Stocks Slump on Fitch U.S. Downgrade and ADP Jobs Report, AMD CEO on Earnings and AI 8/2/23

SPEAKER_1 (0:00)

What do you see on the horizon for financial markets?

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Carl Quintanilla (0:31)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, a post-9 of the New York Stock Exchange. David Faber is the morning off. Pre-market is taking a spill on that Fitch downgrade of the United States, big menu of corporate earnings, and the macro data runs a little hot today. ADP beats 10-year 406 Our roadmap begins with that downgrade though. Fitch is the first major ratings firm to downgrade the government's credit rating in more than a decade. Earnings in focus, Starbucks, EA, Match, Humana, and AMD among those crossing the tape. In fact, AMD's chief Lisa Su will join us later this hour, and Apple Sports Push reportedly nearing a new streaming deal with the Pac-12.

Let's begin though with the Fitch downgrade, downgrading the US from AAA to AA plus. Jim, you talked about this a bit last night.

Is the market shrugging it off or not?

Jim Cramer (1:28)

I think it has to because in some ways, it's just an upgrade of the way that we run our country. I think you want to go back and think, well, what happened in August 5th of 2011 when the S&P downgraded us? S&P was at 1,119. It already had gone down from 1,317, went down to 1,095.

So, there was a big decline. Then, one year later, it was at 1,401. So in other words, if you just take the worst-case scenario, which was what happened in 2011, it was an amazing buying opportunity. When people looked at it, I think they said it was quizzical. Tim Geithner was very angry. He said the formula was wrong. This one just says, all right, look, you're a completely dysfunctional country, and we recognize that.

But all countries are dysfunctional, we're dysfunctional less than others.

Carl Quintanilla (2:19)

So are you buying the pushback that their model is actually on the mend? Why didn't you do this three years ago when things were even more dire? Arguably, they say.

Jim Cramer (2:28)

Well, look, I think that it's very easy to say that we are, as people are saying, as Fitch saying, that it's the worst we've been since we started as a nation.

I think they should take a look about that, that like 1860, 1862 period, which was kind of perilous. Not being facetious, I mean, you know, geez, obviously, there were times. Lincoln had a lot of fiscal responsibility, but if you want to go there, I think you can say, well, you made a big splash, Fitch, thank you, but a week from now, we're not going to be talking about it. Maybe we're going to be talking about it three days from now.

Carl Quintanilla (3:02)

That's sort of the view. I mean, there's a bunch of notes reaction this morning. One of them is exactly as you said, is that this is going to turn very political.

And you could sort of see that in Yellen's statement last night.

Jim Cramer (3:13)

Yes. Well, look, I mean, should we be doing this thing since 2017? We're doing this debt ceiling. It's obviously a very inefficient way to deal with it. I'd like to speak to Speaker McCarthy because Speaker McCarthy had some very practical things to say about how it's not the way to run the government.

I think that both sides don't want to run the government this way. So if that's what Fitch is saying, and it could promote anything like that, that would be good. Industry rates are up again today. I don't think it's necessarily a coincidence. I think the economy is much stronger than we thought.

The job numbers are very good. But, I mean, Fitch, we're talking about Fitch today, so you can make, anybody can make themselves relevant.

Relevant. They made it so relevant. Some of these things, I get up and say, oh, geez, I got to look at Fitch. I haven't looked at Fitch lately, but I'm good for them, right? I mean, there's people at Fitch right now who are saying, they're talking about, hey, make it louder. They're talking about us. And people are like, yeah, I know.

SPEAKER_6 (4:04)

No, no, this is really good.

Jim Cramer (4:06)