of like, and then Pinto, I mean, Pinto, what is he like? Camaro, I mean, what is his Pinto? I mean, there was this moment where I just said, you hit him in the back and-- - And he hits on, and he turns into fire. Yeah. - Ooh, it's on him. - Pinto. - Wow. - I was like, what was the other people they should put out? I would put out other people. - Yeah. - No, he's the great the glass guy by the way. - Separately, we obviously, we heard from Jamie Dimon yesterday talking yet again about his destiny. - And saying that Doug Pinto is the man. - Meanwhile, if something should happen to him, nothing is gonna happen. - You mean, like, come out and cut numbers and make me feel awful about the stock? Well, that's happened, that was good. - Pile on top though, Buffet's BAC sales continue, and the downgrade today, Jim, of Morgan Stanley at a Goldman. - Oh, man, so my travel trust was Morgan Stanley. It started going up, a lot of it was the yield, but that was one of those downgrades, which is basically what happened to the capital markets. So I merged that downgrade with JP Morgan. David, and I said, you know what? Time to go buy the tool and die stocks. - Tool and die. - Yeah, what do you buy when you're buying tool and die stocks? - Tool and die stocks. - Okay. - Look, what, the bank stocks, they became yesterday in one session. Thank you, Mr. Pinto. The bank stocks became, and of course, Alec made me feel like, okay, there's one place you can't possibly touch. Going into a rate cut, that's like should be Nirvana. And then that interesting come moment in Pinto, it's like, well, we care about NII, and he just basically said, you know, you guys are way too optimistic. We weren't even optimistic. I don't know, I don't know. I mean, you know, David, I don't know. - Well, one thing that we should probably mention while we're in the neighborhood is the deflationary effect out of China. Yardini today uses the D word to describe what's happening in China, both a recession and a depression, which is Wang. He argues on demand for oil and bonds and the dollar. - He's dead, right? I mean, that economist story, the cover story, which is basically, when the numbers get bad, they stop putting out the numbers. Well, there's a third world country, and I'll use that term anymore. I mean, one of the things that just incredibly bothersome about China is that you'll see some of the retailers generate pretty good numbers, but then the retail sales numbers are so horrible. Well, who is generating good numbers if every retailer's generating bad numbers? And the Temu Xi'an thing, maybe they're starting to get into that quality issue that I ran up against when I bought the lingerie from my wife, which they traded. - That was a bathing suit. - Well, I want you to get a little more specific. But, you know, there's like Chevron, there's Exxon, and there's Xi'an. - Maybe three things made of oil. - Maybe three things made of oil. - Three big chemical producers. - Yes. - Yeah. - I got it. - Yeah, I'll be good, Dallas trying to be more responsible. - But that said, to get it back to China, it's not an unimportant part of the global economy. - Right. - And it certainly is not moving at a fast pace right now. - No. - They will claim they're still growing at what? Four or five percent. - Yeah, I don't believe that for work. - I know a lot of people don't believe that. They're dealing with deflation to a certain extent other than food prices, but that was brought on by some drought. - Yeah. - China, big loser. - They're a stitched bait. - And they're still dealing with the property issues, which are enormous. - This should have been shaken on by some of the municipalities that were able to meet their obligations by selling land, which is no longer happening. - I also love, when you want to cause pain to U.S. companies, there's always an investigation. There's a bit, like proctor's investing, what a proctor do? Like sell a razor to expensive, proctor, that's the problem. I mean, come on. I mean, companies are fiercely trying to get back. - They're also going to export deflation to a certain extent, because as you all know, we discuss every day, the EVs, and you and I have had this conversation last few days, or solar panels, or so many other things that yes, they are subsidized by the state, no doubt about it, but they also provide a real benefit to the potential consumer in certain places, if they're able to buy them. - Talking to you, a nice decent EVU can drive, and it costs you, what, $13,000. - And Spain is starting to talk about whether they should be beholden to it. Peter Navarro will be making a big comeback, it's my prediction, if President Trump is a real elected. And Navarro has written incredible texts about what a villain China is. So I think that China has to be, if I were China right now, I would be laying real low and not putting this, not coming up in the straits of Taiwan. If they want to provoke, it's a bad call, because there's no one in either administration that likes China right now. Speaking of geopolitics, just one topic that was