Transcripts For CNBC Squawk 20240703

You have the nasdaq up by almost 9 treasury yields are a little weaker t tenyear yield at 4. 814 . And openai will have a product Conference Announcement today. Sam altman said they will not launch a Search Engine, but working hard on new stuff they think people will love and feels like magic to me according to people close to the information. This Technology Rolls Image Recognition into one product for advanced Voice Assistant and separately or maybe not separately, you will see how things are coming together apple nearing agreement to use openai and its technology on the next generation iphone to allow apple to offer the chatbot as part of the features that are coming next month. The big issue there, by the way, to understand all of this, openai is now processing all of its queries in the cloud apple, for privacy reasons, is to query all with siri and on the device processed on device. The question is going to be is there a clever way with some of the Openai Technology ends up being done on device if they can figure that out, that would be a neat manager we are expecting to hear about this in the next month and the other piece of this is well hear about that at the Development Conference in june and the other piece of it is does google, which has the Search Engine or button right now on safari stay there do they use gemini there were reports about gemini. Maybe apple will do a mix and match system with google stuff here and using some openai stuff here maybe that is the benefit for apple. They dont need to do it all themselves how does microsoft feel about this microsoft with the big chunk of openai that it owns they should feel great about it because apple has to use their product . They get the benefit of it. They want bing or anybody to use that service having said that, they are not in control of openai they are not supposed to be openai is supposed to be a thirdparty independent company. This is how the thirdparty independent company acts if microsoft doesnt control it there may be products or services not offered. That are unique to microsoft . Microsoft has done so well because of what it can do with a. I. I guess it would be great to be the platform supplying it to apple. You start to wonder. I dont know. Well see. We should tell you in some other sam altman news, shares of the oklo Company Started trading on friday yes, like every spac in the world, they plunged 54 . They went public with altmans spac and this is based on comm commercializing which could power advanced data centers. He is targeting 2027 for the first plant to come online like so many of the ambitious spacs, if you will, you could say Virgin Galactic was a spac it will work or not work we dont know. Youre favorite is working . Which one 51 . Thats a different i dont put that thats not in the same category. I didnt think about that because it is not the same category. One of the spacs. 7 billion workers at an apple store in short hills in new jersey have voted against unionization my apple place are there really chargers that i can get cheap . Steve kovach was telling you. I cant imagine you plug it in and says do not use this. Start a fire. Exactly Union Organizers filed complaints they blame the defeat on the Company Behavior apple denied wrongdoing. Meanwhile, workers in towson, maryland, who voted to unionize now authorized the strike. They said apple has refused to fairly negotiate apple will continue to engage with the Union Representing the workers in good faith. Overnight, softbank reported a 4. 6 billion gain for the vision fund in the fiscal year ending in march. The performance of the vision fund helps softbank swing to a quarterly profit with bytedance and u. S. Food firm doordash. The biggest gains of the year was the ipo of Chip Designer Arm Holdings s softbank has a 90 stake in arm. That stock up 1. 5 right now speaking of arm holdings, a report from nikkei asia says the company is planning to launch Artificial Intelligence by next year it will set up an a. I. Chip unit to build a prototype by next spring softbank is in talks with manufacturers including Taiwan Semiconductor to produce the chips and arm holdings are up 2. 5 . Shares of gamestop are soaring this morning and one of the prominent backer is back keith gill made the social media post on x, the first in three years. This helped spark the meme craze in 2021. It was an image appearing to state he sitting up and paying attention. Thats what we got. Thats all it takes apparently. Protests erupted at duke un universitys Graduation Ceremony as Jerry Seinfeld was due to give his address seinfeld has been supportive of israel he delivered his speech uninterrupted. 30 students walked out it did make headlineses. Protests disrupted other ceremonies, including one at uc berkeley in los angeles, protesters clashed with Police Outside of p Pomona College ken griffin said this was the product of the culture revolution in u. S. Education griffin is a harvard alum and has given more than 500 million to the university. He said, the narrative on some of the College Campuses has deinvolv devolved that the system is unfair in january, griffin called Harvard Students whiney snowflakes and he was pausing donations over the antisemitic comments on campus which he blamed on the dei agenda it did not all start on october 7th. He is right. Heres a novel idea for harvard. Embrace western values. Coming up, key inflation data due this week we will get you ready after the break. Later, Eric Rosengren will tell you what he expect from the cpi. Squawk box will be right back. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. I cant believe you corporate types are still at it. Just stop calling each other rock stars. And using workday to put finance and h. R. On one platform. Tim, you are a rock star. Using responsible ai doesnt make you a rock star. It kinda does. You are not rock stars. clears throat okay. Most of you are not rock stars. Oooh. Data driven insights, and large language models. Oh, thats so rock roll. It is, right. He gets it. Yeah. Norman, bad news. I never graduated from med school. What . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. Thats like 20 a month per unlimited line. I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . The cpi and Retail Earnings Take Center Stage this week. Stephanie link is joining us from hightower advisers. Were not done with earnings, obviously, stephanie, we have home depot tomorrow and walmart. There is an interesting piece and lead story in the journal, which is different than your take you like the Overall Results the journal points out if you are disappointed, you got hurt if you exceeded expectations, did you not get the bang for your buck in previous quarters to me, that sounds like multiples with perhaps no Interest Rate cuts and multiples will have a hard time expanding further from where they are. If you meet expectations, you get a bounce and if you dont, you go down with the earnings or staying down if you dont have multiple expansion, but earnings going higher, that will be enough, joe, i think i always call earnings season silly season you know that because you have the absurd reactions if you miss, some stocks being down 10 to 15 to 20 and that gives you an opportunity if you have conviction in the idea. If it doesnt go up that much, but they actually do beat, that is also an opportunity stocks follow profits on the way up and on the way down the names in the sectors seeing earnings revisions higher, obviously, the stocks should go higher over time. Home depot has been uncharacteristically uncharacteristically, as least as far as the results, it hasnt been the stalwart it has been in recent years the stock, for a while, had a really sharp comeback although the fundamentals were not sharp. It emerges right where the stock peaked and inflation doesnt help home depot usually. Well, higher lumber prices will help, actually, joe, for this quarter alumber is up 13 home depot, if you step back, they were a beneficiary during covid. We were buying everything for our homes because thats where we were living 24 7. They benefitted in covid you had that postcovid hangover and you have had five negative quarters of samestore sales i think you are coming to an end of the negative comps. You have a little bit higher commodity price. They are focusing on pro they made the acquisition of srs. Now pro is 50 of the total revenue as opposed to lowes which is 25 i think pro will hold up better than do it yourself. That is why the stock is poised to do better higher Interest Rates is the concern and overall concerns about housing. Im a bull on housing. I think we are 5 million homes short in this country. If you talk to any of the home builders, they underproduced for 14 straight years. It is cheaper to buy back stock than to buy land i think housing over the long haul is going to be favorable. Maybe this year you have ups and downs and volatility i like the home play through home depot comps are going to be another down quarter this is not where you think things are bottoming, but not in this quarter with year over year gains . I dont think you will see that great of a result it is not going to be negative if we look at scots miracle gro and the read through is record shipments to Retail Partners home depot is a 29 customer i think this is also a se seasonally strong time for the Home Improvement companies and housing stocks look at dr horton, they have 59 growth in the quarter. You have puts and takes. I think you are on your way to a nice recovery. Maybe flat samestore sales or slightly higher yeah, i think flat or flattoslightly higher. I dont think negative after five straight quarters of negative comps, it will show improvement. They have the easy comparisons throughout the year. I think we should see a better setup. The stock has done nothing, by the way, joe its gone down. Yeah. The housing is tough right now. Supply and Everything Else this is a housing proxy. There are times it does better if people cant buy new houses you can always make an excuse why home depot is doing well or not doing well people arent moving, then they are improving. If the housing is strong, they are doing well for the professional builders. We will see what happens you like other ones . Energy i do. I think one of the most powerful themes that i heard throughout the quarter that is starting to come to fruition is the Energy Transition super cycle we have been talking about this for a long time. We will spend about 4 trillion on anything thats tied to green clean power. Grid or data center or also a. I. This past quarter, we started to see it you guys were talking about utility stocks last week and how well they have done. Thats because earnings for utilities were up 30 . Cap ex is going higher because of all of the initiatives. If you look at Companies Like ea eatothe eaton, up 37 . Ge was up 24 . They are looking to build in electrification being 2. 2 times. We are starting to see this come together thats why it is really a powerful theme i own all three of those names i would be buying any of them on weakness you had the jobs number which started to become sharply higher you had the claims number which was a big surprise being higher. That helped the markets. That helped yields were starting to think you are seeing a slowdown and you come back with focusing on the atlanta fed at 4. 2 growth now you are telling me theres no slowdown in sight whatsoever. Which is it . I dont know. I dont know i dont think were going to grow gdp at 4. 2 like the atlanta fed tracker is now i think we are growing above trend. Is that 2 or 2. 5 is that 3 the whole point is we are running above trend. All of this fiscal and Monetary Policy and stimulus we put in place from covid until now is actually doing its job i think the better growth is the reason why were seeing that last piece of inflation really challenged to come down. Were going to get the core cpi this week and it is 3. 6 give or take a tenth or two or whatever the number is, we have made progress from 9. 1 to this 3 area we are not going to get to 2 if we are growing above trend so, to me, ill take faster growth and a little bit higher inflation any day from an investment point of view because that means earnings can continue to go higher 9. 1 is where it was when joe biden took office. Actually 1. 