Break a fiveweek win streak one name that is moving higher, though, is nvidia, up again in the premarket after adding more than 200 billion in valuation following that big earnings beat elon musk reversing his stance on chinese ev tariffs, now saying he opposes the u. S. Moves on those autos lets begin with the markets after the selloff yesterday, jim. Lot of things you could point to pmis some concerns about commercial real estate. Well, im glad you point out the second one, because whats happened is that weve got this feeling that the reason why the commercial real estate is worrisome is because theyre not cutting. Its kind of a chicken and egg thing. Yesterday was jarring. Here we go again durables, a little too strong. If i were jensen huang, i would say, darn it, i would have been up a hundred notthat he eve looks. Hes a pretty confident fellow but that stock would have been really huge and carried a lot of other stocks, but because the bonds Interest Rates went up so much, everything reversed, and the only thing that was still up in semis was nvidia. Look, yesterday was a bad day. It was a really bad day, because we got oversold very quickly, by the way, because we had no leadership there was no follower to nvidia. I mean, today, we have note out on nxp, and thats going to have more pin action than what happened with nvidia but yesterday, carl, were getting this undercurrents about this starwood sreet, and i want to hear from Barry Sternlicht. When we heard from blackstone on theirs, it was pretty calming. We dont really talk about it much after they did a good job Jonathan Gray did a good job we kind of didnt want to make we never made a mole hill into a mountain, and i dont want to make a mole hill into mount ste sternlicht. Its not fair. I would like to hear from him about what he wants to do, rather than just read the press reports. Jims referring to this limited redemption buying back 1 of the value instead of 5 . Of course, sternlichts been a consistent critic of rates and the impact theyre at least having on his industry he did talk about how there will be a bank that will fail every week, and i think there are a lot of people who might be not me, because i like barry who might just say, give me a break. Maybe it fails because youre defaulting on properties, doing these spacs. I say, lets hear from barry i know he doesnt want to sell into a low, but how do we know its a low hes been telling us one of the things that barry has done is hes i dont like to be scared but he has scared me i would never if you came to me, carl, and said you had a real good deal on a commercial real estate property, i would say, did you ever hear of Barry Sternlicht hes telling me not to be in it. Hes the one that is front and center for a problem here. On top of that today, jim, goldman gives up the ghost on a july cut they move to september yep they do say, by september, youll have five more pce prints they think the majority of the committee will be in favor i thought yesterday was an outlier with services. We still know service the service economys strong i come back, again and again, im going to say it. Its employment. And we dont have mass bankruptcies i mean, we do we go to red lobster, and if we think the reason it went down is unlimited shrimp scampi, im going to take that out of the equation of what the fed says, oh, thats a good one. I never want rite aid to go under, but when you go there, they have some razors, and its like, yeah theyre not shipping youre talking about very specific execution issues. Thats the thats the problem. The drugstores, obviously, hideous, but thats the problem. Look at vf corp. I think Bracken Darrell is going to fix it, but if nobody goes under and theres no mergers to speak of and theres no closings, then we just dont have enough people very interesting when you talk to nvidia, they go over the four cliffs conundrum they always talk about, look, were creating lots of Different Things i dont want to say people, because that sounds bad. But theyre creating a lot of devices that will make it so we dont need as many people, but we have a big my friend, carmen, who runs ey but now is near the end of his run, is really fond of talking about how we just dont have enough people being born we just dont. Its the topic of a big fund strat report today, looking at the longterm labor shortage all around the world thank you for these numbers we need 2. 1 people born from a family in order to make it so you dont lose population. Italy has 1. 3. Were all being threatened by this its the demographic challenge is really major. Tom lees point would be that that is what the a. I. Trade is going to be about. Hes right. Replacing that lost labor hes right. I think thats what when you talk about when were all learning that theres training and inference, you want to train youve got to start training on the h100. You cant wait for the blackwell. This is the upgraded nvidia. But you want to train using video. A lot of Different Things. But the main thing that jensen feels is that we are really going to go full selfdrive. That was good for elon i mean, theres a lot of firstname people in business right now. Elon jensen but i will say that jensens real big issue was full selfdriving on that Conference Call people dont seem to realize that was his emphasis. Previously, that had been the digital twin it had been robots it was all full and this is all musk we covered it a lot yesterday, and a lot of our questions to sellside yesterday was about your point that, what a surprise the auto blessing was, and they all agreed really, i did not see that coming, and my talks with the Company Behind the scenes after, i said, are you kidding me were talking about digital twin and the omniverse . Where are the robots that can shake, not stir, the cocktail . They said, no, stay focused on the prize. The prize is full selfdrive i know that jensens always been interested in that, but lets think about all the people all the productivity we get if you didnt have to go behind the wheel and all the safety and the fewer accidents. Obviously, people think that the authorities are really unlikely to go along with this right now. Right so, overall, the vibe youre getting i mean, alltime highs were just a couple of days ago. This might be growth scare number two on the the reflation scare, i guess id like to make more of it i got up really early to find something negative so i could say, carl, you know, the real problem was the commercial mortgagebacked securities boeing didnt help. The boeing cash flow, because you know, boeing wants to go buy spirit do they have to issue equity do they not . Im not saying that. You should never be sanguine after a big run like this, but were not faced this weekend, the threeday weekend, and there have been times when you and i have been together in june where weve suddenly, like, wow, how did ge drop 20 . That kind of thing i dont see that happening i do think that we got the usual suspects we have taiwan versus china. We have to be concerned about, i would say, about once again for boeing and cash flow, because weve seen boeing be in trouble. Some commercial real estate. But for the most part, we had if workday is our biggest problem. Workday. I mean, workday picked a bad day to report. Theres like nobody else reporting other than ross stores good number. Deckers. Great number and then workday workday is getting punished, down tenplus on a, i think, one percentage point trim on sub revenue guide. They did that one they used the term, we got to get used to all the terms. They were talking about elevated sales scrutiny, which is as bad as elongated elevated and elongated. I have to create an english to shortfall dictionary if we go into the four oh, and if we put in elongated sales scrutiny, it doesnt come back and say thats elevated, thats elevated same as elongated. Yeah. But this call, can i just say, was not that bad. One of the missing sub ttexts w hr, in general, was not the greatest place to seek a job Human Capital management people are trying to not beef up those divisions. Intuit is another story where people are pointing to turbo tax units down one, even though they did raise the fullyear guide, jim. I thought intuit was good im just going to put it out there. I thought it was a good quarter. It wasnt a great quarter. Its a high multiple and weve never had anything other than beat and raise under this we did not get beat and raise, so i get that, but it has more to do with how perfect this companys been than anything that is really worrisome right and of course, you talked to walt of schwab yesterday his comments really rhyme with yellen and the ft today, talking about how inflation has become a number one concern. We should listen to this. Lets take a listen to what walt told jim. Inflation has now become the number one concern among investors across, again, 35 million clients that we serve. And so, when they think about inflation, it has moved their position from the first quarte of being a little bit on the bullish side to where now, theyre a little bit on the bearish side were going to get umich in about an hour. I didnt see that coming. I was asking him, because business was very good it wasnt as strong as people thought. He did guide people down a bit 35 million, thats, you know, youre talking about one tenth of the country is with schwab. What i thought was interesting is he had an opportunity to say, i think its coming down its not a problem if i were president biden, and i heard that interview, i would say, you tell me that onetenth of the country with the stock market where everybodys making a lot of money is worried about inflation, and then we have janet yellen over in london talking about inflation. Shes this is it makes sense why were higher for longer i did not expect that from walt. Walts a really good guy, and for him to say that theyre worried about inflation, then people at home are saying, it costs too much to go to the store, and im stuck in my house. Theyre not stuck in their house, jim atlantas airport yesterday just blew away the record theyre still going gasoline is lower. But tsa, 111,000 people yesterday crossed through Atlanta Hartsfield and theyre probably going to break the record again today