covered last night, and the contentious presidential debate between the vice president and the former president, both candidates now neck and neck in the race of the White House. Our image average joins us this morning with some highlights. Morning, Haman. - Yeah, good morning, Carl. It was lively, it was at times, Rokus, the debate between the two candidates in Philadelphia last night as Kamala Harris, the vice president, was largely successful in her goal of getting under Donald Trump's skin, baiting him to debate on issues that make him appear to be on the defensive, such as his crowd size or his inheritance from his father and how he spent that. For her part though, Harris ducking questions about her flip flops on a number of prominent issues. But you can see here from this body language going right in for the handshake early on. These two folks had never met before. Harris walking right over to Trump's side of the stage, going in for a handshake that had appeared, he didn't want to give. And from that moment on, she was successful in sort of getting under Trump's skin and provoking more angry responses from him as the night went on. The early part of the debate guys talked a lot about the economy, including Donald Trump, blaming the Biden-Harris administration for inflation. Here's what he said. - We have inflation like very few people have ever seen before. Probably the worst in our nation's history. We were at 21%, but that's being generous because many things are 50, 60, 70, and 80% higher than they were just a few years ago. This has been a disaster for people. - Now for her part, Kamala Harris said that Donald Trump's economic plan, including his tariffs, will be bad for the US economy. And she cited Goldman Sachs as her authority on that. Here's what she said. - The best economists in our country, if not the world, have reviewed our relative plans for the future of America. What Goldman Sachs has said is that Donald Trump's plan would make the economy worse, mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. - And guys, that's one of those bait pieces that we were talking about. As Kamala Harris there mentioned, the Wharton School at Penn, obviously Donald Trump went there. He could not resist responding to that. The Harris campaign clearly knew that by dropping that mention of Wharton in there, they would get under Trump's skin. It seems to have worked last night. No real indication whether there's gonna be another one of these debates, guys. Trump was asked about that on Fox News last night. He said he won the debate. And so therefore, he doesn't think he necessarily needs another one. The Harris campaign has said they would be open to another debate. We'll see whether it happens. Back over to you. - Yeah, Ayman, a lot of performative stuff last night. Jim, I wonder if you're surprised at things that didn't get mentioned, no tax on tips, unrealized gains, corporate tax. - I was, I mean, look, we gotta get, as someone who has started a lot of small businesses, the emphasis by Vice President Harris on the $50,000 break for taxes is something that is so, that rankles me because you don't make any money when you start a business. I mean, everybody knows that. I mean, nine out of 10 businesses fail as it is. So that's really doesn't really spur economic growth. - You don't think of $50,000 credit? - It's nothing. - No, it means nothing. - You push someone to start a business rather than not. - Well, boy, are they stupid if they do that? Because, man, you don't want that. You want revenue growth. You will have to have a big bank account. But if you start by coming up with a, that's what you need to break. I mean, you should have what they did with PPE. You can give people money. The tax rate, there's no gains. And you're like, I just think that that is so much less important for Harris than the idea that she's not gonna give the same, the same high increase in taxes that Biden would have done. That's what I would have done. I would have gone for that. - Talk about lower capital gains tax rates. - Isn't that like the emphasis? - Yeah, I mean, Amy, I'll bring you back in there. There wasn't any real deep discussion whatsoever of these matters as we've just pointed out. I mean, Trump continues to tell people that somehow we're not paying for the tariffs. I can't even imagine we're still having this conversation. And Harris did not go into any details of her economic plan in terms of taxes or anything else. Or frankly, defend the economic moment right now in the country, which obviously is not quite as dire as I think the former president certainly would have people believe. - Yeah, let me look. This is a massive debate with a massive political audience of millions of Americans watching. They're not gonna get into technical details about tax rates on accrued income for billionaires and that sort of thing. I think what you saw, I was a focus on food and shelter, right? The price of food at home inflation was a topic that they both talked about. And Harris mentioned her idea about trying to lower costs