6 whos counting stephanie, thank you it is headed in the right direction. Thanks. Thanks. When we come back, the Northern Lights on display in some pretty unusual places over the weekend. That solar storm also disrupting one of elon musks businesses. We have details after thfris. A programming note, cnbcs fast and growing startups is back for the 12th year the 2024 cnbc disruptor 50 list will be revealed tomorrow on air and online at cnbc. Co cnbc. Com disruptor well be right back. Over the weekend, a geo magnetic storm was driven by solar flares from the sun and resulted in the display of the Northern Lights in locations that dont usually see them. You probably saw pictures of this if you did not see it yourself the sky lit up pink, green and purple the hues in alabama and mississippi. The Northern Lights stretching far south. On saturday, elon musks spacex warned of the storm and sat satellites were holding up well. I bet you have seen wonderful pictures. Were you in iceland i have been in iceland, but not the Northern Lights. I had a friend who had been flying during and took a picture from the airplane. It was cool. Coming up on the other side, openai will live stream a product event later today. We will tell you what to expect next. And tomorrow, we have an interview with Boaz Weinstein on his campaign against blackrock we will talk abouthat en twh we talk to him tomorrow on squawk box. Announcer executive edge is sponsored by at t business next level moments need the next level network. Ed an idea. Its a pillow with a speaker in it thats right craig. A team thats highly competent. Im just here for the internets. At t its superfast. Reliable. You locked us out . arrggghh ahhhh solutionoriented. [jenna screams] and most importantly. Is the internet out . Dont worry, we have at t internet backup. The next level network. I sold a pillow voya there are some things that work better together. Like your Workplace Benefits and retirement savings. Voya helps you choose the right amounts without over or under investing. So you can feel confident in your financial choices voya, well planned, well invested, well protected. At pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Good morning welcome back to squawk box. Were live from the Nasdaq Market site in times square. Futures are in the green this morning. Dow futures up 40. The nasdaq up 39. Openai is expected to make a big announcement later today we have steve kovach at the table with us for more on what is a fierce a. I. Tomcompetitionn big tech i think the timing is the most interesting part. Today is at 1 00 p. M. Eastern with the openai announcement which is reported to be a supercharged sirilike ass assistant. Then the Developers Conference and then a week after that is apple. It is getting head the Big Tech Companies would not be doing this without openai openai forced them to reorient their business with Artificial Intelligence it is interesting they are going first in this and it will look like appearance wise, they are following the big guys. What is the take that there is an agreement with openai and apple and what do you think that portends for what that product could like likor what deal they could have in place with gemini being in talks with apple and google stock surged. Google stock went down a bit. We were talking about the on chip and off chip and how google is implementingthis structure. Lets say it does happen. This is great for microsoft cloud because openai runs on the azure cloud. The more stuff happening on openai, the more money microsoft makes from the cloud products. If it is trstructured that way siri and stuff is running on timers or if you ask a question, that goes to the internet. That is not a new paradigm, but if that is running in microsofts cloud, that is hug news for microsoft it depends what does it look like your colleagues reported on friday with a supercharged siri. They will finally make siri this really smart agent to help you out with everything. What does this mean to google the gemini thing . Right. It depends where the money is going. Google is paying apple enormous amounts of money to be the default Search Engine. What is that relationship if it is the default a. I. Search engine or with the doj case, does that doj case impact the relationship or is it backward looking . Google benefits from that, i think, from having exposure to all of those users even if they pay a significant amount of money to apple to do it. What is the chance that openai runs on azure for most of the stuff . I believe you can put it elsewhere if you like. They have smaller models. My question is, is it possible this is running on the Apple Service . That is super interesting im dying to know what that deal is going to look like here. This was going back to beckys question of the microsoft piece of it. Do we think microsoft has a major influence over openai . Are they acting like a third party . Technically no. Spiri spiritually, yes what would microsoft want in this world do they want to have openai features unique to them and control because it helps the stock or would they like to be the engine powering everybody elses a. I. . I feel it is the latter we have not seen microsoft really prove to the consumer facing a. I. Nobody has. They have had copilot we have no idea if it is selling well we are getting great azure numbers from the a. I. Activity the more people are glomming on, the more apple uses it, heads i win and tails you lose they are doing smart investment all over the world to make sure this continues and benefit from Artificial Intelligence activity going on azure they announced investment in france after the global data centers. Thats why theyre doing it. Satya nadella looks smart. He laid the ground work a decade ago and it is paying off. Final piece on the apple piece of it. Speculation of the apple deal. How deep do you think ultimately the a. I. Assistant, if it is powered by openai, could ultimately work inside an apple phone if it is not apples i mean, what you want to be able to do is say, uber, get me a ca this second. Not just get me the song on spotify in a sophisticated way and go deep into the app with siri, you cannot go deep into the app that is interesting this the idea of the a. I. Agent. Bill gates has written about it decades ago. Who needs an app it is all voice and all yourself that could be a threat to apple and the app store model. Apple enabled their a. I. System to tap into that with a phone you described. Joe and becky and i are having lunch tomorrow and wednesday. It makes the reservation and sends joe and becky the invite email. It figures out you are across town it is shocked you would sit down for lunch with joe. It would do all these things at one time, but it has to get deep into the phone. I dont want a table near the restroom back to the wall. Or back to the wall you never know what is happening. You want the openai the agent would know your preferences. That is the only thing i have to say for when i make a reservation for my family. Not near the bathroom not for me. Somebody else. That is the issue. I dont like sitting by the bathroom on a plane. I understand it its gross. Is it most bathrooms are tucked away we have gone from a. I. To bathrooms. I want a waiter you want a waiter i like a table near a waiter. Always a good thing. Take my wife, please. Coming up this morning, crude prices holding below 80 a barrel we will dig into the moves in Energy Prices and in copper prices, too, right after this break. You can get the best of squawk box with squawk pod on your app and listen anytime well be right back. Surprise for you, mama. Can help you open those doors. By proactively reviewing your entire portfolio. With an eye on taxes and risk. Doors were meant to be opened. The future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future. A future where you grew a dream into a reality. Its waiting for you. Mere minutes away. The future is nothing but power and its all yours. The all new godaddy airo. Get your Business Online in minutes with the power of ai. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire wall street forecasts over 100 billion in sales for weight loss drugs known as glp1. Even with unliked and inconvenient injections, dehydratech processing of a glp1 drug demonstrated improved blood sugar reduction and reduced side effects. More human Study Results for lexarias patented oral Delivery Technology are coming soon. Lexaria bioscience, transforming the future of glp1 drug delivery. Its a beautiful. Le. Day to fly. E, wooooo welcome back, everybody. Energy prices fell on fears of higher for longer rates would hurt future demand joining us is don stroybeck from goldman sachs. Good morning. We know oil prices might struggle th a bit if prices are higher for longer. The higher rates would hurt the situation. What is the demand situation what is the supply situation like right now great on the demand side, i would state it as solid especially in england and u. S. We are seeing misses in china. It has to do with the relatively High Oil Prices compared to natural gas is natchinese trucks switching from oil to gas. Last year, with the supply growth outside of opec is strong last year, the u. S. Was surprising to the upupside this year is guyana. Lets go back for a moment to the demand picture if you think the weakened demand is china switching to evs, thats something that sdticks around that is not a oneoff. That is demand thats gone we are seeing switching from gasoline to evs, but it is a gradual process subtracting 150 k on an annual basis the other switch i was referring to is switching interest oil to natural gas. Trucks to use lng. Gas prices globally are light. When you are switching, whether evs or natural gas, that is demand thats gone. That doesnt come back on the ev side, we dont have the history of drives moving back to Traditional Cars its true on the natural gas price side we look for markets in european and asian gas prices from 2025 until the end of the decade because we are expecting so much additional Global Energy from the u. S. , which is bullish, and u. S. Gas prices in 2025. You are not talking just about supply, but production at large . We are seeing negative spillover from the bear markets in natural gas to demand for oil. If natural gas is cheaper, you know, that reduces the demand for oil and increases the demanded for natural gas taking a step back, outside of the switching, Global Oil Demand continues to rise at a solid pace at 1. 5 Million Barrels per day. Are you surprised oil has stayed below 80 a barrel we highlighted 90 for brent is likely a ceiling. There is a lot of Spare Capacity more than 6 of the Global Oil Markets is in Spare Capacity the second reason why is 85 and 90 is a ceiling is if you look at global stock data, they have been roughly flat to slightly higher over the last year. In fact, over the last few months, we have seen meaningful increases in data and oil market lets talk copper it is the highest level we have seen in years. What happens next . After the 20 price movement, we will enter a consolidation phase for a few months we think at the next leg of the multiyear boom market will continue start in the middle of the year with copper rising to 12,000. Another 12 upside from here by year end. That is mostly demand a combination of Strong Demand the overall macro is mixed we saw 7 demand growth in china for copper in the First Quarter. The economy is greener and on the supply side, we are seeing a very significant supply shock with panama which is no longer operating we expect global copper mine to peak in 2025 in the area where demand should grow at a solid pace. Don, thanks for coming in. Coming up, competing messages on taxes from the Biden Administration and former President Trump setting up a key Campaign Issue in the race for the white house. At cinupext. Wered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. Get an expanding library filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. [bushes rustling] [door opening] dramatic music yes hon the weathertechs here. Weathertech is the ultimate protection for your vehicle. Lasermeasured floorliners. 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Taxes were in focus for the race for the white house in the speech on friday, joe bidens economic adviser Lael Brainard said we need to end the 2017 tax breaks the 2017 tax breaks for the ultra wealthy and scale back the costly permanent tax breaks then on saturday at a Campaign Rally in new jersey trump, former President Trump pledged to double down on tax cuts if he wins a second term he said instead of a biden tax cut ill give you a trump, middle class, upper class, lower class, Business Class tax cut. That law will expire next year it was quite a rally, and it was new jersey it was wildwood. And even it wasnt like the inauguration where he made it up they said 80,000 to 100,000 people, which drew comparisons to something that happened in see gert in 1932, fdr had 100,000 people every single deplorable in the state of new jersey had to be at this thing trump says new jersey is in play my expert on this is scotty. He said nfw 2020, 16 points. 2016, 14 points, trump lost by new jersey will never be the last time you know the last time they voted for a republican . It wasnt that long ago. H. W. Its been considered a purple state for a long time. No, no, its deeply blue. If you look back at the last 25 years. In the last 25 years its been deeply blue h. W. Won in 1988 but a republican hasnt won since then it probably wont be 16 points this time, but if it was singledigits, that would be earth shattering yeah trump shutting down an axios report that nikki haley was being considered to be his running mate in a post on truth social, trump said nikki haley is not under consideration for the vp slot, but i wish her well. Haley suspended her campaign in march but is still racking up votes in primaries she won nearly 22 of the vote in indianas gop primary last week despite taking herself out of the race a while ago. He kind of said its doug burgum he teases a lot, and hes, you know, going to wait a while probably, but he was saying doug burgum i looked up doug burgum. I do like him. I guess he took the family farmland and mortgaged it and invested in Great Plains Software and eventually became the president of Great Plains Software and sold it to microsoft for 1. 