Transcripts For CNBC Squawk 20240703

Gold with the worst day yesterday down 1. 3 . Copper up 2 . It hit its highest level since april of 2022. We have been waiting for home depot. It hit. 3. 37. Closed at 3. 40. The same store. 3. 2. Overall, same store is down 2. 8. It was 3. 68 a share. Oh, its all on the teleprompter. Ill read it now. You heard this already. Home depot just reporting. 3. 63. Revenue missing. 36. 42 billion. 36. 66. I dont think those are people are expecting down 3 to 5. The same store sales fell 2. 8 . People were expecting 2. 2 . Ted decker saying the company is still seeing, in his words, continued softness and certain larger disregucdiscretionary pr. It is expecting sales growth of 1 . Lets bring in brian nagel for more. Still seeing same store sales. Brian nagel with oppenheimer. Brian, you figure the stock recently has been a little weak after a pretty good rebound after prior weakness. You dont think it is cheap . Good morning, joe. I dont think it is cheap. That is the key reason why i remain on the sidelines with home depot. In my view, you know, i said for a long time, this is a well positioned company for the longer term. I think i believe and we see the numbers again today that the cyclical pressure, which i view as postpandemic numbers, are continuing to weigh upon home depot and will continue to weigh upon home depot through 2024. I dont think that die ynamic i yet in the stock price. I dont understand that. People did things during the pandemic and they used up all of the demand for what they would do at that point . That is still a postpandemic what did you call it . Cyclical issues . They moved it forward. They have already done some of the stuff. They got the boost during the pandemic, is that it . Im trying to Say Something creative and lump stuff together. I think and this is debatadebat. We bottom lined this. Same store sales were down 3 roughly. The normal growth algorithm for home depot is plus 3, plus 5. We are tracking significantly below what i consider to be a normal growth algorithm for home depot. Why is that . There are multiple factors at play. I think one of the biggest factors is the amount of demand that was pulled forward into the pandemic. Thats what home depot sales were tacracking up 25 . We are all home and building decks and landscapilandscaping. It will take a while to get past the boom in demand. Weve gone back and forth on inflation with home depot. Lumber prices, i guess, helped. Now im seeing higher prices for the bigticket items makes demand softer. Are you seeing actual consumer, i guess, elasticity based on higher prices . It is difficult to say because if you take what ted said in the press release today, he talks about ongoing weakness in demand for bigticket items. That could be the consumer pulling back somewhat in a tougher Consumer Spending environment. Holding off on that purchase of the bigger ticket item. That very much could be at play. I think another piece of this is that there were a lot of bigger ticket items purchased during the pandemic. There sis a normal break cycle for these items. Were not there yet. Its a mixed bag. The other part with inflation and this is interesting with the lumber prices. Generally expecting on commodities and other mundane i items, inflation is a positive for home depot. Home depot has been good at passing that inflation along to consumers. That inflation is a sales growth record. That makes sense. Now it is up. Now its down. Its been around 3. 40 or 341 is where it closed. The high is almost 400. I guess that is an alltime high. Would you buy this long term . Do you have an objective down the road . I would buy long erm. I would wait. This is what i would tell our clients. Wait for a better price. I believe the way i think the market will absorb this data point today or this report today is that its one more softish report from home depot. That makes the second half of 2024 rebound that a lot of people are waiting for less likely. I think thats the take away as the day progresses. My advice to clients is you want to own home depot at some point. You want to be price sensitive here. Not to get too technical, but were trading at 23 times earnings. I think that multiple should be something less than 20. Something less than market multiple. Thats where it gets attractive. What does it get you to . What is the price target that is attractive . I established my recent reports of home depot is the downside target. The range i have published is 260 to 290. Thats a reasonable price. Thats the plug your nose and buy home depot. Buy home depot within that range. You plug your nose . Plug your nose and buy it. Plug it. Hold your nose. You have to do for a while. Flexible. 274 is the low. It is not like it hasnt been there in the past 12 months. How many quarters in a row that you call it another soft quarter . That is five in a row . Five. You look at this. This is the First Quarter of 2024. Were seeing the dynamic today is similar to what we saw through 2023. Its at least five quarters. Brian, thanks. Thank you. We have too much white space. I used to plug my nose when i swimming . No, duty calls when i pick up the dog stuff. Oh. I look ridiculous. Thats why my nostrils are now so big. Meantime, the Biden Administration hiking tariffs on 18 billion of chinese imports. It will target strategic sectors like steel, aluminum and batteries with 25 tariffs. Solar up 50 tariffs and evs up 100 . Chinese evs were locked out of the u. S. Market by exists tariffs and now they will stay. Some will be phased in over a year or two in order to give u. S. Industry time to adjust to the move after the review of tariffs that President Trump put in place in 2018. China had not sufficiently changed its behavior citing ip theft and other concerns. The white house officials said this is not a political move, but Lael Brainard highlighted two states which stand to benefit from the actions. We will hear from the u. S. Trade representative katherine tai. They may say it is not political, but they may take the china issue, if you will, on the tariff issue, from trump off the table. Having said that, this is inflationary which is what former President Trump has been criticized for in his campaign with tariffs. Pennsylvania is key in the next election, obviously. Thats why wildwood it is not going to win new jersey, but a lot of pennsylvania people were at the magmaga rally. What do you mean . The titfortat what trump has done . Thats the argument. Trump will go super hard at china. Who agrees with that . No real conservatives agree with tariffs. Its not in the conservative playbook. When they talk about trump, there are a lot of things about trump that you have to accept for anyone. At lot of things you have to accept. You would be critical of President Biden doing this . I dont like tariffs. Do you like tariffs . I dont think theyre a good idea. I dont think you ever liked tariffs. I understand the argument that its not a level Playing Field and china has spent a lot of money on manufacturing and dumping these things. Were doing the same thing. We targeted the industries. We propped up the industries with the i. R. A. And chips act. It is all part and parcel of the same game. Wearing are doing the same t we are critical of. I dont know what our european allies are thinking about spending money in the critical industries. I understand the defense argument. You have concerns with inflation. If you are looking at the front page of the wall street journal, the lead is aluminum and cardboard is expensive. The tariffs, we dont collect the tariffs. We made billions of dollars. Thats the other thing. It means these things dont get shipped herem. You protect your industry. Yes, its consumers paying the other end of. This we will talk about it later today. You can understand it is not a level Playing Field. In the meantime, gamestop shares closing 73 higher in yesterdays session. Theyre up again this morning by 45 . This comes after the reemergence of bullish internet persona keith gill known as Roaring Kitty. Hemage that seemed to imply he is sitting up and taking notice. Maybe he is looking at gamestop shares or getting more involved. He posted movie chips on his x feed. Short sellers in gamestop lost 1. 25 million alone in april. You have amc and reddit shares jumping. For week to date, amc is up 175 . Reddit is up 11 . You maybe thought the short sellers would have learned a lesson and moved carefully. It raises questions about what is happening with the markets and Retail Investors and how much of this is just the way the markets will operate. We will talk with former s. E. C. Head jay clayton this morning about this. Gamestop had a reverse split. The market cap is now back over 1 billion. Im sorry. Amc. It was well below 1 billion after the short sell. You figure the shorts and did they learn their lesson. They were once again making money on the short side. Is that what he noticed . I dont know. The kitty he did notice improving fundamentals at gamestop. He didnt say, oh, look, this is getting better. Short interest. Thats what it has to be. Coming up when we return, we will give you the big reveal. Dont go anywhere. The unveil of the 2024 disruptor 50 list and the startups shaking up the tech world. And a rare interview with Boaz Weinstein of Saba Capital Management andis h campaign against blackrock coming up in just a bit. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. This is our future, ma. Godaddy airo. Creates a logo, website, even social posts. In minutes how . A. I. impressed ay i like it who wants to come see the future . get your Business Online in minutes with godaddy airo and theyre all coming . Get your Business Online in minutes those who are still with us, yes. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Welcome back to squawk box. The moment has come. It is here. We will reveal the cnbc disruptor 50 list. We have the queen and founder of the list to tell us about it. Good morning. Good morning. Im excited to be here. Hundreds of Companies Applied for the disruptor 50 list. We used a quantitative evaluation process and the guidance of the Advisory Board and the new vc board to select the top 50. This years disruptors have a valuation up from last years list. Here are the Top Five Companies on cnbcs disruptor 50. Number five databricks. The firm using a. I. To help the enterprise clients organize data. The company surpassed 1 billion in annual revenue last year and added nvidia to its hroster of investors. Number four, brex. After giving credit lines to thousands of investors after svbs collapse, the platform is now growing to service larger firms, including doordash and seatgeek. Number three . Stripe. On the list for a record tenth time, stripe processed 1 trillion in transactions last year for customers ranging from amazon and google to bmw and marriott. An ipo has been at speculation, the ceo says the company is in no rush. We have no timeline on announcing being a public company. We are focused on goods for employees. Number two is anduril. Powered by venture funding, the defense disruptor is taking on Lockheed Martin and northrup. It is on the frontlines supplying ukraine and operating throughout the middle east. Number one . Openai. The company burst into the mainstream in 2022 with the innovation of chatgpt. Since then, it has announced a litany of business partnerships surpassing 2 billion in annual revenue and reaching a valuation of 86 billion. Of course, openai is keeping up the innovation launching the gpt 4. 0. No doubt that a. I. Dominated this list and not because openai is number one for the second consecutive year. Thats a first in the dozen years of the disruptor 50. 34 of the disruptor 50 Companies Tell Us that a. I. Is critically important to half of the revenue. 