for housing for Americans. Now, there's a debate about whether that will just go right to increasing prices for houses, but she did mention her ideas there. And those are the two areas where most Americans experience the economy, right? In food and shelter. So I think there was some general debate there, but this was not the venue where either candidate was gonna get into bullet points and sort of the TED talk about the economy. This was an opportunity for them to make very broad points and try to break through and have that cultural moment. - And why didn't it matter that as we deal with the top of the show is how low rates are gonna come down because inflation is much more under control? Why was there not a reference to other times in history? - Well, yeah, Jimmy Carter peer, which many of us lived through, where it was far worse. I mean, you had a real chance to go right after Trump and you just didn't skate where the puck was going. - Yeah. I mean, look, I think Trump, you know, he's making the argument that this is the worst inflation that America has ever seen. You know, that's arguable certainly. But I think what, you know, I've talked to Eric Trump about this and what the Trump campaign wants to do is increase energy production. They want to lower costs in the country overall and they think that's gonna help the Fed lower rates going forward. - Yeah, well, energy production, all-time highs. And as we heard from census yesterday, inflation adjusted, household income, now outpacing inflation since 2019, things that did not get talked about. Amen, thanks, Amen, Jeffers. After the break, a moment of silence of the big board and the NASDAQ in remembrance of 9/11. - Trading as Schwab is now powered by a merit trade, unlocking the power of Thinkorswim, the award-winning trading platforms, loaded with features that let you dive deeper into the market, visualize your trades in a new light on Thinkorswim desktop with robust charting and analysis tools, all while you uncover new opportunities with up-to-the-minute market news and insights. Thinkorswim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more at Schwab.com/trading. 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LinkedIn, the place to be, to be. - The New York Stock Exchange and the NASDAQ each about to observe a moment of silence, remembering and honoring the victims of the 9/11 attacks, which occurred 23 years ago today. Jim, we talk about this every year. The challenge is to keep that memory fresh for people who were either too young at the time or in many cases, not yet born. - I think that, and I've always felt that there should be a national way to subsidize people who come to New York. - And go to the museum, 'cause the museums, you'll never forget, if you're even, if you're 10, and you go to the museum, you will have a really good understanding of what occurred that day. - Let's get that moment of silence. - Robert J Maxwell. (bell dings) (bell dings) - Support for this program is provided by Chevron. 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Linkedin, the place to be, to be. - Welcome back to Squawk in the streets, six minutes before we get started with trading here at the New York Stock Exchange. Let's get a mad dash and talk a little Nvidia, Jensen Wong, of course. The well-known CEO, founder of the company, going to be a guest at Goldman's Community Copia Conference. I believe Jim on stage very early in the morning Pacific time with David Solomon, the CEO of Goldman Sachs. - And very specifically, we're talking about the problem of Nvidia. There's a lot of the networks kind of view that I heard, yes, it was a slowdown. That's just not true. There is no slowdown. But what there is is a complication. This new chip's very powerful, really hard to make, but there's a couple of releases today, a really good release from Oracle and Nvidia together, talking about, and this is the complication. AI supercomputer, the largest in the cloud, to deliver up to 103, 1,072 Nvidia GPUs, to enable customers to build, train, inference, AI scale. Now we're all over our heads. See, now we're all trying to figure out what do you do with that? Like, I immediately shot a series of questions to Nvidia saying, well, what does that mean? And when you don't know what it means, and I've spent 12 years trying to understand Nvidia, then one of the people going to do is like, we will own it because they just hear that it goes off. We are now in a moment where Nvidia's too hard for most people to understand, and we need Jensen to explain it. And why if that's late, what does that mean? So I say that we're at a moment of confusion in Nvidia, not a moment of slowdown. >> But didn't they give a bit of an explanation during the earnings when they discussed and gave a little detail around Blackwell, and why it was going to get up to full production? Not too long. >> Right, and that's important. Like, for instance, we found out that there are, that sovereign users want it. But more importantly, I mean, you look at it, and you can say, okay, well, I don't