1 billion in 2000 and i forget when then he started a bunch of other companies. Hes a really good entrepreneur. Serious eyeborows dude, he look like hes brooding all the time. Nikki haley there were a lot of questions over the weekend. What she would do. Shes still not endorsed. Thats the journals lead editorial today. Please picnk nikki. Her showing in indiana is impressive indianas primary is an open one where democrats or independents can vote too almost 22 of the vote there. He needs haley voters they make an impassioned plea not to go maga, and theyre talking about tulsi gabbard. He would never pick tulsi gabbard. I have two words for you, sarah palin. Coming up on the other side of this, the talk about the slide in tesla and whats keeping elon musk awake at night. Well talk about that when we come back. Wealthchanging question are you keeping as much of your investment gains as possible . High taxes can erode returns quickly, so you need a taxoptimized portfolio. At creative planning, our Money Managers and specialists Work Together to make sure your portfolio and wealth are managed in a taxefficient manner. Its what you keep that really matters. Why not give your wealth a second look . Book your free meeting today at creativeplanning. Com. Creative planning a richer way to wealth. She runs and plays like a puppy again. His 2s are perfect hes a brand new dog, all in less than a year. When people switch their dogs food from kibble to the farmers dog, they often say that it feels like magic. But theres no magic involved. dog bark its simply fresh meat and vegetables, with all the nutrients dogs need instead of dried pellets. Just food made for the health of dogs. Delivered in packs portioned for your dog. Its amazing what real food can do. With gold and copper prices pushing towards all time highs, us gold corp. Offers investors leverage to both gold and copper at its project, and mining friendly wyoming. U. S. Gold corp has a reserve of almost 1. 5 million ounces of gold equivalents. Permits to mine zero debt with only 10. 73 million shares outstanding and a portfolio of world class american Strategic Metals assets. U. S. Gold corp, join the golden age. Welcome back to squawk box. Teslas stock down now more than 30 this year driven by declining revenues shrinking margins and some of elon musks comments his latest column is the man whose musings fuel elon musks nightmares tim, why dont you tell us about it okay. What is fueling his nightmares good morning. For years elon has been worried about planetary destruction, so hes had spacex to kind of make sure humanity had other planets to be on and tesla was about protecting against global warming, and recent years weve heard these other concerns hes talked about killer ai, and now more recently the woke mind virus, that kind of his shorthand for progressive liberal politically over correct ideas. Weve seen him interact a lot with a canadian professor whose book the parasitic mind, he kind of helps fuel some of those worries. And even elon says this book gives him nightmares. And how should investors maybe investors should go read this book . What would be the takeaway if they did it helps kind of explain some of the world view that elon has started leaning towards in the last years hes very much active on x, concerned about some of these immigration issues, dei issues, you know, generally things that are overly politically correct he kind of pushes back, and you know, for years he probably didnt necessarily bother people because teslas stock was doing relatively well, but in recent months as you point out, it hasnt been doing as well, and theres just kind of general concern that maybe these bigger ideas and acts are being a distraction for him, right how much do you think people talk about how in the United States ev ownership and buyers, its become political meaning blue states you can see materially different buying patterns than you can see even red states, and how much do you think he has stoked that absolutely. Hes probably brought in republicans to tesla, but maybe not because of his politics but because of just tesla vehicles performance over the years, but you look at the data about consumers at the end of last year when he was very much politically having these political outbursts, and you could see democrats kind of walking away from the brand, not stomaching some of that talk, and thats a harmful thing for the company at a time when democrats really are the biggest cohort of electric car buyers generally in the u. S you need to keep those if youre tesla, and that kind of turned them off to the idea of owning a tesla. Tim, at the same time, i would say that he has been right about a lot of this, both technologically and even culturally and socially. I think theres an increasing understanding, even on the left about some of the issues that he was trying to vocalize a year or two ago about where we are with some of these issues that where the pendulum is swinging back i was even mentioning your paper today has a piece called suddenly there arent enough babies, the whole world is alarmed. Thats an issue that he has been talking about for years. Absolutely. Its one of the interesting things about him you know, its not black or white. Theres some gray when hes talking here, and you cant necessarily dismiss some of these things that might appear at the beginning to be fringe. He does have this ability to kind of pull at strings that become more interesting over time go back 20 years, electric cars did not seem like a thing that people were going to be interested in. He had an idea and an understanding of how to make it popular. Its very similar with some of these social issues that sometimes he has his fingers on the pulse of whats occurring underneath kind of the surface that people are now more willing to talk about. He even talks about how hes expanding the overton window the idea of whats acceptable to communicate and talk about in general society. He thinks thats important thats part of the reason why he bought x is to have greater debate, more robust debate to ensure that not just one or two ideas are conventional wisdom. Tim, im sure well continue t that debate. We appreciate seeing you this morning, folks you go out and read that column, its an insightful one on how elon musk is thinking these days its just after 7 00 a. M. On the east coast youre watching squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and joe kernen. Chips, the Biden Administration giving its latest chips about award to Polar Semiconductors. The company will receiving 120 million from federal grants to build a factory in bloomington, minnesota the price tag there 525 million and apple reportedly closing in on a deal to put open ais Artificial Intelligence tech on the iphone, according to multiple reports, the twosides have been finalizing terms of a deal for apples upcoming mobile ios 18 we imagine well hear more about this in june and open ai having a presentation later today on some of its new tech well see that as well also a report from nikkei asia saying arm holdings planning to launch Artificial Intelligence chips itself next year it will set up an ai chip to build prototype next year. Softbank is in contract with taiwan semiproduct tor to produce those chips. After a couple of years of not feeling like we heard anything about chips does it feel like every week theres more money getting handed out to some company or another. Thats the whole program. Thats the plan. Polar semi . Im not familiar with them it wasnt a lot of money no, but last week it was microsoft. Remember the white house made that announcement that it wasnt chips related. Weve had intel, other companies along the way. So it does feel like that money is coming. It makes you wonder what that does to liquid it out liquidy out there. The dow is up another 36 points. S p futures up over 7 points the nasdaq up by 45. Lets get over to dom chu. Hes got a look at this mornings premarket movers. Good morning, becky, joe, andrew our monday morning mover starts with notable calls on the analyst front. The airlines ones, thats thanks in part to the team at hbc each with buy ratings you can see each of these is up a half a percent in the premarket trade. They say delta is their topic in the universe its all about sustained recovery and business travel, Stronger International demand and better capacity trends for delta its competitive conditioning at its free club. The target price for delta is 72. 80 u un united at 69. 20 it applies decent upside were watching shares of nvidia. Theyre up fractionally, around 115,000 shares of volume theyre getting help from jeffries analysts there have assumed coverage of the broader semi industry with a bullish longterm view, and theyve upped their target price specifically in nvidia to 1,200 bucks a share. It was 780 prior they keep the buy rating, the stock remains their top pick in semis overall when it comes to capitalizing on the ai boom. For more on those calls and other top analyst calls of the day head to cnbc. Com pro subscribers get more detail in analysis of those calls. Well end on a check of one of, if not the original meme stock thats gamestop. Those shares are up 26 in the premarket. A million and a half shares of volume this is trader keith gill, some folks know him as Roaring Kitty on social media and internet messaging board circles. One of the original people most associated with that volatile trade for meme stocks back in the day. He posted on x for the first time in nearly three years just yesterday, and it showed what some are interpreting as an image that he was taking notice of gamestops stock. You can kind of check that post out for yourself you can see the stock has been hammered over last year but has rallied sharply by about 75 in the course of the last couple of months here. Watch what happens off those recent lows, gamestop, og, memes, ill send things back over to you. We showed the image earlier, and it does, it looks like hes sitting up and taking knows. People are anticipating theres the image again. Looks like hes paying closer attention to something whether its gamestop shares or not, but its kind of amazing that thats all it takes to get that move in the stock, and when you first arro wrote that it was up 21 , now as you mentioned 26, and 27 . That is a big mover. I dont know, becky whats in his hand on that image might be a Remote Control or some people are saying its a game console its a controller. I dont know exactly what it means. There is this broader interpretation on places like reddit right now, on x, which has now been engaged with quite a bit on this particular image that kind of implies or is trying to tell people its maybe about gamestop nothing definitive in that image as you said. It is enough to drive a stock like gamestop up 27 it was already up massively, kind of the nearterm trend. Its been getting a lot more traffic these days this is kind of like maybe that i dont know if its the gravy or the icing on the cake for some people out there. Its been a decent down trend over the course of the last year well see you a little later. Every couple of days, i swear that i wont post on x again for three years, for another three years. Whatd you do uhoh. Because if youwrestle with pigs you both get dirty and the babylon b comes out with something. Did you see what it said about terry seinfeld the organizer of the walkout against Jerry Seinfeld revealed, and then they had a picture of newman. Thats pretty ood. You remember newman of course. That is pretty good we used to do that. We used to talk to newman all the time when we had wework. The economy shrugs off the usual indicators leslie picker joins us now with more good morning s spl. Hey, good morning, joe. The usual playbook is that the fed raises rates, banks pull back on lending, demand for lending plummets and then a recession follows. Those precursors happened towards the end of 2022, and yet, afterward gdp growth has been pretty stable jeffries constructed an index that measures the percentage of banks tightening credit standards based on data from the fed senior loan officer Opinion Survey the Research Shows over the last 30 years, every recession has coincided with the index rising above 30 the scale is inverted in that chart you see on your screen here you can see that correlation during the pandemic and in the financial crisis, and in the dot com bust as Bank Lending Standards declined during the feds more recent rate hike, the economy has continued basically chugging along so why is this time different . Well, jeffries notes this will be the subject of a, quote, host of future doctoral dissertations because its not exactly clear one theory from the report is that even though new debt is more expensive, large companies, especially mega tech ones are still experiencing high nominal growth and locked in funding at low rates. So theyre actually earning more interest on their cash than theyre paying on their debt meta and alphabet have even announced dividends, for example. So to be sure, not all companies are meta and alphabet, and there are smaller, highly levered companies feeling more of a pinch, but so far it hasnt been meaningful enough just for any sort of recession. Those who believe the soft landing narrative dont think they they ever will, guys. Its a bizarre world because normally this would not be the normal correlation, but i dont yeah. Nothing seems typical about this environment that were in right now, and this is just another example. Yeah, i think kiwi is in part to blame obviously theb banks have excess reserves, and thats playing a role if you think back to a year and a half ago, everybody went into 2023 expecting some sort of recession, and i think its because they were looking at historical indicators like these and saying this is how the playbook has always operated or at least its operated in kind of modern times, so why would this time be any different, but it has a lot to do with qe i think also private credit has a role here as well. Theres such unconventional financing taking place, and because of the rise of private credit in recent years, that may also have kind of a blunting impact on the tighter lending standards were seeing at the traditional banks as well. And we thought, you know, a steeper yield curve, but Interest Rates go up you dont even necessarily get a steeper yield curve if its inverted is this helping or hurting the banks, do you think, the stocks themselves yeah, the bank stocks, well, i think kind of going back if we can a year and a half ago when everyone was expecting this recession, that was harmful for the banks, and it also coincided with these new capital rules which would tighten their ability to lend as well now were seeing the potential for those rules getting watered back that proposal getting watered back thats kind of the expectation at this point in time for bank stock investors, plus the fact that there isnt a recession youre seeing the kbe Bank Stock Index at its highest levels in a year because of the fact that it looks like we could be potentially avoiding a recession and banks dont have to kind of pour as much capital they can be lending out more given kind of the changes that are expected to these rules. Its definitely a double tailwind for these banks. Thanks, leslie. When we come back, investors will be focused on inflation data this week after the dow notched its best week of the year Katie Stockton is going to join us to talk market technicals right after this break we have seen some momentum well see what she thinks about it all squawk box will be right back. Dad, dont forget about my new cleats. Sweetie, i cant make it to dicks this week. Have you heard of dicks. Com . Have i heard of dicks. Com . Girl lets go lets go have i heard of dicks. Com . screaming whoa. Dont overthink it. Lets go shopping. Actually what i need are some cleats. How about one of these . Great. Done. Anything else . No. Golf clubs . Not for me, for a friend. Yeah, yeah, of course. Anyone impressed with how fast that was . Yeah, totally i know, i went to dicks. My cleats thank you i love you wha. Ii went to dicks. Com. Ever heard of it . Girl 2 yeah, i told you about that. a slow network is no network for business. Girl 2 yeah, i thats why more abou choose comcast business. And now, were introducing ultimate speed for business our fastest plans yet. Were up to 12 times faster than verizon, at t, and tmobile. And existing customers could even get up to triple the speeds. At no additional cost. Its ultimate speed for ultimate business. Dont miss out on our fastest speed plans yet switch to comcast business and get started for 49. 