Transcripts For CNBC Squawk 20240703

Bit. This is what happened here. The 2year treasury yield topping 5 after fed chair jay powell made his first comment after the hotter than expected data. We said its moving sustainably toward 2 before proemtsly easing policy. The recent data have clearly not given us greater confidence and instead indicate that its likely to take longer than expected to achieve that confidence. Powell echoed recent statements by other fed officials indicating the current policy level will likely stay in place until inflation gets closer to its target. And so effectively, andrew, hes saying the data has been coming in increasingly hot. Weve been trending toward it. Now the question for the markets is will we have to establish a new trend and is the bar even higher to start cutting rates. Weve seen banks push out in september, which is 68 at this point. Some have said maybe none in 2024. Maybe its 2025. Can you believe were at 7 . Thats always crazy. I dont think the street should have ever been at 7 or 6. Five, six weeks ago. Beginning of the year it was six. We have seen literally three weeks ago how it was going to begin in june and there was going to be a cut every month for the rest of the year. Right. Yeah. Meantime, new this morning, President Biden calling for a tripling of the existing tariff rate of chinese steel and aluminum. This is in response to what the u. S. Says are unfair trade prac practices. The white house says the current average tariff on steel and aluminum is 7. 15 . He wants to try to consider to raising that rate to 22. 5 . In the next hour were dpoung to talk to white house expert Jared Bernstein about that topic and so many others. What do you think . Its a big jump . Its a hugeup p. While all of these have a political basis, its basically inflationary. Whos going to pay for the higher costs if there are continuing sanctions on oil, steel, and aluminum . 100 . Has jay powell, you think, consulted with him on this . Highly unlikely. Meantime speaker Mike Johnsons former aid plan encountered resistance. The house caucus said they would not support it without offsets and concessions on geo security. If have voted to oust the speaker after Mike Gallagher steps down from the house on friday. It will take only two if all democrats vote against him. Well bring you more on this story from washington later on in the show. Federal boeing engineer turned whistleblower will testify before a Congressional Committee on the safety of the 787 dreamliner. He spoke to tom cause still le o in an exclusive interview. Should boeing ground the 787 to check the gap sizes . I would say they need to. The entire fleet worldwide. The entire fleet worldwide needs attention. The attention needed is to check your gaps and make sure you dont have potential for premature failing. Boeing told c kr newsu c news theyre quite confident. They say the claims about the 787 are inaccurate. Meantime United Airlines is reporting a loss, much better than the 50 cent loss they had expected. Theyre expecting better than expected profit for the First Quarter and its announcing its revamped fleet plan will take delivery of just 61 planes. Thats dune from the prior 101 jets and an even earlier plan of the 183 jets. United confirming or there were earlier reports it will release airbus planes to make up for the shortfall. It reached deals with aircraft that will begin flying in 2026 and 2027. Well speak with ceo of United Airlines scott kirby. You dont want to miss that. You look at everything else, and we will do that in the 8 00 hour. Yep. Meantime, we do have some interesting political news. David ellison, sown of larry ellison, gave 929 million to back biden. It comes as his fiancee larry has refrained from donating in 2024. For context, larry donated 31 million to gp candidates during the 2022 congressional midterms. The move by the Biden Campaign to gain dauvd ellisons report was a move by bidens campaign manager. Meantime trumps criminal hush money trial continued yesterday in manhattan. The jury has partially been selected. The judge expected Opening Statements to begin on monday morning. Meantime the other piece of this that everyones watching at least in our world is shares of trump media, which fell again sharply yesterday. Closing down by nearly 14 . Its don 30 in the last two sessions. A sharp drop coming after the Company Announced a rollout. Immediately afterward when we talked about this, the worldwide streaming plan would be a platform for content delivery. It jumped a couple percent and went the other way. The content expected to include, as they said, news networks, religious challenges, familyfriendly content and other content that they believe is, quote, unquote being canceled or suppressed on other platforms. Maybe given how tough the streaming world is for the big players. And how much money it requires . Its hard to see. But, you know, hope springs eternal for some. Exactly. Especially for this stock. Coming up well talk about the fear of the market. That is next. In the next hour well talk real estate and Home Renovations with the Property Brotherss. Squawk box will be right back. Are you keeping as much of your investment gains as possible . High taxes can erode returns quickly. At creative planning, your portfolio is managed in a taxefficient manner. Its what you keep that really matters. Book your free meeting today at creativeplanning. Com. Norman, bad news. Its what you keep ti never graduateds. From med school. What . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. Thats like 20 a month per unlimited line. I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . Fear is back on wall street as the volcano tilt hits a sixyear high. Shes a cnbc contributor. Thanks for being with us. Sixyearhigh levels seems like a big deal, but in particular when you think about what was going on six years ago because february 18th was a huge volatility event. Crazy. Huge explosion of volatility at that time. S p 500 lost 10 in a very short time frame and what traders said was alarming this time around is it was down and yet were seeing a stampede in wagers with the recent turbulence weve seen over the past two weeks. This is really the first sign of fear were seeing in the market after rlg going in a Straight Line up for months now. Historically its not that high, but historically when vix had been at 16 or lower, what are they saying how high volatility can get and how it will impact the markets . Because volatility is a bet its up and down, right . Its not necessarily that stocks will go down. Thats true, mlts, but whats remarkable is in the past few weeks weve seen bets on it. There were bettss that nvidia would keep skyrocketing or it would be more vol title. People were afraid on missing out on the upside and now were seeing downside hedging. Were seeing the types of trades that would profit if the stockmarkets did fall. Think of these as insurancelike contracts. The demand for stock insurance has increased and this is a remarkable shift from the roses and sunshine we saw in the prior months. And i think a lot of it comes down to inflation, geopolitics, and the path of treasury yields that are finally spooking the market after the stockmarket being pretty resill yejt in the face of rising yields. When youre talking in terms of hedging, are you also seeing commensurate trades on the option side for spy and nasdaq 100 in terms of hedging . You know whats interesting . A lot of traders are telling me this is concentrated in the vix complex. Thats interesting because as youve pointed out, weve seen the vix rise to the highest levels. While theres been a pickup on the s p 500 side, thats what theyre reflecting. People are placing call option bets tied to the vix itself. Thats a true bet. Were seeing that in the futures market as well where pricing indicates its increasing over the next month or two. Theres this nearterm fear that this whole complex is reflecting right now. What do you think are the fundamental reasons for it being a two to threemonth bet . Is it just the uncertainty about Interest Rates at this point and probably increase in certainty now that fed chair powell said what he said yesterday in terms of keeping rates where they are for longer. Melissa, what i did here, is a lot of this activity started picking up friday heading into the weekend, and it was the geopolitical fears where people are saying we dont know whats going to happen here. That led to that rush into the vix options bets. Its been incredibly elevated especially when you think about the calm we saw previously. Do you think traders are thinking in their head we will see that 10 decline, the same we saw during that time . I think were 3 to 4 off. What traders are telling me, it is lake people woke up and said the stockmarket cant go down. It can go down and have a little bit of volatility. I think people forgot that. We have a treasury auction at 1 00 p. M. This has become the hottest thing on watt street that used to be really sleepy. But theyre causing a lot of volatility. Weve seen that after the inflation data where they recorded the biggest oneday jump after an ugly auction. I think we need to stay tuned for that today. Down 10 actually lines up on the technical side of things. Thats interesting theyre targeting that or thinking about that in terms of the time frame, and on the technicalside, thats where we see the s p getting down to the bottom channel. Thats an interesting channel. Gunjan, thank you. Two big European Companies moving on earnings. Well bring you details after the break. And today marks 100 days until the start of the paris olympics. Later this hour, well hear from three athletes preparing to represent at the summer games. Teth. Bk ox comes rightac afr is engineered to minimize noise. And built for adventure. Which can also be your own quiet cabin in the woods. The fully electric q8 etron. An electric vehicle that recharges you. How we get there matters. vo what does it mean to be rich . Maybe rich is less about reaching a magic number. And more about discovering magic. Rich is being able to keep your loved ones close. And also send them away. Rich is living life your way. And having someone who can help you get there. The key to being rich is knowing what counts. I have a business idea. And it just might change the world. But heres the thing, i cant do it. Alone. So, are you in . Im in. Nothing else to do. Yeah, i dont know. Um, i need to speak to my agent. snoring i think creeds out. Shares of lvmh rising. Other divisions include champagne and jewelry. They fell by 6 in the First Quarter. They attributed that to chinese buying outside the company. Shares of adidas jumping in germany early this morning. That comes after the company unexpectedly raised its fullyear guidance and increased its yearoveryear increases. Its been selling off its yeezy inventory after breaking ties with the rapper formerly known as kanye west. It will result in additional sales of around 200 million euros. Coming up, the u. S. Considering additional sanctions on iran in response to attacks on israel over the weekend. That story after the break. As we head to break, a look at s p 500s winners and losers. [thunder rumbles] announcer wehners and losers is sponsored by state street global advisers. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . [thunder rumbles] welcome back to squc box. The s p 500 looking right about close to 18 points higher, melissa. Apple may be looking to diversify its supply chain furtherer away from china. Tim cook is looking on whether to set up a new plant in indiana donisha. He made the comment after meeting with indonesias president in jakarta overnight. There are new sanctions in iran last week. The administration is considering ways to further restrict iranian yoil exports. Joining us now is Megan Osullivan who serves in the Geopolitics Energy project. Shes on the secretary of state blinkens policy advisory board. Thanks for joining us. Its great to see you this morning. Were trying to see where the whole situation goes next and what the role of the United States can or cant be, what kind of influence we have on the situation as it stands right now. Good morning. Its great to be with you, andrew. The u. S. Has a very sig cant amount of influence on the situation. Of course, it doesnt have full control. Israel is its own entity. Its not a proxy of the United States arc nlds it will make its own decisions. But the Biden Administration and International Community really does have the ability to set a framework that can influence the very intense indiana term debate going on with israel right now on how to respond. It will it being the Biden Administration and its European Partners and other allies will stress that it is possible to hold iran responsible without a big us rah i will military response. Thats a big focus for the United States and others. We have already gone from a situation lets say before what happened over the weekend, you know, its unclear im being polite unclear whether President Bidens message to netanyahu on some of the efforts in gaza were the appropriate way to go, and, of course, netanyahu continued over the weekend. The pretty at least according to the readout we got publicly, he said, take this as a win and theres no need to retaliate, and now were having a con very sausage about retaliating. Thats the background to what kind of leverage do we have in all of this . I would have thought that that might have actually given us a better relationship, more unfluns, but it doesnt appear to be the case. Well, a couple of things. First on the retaliation question. In my mind there is no question that israel will respond in some fashion. It will need to both in terms of its domestic politics, but more importantly in terms of its regional dynamics. What that looks like, what timeline its on, what mode it takes is still open to question. Thats where the debate is happening. In terms of its point, i think its true that what the United States did alongside other europeans and even with the help of some arab states was very forceful in saying to israel this can be a new strategic position for is reeling and the region. That holds weight within israel. Whether it holds sufficient weight to keep israel from doing something that is ka lats further is still an unknown. I think what we did see this weekend is even though we had a clear falling out between Bibi Netanyahu and President Biden, that the u. S. israel relationship is still very strong. So theres still the ability to, you know, make the case that iran can be held accountable. And i think if i were an israeli leader, you cant dismiss that and you cant dismiss the situation we saw. Its important, significant, wu also fragile. I had one arab leader say to me that the continuation and the deepening of these partnerships we saw manifest on saturday night really depend on israeli restraint. So if israel wants to capitalize on this new reality, it will require a recalibration of their response. Do you believe if there is retaliation that you could retaliate, if you will, without escalating and creating more retaliation . Well, of course, i believe that there is a world in which that is possible. Rye tall yags does not have to mean you know, the worst kind of retaliation is something being considered and advocated by some as not only striking, israel striking on iran, but striking Irans Nuclear facilities, taking this as an opportunity that israel has seen as a threat for a long time. Thats the most extreme. But there are also nonkinetic responses. There are cyber kinetic cyber responses. There are diplomatic responses. I think israel will want to go beyond the diplomatic, but i think exactly how far it goes toward the extreme side of the spectrum is very much an open question. Whether this escalates, again, there are two parties in this conflict, and so some of that will have to do with how iran sees its options as well. How much of this is performative . Someone described what iran did as performative insofar as it was telegraphed days prior. Having said that, of course, there were many missiles and drones in the air, and if one of theld would have struck, it would not have been as performative. How do you think about that word even . I know this is a debate. I feel very strongly or come out on the side that its very hard to look at the scale of this response and consider it performative. I think that the collective response of israel, the United States, arab states, the uk couldnt have been taken as a given, and certainly iran was taking a huge risk in waging that kind of response. What we can see from that response is that iran, although it may another want a larger war, it is willing to take the rusk that a larger war would develop because it sees it as essential to establish itself and make clear to the world its a rise in power in the region, its a power that can protect itself interests, that it will respond to the attack in syria that