Carl Quintanilla, David Faber and Sara Eisen wrapped up the week with market reaction to major banks kicking off earnings season -- JPMorgan Chase, Wells Fargo and Citi each posted Q2 beats, but Wells shares took a hit. The Producer Price index for June came in hotter-than-expected, one day after tamer CPI fueled investor hopes for a Fed rate cut in September. The anchors also discussed Thursday's tech selloff, Russell 2000 surge and sharp decline in "Magnificent 7" stocks. Tesla snapped its 11-day win streak on a report of a Robotaxi launch delay. On Friday, UBS slapped the EV maker with a "sell" rating. Also in focus: AT&T falls after its hack disclosure and drags another stock down with it, "2nd Half Playbook" on the chip sector.
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I'm Carl Kingston here with David Faber Sarah Eisenhower eyes and a post nine of the New York Stock Exchange Kramer as the morning off futures pretty solid as we watch for signals as to whether yesterday's rotation was the real deal. Bank earnings in focus PPI does come in a tad warm yield still lower at the short end two year below four and a half. Our roadmap begins with the banks investors watching for warning signs in the banking system. JPM and Wells see a profit drop city revenue rises. AT&T shares are under some pressure this morning. The company reporting that hackers stole records of nearly all cellular customers calls and their texts and trouble for Tesla shares that to sink for a second day after reports of a robo taxi launch delay. Let's begin with some market reaction to the banks today. Interesting split in the action Sarah at least price-wise between say city and Wells on their results. Well I also just this this the higher rates picture is affecting these banks differently. We always look at the net interest income and it was a big miss on Wells and that's partially potentially why the stock is getting punished today. We're going to talk to the CFO of Wells Fargo on money movers but the 9% decline in net interest income David the fact that they don't appear to be making as much progress on the expense side which was the bull case in part for the stock that that's certainly two of the knocks against Wells Fargo that I'm seeing this morning but you did you don't see for JP Morgan that net interest income number was a beat a slight beat and they reiterated reiterated guidance so I think there's a question now of how rates settle now that we're expecting two cuts from the Fed and whether we've seen the bulk of the gains that the banks have made profitability-wise from these higher interest rates. Yeah JP Morgan as you say a different story as you take a look the stock is not doing much it's perhaps going to be down they got a I mean they posted a 20% return on tangible common equity but bigger than expected buyback as well the strength there was capital markets wealth management and cards there were sort of trends and loans and deposits a bit flatish in terms of guidance NII what Sarah's been talking about came in more or less as expected but generally seen as a very positive quarter for JPM nonetheless as you can see the stock really doesn't seem to be reacting although quite a difference from the last quarter we should point out when the stock was down sharply on earnings as you point out Wells Fargo I think there are a lot of investors though who are still lined up there for the what is yet to come in terms of the benefits of the turnaround that's taken place under Charlie Sharful but this is not a quarter I guess that's kind of particularly excite them Sarah when the asset cap will be lifted which we don't know and we ask every quarter and they don't know and the Fed doesn't know and the nobody's telling us anything like that so that's potentially the part of the problem the other thing I just noted in the JP Morgan quarter is that the credit loss provisions were a little bit higher than expected there was a three billion dollar build 3.1 billion of credit costs which was higher than anticipated they had an eight hundred million dollar incremental reserve bid so that's always something to watch as we wonder sort of where we are in the in the credit cycle and how these what these banks are seeing ahead you know the the commentary from Jamie Diamond continues to sound a bit cautious even in the face of good news I mean it came right up top in his statement in the release where he said there's been progress of inflation but he's still worried about it while market valuations and credit spread seem to reflect a rather benign economic outlook we continue to be vigilant about potential tail risk there's been some progress in bringing down inflation this is what I was talking about but there are still multiple inflationary forces in front of us large fiscal deficits and infrastructure needs restructuring of trade and remilitarization of the world therefore inflation and interest rates may say higher than the market expects it these bankers continually warn about this unfortunately the statements all we have because he was not on the call because of a travel conflict we did get the CFO Jeremy Barnum saying U.S. consumer is fine there's some elevated dialogue regarding M&A although regulatory pressures continue I think we have some sound from the call take a listen when you