99 a month. Plus, ask how to get up to an 800 prepaid card. Call today a quick news alert right now on intel the wall street journal reporting that the chip maker is in advanced talks with Apollo Global management for an 11 billion deal to help intel build a new chip factory in ireland. Shares of intel this morning up by about 1. 1 . Just theyre supposed to build them here, arent they we just gave them a bunch of money to build stuff here. Lets talk technicals with Katie Stockton, fairly strategys founder as well as a cnbc contributor. What is it, its four weeks in a row. Is that the dow and the s p, and the best week since december and this was even after were thinking higher for longer and maybe even maybe even a, you know, some people say no, but i think a cut or a hike could be in the cards not as 0 chance, katie. So what happened momentumwise well, there is shortterm upside momentum on the pullback, right, so we saw about 6 downdraft for the s p 500 and now a 6 or so rebound, and that puts us back to square one the market is at a proving ground in terms of the shortterm resistance. For the s p 500 the level is about 5260 and we are looking for one more downdraft before we see newhighs logged. We could see maybe a brief new high what were looking for this rally to fail and give way to one more downdraft before the corrective phase ends. So were seeing that sometimes corrections unfold in this a, b, c fashion, and we see that april wave as the a wave this current wave as the b wave, and were still awaiting the c wave the intermediate term momentum is still to the downside even though weve had this strong bounce i think, joe, what youre alluding to is that sentiment could be getting a little bit complacent some measures show it, others dont. Were watching the vix in particular because the vix is really quite oversold as you can imagine right now, and very close to strong support on the chart, and no resistance until about 21, and weve seen momentum behind the vix, which is sort of an ekg for the market in a way we see momentum shift, the degree that we could be getting into more highly volatile environment going forward. So whos calling the shots right now . The generals or the troops has there been enough of a broadening to where, you know, we dont need to watch apple every day or, i dont know, any of the magnificent 7 its still them, isnt it . You know, i went back and looked at the yeartodate winners on the sector front just today, and we have Communication Services up there, even utilities, energy, and then technology so its not been all about the mega cap complex this time around we do have good brass behind the market, and thats something that does support the bull cycle beyond this corrective phase that were anticipating. We do think that yields are really the driving force here yet again with tenyear yields they look poised to bounce, and that could instill that next down move for the s p 500, but well be primed and ready to buy into that weakness were just waiting for those intermediate term metrics. These are things for the techn technicians, the weekly oscillator we want those things to look better before we can feel confident adding back to take advantage of that stronger breath you dont do you cant chart cpi or core cpi, can you it would be so slow moving. It wouldnt be probably worthwhile thats what will inform the next move in rates probably. So you think yields look like theyre ready to rally, in other words bonds look like they could sell off more. That could bring the next b wave you called it for the s p. So what does it indicate whats the terminal yield on the tenyear it indicates . You know, we expect a fleeting bounce for yields and certainly the ppi data could instill that, right . Just a brief knee jerk reaction higher, and thats when wed actually be adding fixed income exposure because we have in tenyear yields still that loss of longterm upside momentum, so weve been calling for a lower or high of course versus 5 . We dont think were going to see 5 again this year were not terribly convinced that that lower high is already in place we want to see this last sort of ditch effort from yields, and that should get us to maybe a place of better capitulation for equities so its in the 460 where we just were, 465 i dont have conviction as to where it could go. Honestly theres no strong resistance for yields between here and 5 . 5 seems way too aggraggressive 4. 8 maybe, but theres no real resistance between here and there. Has gold stalled out at this point . It is stalled, but thats okay it really hasnt impacted the intermediate term metrics. We have uptrends in place across really the metals complex, and these follow longterm breakouts, so longterm trading range breakouts for gold, for silver we actually are really on board with having that exposure and even more broadly Commodity Exposure in general because we believe that weve gone into this more sort of broad commodity bull cycle with turn arounds and floating in Agricultural Commodities we have even signs of life in nat gas, which has been a down trending commodity for a long time here. Weve got to go, i know, i just want to ask, so 60 looks like a pretty on bitcoin, 60 looks like its becoming a pretty significant support level. It keeps testing, and thats bo bounced back again today almost 2 . I think we can trust that bitcoin and other all coins can see one more downdraft alongside equities, that theyll have sort of an in step maybe not terribly correlated but at the same time showing that risk on is still going to suffer during the next down draft so for bitcoin, we think there is Downside Risk into the low 50s and low 50s wow shes looking for a little bit of a pullback in the s p, which with bitcoin correlates to like 52, which is thats unbelievable okay all right, katie, thank you. Of course coming up, we are going to talk about the health of the Housing Market and why loan balances are ticking up. That is next were coming right back. I came to the u. S. As an immigrant, i started here in college as an undergrad and then came to work at morningstar right out of college, and i worked my way up the firm and i think the best lesson is that a combination of hard work, entrepreneurship does lead to great outcomes in my view, the American Dream is alive and well and thriving and when i got there, they have the sushi this is clem. Like sushi classy clems not a morning person. Im tasting it or a night person. Or a. People person. But he is an i can solve this in 4 different ways person. And that person. Is impossible to replace. You need clem. Clem needs benefits. Work with principal so we can help you help clem with a retirement and benefits plan thats right for him. Im short but im. Im confident. You know . Let our expertise round out yours. While i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. Upwork is half the cost of our old recruiter and they have toptier talent and everything from pr to project management because this is how we work now. Music unnecessary action hero from pr to project management unnecessary. Was that necessary . No. Neither is missing your daughters competition to do payroll. With paycom, employees do their own payroll so you dont have to miss your daughters big day. Time to shine. Get paycom and make the unnecessary unnecessary. Welcome back, everybody. A new report from Property Data provider adam shows that about 1 in 37 homes were what they called seriously under water the First Quarter. But while that number is ticking up, it remains much lower than before the pandemic when this ratio was closer to 1 in 15. Joining us right now for more on the health of the Housing Market is an analyst at housing wire. Logan, the number on a National Level ticking higher, obviously not a major concern. That report did go to point out that there are some Southern States where the number is significantly higher whats happening yes, theres actually a certain small percentage of homes that are the values are 125 for a few years now, but in general we have the least amount of under water homes ever in history. Now, theres pockets of america where assuming that you bought at the very peak in 2022, boise, austin, seattle, technically you could be under water, but in scale terms the underwater issue is not a problem i think it becomes more of a problem if we did have a job loss recessions. Home prices fell, then that percentage would gradually rise all across the country for those that bought at the very end of the economic cycle. That makes sense that its not a problem unless somebody loses their job or they need to move those are the only two situations where i guess it becomes a huge issue why is it a bigger deal in some of these Southern States, southern cities . There are pockets of this country where home prices really didnt appreciate, and if anybody did have a very low down payment, then youre going to have a small percentage of those house. But we also have to remember 40 of homes in america dont have a mortgage, and the loan to value is generally terms are the l lowest levels ever there are going to be pockets. Thats why i highlight seattle, austin, and boise, those homes could be down 10 , those homes are only 3 down youre technically under water. Its not just a short sale or foreclosure risk its a supply suppression and the lack of ability to move unless you bring cash into the closing of the transaction so you can sell your house and move. It is the spring selling season what are we seeing at this point . Are there more houses that are going on the market . Is there more supply is there building thats being done yes, this Housing Market this year is much better than last Year Inventory is growing yearoveryear, new listings data is growing yearoveryear, its not a lot its about 150,000 homes from last year at this point, but its still a positive. Last year wasnt a positive for the Housing Market we were at record low levels of sale inventory didnt grow, prices rose, which made housing less affordable this year even with Mortgage Rates elevated we are growing inventory yearoveryear, new listings data is growing yearoveryear, but context is key. 2023 was the lowest levels ever recorded in history. Were still trending at the l lowest levels ever in new listings or active listings. Much more positive this year than it was last year, and price cut percentages are slowly rising. Thats the chart we were just looking at its a little counterintuitive these are the number of homes that have to have a price reduction. When you see that going up, its signaling that maybe houses are staying longer on the market, buyers have to offer or sellers have to offer a discount to get a buyer in . Yes, as inventory grows and rates stay elevated, prietce cut percentages should grow. As you can see in the chart, the slope of the curve was very fast, Mortgage Rates from 3 to 7 , the slope went up. Here its a much more slower slope. It is a much more healthier market this year that active inventory is growing and new listings growing most sellers are buyers so you get a little bit more demand as more people sell their homes but again, realistically were at record low levels of sales. If Mortgage Rates were trending towards 6 and stayed there, we could have definitely the sales levels start to pick up and hold, but lately we have rates fall down, demand picks up rates go up, much healthier this year that we have more sellers in the marketplace logan, thanks for the update. Pleasure. Kocpalantir cofounder joe lonsdale is going to join us the futures right now are flattish the dow off a little bit id say up for faivae r lu anyway squawk box will be right back. Where are my keys . Memory and thinking issues keep piling up . It may be due to a buildup of amyloid plaques in the brain. Visit morethannormalaging. Com coming up, joe lonsdale is going to join us on set to talking everything from investing in india to College Campus