13 of those specified that generative a. I. Is essential tto more than half of the revenue. You can see the list on cnbc. We will have ceos on throughout the day. A couple of things, most of the companies, historically with the lists, there have been a bunch who have gone public. An index. I was going to say a lot of the companies as successful as they have been, they have the messy moments where they were struggling and laying off folks. If you look at the past 12 months, there were not ipos from the list. Exits from prior before the 2023 list, but no ipos of the companies on the 2023 list which reflects an ipo market that dried up. A number of companies did have layoffs which is unusual in the past. We saw a lot of companies scale quickly to address one issue or another. We were discussing brex to absorb the customers from svb and grew too fast. Some companies have done layoffs to focus on profitability. It is harder to raise money now and they are not in a rush to go public. Over time, we talked about this as a venture capitalist if you track the fund. What percentage of this list do you think goes public and also how many go bankrupt . I hope that our disruptor 50 list is strong enough. You should have a couple. We had a couple that have failed over the years. I would say these are companies that will eventually go public or will sell to other companies. Because these a. I. Companies are in such the early days of capabilities, it will be a long time before we see those companies go public. Years. You know, in some ways, they have the partnerships with the big guys because they have to because it costs so much for the computing part or the partnerships in the past would have been companies acquiring them. Its a weird round about way because none of the companies would pass the ftc smell test for being acquired or the doj. They were functioning if opposition to the giants, but openai has a Huge Investment for microsoft and partnership there. We mentioned nvidia is the investor in a number of companies. Because the compute power necessary for a. I. Is so massive, were seeing these partners with the giants. They need to partner with them to have that compute power. One other question and it relates to a. I. How Many Companies do you think on the list ultimately get disrupted bythe Large Language Models on their own . I was looking at the web side maker wiz. At some point you will go on to chatgpt and very well make your own web site and it will code it for you and ultimately disrupt a businesslike that. A lot of the companies are competitors with each other. As we saw yesterday with how very quickly openai continues to innovate, the question is if it will do a lot of the things that are more specialized than other companies were focused on in the past. I think with a. I. , it is better to be specialized for are you better off licensing Openai Technology as many of the companies on the list have done. Julia, it is a pleasure. I love the disruptor 50. Thanks, julia great to see you. When we come back, some surprising news from a longtime friend of the show. Jimmy dunn abruptly resigning from the pga tour board. We have details next. He is very public about why he is stepping down. Later, key inflation data due out at 8 30 a. M. Eastern time this morning. We will have the ppi to give us an indication of what is happening with inflation. Squawk box will be right back. [bushes rustling] [door opening] dramatic music yes hon the weathertechs here. Weathertech is the ultimate protection for your vehicle. Lasermeasured floorliners. No drill mudflaps. Cargoliner. Bumpstep. Seat protector. And cupfone. What about my car . Weathertech. Sure, im a paid actor, and this is not a real company, but there is no way to fake how upwork can help your business. Search talent all over the world with over 10,000 skills you may not have in house. More than 30 of the fortune 500 use upwork because this is how we work now. Some news this morning about someone we know well on the show. Jimmy dunn resigning from the pga tour board yesterday with the letter that expressed frustration over the lack of progress made and no longer included his input. Dunn was the architect behind the reversal to strike a deal with the saudi backers of liv golf. He said players out number the board and his role is utterly superfolous. He said that along with the lawsuits dismissed, the original agreement with the pif, it did not obtain an exclusivity clause. That came from the Strategic Sports group to look into the options and find other investors to come in on this. That pif deal was supposed to be resolved by the end of the year last year and it has not. You can watch both now. The other weekend, there is a pga event, the week before, not this last weekend. I know most of the golfers. I didnt know the top four or five golfers on the pga tour. Over on the liv golf tour, on a different channel, it was like watching a major or ryder cup. You see the guys on the leaderboard. They are all on teams. In addition to the individual scores, its weird. You like that better . Im saying that i was drawn to watching the big names because the other event, i had not heard of the top five guys. It was a great ending. I ended up back on the pga. They had great players that are on definitely on liv. Were Still Available for some venture. A Business News venture. Rory mcilroy quit the board. I dont have a price. Priceless. Rory. Just walked away. You saw what he did over the weekend. He was getting further away from the rest of the field down in charlotte. I think the wells fargo. Hes got a tigerlike walk when he is playing well and no ones got that swagger. March down the greens. Hes pretty cool. Coming up, its a busy week for a. I. News. We will show you what openai announced yesterday and get you ready for googles developer conference which begins today. As we head to a break, here sisa look at the s p winners and losers from yesterday. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. To start a business, you need 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 good morning. Welcome back to squawk box live from the nasdaq in times square. You see the dow continues to be in positive territory in spite of what were seeing at home depot which reported results as brian nagel called it a fifth softish quarter. Its up now. Its been all over the place. Down at 337. It is rare you see at 6 00 when the Companies Report that the dow start to flip around. We happened to have the futures board up. And walmart is tomorrow. 338 bid. You see interesting moves in home depot. Thats the main one today. Is there anyone else . We have stragglers. Totally different fiscal year. They do end of january with the Holiday Season being such a big deal for them. A flurry of a. I. News. Openai with the new model of c chatgpt to everyone with the openai free users. The model called gpt 4. 0 allowing to handle 50 languages. Anthropic launching the chatbot in europe today. It is backed byamazon and a partnership with google. It is rolled out by the web and iphone app with openai and anthropic in the top ten of this years disruptor 50 list. The google conference starts today. A lot of stuff happening today. It is expected to update its efforts and we will have cover on cnbc and cnbc. Com. The head of the imf warning a. I. Is hitting the Global Market like a tsunami. It is likely to impact 60 of jobs and 40 of jobs around the world and advanced economies in the next two years. Watch out. Coming up on the other side of this, the countdown is on to the ppi report. Later, a rare interview with a man going after blackrock today on governance. Boaz weinstein from Saba Capital Management on blackrock and so much more. He is the one who founded the london whale. Were back after this. The determination and gritty dev i developed led to the p perseverance i needed to have the company it is today in our field in tech. We are no longer considered a minority. The allyship is what really helps us push us forward and be successful. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from Morgan Stanley welcome back to squawk box. Were going to talk the markets along with justin timberlake. What do you think of him . J. T. . Yeah. Hes got a beautiful voice. Yes, he does. Hes a good golfer. Okay. Now we have gone off the rails. Gabriela, we have the ppi numbers later today. I think were also watching a meltup . What are we calling this in the market right now . We had a brief 5. 5 pull back for parts of april and almost a full rebound, less than 1 from alltime highs. I think it is just a continuation of the bull market here. The bull case. I think ultimately, for the bond market and for the fx market, it is still very much about what is happening with inflation and the timing of the fed rate cuts. When it comes to assets with Corporate Credit, we have moved on a bit. There is more with the base case of 2 to 2. 5 growth and inflation normalizing over time and the fed in december and then again in may that took rate hikes off the table. Thats an environment where you can have great Earnings Growth and you can have a continuation of the bull market and very tight Corporate Credit spreads. Im trying to think of the guest who mentioned this. Think of the president ial cycle and if we dont know whos going to win and often a pullback in spending with Capital Spending by businesses because they are not sure whats about to happen and Consumer Spending. Is that in the offing or no . What is interesting in the bond issuance this year, we had record Investment Grade for this part of the year. We have been hearing that part of that may be taking advantage and the market is open and doing it far enough in advance of the election. Perhaps thats already impacting certain decisions like that. If we look at the business round table survey of companies, 40 of ceos still plan to increase cap ex over the next 12 months. It is very much an impact at the margin in terms of election decisions. I wonder how much of it is so much liquidity sloshing around. The idea you see a 5. 5 pullback and everybody rushes in from the sidelines. What happened yesterday from the meme stocks which is crazy to see. This is the market which has plenty of liquidity and the fed should Pay Attention to that, too. We have talked about the 6 trillion of cash in money market funds for a lot of people waiting for the hard landing last year and waiting for more meaningful correction to get invested because they were afraid to invest at alltime highs. What you are seeing is a capitulation. The hard landing risk is always there, but it is really de decr decreased. Overall, the base case is underwritten and investors want to participate in risk assets. Any kind of pullback, you see investors buying equities, but also buying Corporate Credit and buying International Equities as well. I know it is not something you focus on, but what do you think of the gamestop situation all of a sudden coming back into the marketplace . Does that Say Something more broadly about what we are here . I think it says more about the psychology and behavior of different generations. I think it is really interesting to see for millennials and gen z investors. There is more focus on the shortterm investing behavior. It is kind to call it investing. Exactly. It is trading and gambling. It is trading and gambling and quick payoffs instead of investing for five or ten years which is the time horizon for equities here. A lot of that is the reflection of the new generation of investors. In part, it is good, especially given the low affordability of housing now to build wealth for the Younger Generation is through assets versus real assets like housing. It is important to change the mentality and be much more longterm trading. There are tons of opportunities in the long term in the u. S. As well as overseas, especially in asia. We have to run. I want to know what the opportunities are. You want to tell people real quick . For us, we have been doing a lot of focus in investing in asia. We are launching a guide to investing in asia. There are so many beneficiaries in that part of the world. We have the reorganization of the supply chain and huge winner in india with good demographics and good reforms and excellent quality companies. You have the a. I. Theme with korea and taiwan. You have huge generational rerating. Would you buy individual stocks . I think it depends if you are the investor that has a huge Research Team thats focusing on these individual companies or if you prefer to outsource that to a manager of a single country or probably a broader emerging market or global equity. Gabriela, thank you. Coming up, hot dogs for sale. Kraftheinz is shopping its oscar mayer. Gamestop is alsoing moving. We will talk to former s. E. C. Chair jay clayton. Chair jay clayton. Well be right back. Back, announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. They wear business sneakers and pad their keyboards with something that makes their clicketyclacking. Clicketyclackier. But no one loves logistics as much as they do. You need tamra, izzy, and emma. They need a retirement plan. Work with principal so we can help you with a retirement and benefits plan thats right for your team. Let our expertise round out yours. 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. 