okay. So, everybody does have jobs, and jobs are plentiful other than Human Capital management, according to workday. But i do think that for i didnt want walt to say that when youre doing these interviews, youre revving and its the indy 500, and you say, i better ask about inflation because everything is so good, and then he just hits me with the roundhouse my plan was really gooduntil i got punched in the face. Yeah. It brings to mind, jim, a note from goldman, the desk yesterday, talking about they dont think institutional traders are prepared for the potential for a blowoff top, and they say the retail cohort is the reason why, because theyre on the come. But would walts comments back that up . No. Absolutely not and walt, i asked about individual stocks, and hes just going toward mutual funds and going toward index funds, and not remember, we have been using these things of trying to figure out whether the consumer is enthusiastic, whether the consumer is ebullient. I felt from him that the consumer was, eh, business as usual. Its okay. But inflations not okay well, when we come back, were going to talk about maybe some moves in the opposite direction as some of the fast food chains move further into value and the target price cuts as well. Well get to the latest developments surrounding tesla and elon musk, his message regarding tariffs. Some reports of cutting production in shanghai as well take a look at the premarket more squawk on the street continues in just a moment power e trades easytouse tools, like dynamic charting and riskreward analysis, help make trading feel effortless. 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And now, were introducing ultimate speed for business our fastest plans yet. Were up to 12 times faster than verizon, at t, and tmobile. And existing customers could even get up to triple the speeds. At no additional cost. Its ultimate speed for ultimate business. Dont miss out on our fastest speed plans yet switch to comcast business and get started for 49. 99 a month. Plus, ask how to get up to an 800 prepaid card. Call today some new challenges for tesla in china published reports say the company has cut model y production at the giga factory in shanghai. Meanwhile, musk saying hes now opposed to tariffs on chinese evs. This is at a tech conference in paris yesterday. Neither tesla nor i asked for these tariffs. In fact, i was surprised when they were announced. Tesla competes quite well in the market in china with no tariffs, and no differential support. So, in general, im in favor of no tariffs im also, actually, in favor of no tax incentives for evs, but provided that there are also the tax incentives for oil and gas must also be eliminated. So, im in favor of no tariffs and no incentives for electric vehicles or for oil and gas. So, is it is it that after you build a giant on the back of subsidies, youre for no more subsidies . I guess so. Once youve won, no more subsidies for the other guys the most important line that came out of that, he was pressed. Musk was pressed about flagging sales. He was pressed about declining stock price, and he did say, in a most informative moment, we can stop the question right now because i dont think Business Insider is a real publication. President nixon used to do that. Are you running for president , dan rather to turn on the press like that, thats a timehonored way when youre sick and tired of hearing about your flagging sales. Reuters does have this piece he doesnt like reuters about model y data shows its down by a third in april year on year. I know. Things are, you know, look, the long knives are out there. Youve got the chinese putting you know, coming up with cars that everybody likes that cost very little. Look, im going all in musk on the vote i think he wins the vote and i also think that if hes not right with jensen, im not writing him off. The stocks been resilient. I think theres something going on in the last few weeks, which is saying, okay, listen, we are going to go autonomous, and you better get on board. I dont know where i mean, to me, i was still used to when i was in san francisco, it was autonomous, and then the next thing i know, its gone. And mary barra shrewdly had to do what she had to do, but i keep thinking about, if theres this much backing, somethings going to happen. Speaking of barra, she did speak to the detroit economic club, and she says, on musk, i have respect for him its a different kind of playbook, but at gm, we really have to think through and try to talk about the issues that are consistent with our company values. Well, you know, i dont know why she should comment on musk i think that this is a good chance to say nothing. I do think that the tariff issue is very strange, carl. Remember, mary has a lot of cars sold, huge gm business in china. Stay low, stay low have you been you have been watching these military drills biggest series of military drills for the chinese in about a year yeah. And thats back, and i think that that asml comment, we got to go back to what they said at taiwan semi, dont worry, we can shut these things down, and then go back to Gina Raimondo from commerce, and a lot of people feel, oh, shes picking winners. What she is picking, and her team is very good, brad konig ran the Investment Banking division at goldman. Theyre not picking winners. Theyre picking a strategic semiconductor reserve. If we dont build them here, and china takes action, then we are done we saw what happened with covid. I had felt, and i know its a very outlier move, that maybe we do have to put soldiers there. No one wants to put soldiers anywhere, but we have to make a statement to the chinese, listen, this is not were not going to let this stand. As a country, we cant let taiwan taiwans the most important ally we have thats probably true i mean, thats something thats a little bit fraught, that theyre our most important ally, because we cant make most of the things we make without them. It would be a huge new chapter, jim, in geopolitical risk while were at it today, we do want to take a note and remember our good friend, mark haines, who passed away 13 years ago today. Mark was the founding anchor of squawk box, as you know, coanchor of this show, squawk on the street. We always remember mark for his knowledge and wit, and jim, i sometimes think about what he would do in the face of so much misinformation today oh, he would be so angry. He would be so angry and so dismissive what he would do, i think, call out one of them so strong that the others might say, you know what maybe we should stop did you hear what just happened to soandso news outlet thats what mark was like. I would come on and have my rap, and he would say, no free passes and then, one time, i was under fire from him, and he goes, no free passes, and you trembled. You trembled because mark haines was the authority, and we forget that and we miss him. Theres a look at his portrait, which still hangs just on our way down to this set every single day what a guy. Our thoughts are with marks wife, cindy, his son, matthew, daughter, meredith, on this day. Opening bell coming up in a few minutes. office chatter is it me. Or is work not working . At least, not the way it could work. Your people are buried in busy work. And you might be thinking. Can ai make it all work . Can ai help your people work. Without all the workarounds . Feel better. Make Customer Service work the way customers expect . That one. Make your old tech work with your new tech . Thank you. And todd here is wondering, can ai do all that. Now . No pressure. It can. On the servicenow platform, ai transforms your entire business. Your people work better, your customers are happier, and todd. Well. Hes practically euphoric. Practically. Because when your people work better, everything works better. So what are you waiting for . Lets get to work. Idris elba works here . Mmhmm. Ya, hes super nice. What a week its been in retail take a look at some s p gainers. Ross and deckers both leading the charge there were going to get jims take on both of those as we also watch travel lowes corp. , of course, below that cramers mad dash ahead of the opening bell as we get ready if a long threeday memorial weekend. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. Time for cramers mad dash as we count down to the opening bell heres something we may start seeing one of my Favorite Companies is the company that delivers uniforms and a lot of other things to small and mediumsized businesses citi today said its price further acceleration ebit growth but downgrade it to sell because its gone up so much this is my fear for nvidia, people come in and start saying its going up too much this is such a great company, and to take it to a sell by citi is really just to say, you know what, we have had enough, and i dont think it really works like that in a bull market. In a bull market, it rests and then it goes so, do not sell cintas didnt they raise the target as they go to sell yes i dont like that. Dont do that. And understand, intas, which comes on the show, they reinvent themselves constantly. Really Great Companies do not rest on their laurels. Lets get the opening bell here its a loud one. At the big board, its Energy Company oklo at the nasdaq, it is memorial day flowers foundation, an organization that places flowers at Arlington National cemetery you can hear the noise. When i was in my car, i was in sacramento, and the police said, look, if youre going to sleep in your car, please sleep next to the Nuclear Power plant we will never bother you and i always liked that. It was called smud, sacramento municipal utility district, and they never minded me sleeping as close to those towers when you wanted to. Thats where you go when you live in your car, just for the record after an 80 down day yesterday, this is the kind of breadth youd expect to see. Yeah. Look, yesterday was so overdone in terms of we had a pmi Service Number it all started when rick gave us that number, and i came back and said, wow, this is really such a bad day for no reason, other than the fact that lotteries ahead of a threeday weekend this is nice i dont know if it lasts a threeday weekend, we do get selling, but yesterday was overdone, carl it