look at the system as a whole just to go through it you know QT is still a bit of a headwind long growth is modest and not enough to offset that and our P seems to have settled in roughly at its current levels and there are reasons to believe that it might not go down that much more although that could always change and that could supply extra reserves into the system but on balance net across all those various effects we still think that you know there are net headwinds to deposit balances so when we think of our balance outlook we see it as you know flat slightly down maybe with our sort of market share in growth ambitions offsetting those system wide headwinds meantime assets under investment management up 14 record number of first-time investors and the city got the Wells commentary as well the percentage of investors who are moving into higher yielding instruments has slowed pretty interesting and then credit performances in line with our expectations that was the word over at Wells yeah moving cash into it what you know one bright spot David in all of them consistently it's investment banking fees right that I mean they sort they soared cities investment banking revenue I saw up 60% from a year ago now it was lower base maybe but Wells Fargo fees up 38% from 2023 but slipping from the previous quarter I guess is another trend but way up year over year as you see an activity come back there has been there has been more activity more capital markets activity for certain M&A not as much in terms of advisories perhaps there's been a hope for when this year began and things seem to be perhaps on a holding pattern ahead of the election you know you most recently you're the most recent person here interview Jane Frazier I think Sarah so I come to you I come to you on city which as you see is is up is up a bit on revenues that were up what four percent over the prior period what was the highlight from this quarter well just incremental growth and in a lot of the businesses and and I think that that's important for Frazier to show as she has gone through this big restructuring which included layoffs and it included a number of the departments under her getting restructured she she said it in the in the release this morning we have made incredible amount of progress and simplification both strategically and organizationally this is what they've been embarking on we are modernizing our infrastructure to improve our client service and automating processes to strengthen controls we will continue to execute our transformation and our strategy so that we can meet our medium term targets and continue to to further improve our returns over time so potentially incremental progress on that despite some credit card losses which you know we watched big business and not enough progress being made at least in terms of the from the regulator standpoint in terms of enhancing their data quality management I know you saw this a couple of days ago Sarah we didn't really give it a lot of attention but they got fined 75 million by the OCC another 60 million by the Fed as well for what they say is a violation of the 2020 consent order that they entered into they did an examination in 2023 that found that city groups continue to have ongoing deficiencies in data quality management I just note note that because it's not an insignificant combination of fines and they continue at least to apparently not you know toward the implementation of appropriate compensating controls but so far the Fed says that has not been adequate we all know that has been a big issue for city in terms of just overall data and of course you go back to when they wired all that money to on unknowingly to a creditor no I mean we watched the expense side of on a lot of these which appeared look for city it was a good story that this is a bank that eliminated but 7,000 positions in this restructuring they were expected to generate one and a half billion dollars of annualized run rate expenses as a result of the transformation according to to Frazier a few months ago so that's been a positive story obviously the regulatory setbacks just a reminder of what kind of regime these banks are still facing I think all of them I mean it's not just Wells Fargo clearly city and a lot of them and as we debate what's ahead for Basel 3 in the end game and investors have been saying yeah although it's very specific to city on this one issue that they've been dealing with and obviously she's been taking taking steps to deal with for for years now and to your point Wells is more or less out from under most of the regulatory issues except for the asset cap which remains sort of a strangle you know the bank the setup was interesting too because the banks had rallied pretty nicely this year and into this report the big banks outperforming the regional banks Carl which have seen more pressure on profitability and why it could be interesting to see in the coming weeks how they are dealing with some of these net interest income and what they say about the consumer as well and whether they're hit harder just because they don't have the investment banking fees as much to lean on the markets gains that some of that we're seeing in some of these banks obviously ties right into the macro data that we got this morning PPI came in a little bit warm after