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. Kraft heinz gauging interest in its oscar mayer business. The make of hot dogs, cold cuts, bacon, bologna, all that kind of stuff, it has kind of fallen out of favor i guess recently. Were making fake meat, so who wants processed meat. That is according to the wall street journal report. It says the Company Recently hired bank of america and Center View Partners to evaluate a potential sale. The business reportedly could fetch somewhere between 3 billion and 5 billion at this point. Most of the stuff that gets sold like that is uncured, doesnt have the preservatives in it. The new stuff. New stuff. You know preservatives, you know what they do . They keep you from getting poisoned. I dont recommend any unpasteurized milk anytime soon. No. When we come back, the reemergence of online. Well dig into the moves of meme stocks. Welcome back. Gamestop shares are soaring once again adding more than 170 just since yesterday morning. Another meme stock soaring along with gamestop is amc, up 187 for the week to date. And of course it is only tuesday. Joining us with more is jay clayton, former s. E. C. Chair and cnbc contributor. Jay, weve been kicking this around this morning. A whole lot of different takes on this. First of all, short sellers didnt learn their lesson last time around. Second of all, Retail Investors are back with a vengeance, but you cant really call this investing either. As former s. E. C. Chair, what do you think . It bothers me. It bothers me on many levels. I think your last guest got it right. It is a lot closer to gambling than it is to trading and certainly not investing. Is a tweet really Investment Advice in i think weve learned the last five, six, seven years that tweet is really never Investment Advice. It never even mentions the companies involved. You see a massive move like this when really it was just the implication that he may be sitting up and taking notice. That is the tweet were talking about. Why an and we can debate whether it is legal or illegal or manipulation or not. But i have a question for keith gill, why not tell people why you did it. Are you saying gamestop is now a good Investment Opportunity . We dont know. What we know is that it triggered what i would say is eye information rick and speculative buying among the Retail Community which is never a great thing. Information rick speculative buying among the Retail Community which is never a great thing. He said a bloomberg says what about the idea if keith gill were to have gone on and bought options ahead of time, tweeted this and then made a lot of money based on everybody going into this and the price going up, is that illegal. It is not insider trading. Not insider trading. That is clear. And he is trading on his own information, that is why it is not insider trading. But is this something that we should be tolerating in our markets . Whether it is legal or illegal . I dont think so. And that is why i say why doesnt he the idea i would think as you look at this more in the context of market manipulation. And the question is, are you allowed to manipulate the market. People by the way publish things all the time and say hey, i like this stock, and they hope that other folks follow them. Is that market manipulation . Generally not. So what is the distinction in your mind when you ran this department and cares about the integrity of the markets . That is why im saying we can discuss what are exactly the facts and circumstances around the publication of this tweet and the like. But in the meantime, if you care about the markets and you care about investing, come on this program. Tell people. Tell people why you did this. From your lips. We hope he does. Is there anything illegal about this or not . You may not like wait it looks. There is nothing illegal about saying i like a stock. There are things illegal about saying i like a stock and taking activity in the marketplace that is designed to, you know, drive behavior indicate that prices are rising and like those types of things are illegal. It depends on how you auyouyou them. Which is why a retrospective enforcement action is something we always need to do. But we also need to call it out and say hey, whats really happening here, why is this going on. And what is your concern . You worry about the Retail Investor who follows in, the short sellers who get squashed . Lets take a step back. Were doing a bad job for our Retail Investors. You have two choices. You can invest in an s p 500 indexlike product where 30 brs of your returns are driven by six stocks and any kind of stock picking in that really doesnt matter as you go down the spectrum of Public Companies. Were also not bringing enough companies into the public market. So you have that choice which is kind of im joining the herd mentality or you have the speculative. That is what a Retail Investor sees. Ive got that, im with the herd, which is not bad, or ive got these speculative meme stocks, zero date options, those types of things where you are trending from trading to gambling. And if you are not a professional, you are gambling. So you worry this ends badly . Yeah, the integrity of our marketplace. But it is a broader issue. Were shrinking the amount of Investment Opportunities on a relative basis for our Retail Investors. 80 of the companies that have over 100 million in revenue are private now. Weve gone from 8500 Public Companies to below 3,000. What is creating that problem . It is driven by many factors. It is a dynamic result of capital available for private. But it is mostly driven by the regulatory hurdles to be a public company. An interesting perspective. Jay, thank you. Thanks. It is just after 7 00 a. M. Right here on the east coast. You are watching squawk box on c cnbc. We have a lot going on the next two hours. Among the top stories, a very busy day for fed speak headlined by jay powell. Well hear from him at 10 00 a. M. Before that, well get the latest read on Producer Prices at 8 30 a. M. Mark your calendar or mark your book for 8 30. Consensus estimate expected increase of 0. 3 for april. Walmart planning to lay off hundreds of corporate workers and asking others to relocate. Sploi degrees in smaller offices are being asked to move to larger more central hubs such as hoboken, new jersey. And walmarts hometown of bettenville, arkansas. And uber expanding in asia. Buying a business for 950 million. Uber aiming to complete the deal by the first half of next year. Lets take a look at the futures. Right now it looks like dow futures up by close to 60 points. S p up by 5, the nasdaq 17. The dow is doing well. It did end down yesterday so broke the eight day winning streak. Dom chu has a look it the the morning movers. Lets start it off with the headliner and that is home gee poe, shares fractionally lower at just over 10,000 shares of premarket Trading Volume after it reported mixed quarterly results. Profits Beat Estimates on revenues that fell just shy of the mark. Full year guidance was also reaffirmed or affirmed, however you want to look at it. One of the headwinds came in the form of customers who delayed spending on bigger projects like kitchen and bath renovations given higher Interest Rates. That drove a drop in sales at established store locations or the socalled same store sales. So shares now swinging from marginal losses to nearly 1 gain in the premarket. Meanwhile on the analyst front, another day another price target hike for nvidia shares. Right now down about onehalf of 1 after posting half percent gain yesterday. Analysts at wells fargo raised their target price up to 1150. Prior target was 950. They keep it as an overweight stock and signature pick. They see what could be Data Center Revenue up side driven by things like more corporate spending on Cloud Computing and Government Spending around the world on things like Artificial Intelligence related efforts. By the way, for more on that and other top analyst calls of the day, head to cnbc pro. Subscribers there get more detail and an analysis of those top stories. And gamestop soaring another 57 this morning, over 7 million shares of volume. That builds on a 75 gain yesterday on over 161 million shares of volume. All of this after cryptic tweets in keith gill known as Roaring Kitty on messaging boards. Shares of other meme stocks like a 346789 c, blackberry oig, also up in the premarket. Traders are trying to assess how much momentum there is still left in the trade. Per the conversation with jay k clayton. And this ramp up entering todays trade was already up 210 from the lows we saw in the past month or so. So well see what happens with this 60 gain. And well continue to watch. Dom, thank you. Coming up, the Biden Administration raising tariffs on 18 billion worth of chinese imports. Details next. And then later, marc lasry hitting the high seas with the sail gp u. S. Team and the ceo, well hear about the new endeavor and talk markets as well. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. 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 . Got him. Good game. Thanks for coming to our clinic, first ones free. alarm sound amelia, turn off alarm. Amelia, weather. 70 degrees and sunny today. Amelia, unlock the door. Im afraid i cant do that, jen. suspenseful music why not . Did you forget something . suspenseful music my protein shake. The future isnt scary. Not investing in it is. Youre so dramatic amelia. Bye jen. Nasdaq100 innovators. One etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. And theyre all coming . Fundthose who are stillves, rwith us, yes. , grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Major studios are showing offtheir latest content for advertisers, this as nielsen released its newest data called gauge which takes into account total viewing now across broadcast, cable and streaming all together. The ceo of nielsen is joining us. Good morning to you. It is a fascinating new development in terms of how you are measuring all of this. Lets walk through the numbers because i think that they may be eye opening in terms of who is winning and who is losing. Thanks for having me. As you know, weve been putting out the gauge for many years now. And streaming now is almost 40 based on the latest report with broadcast and cable adding up to close to 50 . So we thought it was really important to put together a total tv view because that is the best measure of the way consumers are voting with their time. And so next evolution of that is the distributor gauge which is what were talking about which really lays out from a media property perspective how total viewing on the television happens. And should be no surprise that this is a very interesting report. Because it puts it all together. In the april version of the report, and well put this out monthly, disney ranks at the top at 11. 5 of total tv viewing. But also interesting to see all the other players that are in there. And this is a really Exciting Development because at the end of the day, this is the best representation how we as consumers and viewers are voting with our time. And this is a great tool for all forms of content Planning Decisions or ad Planning Decisions. So were excited with this. Let me ask you about some of the ad Planning Decisions and specifically as we look at this bar chart here, youtube is number two. They would be considered the one that is sort of untraditional if you will. Is there any double counting, and i know there are some media executives who want to understand this, you know, a lot of Nbc Universal content for example including stuff from cnbc that exists on youtube today. Similarly disney has stuff that exists on youtube, paramount. So when we look at that total youtube number, how much of that is youtube exclusive, if you will, versus other folks who may be sharing clips and even programs on youtube . Yeah, so this includes basically youtube main. It does not include youtube tv which is a Live Streaming of channels. So to that extent, anything on youtube main is in this thumb because that is what consumers are doing as they turn on youtube on their tv set. But it is not the full broadcast channel for youtube as an example. Youtube tv is not included in here. And how should we think about time spent on social media . It is not included in this fully, but obviously were trying to figure out time spent on tiktok which also now includes clips and things from other places, similar instagram, some of the meta products, et cetera. So this is all about what hits the television screen. That is the first evolution of putting together call it video viewing in totality. But next iterations obviously you want to expand it. So as it is even broken out, you can see the gauge in itself has streaming that adds up to about 38. 5 in april, cable and broadcast to about 50 . And the remaining is where you have all the other forms of engaging with consumer time. So next youevolution will start break out further ways in which people are engaging with other types of content like social. This may feel like a curve ball, but if the department of justice called you tomorrow and one or two of these companies decided that they were going to be merging and you went and showed them this chart, would you say this is a remarkably competitive business, would you say it is not a competitive business, would you if i made you king for the day and you thought about regulation, would you allow a whole bunch of these folks to merge . Because by the way, all these numbers actually based on this chart are actually quite small. Youd say this is a very fractured industry looking at this chart. Yeah, it is the tale of time. There is only 20 years ago when there were only three, maybe four players that consumed the entire pie. And today there is 15 and more actually because we cut it off at the 1 mark. So id say there is a lot of ways in which consumers are voting with their time. And it is a wide distribution for any 2k3given market as compd to even 15 years ago when there were probably three or four that consumed all of it. And for the advertiser who is looking at a chart like this, all of these shows and the platforms are not equal insofar as i imagine you think there are certain platforms meaning that you are actually watching it physically on a tv perhaps through linear that may be or maybe through a streamer where the advertisement resonates more or less with the user. Do you find that or not or one size fits all . This is the most equally created view. This is truly comparables. Everything that hits the tv screen. In some sense it is the true measure of equal attention from a consumer perspective. Which for the record it does not include mobile viewing. That is why this is about the television. And to that extent, it is as comparable as possible which is what we do at nielsen as you know. Great to see you. Appreciate it. Keep your nielsen box on when you are watching this broadcast. Thank you. And up next, a check on the markets and then openai frontrunning googles big developer conference. Well get the detas. Il 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. This morning a quick check on the markets as we countdown to inflation data at 8 30. Right now dow looks like it would open up about 52 points higher nasdaq 10 and s p about 4. And alibaba missing on earnings but beating on the revenue line. The company saying it focus on price competitiveness led to double digit online order growth year over year. Alibabas board approved a 4 billion dividend and that stock right now is off by about 5. 