protests. And later, the uaw facing a key test on an upcoming vote, a mercedes plant in alabama. Phil lebeau is going to join us in just a little b tito bring us those details. You dont want to go anywhere, were coming right back. When you need to prepare for unpredictable adventures. gasp you need weathertech. [hot dog splat. ] laser measured floorliners front and rear. [drink slurp and splat. ] scream seat protector to save the seats. [honk ] theyre all yours were here hey, i knew you were comin. So i weatherteched the car can we get ice cream . We can now. Kid proof your vehicle with American Made products at weathertech. Com. [ ] your skin is everchanging, take care of it with gold bonds age renew formulations of 7 moisturizers and 3 vitamins. For all your skins, gold bond. Welcome back to squawk box. Joining us to discuss the College Campus wars, defense tech, his recent trip to india, joe lonsdale is here, cofounder of palantir. Its great to see you this morning. Imma i want to start with the controversial issue of whats happening on campus. We saw what happened with Jerry Seinfelds commencement speech, dozens of folks protesting that. But i think youre a unique person to talk to about this because youve also started your own school, university, or i should say college i dont know what the distinction is between a college and university in us austin. University. And what you are seeing right now. Its really sad but its really showing the rot at a lot of these places. I didnt agree, you know, ten or so years ago when they decided anyone who questions the selfunderstood identity of somebody or refuses to affirm it is in big trouble. Thats the rule at these places, and its very clear now that these people are questioning this and it turns out the rules of some identities, others are not, its antisemitic it shows how messed up this i think its a religion these people are following its like some kind of calvinist predestination where some things are youre destined to be a good person, neoracist thing, and its terrible. I think theres something thats been spreading in our society for the last ten years its really interesting. You can quantify the fact that women on average are more religious than men, on average, its a thing for 400 years weve known. Thats not true anymore amongst women in the last eight years in the younger generations, and i think the reason is their new religion doesnt identify as a religion i think its a very terrible weird religion where theres no forgiveness and they have this mix of values. They see the world through a framework thats unhealthy this is a broken thing its not right im here in new york with you guys, people go into the board of dalton, theyre taking first graders weird sex ed stuff this is a weird religion theyre spreading in the blue cities, weve got to stop it. Joe, its not a coincidence, i dont know what numbers are like for whether you think americas a good place or whether youre proud to be here, whether you think capitalism is but there are bad ratings, so like you said its been a rot of like ten years j its been going down for ten years its not just about antisemitism. Obviously im jewish, i care about antisemitism, but im american and i care more about america itself if you see the problem with corrupt ngos doing weird things at the border, all the stuff thats broken. Its tied back to this weird antidemocratic if you speak out against it, you are controversial. I am now the controversial joe lonsdale for calling this out. We all need to call it out because its broken. Let me ask you a separate question. What is it . Is it its social justice fundamentalism its maybe wokeness. Theres all sorts of words for it its a new religion. Its seeing the world through oppressor, oppressed frameworks. Its this new way of approaching the world that is frankly broken and comes from a bad set of philosophi philosophies. So many of the protests were seeing around the country have to do with the approach that israel has taken, if you will, in gaza, and the question is if you believe that there is a way to have theres a way to think about this is there any distinction maybe is the better way to say it between having a prot protest about the approach israel is taking from a policy perspective versus the question of whether there is ultimately antisemitism underneath that feeling . For sure. So i think good people can argue and disagree about israeli policy, and thats a very fair thing. The problem with these protest ss a few things. You get a lot of antiu. S. Sentiment, a lot of proviolence sentiment, and second of all it goes back to the core of this broken religion, youre not allowed to discuss and debate things theres no such thing as gang together with humility and having a conversation saying i agree with this. I disagree with this you are on the oppressor side. You are evil and theres no questions asked. Thats the framework right now. Let me ask you a separate question youve invested in a lot of defense companies. We showed some tape with an interview i did with general milley last week one of the things he talked about and eric schmidt talked about was the idea of the future of the war is going to be more lethal than it has been in the past in large part because its going to happen in very dense cities, and gaza may be a dress rehearsal for what that looks like and that the both morality of that but more importantly the politics of that are going to become more and more complicated especially since everyone has an iphone and is going to be able to take video of this. So the ability to quote, unquote either defend yourself or, you know, some people think that, you know, the only good defense is offense well, but the politics of offense may become more complicated. You know, you saw u. N. Revise down by half, their guess about how many civilians died. Its too many civilians. Its less civilians than an armed conflict, but its still horrible, and it is a very, very tough thing. War is a terrible thing, and you know do you think that technology and by the way, we deba debate thd last week do you think technology is going oto be able to change that part of it . I will say the group was very mixed on that. It wasnt clear that somehow ai was ging to change that. Id love it if robots could fight each other and determine the outcome. We are working on amazing defense technologies youve seen new videos where they can turn off the swarm of drones from far away with electronic shields there are things like this the best defense still is offense and wa r is still going to be terrible in a social media age, war is going to be even tougher thats true j. You just got back from india. There are a lot of tech folks who have been making dare i say pilgrimage to india in the past year or two that seem to be very bullish on india folks have been bullish before these pilgrimages have happened before over the last decade and are for whatever reason it has not moved the needle the way the expectations is this time different india has been an important player in tech for a long time theres millions of programmers there from top i. T. Services companies. What we used to send our very well ke find i have teams of hundreds of people, mulltiple companies, what youre seeing if you have people solving our hardest problems here in the u. S. , theyre also going to be able to solve problems in their own countries. Starting to write checks there im very bullish on india. The rot you talk about, do you point fingers at the left for this do you see trumps rally do you think that politically that this is going to cause a shift in i mean, do we ever we turned to one all the time, reagan, it was very similar, you werent around. I was a kid. Yeah, you were a kid. I never thought things would turn around. Im on the Ronald Reagan president ial library i admire some of what hes done there. Asking whats going on in the u. S. , you guys are crazy, and some of them saw it as neo colonialism. Like microsoft forces you to use your pronouns, youre trying to force this craziness on us i dont think its that hard to stop i think it requires the courage for a small number of us to speak up you go to thesecolleges, to columbia, maybe 10 of the people there are the fundame fundamentalists. Everyone else is afraid to speak up dwagainst them you need to speak up against the far ends of both sides, but the far left thats what i mean. Do you go right or does it mean you just reject the left. This is the biggest problem that happens in society, when you get a crazy far left, you get a crazy far right. You dont want a far right, you want a coherent moderate response where you stand up and say why its wrong i mean, at this point, it seems like the administration is held hostage by the left whatsapp hundreds of ceos and founders, they agree this is wrong. Theyve woken up. Youre watching a change in business where google said you cant protest here. Thank you, joe, youve been speaking about this for years. I didnt realize how bad it was. I totally agree with you theyre still a little bit afraid. Thats the thing, most ceos, you know, you run your own firm. Its a whole different operation. Alex karp lives in his own universe you know, there are people who are elevated to a special place or that they are either the founders of their own company or theyre considered, jamie dimon can say what he wants to say most ceos in america do not feel super comfortable saying what they want to say. Most of them got there by being risk averse, and climbing ranks. Founders, its very different than ceos. I think they are waking up to this the problem is our big institutions are still totally captured by this our schools, our ngos are still captured. If theyre waking up to this, are they woke . Its a better form of it. Good to see you. When we come back, Mercedes Benz workers in alabama will vote on uaw membership weve got the details next. And then the ceos of warby parker will join us to talk about the eye wear business and their hopes of opening more stores dave galboa and Neil Blumenthal will join us to talk all about this squawk box will be right back. 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Thousands of workers at two mercedes plants in alabama will begin to vote on whether to join the uaw. Phil lebeau joins us on the squawk newsline with more. Im going to take your word for it that its really you. It is me. It is not ai it is not a robot. This is an important vote, joe, because just a couple of weeks ago you had thevote. A few weeks ago workers in chattanooga, tennessee, to join the uaw. First south of the mason dixon land saying we want to join the uaw. Whats going to happen in alabama. 5,100 workers at two plants near tuscaloosa voting between today and thursday the significance of this is, if this is the next domino, if you will, in the foreign automaker plants in the south thats going to call. About twothirds of the vehicles built at this plant from mercedes are exported but its a big plant. Annual production 295,000 vehicles if the uaw were able to organize this plant, this would be another significant step towards reversing the decline in membership weve talked about this. Talked about it when they were going through the big three negotiations last year look at this chart a steady decline, or has been a steady decline in uaw membership going back a couple decades now. The question is, can they reverse this through the plants in the south if they are successful at the mercedesbenz plant in alabama, then take a look at hyundai and toyota two plants where the uaw said we believe we can organize those plants the next target we would see picked out by the uaw. Again, votes are today, goes through thursday well have results on friday. Is this south for example, alabama. Is it less likely they, theyre prounion, phil, or what can you in the past they have been, joe, but if you are a line worker at the mercedes plant in alabama, even after getting a raise, which most foreign automakers did, once the uaw contracts were approved, they saw writing on the wall and gave workers a raise. Still, if youre a worker looking at the dishes between when youre making and theyre making at a big three plant, youre saying, wait a second why shouldnt i be paid what theyre paid thats made a huge difference in the appeal of essentially joining the uaw. Great all right, phil. Very good. Thank you. I recognize that view. Ip think it was you. Thanks. Coming up, ceos of warby parker on state of the consumer and eyewear maker. A preview of the new inflation data and where rates may be headed get your glasses on, folks warby parker, after the break. Drive the new 2024 nissan rogue. Get 0 financing for 36 months on the 2024 nissan rogue platinum. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire you know whats brilliant . Boring. Think about it. Boring is the unsung catalyst for bold. What straps bold to a rocket and hurtles it into space . Boring does. Boring makes vacations happen, early retirements possible, and startups start up. Because its smart, dependable, and steady. All words you want from your bank. For nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled. Which is pretty unboring if you think about it. Energy fuels, a leading american uranium producer, is ramping up production to supply expanding Nuclear Markets and diversifying into rare earth elements, key ingredients in many clean energy and defense technologies. Energy fuels. Welcome back to squawk box. Warby parker made its mark disrupting the eyewear industry with online to direct consumer model. Now the Company Expanding brick and mortar strategy adding 41 new stores over the last year, more to come and its working. Look at the stock. Joining us now, warby parkers ceo and Eric Rosengren. Good morning. We first met many, many, many, many moons ago, the whole idea, do this online the most capitallight business ever the whole concept. Then it appears whats actually making this whole thing work, really work, is actually brick and mortar, but very old school. How do you i think its been directionally this way for a long time, but clearly seems to have sort of accelerated recently oldfashioned is the new fashion, so to speak, but when we launched in 2010, also a period before any of the social Media Networks had monetized so it was very inexpensive to acquire customers online also, we would have expected this to expand faster than it has. As you grow, you end up taking on more and more of the characteristics of the existing compan industry, most want to go into a store, buy glasses and buy them inperson and thats why were opening so many for the. On the path opening over 900 stores over 49,000 optical shops in the u. S. , believe it or not. What is coming brick and mortar versus online twothirds of our sales come from physical stores we have around 250 stores in the u. S. And canada. A third of our business is still online its still massively overpenetrated relative to the rest of the category, but we are seeing majority of our growth coming from stores. When did you think you realized this and did you say to yourself did i make a mistake . I ask, people online, how people do it. Youve done cool things with the app. You can see what the glasses look like. Do your own eye test and the computer and Everything Else a moment like. Mike maybe its brick and mor mortar. We think all customers to choose whether they get a new prescription, shop for glasses, buy contacts they can choose any part of that journey to take place online and in any part to take place in stores the only retailer brand in our category that offers that choice for yoomers. Lenscrafters, then, finding most coming through the stores we find that people prefer experiencing sort of both digital and physical. Once therapy a customer they tend to use more online . Or start the juny online first and try on glasses using our virtual tryon glasses before coming to the store prepared for the visit having a seamless journey, sosht sosh sort of booking your eye exam and we can tailor the instore experience to you, which we find is radically different than you see at some of our larger scale sort of competitors. We also found this was incredibly helpful whenever theres disruptions, during covid. When all the categories shut down we were still able to serve customers. Hope that doesnt happen again anytime soon. Us, too true. You try to talk me out of contacts just like me they sell contacts. Youll be fine with me if i come in and get a prescription and order contacts not fashionable. I cant look like you guys you wont try to talk me out of it honestly we wont. We want to do whats best for you and we see that in our sales retention rate so weve had very consistent sales retention rates. Our customers spend over 100 with us within four years, and thats because we want to do whats best for our customers and patients so you come in, you want contacts, great. And strength of the consumer in terms of which products are selling . Are they stepping down in terms of going from a you know, most lenses are still 95 yes. Once you put the lenses in, prices go up and up and up have you seen a shift in terms of what consumers are doing right now . Theres no question many consumers are feeling stretched. We feel fortunate to sell products people need to see regardless of economical cycles Median Income of our base is over 100,000 and seen more strength than some other retailers in brands and seeing actually a very strong uptick around our, some of our highestprice point products and recently introduced a lens calls precision progressives which is really innovative lens that offers a wider field of view and better vision, and so highest price point product weve been ever introduced but seeing a very strong updick, because were still offering much better value relative to our competitors. Going to be a, may seem like a curveball. What do you make of the meta ray bans that have effectively cameras in them, tech in them . There was a period of time, rumored or doing it, you guys were focused on trying to figure out whether you could get, become the next google glass yeah. We think that, wearables are interesting. Some of the existing products probably not enough functionality, that most people dont want to wear them all day. Thats going to change and we think we have an Important Role to play there. Why do that partner with somebody else working on anything like that . Do you think were still many, many, many years away from making this work and not worth the time and money whats the thought its going to be a while before we have wearables, wearing them 24 7. Sunglasses taking them on and off for certain moments but prescription glasses youre wearing all day. What is required from a weight perspective is vastly different. But we stay in close touch with some of the folks spending a lot of money investing in technologies here. We have, you know, very Robust Technology team differentiating us from others in our category youll see us continue to sort of make decisions on what do customers actually want . What are they going to wear . Final question. Are you now too big for actually being bought always the questions in the beginning. Just try to take you why not . Now i wonder whether regulators would even allow that given your size and scale so were building our business in a way that we dont need to be acquired. Were really excited about the path ahead and want warby parker to be one mp the most impactful brands 100 years ago and feel were wellpositioned. A period of time you guys thought of other stuff we think sort of those brands that are most focused and they tend to win we want to help people see our mission is vision for all. Thats what were focused on. Focus thank you. Appreciate it. Thank you. Thank you. Its 8 00, actually past 8 00, but we know a lot more about all of this stuff and worth it, i think. Were on the east coast. Youre watching squawk box on cnbc im joe kernen along with becky quick and Andrew Ross Sorkin among the day the top stories, openai planning to announce updates to its cha the gbt product. Sam altman tweeted the new features feel like magic to him and tempered expectations saying it was not about to release chatgpt 5. And square space announcing it will go private in a deal private equity firm. Stockholders you see, 44 a share in cash. That make it is a 6. 6 billion transaction just on an equity basis. And the Biden Administration awarding 120 million to Polar Semiconductor to help build out a factory in minnesota this grant designed to help increase socalled power in krcensor chips used in household appliances, cars and weapons systems. A look at futures this morning. Cant see them from here but i think theyre in the green. Put some glasses on. There we go dow up futures, 75 nasdaq 61. S p up by 12 and treasurys look at that. You will see, ten years yielding 448 two years at 444. More on foreign markets over to senior markets commentator mike santoli. Becky, s p 500 not far away from completing a round trip back to where we were six weeks ago. Oneyear chart six weeks ago riding five straight up months 28 from october lows looking stretched to the upside based on technical in inives cooled off 5 pullback. Earnings came through fine see how inflation data comes out this week. You see here we are about a half percent getting to that old high one thing keeps in mind, a little nagging thought traders have is what happened back here last summer. We did have a very similar rally, what we had before the pullback 5 down. Came back above the 50day average as we have right here. Rolls over again why . Hot Inflation Numbers and bond yields higher. That to me is the swing factor with inflation data. A little hodgepodge of leadership look at industrials versus Consumer Discretionary you see they moved together for most of the last couple of years with occasional out performance by industrials you have now industrials racing ahead. Consumer discretionary not doing a lot. This isnt just tesla look at equal weighted its also the case a nagging doubt the consumer can stay Resilient Embedded in the market maybe setting us up for relief along the way worth keep an eye on how its a little more of a defensive posture. Look at the volatility index not a lot of concern being registered here. Last week one of the lowest volume, lowest volatility weeks we had in a bull market no news it good news stocks back up around a floor although bump around that floor a while. What it says to hedge funds and you have a bend in the market. Mike, thanks a lot. Beginning of the week youve got the cpi on wednesday whats the expectation for volatility around that ppi also before that. The one that feeds into the feds inflation gauge. I think expectation is could be a clearing event starting to see a lot more chatter from the cell side saying maybe in fact resume disinflation or get a clue from that see if it is people leaning lower and get a rally in bonds some arguments thrown out there for the indicator. Thats up to everybody. Mike, see you later. When we come back, evercores roger altman joins us for a wideranging conversation. Dont go anywhere. Squawk box will be right back. So this is pickleball . Pickle ah, these guys are intense. With e trade from morgan stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Its time. Yes, the time has come for a fresh approach to dog food. Everyday, more dog people are deciding its time to quit the kibble and feed their dogs fresh food from the farmers dog. Made by vets and delivered right to your door precisely portioned for your dogs needs. Its an idea whose time has come. Our next guest says the markets seem to be enjoying a goldilocks macro environment and a soft landing for the economy is at hand for more on the markets, the economy and much more, we want to bring in roger altman the founder and senior chairman of evercore. Roger, were very near alltime highs. You think the market deserves these valuations i do, because were seeing evidence of the economy starting to slow. You see the First Quarter growth was down a bit job growth was down a bit. Quits, vacancies weaker, after Hourly Earnings a little weaker, and that should pave the way for down ticks on inflation and then allow the fed a little later to finally turn to ease. I personally think theyll be a rate cut in september. I dont know if theyll be more than that this year, but i think markets are responding to the positive, to the positivity of the slowing. The prospects for lower inflation, prospects for monetary ease, and thats why both equities and the fixedincome markets rallied strongly. I think the big question is, how long that process takes for inflation to come down. Right. We get other hints or readings with ppi and cpi both out. If those numbers turn out to be hotter than expected, would you take your idea at a rate cut in september off the table . Probably. Because the fed has to see proof that inflation is improving, and we have a cpi number this week market expects i think 3. 6 annualized rate. A little better than the last print. But if it were to go the other way i think markets would be quite negative seeing prospect for a rate cut are more distant, talk a little about tariffs. This is the news this morning. The idea that bidens looking at raising tariffs, which we knew was coming, for things like evs and solar panels i didnt realize medical items would be on that list, too, and i didnt realize the number thats now being floated out there. Tariffs for evs Something Like 102 which is significant thats fourfold increase where where we stand now at 25 . Has to be symbolic to some extent even at 25 youre not getting a lot of these cars into the market. I think what biden is doing here, assuming that this rolls out as we expect, is, trying to protect u. S. Manufacturing, which hes obviously focused on reviving, and trying to protect the supply chain, especially as relates to clean energy products. And, also, china is falling back on an old, i would say, tired strategy, which is to heavily subsidize manufacturing, expand manufacturing production way beyond positive chinese domestic consumption, and flood the United States and flood europe with heavysubsidized exports. And when it comes to clean energy, where we need our own production, for example, solar panels, i think thats what biden is trying to push back on. And the reaction you think will be, what . From the american manufacturers, from the markets well, theres an ideological debate about tariffs for example, donald trump wants to impose a 10 tariff on all imported goods one of his cardinal approaches, and trump was a tariff guy during his first term. He was. Theres a big debate about how helpful are tariffs, really, because the margin theyre inflationary, but were in an era where were trying to rebuild american manufacturing, and were trying, for example, with semiconductors to avoid the obvious taiwan risk of being totally dependent on tsmc for advanced semiconductors, and you have to have steps like this if you really want to do that. Roger, the first hot inflation number that we got in january, february. Its a outlier seasonal, inventories, blah, blah, blah, then got another and another were you surprised by what we saw . Have you had this sort of, i guess, dovish view on inflation all along, and has your view been shaken . Just wondering id like to believe you, that were going to see you know, cooler numbers for inflation, but that means that weve had, like, a series of outliers, and when does that become, when do you say, i was wrong maybe inflation is headed back to 4 . First of all, im not certain, joe i could certainly be wrong. You said a higher number. Step back a