yesterday's pretty tame CPI print after rekindled hopes for a Fed rate cut in September PPI 2/10 looking for one got some revisions higher year on year 2/6 is going to take you back to the spring of last year yields kind of gyrated a bit but didn't really change the story and and Santelli pointed out wholesale inflation doesn't really move the needle the way CPI does yeah core inflation up 3 percent it definitely was hotter than expected not goods though it's not it's not it's it's services and that's where we saw it and it's potentially why the Fed has remained wary and wanted wants to have more confidence because the inflation side of the services sector has remained sticky and stubborn but after yesterday's big relief on CPI and really that was the fourth month of data where we were starting to see good inflation progress think the market's pretty confident in a September cut and a December cut and a potential pivot in the language is set up for those cuts from the Fed either in the July meeting which is almost three weeks away or then Jackson Hole in August he's got a number of opportunities he's speaking next week in fact with David Rubenstein at the Economic Club of Washington Monday right yeah and we'll see I mean if he gets a specific question about how we racks to CPI should be good get judging by some of the other fed we've seen Austin Goolsbee Chicago Fed President React they're very pleased profoundly encouraging was the word out of Goolsbee yesterday and Nick Timrose on Squawk this morning suggests maybe we'll start to look for a ways in which he tees up September if at all big piece in the journal this morning it's time for the Fed to end the waiting game why wait until September the herds argument is that September is really just procedural it because there's no meeting in August so that it's not an economic decision in their view but also July might signal a bigger sense of urgency in the in some sort of weakness what do they see in the data you know that whole panic thing which is kind of silly because they see the same data that we see but the the belief is just given Powell style and his cadence he likes to set it up rhetorically for the next meeting although he's he's not going to pre commit you know from July to September because there's still a number of data releases we got to talk about yesterday's market a bit as we as we head into trading here in 18 minutes I mean you saw historic moves yesterday in the Russell versus the likes of the MAG 7 or the QQQ's kinds of moves you have not seen and I'm seeing here largest one day move in 23 years that is the differential in performance I mean that was just stunning yesterday we talk obviously a lot about the quantitatively driven funds that are enormous in size and can have that kind of an impact but you can take a look there what happened it's it is historic I think worst day in 10 years when you worse one day move since the large cap acronym started being thrown around in early 2013 I'm seeing some research here in terms of again that difference and yet you know we're fine across the board but you can see yesterday was just a bloody when it comes at least if you own them very recently and you were short perhaps the Russell wow whether that will continue of course continues to be a question it was based on rates as we all know the sudden move to to small caps perhaps being a beneficiary of a lower rate environment and the idea being that somehow big cap tech growth is is out now that typically has been a one-day move in the past when we've seen these kinds of things although never to the level we saw yesterday we're not a long time Wells takes a crack at it today Chris Harvey pumping the brakes on the great rotation we believe the great rotation needs lower rates and earnings optimism CPI delivered the lower rates Harvey says but earnings concerns linger post delta we'll talk more about Lufthansa today and their guidance which got absolutely slashed but we do see this as an oversold bounce not a rotation so we'll see if it continues I it's just it's the it's the flip side of what we talk about every day which is the narrowness of the the market rally some stunning statistics 87% of SMP members outperform the SMP 500 yesterday because the index moves based off of big tech David Rosenberg had this stat 600 billion dollars of market value wiped out from the magnificent seven yesterday and then everyone you know a rotational move is not the same as a broadening out move according to Matt Bailey of Miller Tayback and how do we read into that and what is it going to mean for the averages and the pain out there despite the fact that everybody's been rooting for small caps and for this broadening the max seven is added some two trillion some incredible number in market cap and that says some extent has sucked the liquidity out of the rest of the market essentially when we come back Tesla's 11-day win streak comes to an end stock gets slapped with a sell rating over at UBS today we'll talk about this reported delay in the robo-taxi event on August 8th as futures hang in there on this Friday what an eventful week stay with us at Evernorth Health Services we believe costs shouldn't get in the way of life-changing care and we're doing everything in our power to make it possible behavioral health solutions