5 . When we come back, the ai race between google and openai heating up today. We have the details right after this break. And then igs trade representative Catherine Tai joining us to talk about the president s move to raise tariffs on 18 billion of chinese imports. voya there are some things that work better together. Like your Workplace Benefits and retirement savings. Voya provides tools that help you make the right investment and benefit choices. So you can reach todays financial goals and look forward to a more confident future. Voya, well planned, well invested, well protected. Openai launching a faster and cheaper version of its chatgpt in an attempt to up stage one of its biggest competitors. Steve kovach has more. Usually you were on before this on our show. I got to sleep this today. It was nice. So look, like you said, openai is frontrunning. The big developer conference right now, they have an announcement of its gpt 4 o which is capable of having natural questions. No more asking a question and waiting for an answer. But just talk to it like you would a friend. You can even interrupt it, ask it to speak in a different tone, translate languages in a real time and a lot more. It is what is called multimodal, so it can process images, text or voice. Openai says it will be rolling out in the coming weeks. Some people already have it. And they also teased there is going to be a next big thing to be revealed soon. Meantime the Ceo Sam Altman wasnt even part of the event but he did publish a blog post calling it the best commute interface ive ever used. Also of note, altman called openai a business and will find plenty of things to charge for. Remember it is structured as the Nonprofit Organization and has been sued by elon musk for allegedly abandoning its original mission and focusing on profit instead. And in the meantime, expecting google which has had multiple stumbles trying to get its gemini ai system to show off similar features at its Developers Conference today. They shared a video on x yesterday that appeared to be a demo of that product. And then of course there is thele question. How would this work on an iphone. It sounds a lot like a super charged version of siri. The New York Times reported it is of course we know those two companies are in talks about a partnership. I was speaking about the microsoft question becky asked yesterday. This is only a boon for a aszur is somehow apple is paying. It is astronomical cost if someone has to run these servers effectively for free. That is why i think that especially with the investigation taking place right now too. I mean, to say you are paying for placement on the phone might be really tweaking it might be hard. And then the next things if like you cant have that relationship and 15 years from now were in court again. The idea that you would say not only am i doing this, im doubling down. And there is chatter around this doj google case saying the judge should rule to against the ai feature as well, not just the search thing which is in the past. Who knows what this will do, but it seems like it will settle legal precedent one way or the other. Doesnt seem like it would be poking the bear if apple is paying to license it. And openai does not have that kind cash. And all that activity running is expensive to run. And if suddenly one billion iphone users have it, that is a lot of money. Like the dog who just caught the bus. So maybe you would actually run it on your own servers. And then the question becomes does apple i mean, there have been reports that they have their own ai chip. Perhaps that is powerful enough to do the inferencing and not the training. But i think this is making my head hurt. I know, right . It will be super interesting to see if this deal happens how it is structured. Im sure they wont tell us in so many ways, but which way is the money going. And what is the nature of that relationship. But even more interesting is this was a blockbuster announcement, but it is openai to use your term again poking the bear saying google, we put you on your back foot for years and years. You were the leader in ai, perceived leader in ai, we have you are priced the world. You still stumbled out of the gate and here we are preempting your announcement. It is interesting. Will drive sergei crazy. Yeah, when the founder comes back in a significant way like that he has a mission. And bill gates is doing it at microsoft too. Not in the same way, but yeah, ser sergei is back. And look at what Mark Zuckerberg is doing. It is all just ai. They all see it as the future. This is real unlike what we were talking about two, three years ago. This is really happening. What would they call it. All the good ones are taken. So it will be interesting to see what the gemini version looks like. Of course google has a long history of stumbling out of the gate. Good chance to reset. They shouldnt call ittal i dont think. That didnt end well. No, it did not end well in that movie, no. Being onokay, thank you. And disrupter 50 full list is at cnbc. Com disruptcnbc. Com . Coming up in a bit from chinese evs to solar panels and batteries, the Biden Administration slapping new tariffs on china. Well speak to u. S. Trade representative in a moment about it. In an announcement earlier this morning, President Biden says he is dreis directing his representative to increase tariffs on china. The measure includes a new 100 tariff on chinese electric vehicles. Joining us now with the details is ambassador katherine tai. Lets talk this through. We kind of knew this was coming. We didnt know all the details. What is the point and what are the fine details of this announcement . President biden is taking this action today to defend americas workers and manufacturers against unfair chinese trade practices. So this comes on the heels of a review of existing tariffs. The decision has beento respond to continuing unfair trade practices that include intellectual profit theft, forced tech transfer and an Overall Economic system that has significant effects on the American Economy and others. And we are raising tariffs on about 18 billion worth of chinese imports. Including on electric vehicles, solar, critical minerals, batteries, industries of the future. The point is to allow for americas workers and manufacturers to have the space and the room to grow and to thrive in a Global Economy that has been significantly dominated by artificial advantages created by the chinese Economic System. Part of those advantages created by the chinese Economic System has been to row educe inflation. It will clearly be Inflationary Pressure at a time when the fed is watching things closely and the American Public is pushing back and saying that they have felt far too many strains from inflation. How do you respond to that . Well, let me say two things. Those economic practices have led to incredibly low prices but i wouldnt put it in inflationary terms. If anything the low prices are artificially low. They are impossible for open market systems like ours to compete with. And so they are in fact reflective of unfair anticompetitive trade practices. What that means is that over time, whether it is in electric vehicles, which is in force right now, or in Industries Like steel, aluminum, solar panels, these practices have allowed the prc to corner the globe ale market in production. That has created tremendous vulnerabilities for the rest of the world. And that leads to supply chain vulnerabilities that weve all lived through in the past couple years. Those supply chain vulnerabilities are actually the culprit in a lot of inflationary dynamics weve experienced. If you think back to march of 2020, what was the price on a face mask in 2020. There was no price because there were not enough masks for the demand that was all over the world. So in fact what were trying to do with these trifgs is to take a targeted strategic approach to create american jobs and to invest in American Manufacturing capability for long term resilience to address those kinds of price hikes that frankly nobody wants to live through again. Ambassador, i can understand the idea of wanting to play on a level Playing Field, but it does seem like were picking up some of the very tactics that you are criticizing china for. You talk about things like industries where they have been heavily subsidized by china. But in the same announcement you put out that we are doing this to protect our investments, our subsidies of the Different Industries that weve chosen to subsidize. Im glad you raised that because it isse an important point. The types of support were providing and types of measures were taking are so a completely different scale and they are at the end of the day still completely based on market logic of supply and demand. Frankly with respect to clean energy technology, we have seen that the market operating on its own cannot provide the boost, the turbo charge that is required to get us into the Technology Developments that we need. But on top of that, market inertia that we have to contend with, is this prc beijing based economic machine that is artificially tilting the Playing Field significantly. So i still dont understand the difference between the two and im not sure our european allies would either. Completely different. This is a response to decades of anticompetitive practices. We have finally had to come off of a tradition of letting the market take care of everything. So it is important to focus on the fact that this is responsive to significant market distortions. But secondly that were still relying on market logic in approaching the china challenge. The argument has been made that this is not political, that this is not something that is be done in an Election Year, but it was pointed out this will help swing states like pennsylvania and michigan. The expectation is that there will be some retaliation from china. What do you expect that retaliation to be, where do you think it will be focused . So we are expecting china to take note of what we are doing. It should not be a surprise to them. In fact over the past several months, you have had the entire Biden Administration in every opportunity weve had to communicate with our counterparts in china to convey the gravity of our concerns with respect to the whole suite of economic practices that we are contending with that comprise the china challenge. An important one is this concern with excess capacity which is the overbuilding of Production Capacity in china and frankly the overproduction that we are seeing china double down on in order to export tear way out of their economic downturn. That over time has shown us that china is exporting its own economic challenges to the rest of the world, abo exporting it unemployment for instance to us. That is something that the rest of the world, the United States as leader can no longer accept. We cannot absorb the negative consequences of chinas own economic policies and decisions. And these are critical decisions and actions that we need to take including in concert with our allies and our partners to defend the open market systems that we have to allow for us to continue to compete and to thrive. Ambassador tai, thank you for joining us. Thank you for having me. Lets check out the meme stocks this morning. Pretty unbelievable. When you see Roaring Kitty like 160 for gamestop top of the gains from yesterday. 75 yesterday. And sitting up and taking notice. I guess taking notice of the increase in the Short Interests, i guess. Or nothing has happened for a while. But that is what is happening now. Everything happening at once. Coming up, marc lasry teaming up with sail gp, well talk about that and as well as the markets and the fed. And at 8 00, an interview with az weinstein. Well be right back. iconic brands speak for themselves. We are so excited to welcome you to our community. Today is all about you. dsg family clothing and gear priced to win. Only at dicks and theyre all coming . Those who are still and gwith us, yes. Win. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. E ilg amng up marc lasry with thsainte ceo will be here to talk about a lot of things. Stick around. 