was like five days of selling shotgunned into one. Jim, you mentioned oil earlier. Lowest price here since february 26th, and its down about 5 for the week this is very important, because janet yellen was citing i happen to think secretary yellen is doing an absolutely fantastic job, and i say that im not being put upon she really understands the s zeitgeist of regular people. Gasoline can go down week of week and we get to sub 3, thats going to be something america feels good about gas futures, threemonth low. Lot of discussion about the spr and whether or not, the way were producing, if it can be truly strategic and not emergency as a reserve does that make sense yeah, well, i do know that there are a lot of pipelines that will be out at once thank you, rusty braziel, for that so it will be neat in terms of the strange flow that we have. Theres no doubt about it. When you signal that youre going when you signal that you might be buying and then you turn seller, in any business that youre in, in the stock business, well, that just catches people the wrong way, and thats what they did i think there was definitely a sense that we were going to start seeing some buying of course, huge impact on Consumer Sentiment, and i do want to get your take on ross and deck this morning. So, deck is really amazing because its very rare that you have not one but two different shoes, really doing well you got 18 growth for the year. 530basispoint improvement. Thats amazing earnings per share compounding into growth of 32 and then, you really start thinking, well, are they can they really hurt nike . Their sales are still really, really small versus nike hoka is a fullpriced product, doing incredibly well. Uggs is a fullpriced product. They did say, listen, our margins are going to come down a little bit the margin beat was like by five points. It was so incredible. And this is footwear these guys at on are really remarkable should the stock be up this much nobody can touch them right now. If youre now, the people i know who work at nike are not scared about hoka, because its not a big company. I think you should be scared about anybody who has that level of momentum. The shoe business is historically been a momentum business, but the people who run deckers, powers, i mean, hes terrific that chart is so i know. Deckers is incredible. You usually dont get you usually get some discounting theres no discounting going on. Uggs is an incredible brand it continues to have great numbers and great Gross Margins. And then ross stores, jim, not quite the premarket gains, but close. Ross stores, when you go over what they did, they delivered they told you again and again, apparel, not that good well, tjx, which is an investing club name, did not say that. Ross stores, when it was up ten, to me just made a mockery of the fact that tjx is back to where it was tjx did a better quarter than they did up ten knock yourself out and buy it. Meantime, jim, if youre looking at Consumer Discretionary, nice note out of schwab today that only half of the components are above the 200day. Some deterioration in that front. Look, Consumer Discretionary. Were in burger war territory. We got burger wars we had we mentioned burger king matching this 5 value meal. Now wendys has this baggie that is interesting. I think that wendys has been the third some of that is because the baconator is 6. When my wife buys a thousand calories, she better pay 5 for that the more calories, the more you pay . Uhuh. Its not pay by the calories, for heavens sake. Thats got to stop of the components of inflation that get noticed, theres something about Quick Service that is yes, because why do i keep referring to the incredible numbers at brinker and texas roadhouse. Texas roadhouse, they both have the 11 meal, and there are some people on reddit, and i do watch reddit, who are talking about they had a 9 burger at fast food, and thats ridiculous. Obviously, its the combo meal reddit is a great place to see grousing and that just tells me, listen, if youre going to pay 9 for a combo, go get the 11 and get that margarita at brinker. They got a great margi by the way, their drinks are made with the finest alcohol be aware they do not use what we call the well alcohol yes theres speaking of all this, theres a great interview with the cfo of walmart in barons today where he talks about the ad business relative to their gmv. It could double or triple that business and membership too. Im so glad you mentioned that, because when you speak with the people at walmart, i was trying to get a walmart versus target thing going. Well, walmart doesnt have the advertising. I momentarily lost my thought because its very hard for me to think when i have oklo in my head whatever i will say that walmart has this whole business that target doesnt have and they also have international. Its no longer apples to apples. He points out that they sell probably the highestend laptop apple that you can get at a walmart. And that speaks to the level of income shoppers that theyre drawing in the old days, we used to say, wow, look at all the beamers on the costco parking lot when you go to walmart, look, im not alone. I wouldnt be going in there with my kids if they theyre not kids, theyre 33 if i felt the place was not a really cool place to shop its just it has that it will convince people one after another after another, but when you go there, the prices are so stunning that you just feel like you beat them. Thats the way i feel with costco its like you beat them. The walmart people want you to feel that way, especially because theres no walmart person thats as rich as jensen huang. Thats true that is true yes. I think less more wealthy now than any of the waltons . Is that how it works of the billionaires that i have met, theyre a dime a dozen, we know im going to the hamptons, oh, billionaire, billionaire the only billionaire that does not carry himself as a billionaire is jensen huang. He doesnt hes like, hey, what are you doing . Hes a billionaire, and hell say, like, that persons not nice when my kids were little, they would say, that persons not nice jensen is concerned about kindness ive never met a billionaire who cares about kindness at all. Its like, oh, kindness, thats not worth anything theres a look at ed, who owns about 3 of shares outstanding. Thats not some astronomical share. Talk about stuff that he does not care about and he wants to lead a normal life he doesnt want bodyguards he wants to have fun, he and his wife and kids. Theyve got these great kids that work there, and youre talking to them this is typical jensen style theres someone whos young, and she wants to help you and stuff, and how you doing . Then you realize its his daughter but theyre unassuming billionaires theyre just not like the other billionaires thats i want people to know that there are people who just have not changed, despite whats happened he is unchanged. When you work when you clean toilets at a dennys, jim, that stays with you. I told him i was a dishwasher, and he said, wait until you take a tough job 3 of the company. Novo, this study now published in the new england journal of medicine about cutting the risk of death from Kidney Disease that was a stock last year, and as we get more and more of the Kidney Disease is fatal, more and more of diseases that are fatal that these things go up against, thats more and more will be part of the formulary, more and more the Insurance Companies are going to have to pay for it under the inflation reduction act, the government will negotiate the prices but that was important. The new england journal of medicine verifying that allows a doctor to argue or a person to argue with their insurance company, saying, come on this can save our lives. You got to pay thats what they need. Otherwise, were going to run out of people who can afford these drugs. Right lilly is so constrained theyre afraid to say, listen, were going to start making a drug we cant they cant meet demand anywhere and again, that hundredx study that goldman uses that was i had them on earlier this week. Just said, look, there are elements of choice, and people dont they want lilly they want zepbound and mounjaro. They dont want lilly. Would you include lilly in a modern version of the mag seven . Yes and some of that is because i respect ken langone so much. He was the first guy who said it was going to triple. You have to. Dave ricks, again, you got these people, they just dont change dave ricks is the same guy, and the cfo is fantastic they are just busy trying to meet demand wherever they can. Thats like, nose to the ground, lets make enough available for customers. And lets not have it so they have knockoffs the knockoffs will not have success. These are drugs that have to be refrigerated correctly you have to worry about the supply chain lilly has always said, listen, you got to be very careful but that stock is going to have a lot of staying power as one after another dr. Gottlieb, scott gottlieb, whos on the board of pfizer, did say that he expects that theyre like the statins. I remember when the first statins came out, and here were talking about 1987 with merck, and people just said, well, you know, it will never catch on too expensive, whatever. And then, you know, a few years later, 20 of the country is on them could be like that jim, one thing that kind of slipped through the cracks with us this week was ether, and bitcoin, and now they have s. E. C. Approval on some of these etfs i think ethereum is really important. Blackrock, larry fink, will make it so that he wants very much to have control over it with an etf. Now, it is interesting that remember, the s. E. C. Was a kicking and screaming on this. The cftc, not so much. I think the s. E. C. Kind of says, listen, if we dont regulate it and let it happen, it will be like gambling. Its better to have draftkings handle it than it is to have whatever nefarious characters handle it. You get a little more sunshine, which is what Justice Brandeis would have wanted. I think its great i think its great ethereum is used if you want to buy things its much more of a currency aspect than bitcoin, which are more of a store of value by now, youve read the doj filing on livenation and hear them