that also keep your projections at their best it's possible pharmacy benefits that benefit your bottom line it's possible complex specialty care that cares about your ROI it's possible because we're already doing it all while saving businesses billions that's wonder made possible learn more at Evernorth dot com slash wonder earning your degree online doesn't mean you have to go about it alone a Capella 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 Capella dot edu Joseph Tesla extending yesterday's losses at least in the pre-market you can see perhaps down another 2% UBS downgrades the stock from what had been a neutral to a cell describing the rally as too much too soon of course that call comes one day after Tesla shares snapped an 11-day winning streak there was a report out from Bloomberg saying the company is delaying its robo taxi launch it will now be in October says Bloomberg and previously of course had been scheduled for August 8 no work from the company as yet they say that two month delay has been communicated internally at least citing people who are familiar with that decision of course Tesla shares as we have been talking about for some time they've had an incredible rally having been down as much as 30% on the year as of yesterday at its high I think it was up about 9% before this report and the subsequent turnaround and you can see month to date and that's just month to date it's only what the 12th still up almost 20% far exceeding again an 800 billion dollar market value not a surprise when it comes to delays involving robo taxi obviously if you go back and mr. Musk certainly admits to this he has promised this technology and full self-driving for many years I mean if he had been if his original promises had actually been accurate these things it would have been on the road for some time did you see uber and lift moved up on the on the news it's pretty substantially almost as if it's not happening at all but right look I think that's the UBS the the bulk of the UBS downgrade has to do with just the share price reaction to some of this hype the the sort of non-auto related business which is what the market has gotten excited about whether it's robo taxis or humanoid robots I mean according to UBS they say it's always had a premium on the stock for the future growth initiatives proper valuing that additionality is difficult the premium is wide end of late we believe on the AI enthusiasm while Tesla is investing heavily on AI and the tech is making progress investment is costly pace of improvement may slow and the payoff is long dated they say basically 60 to 90 a share Carl is the core auto business and then the other attribution the two-year average is 140 a share it's now 175 a share so they're kind of looking at the some of the parts and the valuation and showing this is when it typically starts to trend down yeah funny because yesterday Adam Jonas of Morgan Stanley who's been quite bullish on the name talked about a client lunch where he does every month regarding Tesla core auto business didn't come up at all he says we talked for 90 minutes about energy humanoid AI FSD China geopolitics the the logic of cars was almost completely absent from the discussion is that bullish kind of amazing that's what musk wants yeah it's what he's asked of his shareholders in the last long he said you don't want to own this if you really just care about the car business we're a AI and and robotics company essentially and full self-driving obviously is a key part of that by the way I want to correct something I said the market value is now below 800 billion again at least at the outset today that was a dramatic reversal yesterday from where the stock had been but nonetheless you know you can imagine that enthusiasm will once again be built up conceivably if in fact the new date whatever it may be holds and we again we haven't gotten confirmation of the story at all at this point although typically musk would correct that's what I was about to correct if I was his fake news or something yes in this case it was Bloomberg but yeah he normally comes and issues a very rapid retort he does on on X and spoke volumes look I think it was looked at as a catalyst now the next catalyst is earnings and what's in focus on earnings slowing sales and profitability challenges yeah although the stock did also benefit from those delivery numbers that did seem to at least indicate there was perhaps some momentum and the 1.8 million estimate that's out there for deliveries for the year would be met so July 23rd definitely important coming next week coming soon when we come back here the chips have taken a detour but the sector is still outperforming the major averages so far this month we're gonna look at what's in store for the semis for the rest of the year also taking another look at futures as we head into the opening bell pointed a little bit higher at least for the S&P and the Dow NASDAQ lags again so we'll see whether we're gonna get some sort of repeat of that rotation from yesterday squawk on the street when we come right back earning your degree online doesn't mean you have to go about it alone at Capella 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 Capella dot edu are welcome back we're keeping an eye on shares of AT&T as well the company telling us about