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. New Sports League is sailing its way to success and getting intention and investment dollars from some big names. Lets welcome the Billionaire Hedge Fund titan marc lasry. It is like embarrassing when i say that. He is Avenue Capital i just said it there. Group cofounder. Ceo and chairman. He is also now lead investor in pro sailing leagues sail gps u. S. Team. And mike buckley the team coowner and ceo. It has frogrown to ten teams. Other investors include actor and producer and also investors. Lindsey vonn is a board member. Thanks for joining us. We remember in the past in another person that woe may remember, ted turner, another georgia type guy and how captain courageous. There is a still mystique about sailing that hasnt gone away. It is international and i think this is pretty exciting. I guess im not telling you anything you dont know. Sailing has been around forever. Americas cup is the oldest tradition. But sail gp is kind of the new kid on the block and making huge waves, big momentum the last couple years. Founded by Larry Ellison and russell kuntz. We have 14 races around the world. It has been awesome tobe a part of the ride. Looks like the future is bright. You had sports money to invest, some profits. I was needling you before about i know that you love the bucks still. But that was a decision you made. You had huge paper gains along with others. And you can read this seems like maybe pga and this. We invested in pga, we invested in this. It is really unique assets. It is assets that we think will keep on growing. Ill give you a simple thing. Average audience for a hockey game in the United States for the nhl, half a million. Average for baseball, a million. Basketball is a million and a half. What do you think our last race ratings were . It is like global. So it will be more. And it was close to 2 million viewers. So if you think of that, what youve seen is in the last three years, with sailing, it is dwarfing the other leagues in a sense that is cool. I had no idea. And that was just in the u. S. That was on cbs. 1. 8 million viewers. We have about 19 million globally. So were not there consistently yet, but our numbers are but revenue blew me away. For a year, 135 million . Already . Exactly. Big race in the United States coming up when . New york june 22 23. And they had a race here in 2019 and then obviously covid disrupted the league so this is really the first, you know, race since weve come of age as a league. So, yeah, it will be really exciting. Right off governors island. It will race between the statue of liberty and the financial strict. A lot of viewer ship there. Mr do you sail . Hes the worlds greatest. He doesnt play basketball either either. But he doesnt play golf either. And the pga ive tried to get you out. You just see the eyeballs here and that league, so massive growth properties. You sort of hit it on the head. It will grow and part of the reason we invested, we started seeing the growth. It has been growing every yike like 30 , 40 year over year. So you want to be in these types of leagues in these investments. Just because you are seeing a global audience and you are seeing more and more people. And they love sailing. You play pickleball. You to play that. That, i play. Because you play tennis. I do. Because were neighbors. Greatest place in the world and ive tried to get you out on the course and you said no, you dont have 4 1 2 hours. No, i dont. To play golf, no, i dont have 4 1 2 money. You said time is money, buddy. You did. I got to ask you about the environment were in right now. Is it best of times worst of times for you . I dont think it is best of times. The economy is doing well. Yet because of that, you have higher Interest Rates, youve got issues out there. So from what we do on the lending seed, were able to lend money, so were finding a lot of opportunities. So that part is going extremely well. Youre finding opportunities to lend but not opportunities to buy distressed debt yet . Thats correct. It has gotten hit, but not hit that hard. Is commercial real estate an area youre mining . Were looking. That has actually gotten hit pretty hard, but i think banks are probably a year or two years away from selling. Id love to buy some of the assets at i think what the values are today, but banks arent selling it there yet. So 50 haircuts weve heard and that is what you could get it 23 you could get your hands on it. Yes. How much of this is con tinlg xwen contingent on the fed not cutting rates . A lot. If rates keep staying where they are, you will have more and more issues because the cost of capital is too expensive. But i think the fed will lower rates, but not as much as everybody thinks. You are talking 50 bips over the next year. Not a big number. What are you doing in europe . Europe is a great opportunity for us. Were lending quite a bit of money there. There the kolcost of capital is high. You dont have as much capital there, so were lending there 12 , 15 on senior secure basis. Wow yeah, its a phenomenal opportunity. Youre doing more there . Were investing more there, yeah. We just shouldnt be thinking that were anywhere near a capitulation point or anything that happens . Because if youre not seeing opportunities out there . I dont think youre at a kmich capitulation point, not yet. Part of that is because the economy is fine its not great, its fine people still have time, so people are still waiting. What we really need is for people to give up, and that just hasnt happened yet. So you dont think that this is anything like the 70s . No, no, not yet. Not yet. You dont think that the fed at this point is behind the curve . Conditions are tight right now, so you think that are they tight . In terms of rates . Are we slowing are we doing now have slow the economy, because it doesnt look like it in terms of see the meme stocks today. Do you see gme, see bitcoin, see the stock market . Does any of this look like the fed is tight enough to bring inflation back down to 2 . I think thats the feds focus. Thats all it is. Theyre not really worried about rates. Theyre only going to lower theyre only going to lower rates why wont they raise . I dont think you need to raise. The economy is growing 50 bips, 1 . You dont need to raise rates. What you want to do is youre going to lower rates once we go into recession, right . And whether thats three months from now, six months, a year, i dont know. But if youre not going in a recession and youre just staying where we are, the fed will keep rates where they are. And thats actually not good for real estates, not good for companies then theyll then youll create issues. Create issues or these people got into deals they should have never got into. Thats exactly it. Once these issues start, thats when youre going to start to see the fed lowering rates. And the reason is, thats the only thing that will jump start the economy. Right now, the economy is fine. How are you possibly able to lend money at 12 to 15 , to businesses in europe . Yeah, because people need money for a year or two years, heres the biggest problem. Money is easy to get if youve got huge cloash flows. If what you have is asset value but you dont have the cash, banks dont lend to you. Were lending money based on asset value and based on companies being able to pay for a year or two. Theyre not going to be able to pay you for 5 years, 12, 15. They just need to solve for shortterm problems. Thats what were lending for today. So you think that eventually, just like night follows, well get a recession. You dont think that the fed necessarily needs to raise rates to slow the economy. But you think well get a recession in the next year, two years . I think if you dont get a recession, all you have is really tepid growth, right . So its going to feel like a recession. If youre growing at 50 bips. Thats pretty low, right . But the minute and if you go to minus 50, then the fed will lower rates a little bit to get the economy going again. But right now, i will tell you, they have unemployment at record lows. Everything is fine. Its not great. The problem is really for average americans. For average americans, rates have gone up 100 . If youre trying to buy a house over the last two years, you just found your cost has doubled. Because Interest Rates have doubled. When you look at food, when you look at oil, when you look at the basic necessities, those have all gone up. The average american doesnt feel like life is great, but you and i feel like life is great, because the stock market has gone up. People investing in the market are doing really well. People who are not able to invest in the market, theyre the ones who are having issues. And thats what youre seeing today. All right thank you. We talked about sailing, pretty good. I learned something. Are you guys going to come to the race, june 22nd, 23rd. What will do to get you there . It used to be, i wanted to sit on the floor. Is there a floor seat something similar to a floor . Maybe on a boat. Theres amazing hospitality. We call it the adrenaline lounge. I might be ballasted. Its like formula ones version of the do you know how fast these boats go . 60 miles an hour. All powered by the wind. We did an awesome crash a few weeks ago in bermuda, doing 55 miles an hour, where everybody fell 30 feet into the water. Everybody okay . Everybodys okay. Im having a flashback to a Larry Ellison situation years ago, something horrible happened, right . Yeah it was scary. There have been some scary moments. If youre going 50, 60 miles an hour. Wind storms. Theres some awesome brands coming into sail gp, tmobile, red bull. I can see red bull on your hat. Emirates has just jumped in as a Title Sponsor to the british team, deutsche bank. Were starting to see Real Movement into the sports. This is pent up. Im glad i went back. Thanks, guys. Weve got to go. Andrew, whats coming up . Okay, joe. Weve got a big hydour ahead, including this. A big interview with beoez winestein. Weve got that conversation coming up in just a moment when squawk box returns. [crowd chanting] they ignored your potential, dissed your achievements, and mocked your ambition. But its not the critic who counts, and you know that. From the beginning, you couldnt be stopped. Breaking resistance with every swing and block. Your game plan never changed. So enjoy this moment. The one they said youd never live to see. Some would still call it luck. Let them. Because you know what its always been. Inevitable. It is 8 00 a. M. On the east coast and you are watching squawk box right here on cnbc. Im becky quick along with joe kernan and andrew ross sorkin. The Biden Administration announcing tariff rates on 18 billion worth of chinese imports. Among the hikes coming this year, a quadrupling of tariffs on kbortdimported chinese cars doubling of the tariffs on power cells. Walmart is calling most remotor workers back to the office. Walmart reports First Quarter earnings on tuesday. And uk Online Gaming Company Games global filing to withdrawal its u. S. Ipo registration just one day before its expected market debut on the new york stock exchange. The company blaming what they say are current Market Conditions for that move. Futures right now, as you can see, up 59 points. Treasuries are quiet, but the ppi could change that pretty quickly, when we finally see that 448 on the tenyear. Lets get to dom chu with a look at this mornings premark, premarket movers. Hey, dom. A lot of things on the move. Joe, becky, andrew, thats dow component home depot. Its moving between gains and losses, but currently up about a half a percent premarket, just around 30,000 shares of volume, adding around 12 upside points. This is a mixed quarter for americas biggest Home Improvement retailer, profits Beat Estimates, but revenues narrowly missed. Fullyear guidance was affirmed to reaffirmed. Home depot did see sales decline due at least in part to customers putting off bigger renovation projects given higher Interest Rates in that environment. Those shares up about half a percent. Next up, overseas. Alibaba, u. S. Listed shares are down roughly 4 , 5 , just around 2. 6 million shares of volume. The chinese ecommerce and web services giant that some call the amazon of china reporting mixed results there as well. Earnings were a miss, revenues were a beat. Alibaba is dealing with amongst other things, a more cautious consumer in china, even though the ecommerce unit did post a modest improvement to growth. Alibaba shares on balance down about 4. 5 . Well end with a check on the meme stock trades. Still going big for the time being. Thats gamestop. Those shares are gaining on a 74 gain yesterday, adding whats now a session high, at 2010 on over 22 million shares of is volume this morning. Much of it tied to that cryptic series of tweets from keith guild known as Roaring Kitty. It seemed to show renewed interest in gamestop overall as a meme stock. But check out the over meme stocks. Check these things out. Amc is up about 104 . Blackberry is up 25 . And ckoss is up 32. And we just got news that amc raised capital, used its recent price stock spike to sell 250 million in stock equity at an average of 3. 