minute. This inflation was caused, at least in my view, entirely by the pandemic i think theres a lot of evidence on that and so its taking thats open to discussion. It is we could debate that, but thats my own view. Right. And its taking a long time to work its way out of the system now, were down to mid3s, or midto high 3s on cpi. A little below 3 on core pce so headed in the right direction but not much doubt if the economy slows like we just discussed roger, you spent time at the white house last wednesday with the president. Right. Along with a whole bunch of other ceos. Right. What was he telling you about what he thinks the economy is going to look like over the next year, and what were you guys telling him . Well, the purpose of that meeting was really for biden to hear from a series of ceos as to what theyre seeing. Okay. And it was interesting that a couple of, im not going to mention names, but a couple really leading ceos talked about their inability to get enough workers, and in big numbers. Really big numbers. And i think thats really significant. At a lot of levels. It doesnt suggest a slowing job market, though or an economy that would come with that . Well i mean the job market is hopefully not going to slow dramatically, but it we all saw the last months number was lower. And i think it probably is going to get a little lower, because it does correlate to growth, but in a lot of quadrants of the economy we have, or sectors, we have a labor shortage, and thats a real problem. Listen, biden obviously is not doing as well in terms of Voter Attitudes towards the economy as he would like. There are a little less than six months to go in my own sue, whether he starts to do better on that measure will depend a lot on inflation, because i think what hes carrying around is a burden, legacy of this inflation, which americans really dont like. What was the second piece of that sounded like you were starting to say, talk about jobs and something . Well, most of the ceos in that meeting were very positive on the economy how could they not be . I mean, we have, as i said in the beginning, a rather goldilocks scenario, growth steady, maybe slowing a bit. Equities and fixed incomes, markets at a very strong level. Right. Theyre other share prices right around alltime highs. How could they not be positive on the economy actually a good question. How could they not be positive on the economy, and yet if you have a lot of them come around this table they would somehow find a way to say theyre not happy with whats going on well ceos always want perfection they should. During my tour, two tours of duty in the treasury, always wanted Something Different improvement here or a change there. Thats natural, but they can and some of them unhappy about antitrust policy yes. Some unhappy about, say, the climate reduction legislation, regulations . Yes. But they can see the condition of the economy, as we just discussed, and they can see their own share prices, and they know conditions are pretty good. Is business ever going to say, wow things are awesome thank you very much. Of course not and any finger pointing sorry thats just for for public disposition. To answer your question he does that a lot. In fact, inflation, trickflation a lot of finger pointing doesnt do that when he has the ceos right in front of him, im not there every day. But he didnt in your meeting. No. Next time on a longer discussion about other things that could lead to inflation, like government spendings we talk every day about the chips act and what were butting into that could keep Inflation Higher longer. And u. S. Fiscal policy is not on the right track my view, its a matter of time before there is a reckoning. A long time. As you know, markets often ignore something forever until they suddenly dont. Right. But its not on the right track. No you, and this is going to have to be some, at some point, pact spending restrained, taxes increased. At the moment you say that looks like 1,000 years from now, but then markets change. Prices happen and change is finally the result fiscal policy on the right track, no, it isnt. Thank you for coming in. Thank you. And talking about apple analyst, going to join us talking about numbers and the big head looilines surrounding tech giant pls Retail Division to open a. I. Youre watch be squawk box and this is cnbc. U. S. Secretar Antony Blinken delivering tough public criticism of israel as that country tries to eliminate hamas from gaza following its october 7th terror attack. Blinken appeared on nbcs meet the press. Is it fair to say that President Biden and Prime Minister netanyahu are not seeing eye to eye right now . Two things. One is that, as the president said and as we said in many conversations over the last couple of months, there has to be a credible plan for civilians. Have you seen a plan . We have not. Second, theres Something Else thats important. We also havent seen a plan for what happens the day after this war in gaza ends because right now the trajectory that israel is on, even if it goes in and takes heavy action in rafah, there will still be thousands of hamas left. Joining us now to talk about the israelhamas war and implications for the u. S. , director of foreign and defense policy studies at the American Enterprise institute its good to see you we talked about this last week and we mentioned that in the nearterm, President Bidens decision on arms to israel wont have an immediate effect and it might never really have an effect it may be part of a political calculus at this point or do you think it actually is going to sort of curtail israels ability to do what it needs to do . No. I think youre right, that its performative the restrictions arent significant operationally, but they are sufficient to enrage or make israelis feel betrayed, given the breadth of President Bidens prior statements about support to israel at this time i also think its significant enough to make American Allies and Security Partners really nervous that there is no commitment from the United States that once political pressure begins to mount, a president wont walk back from we saw that with assistance to saudi arabia and the uae in their war against the houthi, which we are reaping difficulties of internationally. We saw it in afghanistan and now were seeing it in israel and we also saw it in ukraine with restrictions on range usage of u. S. Weapons so i think its not significant for israels campaign in gaza, but it is significant both for the u. S. israeli relationship and for concerns that americans friends and allies are going to have about our staying power. What is the difference, how do you parse what israels doing right now in rafah for example, the journal says israel pushes farther into rafah, but this is not a fullfledge israel has still not done what the Biden Administration warned it not to do theyre pushing into rafah, but not to the extent that its an allout end are, trying to end hamas completely that hasnt happened yet. Well, i think, you know, what the israelis are trying to do is extraordinarily difficult, and nobodys good at urban warfare it seems to me possible theyre trying to be responsive to Biden Administration concerns, but its also possible that theyre trying to figure out a very difficult military equation, and were not being particularly helpful. For example, secretary blinkens comments about israel has no plan for the postwar period were also not providing that vision for them. And thats what friends do. Is this going, i dont like to use the term whack a mole. I dont know what else to say. In northern gaza youre seeing militants coming back, reestablishing themselves. So what does a did we really is isis completely gone did we destroy isis completely can you destroy hamas completely if it just reemerges, even if they go into rafah full force . I do think having said that as the objective of the operations is a very high standard, and youre right to question whether its ever achievable israels strategy has been described as mowing the grass. Right . You see a problem, whack a mole is another way to say it, but its very difficult, unless you change the attitudes of the public that is providing support and protection, or even out of fear are not assisting in identifying hamas operatives and hamas soldiers in their midst. And that is the key question. Because the the p. R. War, very early on, started being at the colleges, the universities and Everything Else i dont know how it goes i dont know how its not going to turn to the point where israel loses support at this point. You can sort of see the writing on the wall. Cant you . Well, yes, because the administration isnt making the affirmative case for how difficult what israel is trying to do is how difficult it would be for any military to do what israel is trying to do. Theyre not providing the protection to israel to buy them time and international support, and theyre caving to domestic concern in the United States. Kori, schoke. And coming up, Steve Liesman joins us with new data then speak with former boston fed president Eric Rosengren as gearings for this weeks Consumer Price number. Stay tedun youre watching squawk box and this is cnbc. Things voya helps you choose the right amounts without over or under investing. Across all your benefits and savings options. So you can feel confident in your financial choices. They really know how to put two and two together. Voya, well planned, well invested, well protected. At corient, V Wealth Management begins and ends with you. 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Welcome back, everybody. Weve been watching credit delinquencies for months senior economics reporter Steve Liesman joins us with new data on this front. Steve, what did you learn . We have april read from equifax. Just got that data it shows credit delinquencies on Consumer Credit ticking up to highest level since may 2020 should be worried . Hold on. Made below the prepandemic average and well below 2009. Combination of low delinquencies on real estate and Student Loans offsets the other loans. All areas up compared to a year ago. See that on the left side. Autos and bank cards above the prepandemic levels. Not much but a bit mark zandi says lower income households are under financial stress, worse at hand. Inflation peaking. Credit standards tightened not as many loose loans as we had in prior years data shows delinquency rates are highest from lending in 2022 the 2023 class experiencing fewer delinquency issues wells fargo tracked delinquencies reported by th banks. Running 20 above 2019 levels and you can see minus 7 over there, discovery delinquencies faring worse rate of increase looks to have slowed talked to a fed man, covers this telling meese Second Derivative is turns delinquency pressures easing jobs keep everything together, and were just not seeing a lot of corporate layoffs therefore, not widespread delinquencies and then points to climbing year over year delinquency at capital one and citi trending down there. Evidence to him the cycle is peaking and value in the names he covers because trading in anticipation of worse delinquent outcomes there so as suggested, all bets are off, unemployment rises sharply. And unexpectedly second cleanup further to go it will matter a lot to lowincome debtors raising the question if the fed will initiate rate cuts before there really is a widespread credit problem, becky i guess the fed can have a credit problem if it wants one or make a change and maybe avoid one. Really weird. You would think they would wait until they see it in the data before they actually act on such things, not anticipating problems like that could come. Steve, it matches data we looked at earlier this morning that just shows houses, mortgages, that are under water rising, but still level at pandemic levels and same story there real estate expect we spoke with said its okay, unless you deal with an unemployment situation that rises then youve got a much bigger problem. Exactly. If people are out of jobs they cant pay for these things. Doesnt seem it would be at panic levels yet when its still well below what it was in 2019 theres two metrics i hope viewers walk away smarter from this segment. You have reporters breathlessless coming on saying, know what . Delinquencies are rising yes, but not rising above yet overall 2019 levels with some problem areas in auto, problem areas in bank cards. Its not a 2019, not a 2009 cycle were well below that. Two things relative of to the prepandemic. Also relative to what banks are expecting. Banks are Getting Better results than they had previously expected so, therefore, theres not going to be a problem inside the Financial System when it comes to here. Plus, they tightened up credit in 2023. So theyre not going to have the bad results they had in 2022 and the question becomes whether or not the consumers are the ones who feel it through higher credit cards or get relief from the fed. Okay. Thanks, steve. Pleasure. For more on the feds inflation fight and rate path ahead for the new inflation data we get this week, former fed president Eric Rosengren i dont know if you heard what steve was talking about. Do you want to comment on that first . So i agree with what steve was saying, that by and large, as long as the Unemployment Rate doesnt rise you dont have a really significant problem, but i would highlight for lower income individuals, many of whom i have bought new or used cars at relatively high rates, there is stress on those individuals credit card and auto delinquencies are two are the larger bills a lot of lowincome households have to pay. So frequently it takes an unemployment increase to have significant problems but nonethele nonetheless, it is a sign 3. unemployment, seeing delinquencies for lowerincome titles. When you think about changing the path start with this. Whats your expectations for rest of the year at this point in the ball game for inflation yeah. Inflation, also fed cuts or fed hikes even started with inflation. I think the general trend is down a little uncertain is how quickly that trend will be reestablished. So one of the concerns that weve had over the last three months has been that both the cpi and pce core levels have been levelling off so in order to get the fed to actually ease this year we need to see that trend going down so the fed tends to focus on core pce thats at 2. 