a significant hack where customer data was illegally downloaded from a workspace on a third-party cloud platform now the data is nearly all of AT&T cellular customers from May 1st 2022 to October 31st 2022 these are phone call and text message records of all of those customers the records identify the phone numbers with which in AT&T number interacted during the period they do include AT&T landline landline if you still have one a home phone also of course including counts of those calls that said it doesn't include the content of any of the calls or text it doesn't have the time stamps it doesn't have any details such as social security numbers dates of birth other personally identifiable information it's AT&T shares it's also the third-party platform that's snowflake eyes look into that in a moment let's get the opening belt here in the CDC real-time exchange Rihanna Scurry Michelle acres from the 1999 U.S. women's national soccer team at the Nasdaq ingredient supplier above food celebrating a recent listing via SPAC as we're back within a few points of fifty six hundred and for people I get Sarah on the Russell as we really did yesterday on that 3% date at one point I'm just watching the Nasdaq too which is now down for the week down 4/10 of a percent but it could have been a lot worse judging by yesterday's ugly action S&P 500 for the week overall still up 4/10 of 1% even though it gets hit on the index side when tech is losing it looks like you know the the best performing stocks have really been besides some of the small caps lately the yield sensitive stocks like real estate is the best performing group of the week it's not a nice 4.3% move the REITs a group that have been shellacked by the higher interest rates and their business is affected as we have seen a big move down in treasury yields that got boosted again by the benign CPI data today's PPI wholesale inflation took a little bit of the shine off of the CPI consumer price inflation data but didn't move yields a whole lot and we're still below 4/2 on the 10 year and that's really helped this group like a real estate take charge again and go to the top of the market for the week a week you know where where tech has been the underperformer because it tech does well even when REITs are higher and we are taking a look at at mega cap tech again we went into it with some detail that enormous sell-off yesterday in the likes of the MAG 7 and particularly versus the Russell which had a big updraft Apple shares now regaining a bit of their footing they are they're up a half a percent meta though still down as is Amazon Microsoft and do have shares of Nvidia up a bit here at the outset we'll see how things settle and again back to Tesla which continues to to have some downdraft I did want to come back to AT&T we're explaining that story to you about that enormous hack again no personal information which obviously is important no Social Security numbers dates of birth or other personally identifiable information but there is another company involved here and that's the third-party platform that they a cloud platform that they reference that's snowflake and snowflake shares actually are taking it a bit harder in the early going here then our shares of AT&T the concern being perhaps and I'm seeing some notes here that does it disrupt a sales cycle given what's left in the quarter maybe some impact on bookings there was also a fairly negative UBS note I believe out on snow this morning as well so we keep an eye on shares of snowflake and they see the text messages that I sent to you if they want to look for them but they don't know it's you and me they don't know the content of the message right they don't have the record of the message they just had the record that there was contact so you don't have to worry we're good I mean now you've told everybody that's performing the S&P right now is fast and all which you know I it's always a good early read on the industrial activity they are manufacturer of many different parts that go to the consumer and hasn't been that much of a robust environment for the company and actually the quote from the the CEO on the outlook wasn't all that strong but but they did better than expected at least and or they met expectations and it's being rewarded for that consumer sentiment remains challenging regional leadership is seeing more layoffs shift reductions and plan and planned plant shutdowns actually reference the manufacturing PMI being sub 50 for 19 to 20 months say it's been it's been an uncommon duration it's been a contraction for the better part of two years the last two years manufacturing activity that's been weak it's why the stock is up 3% this year and has been underperforming and is getting a little bit of a boost because they're doing they did okay the read was okay it wasn't all that robust as far as what's going on in the industrial part of the economy and look there are reasons to be hopeful if you do get interest rate cuts and I think the next debate is going to be that we're gonna have okay September December look to be baked in hopefully Powell will hint at them and then what where does the path of rates go what is neutral where do they want to land are we talking about rate cuts at every meeting are we talking about every quarter and and there's no real consensus