know exactly what it does, but boy does Larry Ellison want it, and Larry at Oracle really wants it. Oracle wants to be involved with the Nvidia supercomputer. That's the term we should be using. Not even platform, just a supercomputer. But I just pointed out because David, until all the people who don't understand what Nvidia does get out of stock, you ain't going anywhere. >> All right, we'll keep an eye on Oracle shares, by the way, after that strong day yesterday as well. Keep it here. >> Take a look at the pre-market here, as we continue to digest CPI. Shelter was a big culprit for this time. >> Yeah, plus 5.5, and we can't get that down. I think that we're going to hear from Doug Yearly and told Brothers, I think he explains it more than, better than anyone, so we've got the right person to talk about why Shelter won't come down. >> Yeah, airfare is a little tick higher, although some say what oils do, and maybe that doesn't last. >> Right, but we did have some of the airline executives say that August was going to tighten, because they've taken back some planes. I found that number of quizzical. >> Yeah, we'll talk more about the internals of the print in a moment as we get the opening bell at the big border this 9/11 day, an organization dedicated today as a service in America, and if it has that Tuesday's children, and non-profit supporting the 9/11 community and military families of the fallen, Jim, so important. In addition to the stuff you've done on the redevelopment of Downtown, things we talk about every year. >> Right, I'll be at the interfacial event that helps raise money, and they do a great job every year. >> And don't forget the first responders as well. >> So many of whom sadly had illnesses related to the site itself as well. So not just the initial victims, there's horrific tragedy, I mean, you know, 23 years, but I still can have that moment when I was back in Fort Lee when I got a phone call about that first plane. >> Yeah, I remember I was like down the block, and the building was locked down, there was a rain of research. I remember being hit by deep winter research and the way out when the police found the fire let us out, and you weren't sure what was going on, you were trying to figure out what was next, and then you saw the pictures of people that they were looking for, and none of them lived. And it was all very surreal and horrible. I think people, I wish people had even seen the fire went on for days and days and days, and it was kind of our Pearl Harbor, we didn't know what was going to happen. And anyone who recalls it just wants others to know. >> Right, right, we will be having our attention keyed in on downtown and the Pentagon and Shanksville, Pennsylvania today as well. As for the open here, Jim, a little bit of disappointment, I guess in that core print of 3/10, although three month annualized CPI now, 206. >> Yeah, I mean, that's what he called back the debate. I mean, that would have been a fact that I was surprised it wasn't used. Now, I mean, if you're going to, would that be like you're not running against Biden, you're running against me? I mean, the inflation numbers are actually something to help. >> Yes, they are. Well, firstly come down a great deal. >> Yeah, okay, absolutely right. >> And a former President Trump in the debate, that 21% number, obviously he's talking about over pre-pandemic or right at the beginning to the current moment, which I think is closer to 19 car, but roughly in line. Well, that wasn't clear from his comments at the time. And we are obviously down to an app. >> Well, that's the crux issue. I think that everyone knows that the crux issue is economics and economics is inflation. And that cuts to Trump's favor at the point, just because when we were in 2019. >> Gas prices did not get talked about. >> No, $3.60 a day, moving average now down almost 30 cents, prices for gasoline are basically where they were a decade ago. >> Yeah, I mean, look, I feel that the thing was such a jumble, the debate that I want to, it's hard to criticize anyone to give them home for not having the stat statistics for where inflation is. But there's been major progress made against inflation. But only against this Costco, we tell you, period, say 2021. And we're not back to where we were in 2019. So it's possible to be able to say, "Listen, inflation's still out of control." >> Although yesterday, we saw online grocery prices down for the month by the most since Adobe started tracking the data. And I know that is implications for restaurants. And Jim spoke to Wingstop yesterday. Take a listen. >> You can see it in their behavior. And I think you hear a lot of other brands talk about it. And they're being more discerning with how they spend those dining out dollars. And we know that if we deliver on that quality and value that they're looking for, we're going to continue to win our fair share. >> Okay, one last question. Is it possible that the other guys just thought they could charge whatever price they wanted, almost contemptible to the average market? >> It