8 i do expect by end of the year that its likely to be closer to 2. 5 but when that trend starts reestablishing itself and starts to go down, and when were talking about tenths of a percent, small changes in various components can mean that its delayed before that trend is reestablished. So i am expecting that trend to reestablish a slow decline in inflation first towards 2. 5 this year and towards 2 next year that would be consistent with one to two, 25 basis point easings, depending when theres enough data that the trend towards lower inflation shows up. Do you think we talked to roger altman, just here earlier. Talked about potentially easing in september always say gets complicated near an election. Do you think it gets complicated near an election, knowing what you know i think that theres uncertainty around any election. And thats true about this election it looks like its going to be a close election, and theyre going to be following presumably pretty different economic policies so uncentery is not particularly good for the economy people delay decisions until they have more certainty what the Election Outcomes going to be it wouldnt surprise me if we see some slowing in the second half of the year to the extent we have slowing and inflation trends down, i think the fed at that point would think it was appropriate to lower Interest Rates. So thats interesting, though if we sort of take take it at face value that right ahead of an election things slow down generally. Is that considered when the fed thinks about this . Actually maybe things pick up in a couple months . Two, three months . Actually nothing we need to do artificially so different elections not close. Theres not much impact of an election on economic data. If the elections close, and people are, and the two candidates, or three candidates, in this case, potentially, are following very different policies, that uncertainty actually could slow down the economy a bit as we get into the second half of the year. As people wait to see what the outcome of the elections going to be. It doesnt occur around all elections. It occurs around close elections where the policies are likely to be quite different. Are you surprised at just the strength of the job market thus far . Talking to roger altman, he was at the white house last week and one of the things that came up in the conversation with President Biden by so many of the ceos was this idea they cant find enough people yeah. The u. S. Economy has been very resilient. I think that actually the fiscal policy actions of this administration are part of the reason so normally at this point in the cycle, we would have expected, for example, construction jobs to slow down and thats because both Interest Rates are high and commercial real estate is troubled. The reason we havent actually seen that is because for many of these construction jobs, theyve been helped by the fiscal policies. So the chip acts mean a lot of manufacturing, building new chip factories around the country in part to bring some of those activities from abroad into the United States. There have been actions for green energy that has meant theres been more spending on those kinds of projects, and highway projects have been way up in part because of the infrastructure bill. So some of the fiscal policies are direct government transfers, but many of the Government Policies work through the private sector and thats what were seeing in some of the construction data. So i think one reason we havent seen it in construction is that the fiscal policies have been promoting a fair amount of construction, and thats likely to continue through this year. Eric, thank you for joining us this morning. Great to see you good to see you as well thank you. When we come back, were going to ask this question is apple ready to beef up its Artificial Intelligence game find out ar the break. Toni sacconaghi joins us heading to the break tomorrow at 8 00 a. M. Eastern time, a rare and exclusive interview coming up with Boaz Weinstein saba capital management. A big campaign against this name blackrock. Its going to be a fascinating discussion dont go anywhere. Squawk box returns after this. Old school hard work meets bold new thinking. laughter at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. Old school grit. New world ideas. Morgan stanley. car, this isnt the way home. Thats right james, it isnt. Car, where are we going . Were here. surprise the future isnt scary. Not investing in it is. Car, were you in on this . Nothing gets by you james. Nasdaq100 innovators. One etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com iconic brands speak for themselves. We are so excited to welcome you to our community. Today is all about you. its a beautiful. Day to fly. Wooooo on tech giant apple bloomberg reporting putting chatgpt features from openai on its next operating system. Apple expected to showcase new a. I. Capabilities at an event next month separately two laborrelated stories. First work is at a maryland store voting to authorize a strike second, bloomberg says that employees at the short hills mall, in new jersey area, hit that apple store, voted against unionizing joining us now on all the headlines, toni sacconaghi, bernstein Senior Research analyst. You positive on the stock right now, toni . Good morning, joe yes. We are positive on the stock we upgraded or rating a couple weeks ago and think risk reward on the name iis attractive at current levels. And is this, compared to what queer talking about and other stuff well touch on much more important or something to watch . I think labor is relatively de doug de minimis it happening at apple stores less than 10 on a global basis and certainly less than that in the u. S. Clearly there could be incremental costs associated if Union Activity was organized over time but its not material in the grand scheme of things for apple. Tell me about apple and a. I. . Almost reminds me of Musical Chairs who are the frenemies . How is it you all going to play out . What do you think the strategy will eventually be orcan anyon know at this point well, i think the important thing to recognize about apple is, it doesnt have to do this itself theres been sort of this criticism by investors that apple is not spending enough on a. I. Or its behind in a. I i think its really important to know that there may be some elements of a. I. That apple will undertake itself and there will be some elements of a. I. That apple will look to partner with, and i think we can see that today with apple in the sense that it drives a signi significant percent of its profits probably 25 or more from profits providing access to search for google and google being the default Search Engine and from its app store in both countries google is doing and creating the Search Engine in the app store the millions of App Developers putting their blood, wet and tears in, and apple collects effectively a tool for access to its Customer Base its incredibly lucrative. The same thing could happen in a. I. Toni, thats the question do you imagine that when we hear a deal, if there is one struck, between openai you hear about that, that openai is paying apple as opposed to apple paying them its a great question ai models today are just starting to figure out how to monetize, much like search initially was looking for ways to monetize itself over time certainly, if apple is providing access to 1. 12 billion iphone users as a default or partner with someone and theyre paying significant money, theyll be paying apple some kind of revenue share. Initially that may not be the case. Do you imagine that openai that currently runs on azure that effectively, this deal, if there is a deal to be done, that openais technology will run literally physically on device i dont think it can run on device if it doesnt run on device, is it going to run on an apple server somewhere or microsoft server somewhere, in which indication microsoft is going to be collecting revenue somehow . We dont know the specifics i think we do know in all likelihood if there is a partnership, a lot of the search will be running off a device it will have to go through data centers, whether thats through a microsoft data center. Its certainly plausible that could be the case going forward. So, yes, that is a possibility. And then how do you i think one of the things were all trying to figure out,s if theres a deal with openai, does that mean theres not a deal with google or googles gemini or somebody else, or do you think thats a mixandmatch patchwork . I dont think thats the case what we believe apple has been working on in part is improving the front into siri. Siri is the access point to openai engines apple is working to make siri more intel jnlt. And they could say, this kind of query is going to open iowa. This kind of querrey will go to a voice to image or voice to video, general ai going forward. Certainly there could be a front end in place that decides where a user querrey should go to, which ai engine or app going forward. Its certainly possible apple could have deals with more than one partner. You think its back in the weak hands i wouldnt call Warren Buffett weak hands do you think anything that would be done to wring out complacency has gone onward and upward with apple . Apple has gone up year to date theres been a weak cycle, so part of the attractiveness of apple is that its trading below its three and fiveyear averages, and so that provides a more attractive entry point. Our belief is apple is a really powerful franchise and now you have a more attractive price to buy it at. I think ai could certainly be a catalyst for the name over the next three or four months in the introduction of the iphone 16. But a lot of this is we have a really good company. Its underperformed year to date, and investors have an opportunity to buy it at a lower price. I dont know. If you see 165 again, that might be a good place, or even here. Anyway, toni, thank you. Thanks for having me. Youre welcome. Coming up, the risky move among Retail Investors were going to tell you about the trade some are making as seasonable bearishness is moving in stay tuned youre watching squawk box on cnbc at enterprise mobility, our experts always see another road. Because with the right mobility solutions, the path to success is shorter than you think. its time to get away and cache in, at cache creek casino resort, to rock and to roll. To go all out or. Go all in. With four stars and rising stars, northern californias premier casino resort is the perfect place. To do as much or as little as you want. Make your get away now and cache in at cache creek casino resort. Individual investors appear to be ramping up risks in their port portfolios kate rooney is here. Especially if you look at the most volatile quarter of that. Zero days to expire options among the popularity of average everyday investors theyre oneday vets not only for outsized returns before outsized risks. Last week retail activity and zero d. T. Options are at the biggest weekly sales since the beginning of the year. Thats according to jpmorgan according to spotgama. Those are single spx options short dated vurms is short meanwhile theres been buying for safer proxies. There had been an influence of rates. They say all of this new Risk Appetite is a function of chasing some of the bryce riskaccessed prices and taxrelated peak retail bearishness is in the Rearview Mirror and has been rotating aggressively jpmorgan says they were the most bearish within the mag 7ful that u were selling nvidia and buying apple. They were also overwhelmingly selling markets in like netflix. Plus energy and food stocks, guys. Riskier types of bets, some people might call it gambling. And while were on it, weve been watching this morning shares of gamestop, which i think are up more than 40 they were up 10 when we started talking about this now 40 simply because keith gill whos better known as roaring kittsy, the person who was so involved posted on twitter for the first time in three years and some are saying, oh, hes sitting up and paying attention more closely, they thought, maybe to gamestop shares whats going on . Its like the ryan cohen situation where he tweeted out a picture of an Ice Cream Cone and people tried to trade on it. It is sort of this momentum. One of the dynamics in game stock after that whole even said in 2021, theres almost no shortage people do not want to get caught short in gamestop. You have this dynamic, very thinly traded. If you look at it, its around 17 bucks so 40 rally is massive on a daily basis, but nowhere near the height of 2021, guys. Yeah. It just makes me feel like there are definitely people looking at this as kind of las vegas with some of the trades, kate thank you very much. Its good to see you this morning. Folks, that does it for us today. Well be right back with you tomorrow make sure to join us then. Right now its time for squawk on the street. Good monday morning. Welcome to squasquawk on the street. Premarket is steady as we brace for a week that has something for everyone you have google, i. O. Conference thats where our roadmap begins. The dows coming off the best week of the year and the s p awfully close to some fresh records. Plus the ai arms r