on this from Wall Street I mean some some economists think it's every meeting something that it's every few meeting some things we're going to just going to pause afterwards well that's why I mean you tell me because you just talked to him but when Powell folded in the not just the timing of the first cut but not cutting enough does pose risks to economic activity he he would not go there on the path just like Christine Lagarde won't go and the reason is because they don't know because they want to see how the economy responds and they want to make sure that they don't flare up inflation and financial conditions get super loose again and that that puts price pressures and takes away some of the progress they just don't know and they don't know where that neutral rate where they need to land is if it's higher now in this economy the neutral rate is of course the destination where you're at a rate where it's not hurting the economy and not helping the economy either meanwhile PPI is getting a second look B of A actually cuts their forecast for core PCE pantheons out saying it was really about trade services sort of a very narrow element of the of the construction of the print that resulted in that I'm going to need to read like ten economists interpretations of this PPI report to figure out exactly what the culprit is and how much of it because usually wholesale inflation is a read through into PCE however there are some weird things in here like airfarers for instance went up prices went up on the wholesale level versus what we saw in the consumer price index yesterday where airfarers went down what was it 5% I mean if you want to know what's going on with airfarers just listen to the Delta CEO right at Bastion yesterday and he made it pretty clear excess capacity equals price cuts and that's what's going on in the industry meantime we mentioned Lufthansa they did cut their EBIT guide for the full year they were at 2.2 billion euro now down to 1 4 to 1 8 billion euro I don't know they're talking about elevated costs and yield pressure Delta was more about yield than cost but on the supply side yeah so you put it together and it's it's disinflationary from both of them add in what Pepsi said yesterday yep right about the about about consumers really being focused on that is a company that's been able to raise prices quarter after quarter after quarter so some of these stronger parts of pricing pressure economy airlines packaged food are now sounding the alarm about the consumer and are not talking about reinvesting in price to take it lower and that's also another positive sign for Fed Chair Powell do want to come back to the banks which we led the show with all of the banks that reported earnings this morning have their stocks down JP Morgan of course the largest by market cap and by many other measures ostensibly delivered a fairly strong quarter nonetheless you can see it's down 2% city which had looked up in the pre-market has reverse course and Wells Fargo is the worst performer by far on what were again as Sarah told you disappointing numbers just in terms of the basics there a net interest in the like but not up not a positive morning for the banks after reporting next week we get gold and sacks Morgan Stanley perhaps a bit of a different story you never know given capital markets was a positive certainly in the reports that we've gotten you might anticipate that that would follow through in some of those results and both those stocks are up Bank America also down as again you might imagine even though we haven't heard from that it's a net interest income story and that was the that was the weak spot in the Wells Fargo note although in the Wells Fargo report I would just note though the bank you know the financial sector still up almost 2% this week because it has been a beneficiary of this so-called rotation and just to put it into context I know we've been talking about all morning just the violent sort of change in the market toward the small caps and away from the tech stocks the Bank of America does their flow show where they put out the flows in the last week and the the flows in large cap growth at its highest versus small cap value since 2000 so that was the backdrop we were coming off of just so much money had been moving into these large cap growth tech stocks and away from smart half value perhaps one of the explanations will no doubt one of the explanations for why this move was so violent that we saw yesterday question is does it continue we talked to Jim yesterday David about whether or not the banks were going to start to demonstrate cost efficiencies because of AI yeah widely considered the sector that will in the end benefit the most but we're not getting that yet if anything the expense guides is going the wrong way our names like Wells and City yeah I mean it would seem to be a bit early to anticipate or at least expect that to be coming through on the on the income statement but Jim did make the point of how many chips JP Morgan is ordered from the likes of NVIDIA how much time Jamie Diamond has spent with Jensen long how many computer scientists they have at the bank for example all of which you know when he did his yeah I think he did something I'm mad money this week the idea of what will be in the trillion dollar club in the future