could be because there was a lot of money that was being pumped into the economy, into the consumer's bank account. And so they weren't having to be as disciplined as they are today as inflation has settled into the levels of where it is today. I am so glad we ran that clip because Michael Skipper, he had 28% comparable scale growth. Now, how did he have that? He didn't make it by price. He didn't raise price. He got it by traffic. Now, Michael would tell you, David, I think it was really important because I don't know if you've been at Wingstop, I haven't had it for dinner, this is quite good. But what matters is this, he was basically saying, you know the other guys, they took advantage of America. They thought that they could get away with higher prices. And it turns out our game is their loss, almost zero sum. Because the days when you could raise price with impunity and not think you'd lose customers are over. Wingstop, look at that. On the strength of the fact that they offer a good product for low price. >> Right, really, very interesting. Yeah, and I had not realized the stock had had that kind of a move this year. Guys, we started the hour talking about the banks and perhaps appropriately so. >> The condization. >> They are down again, you know, rather sharply. We're talking about a market that's also off, but about a third of a percent. But all the major banks that we track down, you know, about one and a half or so percent, early going here, but certainly a continued reaction to any number of those different issues we mentioned. Whether it was JP Morgan's Pinto, as you point out, you thought at least being somewhat perhaps overly cautious or negative to the Basel numbers, to credit concerns overall, they're all down. >> David Solomon going to join Scott Watmer later today as well. Interesting interview coming up there. >> David, where are the IPOs? Where's the M&A? Where's it? It's September. We're not in August. >> You're right, Jim. I know, I got a lot of promises this year. This is going to be the year, you know, first of all, it wasn't hard to have a year over your number when it came to M&A looking better than last year, because last year was horrible. And we have, but nothing huge, no, none of the giant deals. I mean, the Kelanova deal was pretty big of a couple of few weeks ago, but very little headline grabbing stuff, certainly, and even on the PE side, keep hearing it, exits have to happen, have to happen. IPOs, how do you do an exit? Do it through an IPO or a sale? Well, right now you've got a lot of funds that are basically at the end of their life span, so to speak, right? You raise the money, you buy the stuff, you've got to sell it. You've got a lot of firms out there that are waiting to get something done. So it has been interesting to know by its absence, both IPOs and M&A as this year moves into the fourth quarter. And to go, again, to the sobering Pinto, I got a cell JP Morgan right now, a call. There was a moment we talked about artificial intelligence and technology. It was like, we have to spend even more on cyber security. Well, that's a deadweight loss. And then he talked about like 130,000, maybe an impact, maybe not, a completely incoherent digression on AI. And it made me feel like, well, AI is just one of the-- It's another clown show. Clearly a Pinto fan, aren't you? I've got to get this guy in the show. I don't particularly know the man. I think that he represented the bank well, if he wanted the stock to be under 200. Oh, god. We did get some commentary today out of AMEX. CFO says, at least sequentially, Jim, environment continues to be stable, slow growth. But again, we're talking about a very specific cohort of consumers. Look, a few squares done are a remarkable job. The chart, by the way, would tell you everything. You've got to buy every single dip of this thing. And I think this is still the same small business really, using the millennials love it, the Gen Z, David Gen X. I don't know, whatever letter you want it. They love it. Give me a gen. I love it. Yeah. David, there were promises on-- is a quiz quote. There were promises on reminade. There were promises on IPO. Who starred in Promises Promises? Who starred in it? I know it was some time. I don't know who's-- Shurry or back? Oh, wow. Maybe the finest song and dance fan of our generation. Eventually became a Disney King, right? Yes, yeah. He had everything. He did everything they made. There's not a plaque. There's not a cop. Yeah, maybe a detective. A peacock, BC, yes. Very good peacock for you. I have to represent peacock well. There's no pintoization of peacock, I'll tell you that. Guys, a mean stock that we haven't talked about in a big game stock did report numbers. They can sell and stock. And they're selling 20 million shares. Stock is down 13%. I did want to mention that. Just not that many handful of movers on news this morning, but that certainly is one of them. Games are still hanging in there $8.7 billion market value. Sales were $798 million for the second quarter down pretty substantially