45 before commissions and fees. Well keep an eye on whether or not that kind of affects the way things are going here. But equity raise is always an issue here. Ill send things back over to you. Dom, thank you. And we have relocated this morning. Were right here now at sava capital managements office in midtown manhattan. Joining me in a rare and exclusive interview is boaz winestein, made famous for the london whale, but now bringing a new activist campaign to blackrock, a fascinating new development in terms of going after their closed end funds. You made a strategy of going after closed end funds now for several years. A lot of folks may not understand what a closed end fund is. So before we get into that, what are you trying to do with blackrock . So closed end funds are theyve been around for more than a century. A lot of the is viewers will recognize the Gray Scale Bitcoin Trust as a very famous closed end fund that was at a deep discount for years, and when it converted into an etf, the discount disappeared, investors made Something Like 80 to 90 from that discount going away. On the new york and london stock exchanges, there are over 700 of these closed end funds, there are portfolios of assets managed by venerable Asset Managers like black rock, and sometimes they trade at deep discounts to their objective value, and that discount can be corrected with the press of a button and thats what were here to do. Why do closed end funds, as a matter of practice, seem to run at a discount. T they trade at a discount almost across the board. There are periods when they are at discount, in fact, there are many today that are at premium, but why do the black rock ones trade at discount . Its because there isnt a sophisticated Investor Base who wants to own these products. They have high fees, so at fair value, you can say, i would rather be in an etf that would do the same thing, so im not going to buy it unless its at a discount, so until it gets to doubledigit discounts, there arent investors like myself that will take up the effort of buying them. But whats your problem with black rock, specifically. You have been at war, dare i say, with black rock for several years, and have gone to court with them too. Successfully, yes. We won in federal court in december. One of the things we were at war with, they were nevesing the Investment Company act, that they prevented us from voting all of our shares, even though the company act says every share gets to vote. In federal court on some rejudgment, the judge says, sava wins, blackrock cannot do that anymore. Thats one thing. Our issue is not really about performance, though some of these funds have performed terribly, to use a technical word, in the last three years. Nine of the ten funds we were talking about have lost money for investors. Negative total return, nine of these funds, performance is one thing, but the performance is exacerbated by this discount, because a dollar of stuff, whether its ibm, municipal bonds, that blackrock manages, despite their 10 trillionaire brand, 1 of stuff is trading freely for 85 cents, 83 cents, 86 cents on the dollar. And our problem is that having become the largest shareholder in hmany of these funds, theyr blocking us from speaking to shareholders and iss last year called them out and withheld on their nominees for what iss terms abusive Corporate Governance practice. Let me ask you this, though. Some critics would say, look, the closed end fund is sold as a closed end fund, meaning, they raise money in the beginning and the plan is for you to mhold it for 12 years, and at the end of the 12 years, you get your money back and hopefully more than that. It may trade at a discount in between, but thats what it is. You, dear sir, are hijacking the process by saying, no, the product shouldnt be this, it should be something else. Right. So first, most of the funds that they have over 70 are forever funds. Theyre not 12year funds. Its only recently that theyve ride to split the difference and make it have a term to it. This idea that a fund that started as one thing and needs to be that thing nine years later. First of all, we dont have a plan to convert it from a closedend fund into an openended fund necessarily. In the last decade, weve done this about 60 times. Most of the time, to get rid of this overhang of too many people wanting to sell it at a discount, the manager goes and buys back those shares. They tender for shares at net asset value. And investors who want to come out come out, and those who want to stay will stay for a hundred years, if they want. And often that does get rid of the discount. There was a newburgher fund that did that and they are trading today at a premium. How much money is on the table if youre successful for shareholders . Thats whats wild about this. Traditionally, these were small funds, but blackrock does everything in supersize. These ten funds that weve nominated to the people of the board of if, if blackrock pressed a button, like weve done before six dozen times and allowed investors to get out just at fair value. They dont have to be right about where amc is going tried tomorrow or be right about the value, the number is staggering, its 1. 4 billion. Are i want to read you a statement from black rock. Obviously, they are not happy about your efforts to try to upend these funds. This is what black rock has to say about all of this, and maybe you can react to it. They say that black rock has a 30year history of managing closed end funds for millions of americans, american retirees, i should say, who they say depend on them for income . Looking to Arbitrage Funds in order to capture quick profits. This attack is not about governance, performance, or discounts, which narrow over time. Its about executingvas welleknown playbook, they say, buying controlling positions and forcing shortterm changes that harm Retail Investors to benefit saba and its hedge fund investors. There isnt one word that they said thats at all accurate. The Retail Investor benefits exactly the same way as saba. We havent achieved some return and we leave enveryone else hig and dry. The Retail Investors are some of the least sophisticated investors in the world. The president of blackrock, i sat in his office seven years ago, and he said, kid i was 43 at time he said, kid, these products are sold, not brought. This is pushed on them by their financial adviser, has slightly higher fees than it should, this super long perpetual term, and so the idea that the Retail Investor is relying on funds where ironically, were here in a bull market, andrew. I dont know if you looked at the stock market, these nine funds are down over the last three years. Total return is down. Some of them as much as 54 . And so this idea that the shareholder, which all we want to do is a vote is vote. We dont want to decide the matter. We just want to be able to vote. The idea that the shareholder needs these funds when theres an infinite number of mutual funds and etfs with very low fees, the idea that that is not something that is worthwhile for them take right now, a giant rek recouping of a loss, we have made investor and they have not disputed this math 1. 4 billion would be made if these funds were traded as well as their etfs. You dont think the investors in these funds want these funds to begin with . You believe theyve been foisted on these investors . Theres a mix. There are some sophisticated Retail Investors that buy the funds we buy, whether its copying us or on their own, those that bought it at ipo, and have been passed on by their descendants. And who buys closed end funds at ipo . The least sophisticated investors. The only thing we want is to have a share vote. The thing that will shock, the vote that blackrock will take next month is to count people who dont vote as if they were blackrock votes. And thats the thing that theyre doing in this election that makes my head explode. But they would never dare do that for blk stock. Theyre treating their shareholders in their stock versus the shareholders in their closed end stock like secondclass citizens compared to blk. The critics say the following, so ill ask you. You have done this before with several other funds. Those trade at a discount, too, even today, and youre in control them. Right. So what do you say about that, if yours are not necessarily performing that much better than theirs . So firstly, the critics are a lobbying group called ici that works for the managers. Second, our fund, which was when we took over three years ago, the ticker is brw. People can go to the website and saw the letter we wrote. In 2022, the year after we took it over, we were the number one performing income closed end fund out of 257 funds. Now, to the question of the discount. Thats a hardball question for me. In grm and ppr, which became saba funds, we offered investors first a 70 tender, which not only 70 of the shares tendered. We got management thood, we took it over, and offered a 30 tender and a 15 tender. If we offered more than 100 . Or right net asset value. And the nrinvestors, some of th did. Some have said, we want to be with you. We want what you are changing this fund into. And that fund im proud to say has outperformed all of these black rock funds by somewhere between 19 and 64 . Let them take shots at my fund. They are atsmall discounts, thats true. Maybe also hardball. Have you lowered the fees on those funds since they have become yours . One is already a very low fee fund. Its only 75 basis points. We have set in place governance we changed the governance to be best in class. The elections are held annually. The votes are counted on how many votes you get, not the nonvoters counting against you. And more than that, the managers of closed end funds this is probably something thats not well understood, they charge fees on whats called managed assets. So if they lever up, you pay more fees. Its the same management fee. So for my funds, i have not been running at a full leverage. We lever up. We dont like it, we lever down. And were not maximizing fees. These other black rock funds are all fully y levered. One more. This is the ohio sentinel tribune oped in january. It says, three years ago, a Hedge Fund Firm took over closed end fund. They changed the Investment Strategy from a reliable Senior Loan Fund to a fund holding risky assets, including crypto. Worse yet, they liquidated their shares leaving unwitting Investors Holding the back. The same playbook seems underway on another closed end fund now. This flies in the face of the basic principles of the Investment Company act, the current law that is intended to separate Hedge Fund Billionaires and Fund Insiders from the rest of us and stop them from eating our investment lunch. Again, not a holder of the fund, but a proadvocacy putting that story in. That fund that got into crypto, thats the one that i was talking about. First, we offered people an exit near asset value. So we gave them the gain that were asking black rock to give. Then, we asked for approval to change the mandate from a reliable loan fund that was invested in single b junkrated loan and got approval from iss. 99 of the shareholders approved those words that you just said. We then invested and we were the Number One Fund in 2022. Thats what i have to say about t that. You talked about talking to rob caputo of blackrock. Have you ever called up larry fink about any of this . Would he take your call . We dont know ooeach other. And im perfectly happy the to do so if someone from blackrock wants me to send me his number. If he did it, it would be beautiful for his brand. His employees are rooting for the discount to go away. Who would not want this shortterm gain . Whats the longterm pain that you might have a smaller fund that blackrocks managing, that you might have to go to one of the million other choices. 1. 4 billion hangs in the balance. And as you know, making money, unless you buy gamestop today, is really hard. 1. 