on our air yesterday afternoon. They defended themselves pretty well, but i think youre going to tick down its food, its tickets. These are things that have not come down. We keep getting back to rent and rent and rent. And theyve got to fix housing in order to be able to make it so when Toll Brothers reported, Toll Brothers did not report a bad quarter theyre still not building anywhere near the homes that you hope you cant look to the Home Builders to get you dont expect regulators to put the Home Builders in their crosshairs no. Definitely not and what i do think is that they have to look at the at the way that we have had immigration and Legal Immigration and how the cities and counties have had to put people in any Available Space so theyve now become a competitor to regular people i dont mean immigrants are regular people theyve become part of the problem in terms of demand i mean, its interesting. On the other hand, theyve been deflationary on labor. Right but inflationary on housing and i think that jay that the chairman knows that, and hes trying to figure out at what point does it tip and we get wages lower . Thats why i keep coming back to the number that you need to think about is the only number you need to think about is the employment number youve got to see people say, wow, over four it could get bad. What youre not seeing that i thought you would see is people think a peak in housing, lets put our house up for sale. That is not happening. Theres no increase in existing home sales so, we cant get it going. And you go back to what Marvin Ellison said, ted deckers said on the home depot call theres just a dearth of transactions, and that is what we need. We need transactions you wont get transactions until you have people who are losing their job. And right now, theres a job for you if you lose your job there is a job yeah. I will say, of all the desks that are looking for weaker prints, Morgan Stanley yesterday, one of their points is looking for leading indicators in rent do show deceleration deceleration in Car Insurance. Core goods, cpi, running negative threemonth annualized. Whats happening with Car Insurance is that people are having accidents and not reporting them theyre afraid their insurance will go up therefore, the Insurance Companies may not be able to continue we are seeing a belief, if you look at workday today, that companies are not growing and thats spilling over to salesforce, which i think is silly, because theyre no longer in the same kind of its a not a great analog but workday is about certain parts of business not growing. And thats the first ive seen of that. I have to do more work on workday, because its a pretty good company, but remember, they business formation does matter for them. We had people saying that toast should go lower because the restaurant formation isnt occurring. Look at intuit now, adding to its losses in the open thats Small Business wow. Thats Small Business. We know what smbs do in the way of job creation in this country. Thats the backbone of business remember, i was saying that the cintas was the downgrade there was off of price, but cintas is probably the company that has more Small Businesses than any other, and you know, you could argue, well, geez, that downgrade is going to have some impact lets not forget, i had kevin harken on the other day, cisco, the largest supplier to restaurants, and he has said the prices have got to high and the restaurants are having problems. Every one of these is saying that the fed is winning, which is why i did a piece the other day that says, be careful, fed, you may be winning they may be winning. But youre happy to have them wait and just stay here. They have to. Weve got to be sure theyre winning. When walmart came out with that private food line for everything under five bucks, that puts a lot of pressure on things. 5 price level is very interesting, isnt it . Theres a lot of people who want to roll things back to 5. When target rolled things back, 5,000 products, they did it like they did it before, right before they reported. Would have been better if they had rolled back a month ago. But i think we are seeing rollbacks. Im saying the fed is going to win and yesterdays pmi was an outlier. The fed is going to win. Theyre just its going their way, but its like the second inning yes its not the phillies, greatest record in baseball. Its not the mets. Holy cow no if only if only he were here oh, i did that really. Hows that we think david will be back on tuesday my favorite that he does, just so we know is, david, are you paying attention to anything im saying what did you say he keeps the ball in the air. Yes, he does, and davids killing paramount wherever he is right now. Right now, hes killing paramount. Maybe well talk some box office later this morning. Watch bonds. We mentioned that tenyear getting close to 4. 5 today as durables did come in a bit warm. 0. 7 looking for a decline. 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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. Take a look at some media names in the green for the most part although more discussion about Domestic Box Office for the year tracking down 24 . 90 inch tv what i keep coming back to. Even as we got highprofile trailers drop for the new Beverly Hills cop, beetlejuice out of wbd. They need nationwide monsoons. Well get stop trading with jim in a moment. Dow is up 30 the darkness of bipolar depression made me feel like i was losing interest in the things i love. 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Ask your doctor about caplyta. Im sensing an underlying issue. Its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. the price lock, the price lock. so, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. Its time for jim and stop trading. When i was growing up there was a jingle, the beer that made milwaukee famous dan ives, the analyst that made wedbush famous, does have a fabulous note about apple. We always get these surveys. Hes got one that says its 2 better than expected and it is working. Hes talking about the 16, using the kiss of death, hes saying super cyclical we have to break him of that term. We had that super cycle, but what i liked about this, he does say listen, this is ahead and most of the time we get unsourced stories which says that apple is falling off the cliff in china this is a new narrative. Wondering if hes going to wear the pink jacket or the green jacket. Theres a few yellow. I do find that hes adobe before he comes on what hes saying is, lets stop talking about ahead of the worldwide developers, saying this is the biggest one in ten years because theyve got to do they must, must, must do ai. Meantime, information has a piece about meta considering charging users for an advanced ai power assistant called meta ai everyone is in this race. That one i got to check with mark on. You know how the that musk was unhappy with Business Insider. Yeah. Sometimes you have to check with mark and get it right with mark cant just get it right with jensen number one was musk and then number two on that great jensen call was zuckerberg. They are building an ai factory to end all factories. Youve had a busy week on media. Ul, a company that just came public, going over all the different im hitting everything is coming public. I still like that meta deal and arm deal those were two of the most exciting deals of the year, and theyre just going to stay good. Theyre good stocks. Well priced. Yes they did both really well, and a lot is because they have very canny ceos who recognize that who matters are the shareholders. Yeah. Really terrific people. Wow. Great long weekend. You too and maybe david faber will come back from assignment. I think he might. I dont know. I dont know, jim. With the jeans and the phone. Jim, let me do this, im talking to my dog here which is more important than talking to you. Oh, okay, david, how are you well see you at 6 00 on mad money. 6 00 p. M. Eastern time when we come back, as jim says, wedbushs dan ives talks apple in a moment. Are you interested in safeguarding your investments with gold . Alamos gold is a growing canadian gold producer with a long track record of outperformance. Alamos gold. Invest with us. Our growth sets us apart. Good friday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with leslie picker and mike santoli, live at post nine of the New York Stock Exchange david and sara are on assignment bulls still licking their wounds from yesterday dows worst decline in more than a year although just a handful of points away from 5300 still. Yields a little bit spice yi today as durables did come in warm. Were about 30 minutes into the trading session. Here are three big movers we are watching positive moves in the retail space. Deckers outdoor and ross beating estimates, ross raising its forecast shares of deckers up 4 and ross up nearly 9 lucid announcing plans to cut 6 of its workforce or around 400 employees. Shares an under performer on the year as the Company Continues to struggle with deliveries and today no different, those shares under pressure down 3 watch shares of workday tumbling after, quote, elevated sales scrutiny and lower Customer Growth drove the company to cut its forecast those shares down 12 . Also kind of emblematic of what we may be experiencing with the enterprise customer. And some consumer data out moments ago. Rick santelli has that. Hi, mike. Definitely these are university of Michigan Sentiment may finals the mid month reads get tossed mid month read for the headline was 67. 4 it now becomes 69. 1. It improved. The comp still takes you back to november, the weakest since november and if we look at expectations, the mid month read 66. 5, also improvement, 69. 6. But remains lowest level since november if we look at expectations, 66. 5 in the rearview mirror, 68. 8 68. 8 that now becomes the lowest level since december and finally maybe most important aspect of all, at least to me, university of michigan has two inflation gauges, the oneyear, mid month read 3. 5 now its 3. 3 that is huge because 3. 5 was the highest going back to november now 3. 3 still comps to december, not november, not a big difference there, but psychologically means a lot to take that 0. 