from the prior year's second quarter, which was $1.164 billion as you take a look at that stock and what it's done over the last few months. And sales were down huge, but they made money. But they make money by selling-- they should sell a lot of stocks by, I don't know, by the two-year to have pretty good numbers. Got a lot of cash. Two-year, by the way, got to $3, $5, $5. I know, I was thinking about selling my two-year, but I don't know what to put it in other than maybe buy a few homes for $967,000 and flip them from $1.1 million. Oh my god, Doug! I'm thinking of which. Hey, guys. You want to bring him in? Yeah, well, I'm sorry. I was possessed with myself there in Pinto. Let's get into the housing market. Morgan's race hitting the lowest level. We know from Doug's last conference call that that could mean something good to all brothers, Cameron Steele, Doug Yearly joins us now. And Doug, first of all, you've had a remarkable run. And what you have done is tap into a vein of people who want quality homes and are willing to pay almost 20% paid cash. So you have something that we in this country want, aspire to in one. How did you do it? Because you own that coal, coal work. Thanks for having me. So as you know, the company was built on a luxury brand, America's luxury home builder. We've catered to move up buyers. But lately, last five years, we can't ignore 70 million millennials. So 40% of our homes are now sold as first time homes. But it's the leading edge of those millennials. It's a couple than 35 years old that may make $200,000 that can afford an $800,000 home. And they never thought in the past that they could get that first home from toll, but now they can. So we've really widened our price point. We've widened our geographies. We build more spec because as you know, the resale market is so tight that we're filling that void that sits there. And business has been great. And I think the future looks really good, particularly where we think rates are headed. Well, let's make some news, but I'm sure you probably don't want to do, but I'll put you on the spot here. Now, we do have your August 21st report. And you did say August was going quite well. Did it finish well in house September? Yeah, so August did finish well. We knew the spring would, excuse me, we knew the fall would get better because the summer tends to be a little slower. People are noticing their rates are coming down. We have a six and a quarter percent rate today. It wasn't that long ago, it was seven and a quarter. And that's meaningful for your business. It's very meaningful. We can get that rate into the fives, and it feels like that's where it's headed. If we have three cuts in this fall, 75 basis point, 100 basis point, we should have a 30 year fix, no point mortgage in the fives. And look out, look out. Look out means what? The market should take off. The builders have done so well with high rates, which no one thought they do. We've been sitting on seven to eight percent rates now for the last two years. And finally, they're in the low sixes with a feeling that they're going to get lower. And that's when the builders sell more houses because the affordability, you know, all changes. But that's been the surprising thing about this entire cycle, I think, as we sat here every day watching your stock at some point hit new highs, and we're like, wait a second, rates are seven and a half percent. Were you surprised as well? I mean, again, obviously they had to do with overall supply, but I'm curious, 'cause now's the time when we get all this analysts saying, oh, it's time to buy the builders, 'cause rates are coming down. So what happened was everybody that owned a home was sitting on a three to four percent mortgage rate. Either you bought the home with that rate, or you refied into it, and you felt locked in. You wanted to move, you wanted your family to move up to the bigger home, but you were locked into that rate because you can't transfer. And so the resale markets were incredibly tight, and everybody gravitated to new homes because we had them. Historically, 10 to 13% of inventory in this country is new. Today, it's over 30%. There's four million transactions a year today. A normal market is six million. It's going to be a bigger pie. Do we have a modestly smaller part of the bigger pie because the resale markets open up a bit? Yes, but we're a move up builder. We need a healthy resale market, which drives people to move up into our home. So we are celebrating the beginning of rate drops. And as well as we did with high rates, it should get even better as rates come down. Isn't there also the reverse happening where you have boomers looking to downsize? They're just smaller homes, right? 