4 billion can be made, literally, if it became one of their etfs or mutual funds or if they did a tender. And youve now started a website called hey, blackrock, trying to get their attention, maybe trying to get the shareholders attention. Really, the shareholders attention. Hay heyblackrock. Com was set up because when you set up your account at squchwab or bank of america, youre asked if you want dookted. We have to get the word out, on twitter, or heyblackrock. Com, where well hold a webinar, take questions, and go through the plan. You mentioned gamestop. Weve been following sthir this morning. You play in the markets every single day. Sigh your whole Trading Floor that way. Cant see it on camera. What do you make of what is happening right now in the markets . And specifically actually, when you look at a gamestop . You are an investor. Is this investing . Its bewildering, because we want to make 10 , we want to make 15 . You see something thats up 100 . You dont know why. It feels great, because its up, not down, for those who have it. But its certainly, in some ways, makes a mockery of the challenge of investing, because it cant be justified on anything other than pure speculation. Why today . Why not 1 million a share . So i look at it and i dont understand it. And i dont want any part of it. Is this different we were talking recently on our air with gary gensler. You were involved in the trump spac early and got out. I ended up being one of the five largest holders of the donald trump truth social trust i didnt buy it knowing that, i bought it when it was a spac, and they decided to merge with that company. At that point, the spacs, which we actually had in the funds that you read thatohio sentinel piece about, were at a very attractive discount. They were tbills in a box. Then they decided to buy this donald trump truth social and it went to the moon. And i, again, didnt want any part of it, because its a little bit at greater fool. If its at 15, it goes to 16, but it was at 9 a minute ago. So i leike when you have this super normal gain in something tyke chips off the table. From a governance perspective and market integrity perspective, given thats part of what youre talking about in the context of black rock, what do you think should happen, we had jay clayton on early, and we were talking about market manipulation and the like. Do you think theres something that should happen to the sort of memeification of the markets . I think its very hard to put in place rules to say, this gain is too much, the news doesnt justify that. I think that it does feel like greater fool theory, but im not sure whos doing something wrong to someone else. Obviously, if there are people pumping it up, but i dont know anything about that. I really dont have a view about it. Separately, just, youre someone who spends a lot of time both looking at arbitrage opportunities, but also looking at the broader markets where things are and i think also looking for cracks in it. Where are we in this market . Do you see cracks . Should we be worried . Are you bullish . Are you bearish . So the market is foggy, right . We had six fed cuts priced in just a few months ago. Now we have one. Maybe were going to zero. The way things change is inflation, has it been kicked, are we going to have higher for longer . I think at last a very heightened amount of uncertainty, even just take the geopolitical skirmishes wars that we have. When you put all of that together, higher for longer, which means higher Interest Rates, which may be great for the lender, but for the borrower is terrible. I think we are going to have a credit crunch in the next couple of years, if things dont change. And even if you take the 100 leading economists, theyre pricing about a 35 chance of recession, a hard landing. Yet the credit market, just look at Corporate Credit spreads, are almost at the lows of all time. So i think that credit does not offer investors any kind of suitable margin of safety right now, Corporate Credit, that is. So youre not you just spent all of your cash in the equity world . Well, we own 6 billion spacs. Not spacs, closed end funds. And then were very involved in protecting pension and endowment portfolios from a selloff using credit derivatives, which is my a domain expertise. When you look at just over the next 12 months, we talk about this being an Election Year and the like, does that change anything . Its huge. If trump is elected, its going to affect the relationship between equity and fixed income markets quite a bit, because he seems to want the stock market to go up. The promise across the board tax cuts, whos going to pay for that, more debt, higher Interest Rates, and i would say trump is likely to lead to more volatility, all things equal, than biden, although once the election, maybe in both cases, therell be plenty of volatility. And im quite excited for it. Youre quite excited for it. Finally, on the timing of this whole blackrock situation, what is the next step in it . Weve sued them again, first successfully last year in federal court, for not letting us vote all of our shares. This year, its for not counting the votes properly. For basically saying, anyone who doesnt vote counts for black rock. That suit will get some resolution, then well see how the votes will end up being counted. The voting will be done between now, and depending on the fund, july 3rd is when its all over. Boaz winestein, thank you for joining us this morning and having us right here this morning to talk about it. Appreciate it. Becky, back to you. Andrew, that was fascinating. Every aspect of it. One very quick question. I dont know if you can answer this. He was saying his fees on his fund were very low at 75 basis points. What are the advisories that theyre talking about on some of these blackstone funds . Or Blackrock Funds . You cant hear becky, but one of the questions she was just asking and she was sffascinatedy the conversation, on the fees, we were talking about 75 basis points, what are the fees that blackstone has on its funds so blackrock story that was my fault. Theirs are more like 1. 1 range, but their etfs are about half of that. If someone went from an esg closedend fund ran by blackrock by an esg openended fund ran by blackrock, they would be getting a very similar portfolio, same level of care, and save about half the fees. How important is it for you to control the funds versus for them to shift and do what you want them to do . Shifting would be massive. Of the 60 or so campaigns, we only ended up running the funds twice. What we want is for shareholders, which we are the largest of, but not in any way the majority, to make that 1. 4 billion, which can be done at the press of a button. And they have not disputed that 1. 4 billion to their share shareholders. Boaz winestein, thank you. Andrew, thank you. Well see you back here in just a little bit. When we come back, breaking producer inflation data. We are a few minutes away. Stayun, quk xilbe tedsawbo wl right back. 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S p futures up by about 6. The nasdaq up by about 15. If youre watching the treasury yield, the twoyear is 4. 84. And Rick Santelli is standing by at the cme in chicago. We have about 15 seconds before we get those numbers. What were watching for is what this is going to mean for the fed. Exactly. But it has so many ramifications in other markets. The euro currency, for example, is at a fiveweek high right now. Why . Because theyre thinking our inflation will be skpoft and th relationship to them being more dovish may change. April read on Producer Price index. The wholesale inflation gauge, up a half of 1 on headline, up half of 1 . Thats up 0. 5 , and that is the hottest read, well, just since february, when it was up 0. 6. And if we look at exfood and energy, same number. More than double expectations, as becky pointed out, up half of 1 . That is the hottest read there. It equals january. You have to go to july of last year, to get a hotter read. Another hot read is exfood energy and trade. Its up 0. 4, exactly double expectations. To find a hotter read, you have to go to january of this year, when it was up 0. 6. Now, lets do the year over year numbers. Year over year, final demand, up 2. 2, as expected. But still 0. 1 hotter than the Rearview Mirror. To find a hotter read than 2. 2, you have to go to 2. 3, and that was in april of last year. Strip out food and energy, your year over year number is 2. 4. That is 0. 1 hotter than we expected, equal to the Rearview Mirror at 2. 4. And that means that we have backtoback 2. 4s. And last months 2. 4 was the hottest number since august of last year. And finally, year over year exfood, energy, and trade, up 3 3. 1 . We were expecting up 2. 8. To find a hotter numberthan 3. 1, youre going back to april of last year. These numbers are obviously hot. We have moved from 4. 83 in 2 as to 4. 87, on tenyear, down a couple of basis points at 4. 47, were now at 4. 51. Preopening equities were up about 45, dow futures, theyre now down 65. Basically a spread of 100 to the downside. And i do want to point out that the euro currency, even to some extent the british currency, many Central Banks were deemed to be in a better place to lower rates than our fed. This number does not change that. So my guess is, youre going to see the dollar pop, the euro go down, and very quickly with supply, china Just Announced 138 billion package of longdated treasury paper, and just to put that in perspective, 138 billion, theyll be playing around with that between now and november. However, just our last package of 2s, 5s, and 7s was 183 billion, just to put that some perspective on it. Becky, back to you. That is a lot, rick. Excellent job wrapping it all up. Stay with us, because we want to continue this conversation. In fact, for more on the data, we want to bring in peter earl, senior economist at the American Institute for Economic Research and former treasury official, kitty richards, a senior fellow at groundwork collaborative. Peter, lets start with you. You were anticipating the numbers would be a little hotter than the consensus estimate. I think its even hotter than what you were looking for yeah, and i mean, to get right to the heart of the matter, its clear to me that the fed stopped raising rates too early. The fed funds policy rate is about 5. 3 . Annualized kcore inflation, woud put the adjusted rate at 7. 1 . Theyre calling the natural rate of interest like 0. 9 . Which suggests that policy is too tight, between 50 and 100 basis points. But prices are still rising, and for the past few months, theyve accelerated. I strongly believe that the feds estimate is low by a few hundred basis points, and for that reason, u. S. Monetary policy is still way too loose. Kitty, i think you had the opposing viewpoint before we got these numbers today. The idea that higher Interest Rates werent necessary to bring inflation down, but this kind of flies in the face of that. Thanks, becky. I think the thing to focus on here is whether the policy Interest Rates that we currently have are actually solving the inflation problem, or whether theyre just causing pain for households and increasing the affordable problem. So you know, if you look at inflation and cpi over the last few months, we do have a persistent problem in shelter inflation. And beyond that, inflation is pretty much under control. I think the big question is, do we need to see longer and higher Interest Rates, or was this a supply issue all along thats working its way through . It is taking time. Also, there are huge corporate profits that could come in order to bring prices down. I would like to see us talk about reversing the Corporate Tax cuts of the trump era, rather than thinking about continuing to make it more difficult for families to buy cars, afford their mortgage, make their student loan payments, et cetera. Which is the true, direct effect of highpolicy Interest Rates. No argument that higher Interest Rates do make it more perspective if youre trying to get a mortgage, if youre trying to get a car loan or something along those lines, make student loans, as you mentioned. The reason for higher Interest Rates is to try to tamp demand in the economy. Try to slow things down. And that in turn is basically the only tool that the fed has try to rein in inflation. You say that inflation is only a problem when you look at housing. Thats not the case. Theres a front page story on the wall street journal today that says that aluminum and cardboard prices keep getting more expensive. So do Health Insurance and wages. As a result, Small Business owners are really getting caught in this trap, not knowing what to do and where to turn next. I dont know what you think the tool is to bring down inflation, if its not higher Interest Rates. Yeah win certainly did not mean to leave the impression that the only problem in inflation is housing. It is, however, a huge driver of the inflation that were still seeing. And again, i think the question is, is this tool effective . And is it working . If we really have a supply problem that needs work its way through, how much pain would we need to cause on the demand side in order to bring inflation down further . Recalling that it has dropped dramatically from its highs over the last few years. And so, you know, its really time that we think about, is this medicine causing more harm than good . Are the side effects worth the cure . Kitty, how does raising Corporate Tax rates bring down inflation and make it easier for families to buy goods . How does that work . I mean, for one thing, it reduces the incentive for corporate profiteering. There are a lot of economists that talk about excess profit taxes in these times of unusual supply restriction. We should also talk about the fact that we just have a corporate profits tax that we cut by 14 percentage points, directly before the pandemic started. And that had to contribute to some of the corporate profiteering that we saw over the course of the pandemic. Also, you know, the fed has limited tools, but theres been a lot of talk about the fiscal side of tamping down inflation, and tax policy is a big part of that. Peter, your response to that . Yeah, i have way too much to unpack there. First of all, the last thing i would describe inflation as is under control. We had, you know, gasoline prices rose over 4 for the First Time Since last month. The price index picked up in the most recent report. Copper, aluminum, natural gas, wages, unit labor costs, all up. The one other thing i would add, is the fed has left policy rates in the 5. 25 to 5. 