2 back down. Finally 5 to 10year, same dynamic, smaller dose, 3. 1 mid month becomes 3 we see yields moving down a bit on those and even though theres still a long way from 2 , the feds target, they are moving in the right direction. Carl, back to you. All right rick, really important, thank you, Rick Santelli were 100 trading days into 2024 the s p up nearly 11 . Some data from nikolas over at data track shows those gains have mainly come from nine trading days, two of them this month, and mike, you can see the spike here on some of that relief in oneyear expectations. For sure. I mean for one thing its pretty much always the case that returns are lumpy and theyre erratic and most days kind of offset one another and that you have the big moves that move the needle i do think all of this stuff is a reminder, the sensitivity to every little move in yields and yesterdays action where you had this unequivocally strong result and response to nvidia that didnt really have a lot of broad positive impact. Mostly because the rest of the market has been dependent on that soft landing mix of numbers, having to come in, thats fostering this idea we can broaden out the rally and the benign Interest Rate and economic environment can stay in place. So i dont think anything really was out of bounds yesterday, but it does sort of show after four weeks, we were up 7 in the s p, volatility levels very low ongoing worry or at least lowlevel attention to the softening of consumer activity, consumer cyclical stocks have been weak on a relative basis. All the rest of it was the ai theme was there but what else do we have . I think thats where we are in terms of trying to digest a little bit of this move. Carl, ive been talking for a while and leslie too, the april pullback was like the minimally acceptable pullback to take some of the steam out of the market but it wasnt a full comprehensive reset where people got worried and took down their exposures. I think you have a fully invested wall street with a pretty upbeat and comfortable view of the macro alongside the enthusiasm around ai and were trying to figure out where the equilibrium is for valuations. We talk about the broadening out of the market. Bofa had stats, screened the s p 500 for stocks that saw the largest increase in ownership threat and thats measured by percent of funds owning each ticker nine of the ten were ai or tech related names with the exception being eli lilly which has been, you know, caught up in the whole fervor surrounding glp1 drugs. Exactly. So it does feel like even though were seeing things broaden out, the actual ownership breadth where thats becoming broader is still in these thematic areas. Shows you theres a scarcity of conviction except in those select identifiable areas where you have essentially these dynamics that are not so linked to the cycle and not so linked to what the fed is going to do and, you know, the breadth of the market has operated at the pleasure of the bond market for the entire span. When yields have been coming down, as they were after the february report from nvidia, they actually peaked and started going down, then we had a nice broad rally after nvidia it wasnt because of nvidia. It coincided with it. In general your take has been that the market would prefer to have positive surprises than negative, even if you get a shortterm bounce on lower Inflation Expectations and in that respect, i guess whats your feeling about the current set of data which has been a little negative . It has been a little negative i think in the short term we basically are reading a lot of the things like the manufacturing comeback and the prices paid numbers, as a little bit unhelpful to the feds cause. I do think were fine to have just a patient fed that keeps rolling ahead. Its an estimate of when we will ease on the first time as long as it seems plausible, like things are ultimately inflation wise going to move in the direction they need them to move. Yeah. It sounds like people are willing to be patient as long as theyre not patient for an ultimate hike. For sure. The next direction is lower lets get more on where is market goes from here. Joining us scott crowner u. S. Equity strategist at citi. Thanks for being here. We were talking about his dynamic in the market we think its moved back into euphoria and believes shortterm caution is warranted at these levels what are the indicators that are kind of flashing that euphoric sign for you right now well, the setup actually is kind of listening to mikes comments that were not too far off where we were at the end of q1 going into q2 when we had that 5, 6 pullback. Going into the quarter we had our panic euphoria model going into euphoria, at the same time, we like to look at valuations but focus on what we call our implied growth expectations, which had gotten extended versus where consensus growth is or was at the time. Were back to now where both of those readings were headed into q2 so from our perspective the riskreward looks fairly balanced from here we completely get it theres a new growth driver in town courtesy of generative ai thats been a discussion point for the better part of the year and what youre seeing in our view is a lot of bifurcation under this index surface between companies and then sectors that are perceived beneficiaries of the longer term growth trend. The tailwind for those themes there. I see you think fed rate cuts may be a negative for s p 500 earnings thats somewhat contrarian why do you think that . Yeah. You know, this is a really interesting discussion and dichotomy if you will. We wrote back last fall that we felt that mega Cap Growth Companies were actually being benefited by the fed rate hike trajectory because what it had done was unleashed a lot of Interest Income that was benefitting those companies that are cash heavy or very Free Cash Flow generative in contrast to those parts of the market that tend to be more debt heavy which would be sort of your real estate and utilities you fast forward to now and you begin to incorporate a perspective where, you know, what if we do get to an easing fed . Our math is be careful what you wish for here in a declining Interest Rate environment we actually think that large cap earnings could come under pressure to the tune of 1. 5 to 2 and that would be a market difference from what we think could unfold in the small mid cap part of the market. Scott thats sort of i guess something that relates back to, you know, where the weight of the index is and the weight of the earnings power is within the index. Is it your sense out there that investors in general are happy to put a multiple on that portion of earnings that are essentially just income off the cash i guess maybe if its inside of a company that has high returns on capital like tech thats a good question, mike. Look, i dont like to put much of a multiple on income from cash, much like i dont like to put much of a multiple on Share Repurchase driven Earnings Growth i think where the market gets more enthusiastic is where you see a very clear revenue driver as your Decision Point on in terms of whats going to drive the Growth Profile and thats where you tend to get your multiple. And i think thats whats happening right now in the s p pretty, obviously, is that you have this underlying issue regarding where we are in the economic and fed cycle, got that, and, you know, we would argue that were at a point here where were probably nearing peak in fed hawkishness, but still under the surface, where we go in terms of longer term growth, is still a big question mark, which is putting the ai discussion so much front forward. Scott, goldman today pushing their cut call from july to september. There arent many left in july youre one of them i wonder, do you feel pressure to do the same well, you know, our economists are maintaining a view that under the surface here, youre seeing some fraying on the employment data, and theres an argument here that if were not careful and the fed is not careful, you do begin to get a bit more of an economic downspin from here you know, my view is that i think, you know, the discussion with the fed is, is how far ahead of the narrative do they get . Do they remain data dependent, which almost naturally puts you behind the curve, or do they get a little bit ahead of this and come off of the monetary breaks if you will in anticipation of the ongoing effects of their policies to date again, house view is the july time frame could it get pushed out . You know, hard for me to call that, but what i would say here, no matter how you cut it, we think were nearing the end of this two years of fed hawkish narrative that has become so embedded in market psyche and as that begins to transition, were still looking at that as a net constructive dynamic for equities going forward. Still remains a chicken and egg dilemma in terms of the narrative versus the data and where the fed will ultimately come out as it pertains to rate cuts thank you for being here. You bet. As we head to break our road map for the rest of the hour shares of apple up about 10 this this month and the price getting a price target raise well speak to the analyst who made the call about the road ahead next. Speaking of tech, the sector hitting new highs and the only one carving out gains. Is this Group Getting expensive or more room to run . Well speak with the socalled dean of valuations about that is. Inflation takes a bite out of the american consumer. The winners and losers in the discretionary space as squawk on the street continues on this friday norman, bad news. I never graduated from med school. What . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. I know. Faster wifi and savings . I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . Welcome back to squawk on the street. Tech blooming in may with the nasdaq on pace for its fifth positive week in a row within big tech apple on pace for its first monthly gape of the year up 10 in may our next guest is raising his price target wedbushs dan ives upped his apple target to 275 from 250 and maintains his buy rating on the stock. Good to see you. Were at 189 on the stock right now. Where is 1. 