70 million boomers, 70 million millennials. They're both moving, and we have those homes for them. Where do you think the resale inventory is going to unlock the most? Is it a Texas Florida story or is it go beyond that? It goes everywhere because I think that the concept of, I don't want to give up this low rate. It is a concept for everybody, but I think in Florida, you're going to see more inventory come on. We're already beginning to see a little bit more coming on. It's not affecting our business. We're doing well. Same thing in Texas, but I think as rates drop, there's more people that are willing to give up that low rate because the new rate isn't all that high. And by the way, they want to move on with their life. They want a new home. New homes today are built to today's lifestyle. The resale homes on the market are over 40 years old. They're tired, they're banged up. You can renovate them, but you're not going to get the home that looks like today's home with indoor outdoor living and home offices and open spaces and energy efficiency. And so there's never been a bigger difference between a used home and a new home in terms of quality, functionality, features. And so even as that resale market opens up and there's a little more competition there, I think the new homes are going to shine. >> All right, so don't solve this conundrum for me. You've been since 2010, CEO. Last six years, you went from 154 million shares down to 104 million shares. You've been buying back and pull it back $427 million this year in its stock. At what point do you say, you know what? We must build more homes, we'll make more money, building more homes than we do from buying back stock. >> Jim, we're not trading land for stock buyback. We are now buying land and the industry is much more capital efficiently, where we're not writing the big check to the farmer and then waiting four or five years for all those homes to deliver, where we're sitting on cash and we're sitting on land that we can't put into production. We have figured out ways as an industry to land back our land. We're third parties by the land for us and feed us finished lots back when we need them. We're doing joint ventures with other builders. We're getting better terms with land sellers. So I don't sit in the office and say, I love this land deal for 50 million, but maybe we should buy stock back. It's not a trade. We can grow this company as quickly as we can find good land and still have enough free cash flow to continue to aggressively buy stock back. >> Okay, so tell me what it means to have 54% of your houses being done once back. >> Big change for the company. And COVID really focused us on that, whereas the resale markets tightened up and you had always people that wanted to move more quickly than waiting a year for what we called a build order. There was a void there that needed to be filled. And so yes, we are now building half of our homes as spec, but understand we define spec as a foundation. >> Right, right. We sell a third of them as they're in the early stages construction, a third halfway through construction, and a third at the end. If you buy in the beginning or the middle, you can still go to our design studios and you can customize the home to your lifestyle. We also have naturally came decorators that are picking all the finishes of these spec homes. So we're not just throwing them out there. These are curated million dollar homes that have just shortened the timeframe for delivery, but still give the client choice. >> Now, when I listened to the debate last night, there's a lot of talk about what to do with middle class. And I think we all know it's important, maybe the most important information to have a big middle class. But I have to tell you though, when I read your obstacles, I am always struck, and I don't mean to be crass about this, but how many rich people there really are in this country? Where did they come from? >> There's a lot of wealth that's been generated. There's absolutely a lot of wealth that's been generated. But with the change I described to our company, we build houses today from $350 to $5 million. 40% of our homes are first time homes to that 35 year old couple that they're making $150 to $200,000 as a couple. Even at today's rates, they can afford a $7,800,000 house. Plus the biggest generational wealth transfer that's ever happened in this country. Parents, I want to help my kids before I die, and they inherit from me with a first home. I want to help them with a down payment. I want to ease the amount of mortgage they have to take. That generational wealth transfer is having a huge impact on that first time hire. >> Boy, do we ever not talk enough about that? You are a breath of fresh here. This is really right in our wheelhouse. This is the generational transfer that we should be talking about much more, because it's playing out really well in your business. >> We talk about it with the number of 401K millionaires. >> It has. >> The fidelity, and your Denny brings it up all the time. >> It's so important. And it's also a message of hope, Doug. You have always, from the time I met you, have basically talked about something that I thought was really not possible, which is that over time, the house would become back. Remember in 2010, we didn't know whether the house was a good investment. It turned out it was the best investment. >> Right. And