JP Morgan was an outlier but one he thought perhaps could almost as much as well what's their highest expense it's labor yeah right and they do spend an enormous amount on technology of course norms yeah biggest biggest buyer software is financial services speaking I'm spending a lot of money on that tower too by the way it is beautiful I just want to say I don't know if you guys have walked by recently yeah wow we're talking I'm talking about JP Morgan's new like a rocket shed it's incredible in the engineering that has had to go on in part because they've got the train station below it I think it's close to getting topped off I don't know I was I was up high yesterday looking at the very top of it but it's quite a quite a structure quite an expense yeah they spent over three billion on it easily it's gonna be good for midtown midtown needs the activities yes we we only hope that some of the other big financial services companies build their own big towers I'm talking about you blackstone speaking all this let's get to Leslie Picker who can give us some insight at least on costs and some of the other metrics we got today as well as diamonds absence from the call Leslie yes so the story of the three reporters this morning JP Morgan city group and Wells Fargo as you guys were just talking about it's the extent to which non-interest income is offsetting you did net interest income non-interest income encompasses line items like fees as opposed to net interest income which is largely driven from loan making and for JP Morgan investment banking fees jumped 50% to 2.4 billion something CFO Jeremy Barnum addressed on the call it's progress right I mean we're happy to see the progress you know people have been talking about the request banking fee wallet for some time and it's nice to see not only that you're on your pop on low base but also a nice sequential improvement now of course the year over year jump is off of a very low base last year but Barnum said he's hopeful they could be seeing a better trend here with elevated dialogue within clients but some caveats as well those include the pull forward effects particularly in debt capital markets and that encompasses a lot of refinancings in the first half of the year as the IPO market does still remain pretty dormant on the net interest income side Barnum said quantitative tightening remains a headwind and loan demand is modest and not enough to offset those forces Barnum also added that there are quote net headwinds to deposit balances although he says they see their market share and growth ambitions support those macro forces Barnum said it's too early to call for the end of over earning of that kind of narrative we've seen over the last few years in terms of the importance of net interest income in a higher interest rate environments because of the murkiness around what exactly the Fed will do from here worth noting guys as you mentioned chairman and CEO Jamie Diamond was not on today's analyst or media call he had a travel conflict I believe he is in Germany so we didn't hear from Diamond on the call we did hear from him in terms of the statement some of the same concerns and conservatism surrounding geopolitics the potential for inflation to come back again due to the deficit and due to things like the deficit in the spending the fiscal spending that we're seeing from the government Leslie what do we have up next call wise Wells Fargo and then does Fargo yep that's it correct just checking my schedule here we have Wells Fargo at 10 a.m. for the analyst call city at 11 and I know Sarah is sitting down with the Wells Fargo CFO in the 11 and then I'll be sitting down with the city CFO this afternoon in the 1 p.m. so we should be getting a lot more color on the macro environment on what's going on with net interest income and some key drivers there we heard I was listening in on the media call for Wells Fargo and they talked they kind of alluded to the fact they would discuss a lot of the drivers for NII on the analyst call there were a lot of questions as you can imagine but they kept punting and saying we'll discuss this further on the analyst call so we should be expecting some headlines on that front starting at a 10 a.m. yeah I mentioned earlier you know on the city obviously Jane Frazier is in in show me mode after she's done undertaking this big restructuring split the business into five different units made in 7,000 layoffs how much progress did you see in the report it did look like they they showed some some good growth in parts of the business particularly in the banking business yeah particularly in the banking business that's one area as well as in wealth that saw growth about 2% for that division and then on the cost side we actually saw some some tailwinds there for just overall expenses that were able to offset some of the other costs especially the the fines that took place from the fed in the OCC earlier this week related to internal controls and their management of data so some of the org simplification was able to kind of offset some of those fines that they saw that they had to kind of account for in the quarter as well as some of the other kind of broader impacts that they're seeing so it's absolutely having a directive fact I believe expenses for city were down 2% in the quarter year over year