happened ten days prior. And, you know, iran seeing itself as a threshold. It sees itself as part of this emerging partnership with russia, china, north korea. Russia is courting iran now rather than the other way around. In light of this new feeling of power that iran has in the region, it felt it needed to respond, was willing to take a risk of wider action. You just talked about russia and china, we had david sanger here who has a new book out which he describes as the new cold war, which is a fascinating read. But, look, we have obvious lu a terrible relationship with russia for a lot of the right reasons. With i have this different type of relationship, or at least we have this different kind of roup. Do we have any influence or leverage in terms of whats happening in the middle east compared to the leverage points they may have with iran . I think their leverage point is quite limited. Whats emerging in the last couple of days is the shift in the chinese star tur toward whats happening in the mid east. You saw chinas representative talking to regional actors, talking about calm and deescalation, but coming out very squarely on the side of iran. Thats dufrmt. Chinese have made clear that in the past when iran has threatened to close the straits of hormuz, theyve come down against that. We do see a different dynamic now where russia, iran, north korea, and china are working together in concert in a way we have not seep before, and as a result, china, i think, is going to be much more allergic to any kind of western, u. S. , israeli reaction to try to put additional pressure on iran. This calls into kwegs what some of the sanctions are. We heard National Security adviser Jake Sullivan in a statement saying the world should expect in the coming weeks on missiles and drones without china this is going to have more lilted i affect where it might have been swrg they had skoopted in exerting a certain amount of pressure on irans military capabilities. Meghan, thank you very, very much. Well talk to you again very, very soon. As we head to barack, news out from tesla. Elon musks total compensation in 2023 was zero dollar as, zero, nothing. Stock is up 1. 3 . And with eere going to talk about this because theres much manufacture bend that. Up next, new bills gaining privacy and gaining momentum on capitol hill. We have a reminder of that. Foll sawowquk pod on your fafrts podcast and listen to us any time. Well be right back. Welcome back to squawk box. Weve got breaking news on tesla. Investors are being asked to revote on elon musks pay and overturned by a judge in delaware, the board effectively saying he hasnt been paid since 2018. Remember, these were options that had been granted to him. They had not come to him. But its a very interesting situation. It was the richest pay package in history. At the time i remember sitting with joe and becky in davos when the news broke. Nobody thought he would be paid this amount of money because there were required thresholds around the market cap and sales that would get the company over 650 billion in market cap at the time. People called it laughable and crazy. Right. And yet the judge effectively overturned that pay package saying the board was not independent and was too close, effectively, to elon musk, and did not negotiate she believed they should. This vote or revote effectively would make that case and the judges decision moot if, in fact, they were to vote in favor of it. The companys continuing to appeal that decision, but irrespective of that, this would happen in june when the company has its annual meeting. In 2018, i think people voted on this thinking they would never have to pay it and they would be super happy to pay it if the numbers ever got to where that i are. They did get to where they were. They did get to where they were, and he did everything the pay package required. And he, therefore, earned that pay. He earned that pay. I argued at the time this was the most skin in the game pay package that ever existed. Yes. Now, there were other people, clearly this judge, who said, look, he has so much of a stake in tesla already you didnt need to invest further. Now in hindsight with a look back because the context is different, its more of a challenge, the hopes and dreams are different potentially, does a shareholder in this country say, im happy to pay this money . Do they say, oh, my goodsness i get to save myself 50 billion. Its an up down vote. Now, the flip side is does elon musk or is the suggestion going to be from the board that if we dont pay you this amount of money, that hes going to turn his attention to spacex. Where is the point . Fascinatingly if you look through the proxy, the company is saying four of the large effort shareholders in the Company Including t rowe price came unsolicited. Unsolicited meaning they proposed it . Meaning shareholders according to the proxy came to tess will and say we will vote. We will get rid of the issue. We dont want to deal with this issue anymore. Its an overhang on everything. The other thing that was announced this morning that was fascinated the. The companys been asked to vote in faerng of mooch theyre making argument it will make for more democracy among shaurlds. They dont believe that delaware is actually a democratic place, fair for shareholders, because in this case they see the decision they do, but also that texas is where theyve made their home and this is where they want the company to be based. We knew that part of it. Its really the pay package revote that is the new element here. The big news and the big question is what that fight ultimately looks like. Theres also going to be the