you know what COVID did? It made people appreciate their home more than ever. We had a marketing campaign through COVID. My home is my sanctuary. There's no place like home. People were moving to where they wanted to live. And they knew they were spending more time in the house. And it brought back this sense of the American dream, home ownership, what goes into that house. And it was profound. It's a soft fact, but it's one that really resonated with our clients. >> Really quick, though. Jim mentions the debate. Are policies like down payment assistance? Do they have as much kick, if in fact inventories loosening up and rates are coming down? >> So we support any policy that encourages home ownership, and we support any policy that's going to get more houses built. So incrementally, any of those little things we think will have a small impact, but they helped. No doubt about it. >> What about owners equivalent rent? When is that going to finally come down? (laughing) I mean obviously-- >> It's a tough one. >> --estimating what they would rent their home for, I guess, right? >> Right. >> And it continues to stay stubbornly hot. >> It does. >> Well, Doug, I want to thank you, Doug, and you're the CEO of Tore Brothers, and I have to mention, because I love them so much, we miss Bob Tore, and what a great man he was. >> Two years next month, he passed away, and we were just here. He rang this bell twice with me over the last 10 years, and there was no one like Bob Tore. >> No, there wasn't. Regular guy used to see my dad call Mr. Kramer, my dad, so he just called Mr. Kramer, and he was that kind of guy. >> Yes, he was. >> We all loved him. Thank you so much, Doug, you know. >> Thanks, guys. Anytime a bit of a red open here, down 440, Jim Vicks still, you know, not down, still above 19. >> Yeah, look, I think these declines have been met with advances the next day. Don't sell into the decline, because we've had this very strange pattern where the next day we kind of undo what we did on a given day, so I don't regard today as consequence. >> Which time you wrote this morning that you thought solar remains an interesting dynamic. >> That's it. >> And DJT or solar. >> Look, I mean, I think that there was a moment where the President Trump talked about how he, solar was an eyesore and bad, then he did say favorite solar, but right there, you said, okay, that's the one. >> That was funny, absolutely. >> But on support, that was a tough one for me. I was a sister mother moment. I didn't know whether you liked it or not. >> A lot of the solar names, DJT's down 15% of the lockups coming on the 19th, is it? >> Yeah, okay, stay close. >> Meantime, Jim mentioned rates. We did get the two year down to 355, although, up a little bit now after that core print on CPI was a little warm. You got the long bond though, still below with a three handle. Stay with us. Jim, what's on Matt tonight? >> We're gonna explain GameStop, what the opportunity is, what the peril is, and I think that there's still plenty of people who want to know about GameStop. Left over from that era where that stock didn't go up to 400 and turn out to be not that great a price to buy, but a lot of people made money. >> They got, I mean, they have 4.2 billion in cash right now and they're gonna raise more with the stock sale. >> Oh, they know how to sell cash more than, you know, they can raise stock, they need stock, they raise cash? >> Your point is a valid one, in the sense of it really, you're almost buying us back in the sense of you're, you're buying whatever the opportunity is that he's gonna come up with to buy with all that. >> I mean, money needs to get out of a lot of leases and they cost money, and we have a real good analysis. By the way, don't look at the averages, because the averages distorted. Look at Nvidia, look at, look at AMD, that's what was bad, and that's good. >> And oil sold to you, sold to you? >> Jensen Wong at the Communicopia today. >> Oh, won't you keep an eye on that? >> It's been a while since we've actually heard the most recent wrap. >> We'll see it tonight, Jim, at money 6 p.m. When we come back, any C-director Lael Brainerd, breaking down CPI as stocks are in sell-off mode, stay with us. >> You've been listening to the opening bell on CNBC's 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. 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With the Fed rate decision just one week away, Carl Quintanilla, Jim Cramer and David Faber explored market reaction to the August Consumer Price Index. Inflation cooled year-over-year, but the core rate came in hotter than expected month-on-month. The anchors also discussed Tuesday night's contentious presidential debate between Vice President Harris and former President Trump. Toll Brothers CEO Doug Yearley joined the program at Post 9 with his take on the housing market amid falling mortgage rates. Also in focus: The bank sector slide, the anchors remember 9/11 on the 23rd anniversary of the terror attacks on America.
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