so that's significant given everything that's going on on the regulatory front yeah although shares have given up their pre-market gains cities now down about 2% still a lot more to come as Leslie points out Leslie thanks as we go to break dows up a 123 about a hundred point shy of 40k once again and we're trying to knock on the door 5600 S&P watch bonds as the 10 year now ticks back above 4-2 as we continue to dissect that the wholesale inflation print this morning stay with us watch Apple today important name as it once again wrestles with cracking 230 it's been a pretty positive week of a sell side research but today the FT does have a piece arguing that the company struggling to attract in their words fresh content for the vision pro with they say just a fraction of the apps available compared to the number of developers that created product for the iPhone and iPad in their first few months meantime dows up 121 5600 S&P don't go away what back to squawk in the street let's give you a check on NVIDIA and on the overall chip sector for the second half of the year you can see the performance thus far next guest top large cap pick in that sector is AMD harsh Kumar Piper Piper Samler research analyst joins us now by ratings on both NVIDIA and AMD harsh let me just first let me just get your reaction to yesterday's amazing move you know just overall in sort of the mega cap tech but also the chips as well does that concern you at all when you look at sort of the correlation across the board in much of the sector for the stocks that you cover hello guys we are not worried whatsoever about the future of semis at least in the near and the midterm guys as you know very well the reality is that there's a 90 percent correlation between the macro economy and the semiconductor industry and as you recall all talks of recession are now off the only talks we hear about our rate cuts and basically the pace of the recovery whether it's going to be exceptional or moderate but but talks recession are often in those environments semis have done very well so that's at the broader level when you get down to the end markets itself all the end markets have depleted all excess inventory and they're all rising and it's probably most evident in commodity stocks like micron when you take a look at the stock like micron that in the run that it's had it's indicative of the environment that the semis are in so we are very bullish on semis as we get into the election into the back up perhaps for the second half of the year and so I think yesterday's move coming back to your question was just regards the NASDAQ selling off and probably some software stocks catching a bit but the fundamentals for semis remain very strong yeah obviously there are many Wall Street who love Nvidia you certainly are very positive on it but why is AMD sort of your top pick heart yeah so we had a chance to spend some time with AMD and what we what we heard was very interesting at the time that we made it our topic AMD was about 10 E points cheaper than Nvidia was and now that itself is not a great reason for making it at the top big but what was happening is they're the only real competitor to Nvidia they were massively supply constrained in the first top and those supply constraints will get materially better into the back up of the year so we're expecting a pretty nice acceleration they've got a hundred some odd customers so they've got some Brett as far as the customers go for the MI 300 chip and the traditional server business is also starting to look up it'll do about the market will do about 10% better these guys will take another five six percent share more that said we love AMD we love in video we think there's room for both of these companies to do extremely well what about the cyclical nature of this of this group it's sort of disappeared in the face of AI excitement and what what's going on right now but who's exposed as we make this transition and we deal with a slower economy this group used to be the the tip of the spear when it came to weakness and demand yeah so what happens is when in good times our memories get really short but I'll take you back to 2023 and if you remember the first half of 2023 was all about cyclicality for companies like AMD companies like you know Nvidia and others and the sector was quite so as to say in the dumps if you will so I think right now we have come off the bottom cyclicality remains a very real facet of this industry what tends to happen as you guys very well know is our customers of my companies get excited and they over order and then you get into a sort of a macro funk sometimes and the stocks give up almost all of the gains that they take in a previous cycle so that remains very much an issue and it's only been about a year or so since we've since we're coming off that that's a good book correction harsh thank you thanks for sticking with us have a great weekend appreciate it thank you thank you for having me when we come back s&p trying to close out the week with a small game we'll see if mijigan can cap off this busy week of macroprints when we return you've been listening to the opening bell one 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 such opinions are based upon information squawk on the street 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