5 range fwor months. But last months, we had aggregates. So the money supply was contracting, but now its growing again, which may be part of whats reversing, sloewing o reversing the disinflation. I cant see how anyone could look at this and say that inflation is in any way under control. Gas prices are the perfect example, though. Do you really think that the feds policy rate is the main driver of fluctuations in oil prices . I dont, but i also think at last a whole host of other prices. One of the things i follow is the dispersion index and 85 of prices in the economy are rising. That number was 77 just a month or so ago. Clearly, the numbers point out that inflation is still a big problem. Not under control, swabsolutely not. What i care about is how inflation actually affects families and impacts the real economy. And so, we need to be thinking about what are these big drivers . Gas price. Is that actually being helped by high Interest Rates . Probably not. Housing produces. Are people able to afford housing more with higher Interest Rates . Not clear that they are. So i think thats but obviously, its a very rough instrument. Its just, theres not a better one try to blunt demand and bring it down. I think rick wanted to jump in, too. Rick . A couple of things. I first of all, gas prices are over 6 in california. Policy, policy, policy, is one of the main reasons Energy Prices are up. So ykitty is right. Fed will have a hard time getting at those. But housing how many ten years of zero Interest Rates put everybody in lowrate mortgages. Yeah, i think the blame could be traced to fed. And finally, i want to point out there were huge revisions to last month, which makes me even more nervous on two levels. A, why cant the repeat 0. 3 revisions on monthovermonth revisions. These are large revisions. And if theyre accurate, that means we had a big jump in inflation. So last month was both up 0. 2. Now theyve become down 0. 1. In the year over year numbers had big downward revisions. So i dont think this is going to make traders that are trade markets right now anymore pleased. Its going to be actually a twofornegative with those rather large revisions. Very quickly, once again, Interest Rates on the longerdated now are up on the session, which makes perfect sense to me, considering many of the supply issues, and many of the issues kitty raised, are actually very accurate. I just think that shes alling in the wrong direction when shes pointing finger for blame. The one thing ill say, if you want to look for blame for higher inflation, part of it was the pandemic and supply issues. Part of it was the fed maybe keeping Interest Rates low for too long. But a third part of it has to be the administration and the fiscal spending thats taking place. Thats a big part of the inflationary cost, too. You know, im going to have to disagree with that. A lot of the spending over the last couple of years has been ra really focused on investments in supply expansion, which is what we really needed coming out of this pandemic. It does you can say that it im not saying that its only inflationary, but its definitely inflationary on top of being targeted and trying to do after things where we want to see investments. I think its a good example of thinking about the medium and longterm and how important that is, just as in housing, what im concerned about the fed doing is killing Housing Starts and reducing the American People term supply of housing. If you think about gas prices and Energy Prices, the Inflation Reduction Act has Huge Investments in bringing those costs down for families. And the fed is making those investments i would like to finish the thought, im sorry. Theres like five people youve had plenty of time. Weve had corporations for 40 years able to profiteer and we had 40year highs in inflation. Why werent they profiteering all along . Is any serious economist really blame todays inflation any serious economist really nod when joe biden says its shrinkflation and corporate profiteering. No. Lots of serious economists have done really, really good empirical and theoretical work here. And corporate profits has been at alltime historic highs. The question was directed at me and i would like to answer it. Yeah, mcdonalds is corporate profiteering. 20 an hour. How much is a happy meal package now . You know what, a mcdonalds dinner for a family of four now costs what five years a sitdown at a low, like a lumbars or a fridays cost when you sat down. These prices arent because of that. These are prices are going up because were paying in a wage at the bottom of the food chain more money, and theres a mini wage price spiral going on. Just read the wall street journal article that becky has pointed out. Its so accurate, even though parts of it might be anecdotal, just look at the bill when you go to a fast food restaurant. Listen to mcdonalds, what theyre talking about doing and coming up with cheaper meals, because people are not going to fast food restaurants because theyre too expensive. I would encourage you to look we have to go corporations say on their own earnings calls about their ability to raise prices well over costs during the pandemic because of the overall sense that they could get away with it because of inflationary environment. We have ceos on the record talking to their shareholders, and they people are risking their health to go work there come on pandemic they raised prices because they were open peter, what were you saying . The other thing is that, as inflation rises, companys prices rise as well. If they dont rise their prices, youre asking them to operate at a loss, which is probably not outside the scope of these kind of philosophies, but not realistic for a fundamentally marketbased economy. Guys, we have to leave it here. Its clearly we have a lot more to say on all of these issues, but we appreciate your time today, peter and kitty. And rick, well see you later. Coming up, what the new Price Inflation data could mean for the fed. Author and economist judy shelton will join us. The futures, as you can see, right now, have taken a little bit of a downturn after that hot number. The dow coming off of its first negative session in the last 9, but actually, now its indicated higher, its rebounded. Ayun, u wchg squawk box on cnbc. Exciting music. [mud splat. ] [bird squawk. ] and thats why i never drive those guys. The partys over big guy were tired of hearing i dont wanna get my truck dirty. with weathertech lasermeasured floorliners front and rear. A seat protector. And full bed protection. Trucks are totally covered. You just got weatherteched. Yeah, buddy. Lets get dirty. [bikes in mud. ] drive worry free with these American Made products at weathertech. Com. Welcome back to squawk box. I want to get a check on the meme stocks that are moving this morning. And wow, gamestop was up as much as 160 in the premarket. Right now, thats up 118, 120 literally, as we speak. Also take a look at sun power right now. Were going to flip the board around. Thats up 160 right now. I mean, i dont even know what to say about this. Amc, up 106 . Blackberry blackberry whens the last time you used your blackberry. Blackberry up 120 this morning. You still have one . I dont have one. You were the last holdout. The very last person to get rid of a blackberry. Its just insane. Its the same game. Its the same game. The Short Interest must have been i mean, their short governing right now. What did they say, short sellers lost 1 billion in the last month or something. It was even less than that. 1. 25 million. Maybe it was but as you said, nothing has fundamentally changed about the prospects of this companys future has not changed in a material way. He was like this, and then he was like this. On the right . Yes. You did that well. He was and hes like this n now. The interesting thing was that the shorts built up a big position again. Thats what he thats what got him to sit up and take to s up and take notice. I guess. Joining us now judy shelton, senior fellow at the independent institute. Judy, i think you were i dont know if you were expecting a hot number, but if there is a hot number fshth its definitely going to have the fed wondering whether they stopped too soon or at least making it harder for them to do what they apparently really want to do, and thats cut rates. I think todays report is going to be a very sobering to the federal reserve. Chair powell had signaled that he would much prefer to cut than even stand pat. He was even slightly defensive when someone raised the specter of stagflation. He said i dont see that at all. Things have really changed since last december. Last december the fed was very gratified and pleased that inflation had come down so dramatically, yet growth had not declined at that point. Unemployment was plenty low. Everything was there except a banner saying mission accomplished. Now all talk of a cut seems inappropriate. I think that really puts all the members of the fomc in a very serious position. They consider the current rate restrictive, but i think one has to recognize that it has come down from 4. 9 to 3. 4 to 1. 6 in the last quarter. I think it is restrictive in terms of private lending, but it is not holding back public borrowing. Fiscal policy is working at exact cross purposes. The fed is trying to slow down economic activity. With the federal government and the Biden Administration sprinkling money all over the country on these big projects, theyre bragging about creating more jobs. That is the opposite of reducing demand. Thats putting pressure on prices. I dont think restrictive Monetary Policy can get ahead of that. Thats why were talking about a wouldnt you rather have the fed spurring private you dont want to hurt private. Youd maybe want to tamp down on the public. The opposite effect is what you just described. Its almost 180 degrees from what youd actually try to do. Think of the way the fed raises Interest Rates. At the last meeting on may 1 they nunanimously decided to kep paying commercial banks 5. 4 to leave their money sitting in their fed deposit account. If you look at the way monitor policy is carried out, thats because then banks are unlikely to make that money available elsewhere, even to their customers at a low rate. For small companies, they may not be able to absorb a higher cost of borrowing. They may not be able to get a loan at all. And then the expansion plans get shelved. People dont get hired. Some get fired. The whole plan, thats deliberate. The fed is trying to slow down economic activity. So now the government doing just the opposite, what youre doing is shifting resources including Financial Resources to the governmentmanaged part of the economy versus the private sector. Judy, what do you think the motivation for the fed is, to be so eager to deliver on the rate cuts. If you deliver rate cuts, i guess at that point can you say we have successfully orchestrated a soft landing . Is that what they wanted to get to that point . Now were back wondering how long this is going to last, how long the tightening cycle is going to last, whether additional tightening would eventually cause a recession or more of a slowdown than we wanted. I dont think its the way the fed wanted it to act. Its not the ending they were hoping for. The fed their model makes them kind of a onetrick pony. I think becky just mentioned it. All they can do isratchet Interest Rates up or down. I think the fed is even becoming aware that i wouldnt call it stagflation. Id call it stimflation. Because of the restrictive rates, the fed is contributing to the inflation. The higher borrowing costs for the big companies, they can pass them off. Thats just another cost of doing business. The higher cost of financing the deficit, for the government debt, that ends up fueling the fiscal stimulus, andthe payments now the people who are fortunate enough to have financial assets, if they have bonds, theyre getting a great return on that. That gives them more money to spend on consumer goods or services. So even the fed itself last year it paid virtual banks and money market mutual funds 280 million. For solve of those banks, they found depositors saying, hey, why dont you share that with me . In some way those high rates now feeding the inflation when the fed thought it was holding them high well, quite a number today. More to come later this week. Something to be excited about. Lets see what happens. Thanks, judy. Good to have you on. Thank you, joe. When we come back, whats moving in the markets after that breaking producer inflation data wahos tter than had been expected. Stay tuned. Well be right back with all those moves. 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 welcome back to squawk. A final check on the markets this morning. The dow is up 56 points, s p 500 up marginally. Show everyone the meme stocks. Im going to say it. Its insane, sin sanity. Thats what it is. Gamestop is up 130 right now. Sun Power Corporation up 130 , amc up 120 . Youre looking at blackberry, if you can believe this one, up now 267 brs. Nothing has actually changed, folks. New taylor swift movie at amv . Nada. Squawk on the street begins right now. Futures come off the high as april ppi accelerates. Negative rescissiontion and end line keep yields somewhat anchored. Roadmap begins with inflation and the consumer. Wholesale prices hotter than expected