3 trillion in market cap going to come from to get us to 275 i think this is going to be an unprecedented upgrade cycle we see not just over the next 12, but 18 months. Look, our taiwan checks now are showing not just stabilization, but what i would say is a slight uptick thats important because china, which has been the hieadwind becomes a tailwind i think june will be the last negative quarter for china, and you look at this, get out the popcorn moment, 270 million iphones that havent been upgraded in four plus years and now ai coming to cupertino, i think we sit here a year from now and this will be an unprecedented renaissance growth that we see from cook and cupertino. Havent you thought there was going to be a super cycle in the last couple Iphone Models . This last one because of china has been disappointing, but what ultimately becomeses a headwind is a tailwind the best install base in the world, 2. 2 billion ios devices and at wwdc, i think its the most important apple event in a decade because this is going to be the foundation for developers building ai, most consumers, theyre going to access ai through an apple device. What makes the china headwinds that weve seen ultimately turn into a tailwind . I mean nothing in the data surrounding the economy would suggest that is it the technology itself relative to competitors in the region or what are your channel checks telling you specifically about china and why that will ultimately become a driver once again . Great question and speaks to the march quarter. Bearish on apple better than expected were seeing theres 225 million iphones in china 70 of those have not upgraded in three years so youre starting to see a tick up in the vast majority of those will be on pro, and thats important because thats an asp web and are there definitely geopolitical issues youre seeing no doubt but i think some of that is starting to come down and this goes into what i believe is going to be just a massive ai driven super cycle that starts with iphone 16 but services is king talk about valuation, i think services is the key. The bears where theyve missed in apple is the services valuation. Its been an interesting week in autonomy given the blessing that jensen huang gave autos in the call for nvidia. Do you think it was a mistake to cut the cord on project titan . Will they regretting growth that later . I think thats the best move they made because titan that was going to be an uphill climb without oxygen and i think when you look for apple, it comes down to ai this will be a historical moment, and i think historical period, for cook and for apple and, of course, right now if you look ai being led by the godfather of ai, jensen, look at what nadella is doing in redmond, but now this is the drum roll for wwdc, where for most consumers, they are they will access ai through an apple device. What is it that ai could do for those consumers who havent upgraded their iphone they say okay, now that is technology that makes me want to buy a new iphone what is it that ai would do to kind of incentivize that behavior i think the key focus points are developers will build ai, generative ai apps, on apples ecosystem and a lot of the functionality from a perspective, the openai partnership, they will essentially work on the iphone 16 and further and iphone 17 the other thing is that a lot of the actual features that come through you will not be able to do on a preiphone 16. This is going to be just a main event because it starts whats going to be on the Services Side and a lot of apps as you buy them who is getting the revenue . So what youre saying is apple is the conduit for a lot of other peoples Ai Innovation and thats how consumers will tap into it . Its not that apple is going come out theyll take their bite. Theyll take their bite, being led by god father of ai jensen even though apple is late to the game, when you have 2. 2 billion ios devices, the ability now from an install basis and the Services Side, thats why this is an event when they unveil, i dont view this is when you come back from apple june 10th being disappointed i think its going to be a historical move for the stock. Cooks hand than nadella . In the Mount Rushmore of ai, theres the godfather jensen and nadella. When you look at microsoft the path on that stock, theres no speed bumps. I think probably the first one hit 4 trillion will be microsoft because ai, because of what we see on the enterprise side. Fewer geopolitical. Antitest is not the issue the top of the mountain is nadella. Cook and cupertino this is the start of a renaissance and were going to look back, this is meta 18 months ago. The point is like sentiment awful from an institutional perspective, retail skeptical, but this will be another flex the muscles moment for apple over the next 12 to 18 months. Talk to you then, if not before thanks. Thank you. Still to come the names to bet on here if you do believe that Consumer Spending is here to stay. Plus, what ceos are seeing on main street, thats coming up next as we go to break the biggest gainers on the s p this week what a week its been for solar and retail with cks deerin there as well. Stay with us 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. Welcome back mixed picture when it comes to consumer commentary this quarter with Consumer Discretionary under performing since april and on the year. Lets get to dom chu with a look at the sector and some key stocks to watch here. Its such a huge story here because you dont know exactly just what drives some of the Consumer Sentiment what we do know is some of the biggest drivers within Consumer Discretionary are the mega names like amazon and its look at that in the xly down roughly 2 on a yeartodate basis versus the 11 gain of the s p 500 overall, there has been this range bound effect of that blue line as you can see here, kind of up, kind of down, netting to just about nothing, but its because the picture has become so much more muddy for the consumer and even the ceos of Consumer Companies who dont really have a handle on whether or not there is an overriding theme one way or the other take a listen to some of the retail ceos weve listened to on cnbc programming over the last few weeks and what theyve had to say you know, the consumer is under a little bit more economic pressure in place not just in our category, but across all of retail and across life at the moment i think theres more pressure on some of those bigger ticket items like tires. The consumer we believe will remain under pressure for the balance of the year. I guess the best way to describe our middle and higher end customer in casual dining is the words hanging in there i think its the trends are consistent from what weve seen and as i mentioned more of the lower end experiencing some difficulties. We are witnessing robust consumer demand in all of our markets. Its that muddy picture, the story that seems to be lending investors to feel a little bit more like its maybe not the best sector to invest in if you dont have a lot of economic certainty. Two of the outstanding moves weve seen to the up and down side have been in chipotle which is up 38 on a yeartodate basis versus lululemon down 41 . Remember lululemon on the high end of things, was once a darling, not just because of the pandemic, but because that higher end athleisure shopper was seen being Strong Enough on the personal Balance Sheets to keep buying the higher end clothing what we learned back in march when they gave us a forecast for the year that came in below estimates what kind of effect it can have and down 41 over the year and a steep dropoff around march 21st, when the Earnings Report came out and they lowered their forecast its been very much a tale of two consumers, but its not just high end is good or bad, or the budget end is good, the budget end is bad thats where things get more confusing. A lot of ceo commentary we played there, if youre selling stuff or maybe restaurant meals, things seem like theres a very careful consumer and theyre having a head wind travel seems like its the outlier to the positiveside at least for now. Yeah. The bookings data would show that the last comment you heard was from norwegian cruise lines when they talk about that robust kind of consumer, but they spend on experiences i guess you have to look at whether the experiences are travel or i mean to me restaurants are an experience for me and my family but maybe not as much as some other folks out there. Exactly thanks a lot check out the biggest laggards on the s p 500 this week you see, lululemon and target among them in the consumer area. And still ahead, navigating the ai hype cycle with the streets socalled dean of valuation. Is nvidia and tech too expensive here well talk about it next with gold and copper prices pushing towards all time highs, us gold corp. Offers investors leverage to both gold and copper at its project, and mining friendly wyoming. U. S. Gold corp has a reserve of almost 1. 5 million ounces of gold equivalents. Permits to mine zero debt with only 10. 73 million shares outstanding and a portfolio of world class american Strategic Metals assets. U. S. Gold corp, join the golden age. [busy hospital background sounds] this Healthcare Network uses crowdstrike to defend against Cyber Attacks and protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. Welcome back to squawk on the street. Im Contessa Brewer with your cnbc news update the International Court of justice ordered israel to halt military operations immediately in the Southern Gaza border city of rafah thats where tens of thousands of civilians have fled for protection from israels bombardment. The u. N. Court has no power to enforce that ruling, and israel is unlikely to comply. Meanwhile, israels army says the bodies of three more hostages were recovered from gaza military Officials Say all three were killed on the day of the october 7th attack, carried out by hamas israel believes hamas is Still Holding more than 100 hostages in gaza along with the bodies of 39 more. Iranian state media says the results of an investigation into the deadly Helicopter Crash that killed the countrys president revealed no signs of an attack military investigators reportedly said the helicopter carrying president Ebrahim Raisi the Iranian Foreign minister and six others caught fire soon after slamming into the side of a mountain sunday. Thats the news. Carl, ill send it back to you. Thanks so much. Tech valuations rising as the sector pushes to new highs nvidia did help out adding 200 billion in market cap as apple crawls towards a 3 trillion valuation. Our next guest is focused on navigating this ai hype cycle and says while he continues to hold on to some nvidia, he would be hard pressed to buy more now. Nyu professor of finance joins us the dean of valuations, happy friday, good to have you back. Thanks for having me. Before i get to tech you did point out a few weeks ago that you thought we broke our addiction to fed commentary and speculation and thought that was healthy, although doesnt sound like you think thats going to last. I think that last few years, its not just the last year, i think this fixation on what the fed will or will not do, has distracted us from the fundamentals from that perspective, i think the less talk there is about the fed the healthier the market becomes. Thats unlikely i guess is that a function of the volume of fed commentary, or is the market just primed for that no matter what . Its an illusion that the fed sets Interest Rates drives me crazy. The fed doesnt set rates. As long as we believe the fed can do whatever it wants, our investing is going to be were not going to invest based on what really matters. All right that brings us to tech and what nvidia told us this week and i guess the degree to which some argue they either sucked oxygen out of the room or fed the room oxygen, whats your general take on the space i think its a testimony to the power of momentum. I mean, right now the momentum is clearly with nvidia they can do nothing wrong. Everything theyve touched turns to gold. Weve seen this with other stock, we saw tesla in 2020, we saw it with facebook and google in the middle of the last decade, when the momentum is with you, nothing can stop you, right. The momentum is with nvidia and carrying it forward. If you look at the numbers themselves, the question you have to ask is, what are people measuring these numbers against . What are those expectations . Because right now, those expectations seem to be whatever we do, nvidia will beat it when you talk about the momentum when it comes to nvidia the momentum is in the business in addition to it being in its stock. It seems as if, you know, the market has been sort of dragged higher in terms of how much they can expect in revenue and Earnings Growth going into next year based on the order book and based on what they say about demand over supply to me the interesting question is, at 2. 5 trillion of market cap, what is the stock discounting at this point in terms of longer term growth rates . Thats really the question. Normal momentum has its source in something solid, in this case nvidias earnings and revenues have blasted through the roof. That said, the 2. 5 trillion market cap, youre building in an expectation that either the ai chip market is going to be a trillion dollars which its not going to be, theres no way that chip market alone the ai market might be 2 or 3 trillion but the chip market cannot be that big or building in the expectation nvidia will find a couple other really big markets to conquer over the next decade. Either way, its clearly a possibility, but is it plausible . I dont think so outside of ai, how do you perceive the valuation gap in the private markets versus the public markets, where were hopeful and waiting for the potential for some ipos this summer, hopeful from the standpoint of activity down here at the nyse, perhaps, but we keep hearing instances that theres this gap between the valuations that Companies Looking to go public are looking to get, versus what the buy side is willing to pay. How are you kind of observing this dynamic i think there is a gap between not so much public versus private, but money making, Big Tech Companies and money losing small tech companies. While tech has gone up, a lot over the last year and a half, much of it has been at the top of the ladder, the large mega cap money making companies and part of the reason were to the seeing the ipos that you would expect to see when tech is doing well, is because of that disconnect that disconnect might disappear if the market keeps doing well, but for the moment thats what is separating the two. And i guess i just want to drill into the nvidia point just one more thing because people keep saying, that, you know, the stock is cheaper today than it was two years ago because earnings estimates have come up so much. Its a company with like 80 market share, 75 Gross Margins and one of the skeptical takes is that both are maxing out right now. In other words, returns that high will inevitably draw a lot of better competition. I guess the question is how we handicap that dynamic . I think nvidia will beat shortterm expectations. The question is, is there enough boost, enough size in this market, to keep it going as long as it has to, to justify the market cap thats where Im Holding Back because i think it will continue to beat expectations in the next quarter, maybe the next couple quarters, but i think thats theres a longterm game and shortterm game, and it depends on which one youre playing with nvidia. Finally, professor, you wrote in march that your wife is an elementary schoolteacher, watching students start to use ai in some assignments i just wonder if youre getting enough from some of these product events, microsoft is a good example, of applications that will be useful in the long term in the real world, or if theyre just chasing products to be included in the conversation . It got personal for me because a few weeks ago a friend of mine that teaches Machine Learning called me and said we created a bot, i said what bot he said a bot every blog post youve written and valuation youve done and were willing to start a contest with your students in your class, and im terrified about what outcome will be. If it it does well im done. Every one of us has a bot after us it behooves all of us to think what we do in our jobs and lives that a bot could not do better thats healthy for all of us because it will keep us on our toes. The moment we start having that on the show and notyou, thats when you need to worry. We still know youre a human being, and i think viewers professor, thanks. Still to come the ai boom and how its changing the world of sports a new era for College Athletes well expln tethbrk. Ecout some of the biggest gainers on the nasdaq in this eventful week. Squawk on the street is back in a minute. Against cyber atd protect patient information. But what if they didnt . [ominous background sounds] this is what it feels like when cyber criminals breach your network. Dont risk the health of your business. Crowdstrike. We stop breaches. With gold and copper prices pushing towards all time highs, us gold corp. Offers investors leverage to both gold and copper at its project, and mining friendly wyoming. U. S. Gold corp has a reserve of almost 1. 5 million ounces of gold equivalents. Permits to mine zero debt with only 10. 73 million shares outstanding and a portfolio of world class american Strategic Metals assets. U. S. Gold corp, join the golden age. Ethereum on pace for its best week of a major milestone for the worlds second largest crypto we have been tracking the action and joins us with more. Thats right, leslie. Weve been talking about bitcoin etfs all year and the ftc has opened the door to track spot ether as the agency hit a decision deadline on one of the etf applications, and it has gone ahead and green lit all eight, that includes proposals from blackrock, fidelity, and more, and its important to note this is just a first step. These applications that were approved the 19 before allow exchanges to list different etfs, but the funds themselves arent guaranteed to begin trading until their s1 registration filings are declared effective you may see a bit of a delay or a scramble between now and when they start trading now the price action in these a little bit tepid down 1. 5 to 2 . It ripped this week, 20 in two days as expectations for this approval flipped positive which stunned everyone watching this market its only been a couple days but it does seem like it was very priced in then and then, of course, coinbase and robinhood getting a little lift. You wont be able to trade the etf on coinbase but the company has other businesses like custody that could benefit in a longterm flow into the broader industry back to you guys. Thanks so much. All right. We are going to go to Julia Boorstin now it is not just traditional sectors new ai tools also helping Major League Sports tackle some of the time consuming jobs hello, julia mike, the nba has 30 teams with over 1200 regular season games, so putting together this schedule was traditionally a tedious and manual process now software has improved that process over the past decade, but now, ai is transforming that process. Last summer the nba started a Pilot Program with an ai startup called fast break which it also invested in to help craft its schedule fast breaks Technology Enables the nba to plan matchups and Design Travel around constraints such as rest days, Player Health and venue availability and they can design trips that minimize flights taken and miles traveled. Instead of getting just one manual schedule out of that process youre able to get the best of billions and trillions of possible schedules. So weve been using constraint based optimization for our schedule about eight years but fast break has taken the quality and speed to the next level. Says that the Ai Technology in addition to reducing the number of teams backtoback games, also optimizes for existing matchups which can drive ratings. Thats a win for the league and their Media Broadcast partners ratings bolster the value of the rights, that right now, disney, comcast, nbcs parent company, with Warner Brothers discovery and amazon, are all negotiating to secure a piece of right now now the league is deploying ai to cut highlights. Thats what a Company Called wsd sports does with over 450 leagues and broadcasters from spanish football, and nascar, to Warner Brothers discovery and disneys espn. Its ai tools analyze live sports broadcasts, identify big moments and instantly can create video highlights to cut more customized cant for a fan back to you. Interesting stuff theres almost no limit to the amount of slicing and dicing of sports content that can happen if you sick the ai programs on it, theyre going to come up with something i wonder about the nba scheduling applications. I know that, you know, they say its made it faster but it seems like a more sophisticated version of an existing software algorithm. Heres whats different, its a more sophisticated version of the software they had before, but they can add in all these extra restraints think about what nba wants, to have really exciting games, this can optimize for that as well. Its not just about the logistics and making sure that you dont have teams always playing games back to back, which causes more player injuries, its thinking about what kind of games are going to drive viewership and ratings this is taking it to the next level. So many components that need to be taken into consideration. All that ends up cutting costs and boosting revenue. No sense that having an ai tool that can with ease cut certain highlights from the game wont cannibalize peoples desire to watch the full thing no. In fact, theres a perception out there right now that if you can cut highlight, its going to drive more people to watch the game and keep talking about a game, whether its the nfl or nba, and actually does a better job of cutting the highlights and makes it a simpler process with fewer man hours so if you can circulate those highlights on social media and make sure maybe even youre cutting highlights that are targeted for different fan groups, then youre going to remind people to come back and watch the game in realtime and, of course, games have ads and thats what makes them valuable to the media companies. Fascinating so many cross currents in the world of sports. Julia, you are all over it thank you. Coming up next hour, the ceo of buy now, pay later klarna as they bet big on ai and eye potential public debut as soon as next year he joins us at 11 00 after the break what happens to private credit when you know what hits the fan. Weve got cnbcs latest delivering alpha report after this stay with us the Aapi Community are seeing us model minority, quiet, hardworking, good student. But that also means that we are often forgotten. It took me years to find my voice, to advocate for myself in the workplace. Remember a diverse viewpoint is important and ultimately benefits the bottom line ella fashion moves fast. Setting trends is our business. We need to scale with customer demand. In real time. jen so we partner with verizon. Their solution for us . A private 5g network. ella we now get more control of production, efficiencies, and greater agility. marquis with a custom private 5g network. Our customers get what they want, when they want it. jen now were even smarter and ready for whats next. vo achieve enterprise intelligence. Its your vision, its your verizon. Welcome back to squawk on the street. The recent surge in private credit has been met with a whole host of keshz. Among the louder ones recently, the industry has not experienced a downturn at scale. What that might mean for workouts with borrowers when theres some kind of crisis. Jpmorgans Ceo Jamie Dimon spoke about this dynamic at the firms investor day earlier in the week. A lot of those folks who took private credit loans will be stranded when the [ bleep ] hits the fan. Because they cant roll over a loan in 14 . The company wont be able to afford it. Banks tend to work with the borrower if middle market loan in the crisis private credit hasnt dealt with high Interest Rates, hasnt dealt with the recession and hasnt dealt with high spreads. Later in the week we were able to get a response from Ares Management Michael Arougheti said those risks are, quote, false. If you look at ares and we talked about the strength of our credit performance, weve e eninvested 150 billion since we founded the firm and we had a loss rate of one basis point so, everything weve seen over the last 30 years would indicate that the risk that people are trying to argue exist in our market just isnt true. The numbers comparing private credit to loans made by traditional banks, leveraged loans and highyield bonds somewhat mixed in this relatively strong economy. We obtained fresh data showing implied recovers on a direct loan was about 53 on average, which was below that of syndicated loans, but higher than highyield bonds. For more on this debate, you can subscribe to our delivering alpha newsletter at cnbc. Com deliveringalphanews letter the fed looked into these recovery rates part of that has to do with the sectors that private credit is lending to a lot of those have fewer collateralized the recovery rates tend to be lower. Its also interesting because were seeing this melding of the two areas, private credit and traditional banks. Jpmorgan has, you know, private credit off its Balance Sheet as well theyre looking to grow this area as, of course, it is met with a lot of tension. You wont have those returns and not draw the traditional players into it. Exactly meantime, with ib flags taking a big bite out of the american consumer, the fast food value wars now appear to be heating up burger king rolling out its own meal deal to rival mcdonalds. The headline last night was, the value wars are on. They certainly are, carl. There is a new value offering in town as you mentioned, this time its coming from burger king. The Company Confirming to cnbc its going to be rolling out a value meal of its own for 5 after its franchisees agreed to this promotion back in april it will be offered ahead of mcdonalds 5 million coming in june and set to last for a month. Burger kings will have a chance of three sandwiches, french fries and a drink. Mcdonalds has three choices, fries and a drink. A letter sent to franchisees, the president wrote, regardless of their plans, we are moving full speed ahead with our own plans to launch our own 5 value meal and also wrote the company is testing out additional value platforms in addition to this meal, 5 duos and 2. 99 crispy wraps. The mcdonalds promotion will launch on june 25th and last for about a month. Cnbc reported two weeks ago that cocacola kicked in funding for marketing to make that deal more appealing to franchisees to pass a vote some advocates were pushing for an investment from mcdonalds corporate to keep the value platform on the menu for a longer period of time. Arguing that without that investment, the 30 discounted meal wouldnt be sustainable for operators at their current margin you can see all of these big fast food brands jockeying to figure out who will have the best offering, who can keep it around for the longest time and bring that foot traffic in which is a challenging thing in this environment. The franchisee wars are tried and true tradition in the fast food business. Theyre upset when its about menu innovation because of the money it takes to invest in the kitchen and then theyre upset when the equation is more about value. In this case thats becoming quite clear, right yeah, certainly in that memo from the National Owners Association Board to its membership that we were able to view, theyre saying this is a 30 discounted meal. If you were to buy all of those items individually, it would be at a much higher cost and keeping this around for more than a month without additional investment from the company isnt going to be a doable thing in this environment because to keep things around and have them be affordable for consumers, they also need to be affordable for operators. Again, they run 95 of those Mcdonalds Restaurants burger king keeping it around longer but they have half the footprint of mcdonalds. Burger king is undergoing a revamp definitely competition heating up. Well see if it moves its way into other Service Changes in the food business, starbucks and elsewhere. Fascinating development. Dow holding onto moderate gains, up 40 . On mer srtafr this or a. People person. But he is an i can solve this in 4 different ways person. You need clem. Clem needs benefits. Work with principal so we can help you with a plan thats right for him. You know what im saying . Let our expertise round out yours. With gold and copper prices pushing towards all time highs, us gold corp. Offers investors leverage to both gold and copper at its project, and mining friendly wyoming. U. S. Gold corp has a reserve of almost 1. 5 million ounces of gold equivalents. Permits to mine zero debt with only 10. 73 million shares outstanding and a portfolio of world class american Strategic Metals assets. U. S. Gold corp, join the golden age. office chatter is it me. Or is work not working . At least, not the way it could work. Your people are buried in busy work. And you might be thinking. Can ai make it all work . Can ai help your people work. Without all the workarounds . Feel better. Make Customer Service work the way customers expect . That one. Make your old tech work with your new tech . Thank you. And todd here is wondering, can ai do all that. Now . No pressure. It can. On the servicenow platform, ai transforms your entire business. Your people work better, your customers are happier, and todd. Well. Hes practically euphoric. Practically. Because when your people work better, everything works better. So what are you waiting for . Lets get to work. Idris elba works here . Mmhmm. Ya, hes super nice. Good friday morning. Welcome to money movers. Im Carl Quintanilla with leslie picker on the floror of the New York Stock Exchange. The nasdaq and s p coming off worst days in about a month. Morgan stanley lays out the sectors bag on any pullback. The ceo of klarna, the Protection Bureau says the buy now, pay later players will be treated like the credit card industry well get his response. John lipsky will get his outlook for a fed rate cut whether we have, in fact, avoided recession and why hes a little optimistic on the inflation front. In the meantime, 5300 almost on the nose as the bulls look to salvage some of the damage that was done yesterday of course, the
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