plaintiffs lawyer that brought this case has a lot of their own money riding on this or at least the fees theyre going to get. Sure. They could mount a campaign on the other side of this, meaning this could turn into a proxy war, if you will, of sorts where you have multiple sides coming perhaps on cnbc and other places. The tesla board saying out of fairness, elon musk did everythings he one says pod to do. We should say, at the time, 73 of shareholders voted in favor of the deal at the time in 2018. Right. There may be others is that could come out and say we dont want to vote in issue of this. How is this fair with the board being independent of this aspect . What theyre saying is were sharing with you, dear shareholders, the entirety of the case. The case is now in the public domain. They have effectively attached the decision to the proxy. So if youre a shareholder, you can read through everything, and you can see if you believe the even does that shareholders vote supersede the judges decision . I think it would be hard for them to bring a second suit and say this is unfair. Technically they voted on the first pay package. They voted on the first pay package, and what this judge and in truth i should say i think i disagreed with this judges decision. This judge decided there was not enough disclosure how this deal was made and not enough independent decisionmaking in all of that. If all of that is not just in the public demain but delivered to you in a shareholder letter saying here are all the problems, this guy is close to this guy, and theyre all interrelated, and, by the i roy, the judge thinks this is a terrible deal, and this, this, this, and this, and you still decide to vote on it in that way, i think it would be hard for a shareholder to bring a new suit, the lawyer bringing a new suit to say, well this is a new chapter in Corporate Governance. Completely. Any time a judge finds they dont agree with something that has happened at a corporation, then afterward the corporation attaches that decision to a proxy and they say, now you vote and whatever you vote will supersede a judges decision . I think this is a very unusual situation. Its rare where you have a judge overruling a shareholder vote. I actually cant remember a situation like this. Thats why some of the people with so outraged by the judges decision. And the basis of that decision was on this idea of a lack of disclosure. So if, in fact, you believe its disclosed, i think it would be very hard. I dont think it sets a precedent, per se, because i dont think there are cases that look like this that have arisen so frequently. Not cases specifically like this. But you just wonder if this sets a press demts in terms of just the notion of a judges decision that can be rethought or superceded by a shareholder vote afte afterward. Do it in a different context then. Theres a precedent. Lets say two companies decided to merge and somebody thought that the company thats the buyer spending too much money or wasnt a fiduciary, right, and the judge says this is no good. The question is why is the judge saying its no good . Usually it would be around disclosure or Something Like that. Yes, you could go back and do it. Usually people dont go back and do it or the deal is off or the timing has changed or the price would be different. I would argue its an overhang. Et i dont think this has been an overhang on the stock. I think whats going to to be fascinating i think the other fascinating piece would be yes, t rowe prices are like this when they come out in favor bay that wajts to be there. You may just say, you know what . Im happy to pay the money. There are others who may not want to do it. Theres a huge retail audience in. This huge. This is sorts of like disney. And they love elon musk. And they love elon musk. So its going to be fascinating to see, and also fascinating to see who coming out on the other side. I would think if youre for this, you would take a shoe to this. Now that you know well have to ask somebody. Meantime, several data privacy bills are picking up steam in the house and standards. Emily will kins joins us now wi more. Reporter they want to make sure kids are safe online. Its gaining momentum on capitol hill. This contains a new marsh that would seek to hold Tech Companies accountable. The proposal comes from two top lawm lawmakers. Youve got bipartisan, bicameral, and they would allow users to opts out of advertising. They give them the right to export and deleets their data. It would allow consumers to sue companies for violations of the law and create a Single National standard. So superseding some of those state laws that ares out there. Its going to be getting a hearing today on capitol hill along with nine other bills addressing items like protecting those under 18 when they use the internet. One of those bills, kids Online Safety act, has enough cosponsors to get it to pass. Plus its got be support in the house. It shields members from under 18 from being harass and and attacked and bullied. But he would like to see the senate get a vote. Theyre facing upcoming deadlines. Some real big breaks in terms of what were seeing with the legislation, but a question mark as to whether were going to see votes coming up on these pieces. Emily, thank you. Emily wilkins, d. C. Coming up, going for the gold. The olympic torch has been lit, and the 3,000mile relay from greece to france is coming up. Squawk box is coming right back. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. News out of eli lilly this morning. The company saying that two late stage trials evaluating zepbound reduce lsleep apnea by twothirds. This will surmount osa trials. The stock is up by half a percent on the back of this. Andrew . This is exciting now. The 2024 summer olympics in paris and now just 100 days away. Joining us are three athletes competing in this summers games, maggie stephans, ashley johnson, courtney ryans here, paralympian on the womens wheelchair basketball team. Good morning. How excited are you . Look at you guys with the medals on. Theyre real. So, congratulations. Thank you so much. What are you thinking . Seriously, it is 100 days. 100 days. The adrenaline is real. It is kicking in. I feel like for some people 100 days is a long time. For us, it is time to get to work even more. What is the training 100 days out, does the training regimen get different . No, i think we stay consistent, we push harder, like, every day is, like, a game day where just trying to get, like, that anxiety, and that nervousness, channel it into the pool and, like, bring our best. Is it this is going to be a different olympics because im thinking of tokyo, covid, all of that, were finally out of all of that. Is this knock on wood, right . Yeah, yeah. Lets hope. But, you guys experienced that, and this so going into this is it just mentally different . Yeah, it is different mentally different for me. Covid, paralympics was my first paralympics. So to have the opportunity to have family, friends and the crowd this time, it is really special and im excited. You guys are wearing a lot of medals. What is a shot at not just a medal, but a gold this year, do you think . Well, thats the goal. I mean, for us, it is dream big. Who is the biggest competition for you . When you think in your head how this could play out . Honestly, for us, it is everyone. It is tight. It is kind of crazy. I think every single game it could be a onegoal game. You have to bring your best. Yeah, i think it is going to be really fun to watch us. It is going to be close games. What do you think of the Caitlin Clark effect on womens sports right now . I mean, shes a huge name right now. And is really pushing the womens movement. We need more athletes like that who are willing to showcase their sport, showcase the power of women. Do you feel but do you feel a shift happening . I was with a whole bunch of sports team owners saying that the next big sort of investment in sports and the real shift and where the money is going to go is womens sports. I think they genuinely believe were at an Inflection Point, i know thats been said before, and so im curious whether you think this is an Inflection Point or Something Different . Well, choose us, well take the investment. Well take the sport. But, i think it is very true, to be honest. Womens sports has always been there. There has always been the Caitlin Clarks, there has always been the women paving the way and now theyre getting that shine, that moment and the more that we can capitalize on that, youve seen what has happened even in mens sports over time, and womens sports, were right there, slowly but surely. Imagine the potential and the women that could leave their legacies with that little bit of light, so im really excited, i think it is definitely the right investment, and im right there with everybody else. We have a lot of ceos and Business Leaders and cmos, chief marketing officers who watch our broadcast. If, im curious for each of you, if there could be one product or company that endorsed what you do, who would you want them to be . Not an easy question, right . Not an easy question. Just looking around, im going to say amazon. I think that the way that their trajectory has been up and up and up, and i think it reflects the way womens sports is moving, the way that that consistency just, like, over time builds a strong company. I think that, like, you spoke about womens sports, and the path that we have been on, i think that, yes, having stars like Caitlin Clark trickles down to sports like ours, and just the olympic movement, and, yeah, if we were invested in a company like amazon, that would be even more amazing. And if andy jassy and jeff bezos are watching, you know where to go. Courtney, ashley, maggie, thank you for coming in. We look forward to seeing you in paris this summer. Good luck. Thank you. Thank you. You can watch the summer olympics right here on nbc net works and streaming on peacock. Cnbc will be bringing you coverage throughout the games. Ill be in paris and a special three days of squawk box, re going to be bring you live from paris july 29th, 30th and 31st. Squawk box coming right back. You know whats brilliant . Boring. Think about it. Boring is the unsung catalyst for bold. What straps bold to a rocket and hurtles it into space . Boring does. Great job astropersons. Over. Boring is the jumping off point for all the unboring things we do. Boring makes vacations happen, early retirements possible, and startups start up. Because its smart, dependable, and steady. All words you want from your bank. Taking chances is for skateboarding. And gas station sushi. Not banking. Thats why pnc bank strives to be boring with your money. The pragmatic, calculated kind of boring. Moving to boca . Boooring. That was a dolphin, right . Its simple really, for nearly 160 years, pnc bank has had one goal to be brilliantly boring with your money so you can be happily fulfilled with your life. Which is pretty unboring if you think about it. Thank you, boring. This is remington. Hes a member of the family, for sure. We always fed them kibble it just seemed like the thing to do. But. He was getting picky we heard about the farmers dog. And it was a complete transformation. His coat was so soft, he had amazing energy. He was a completely different dog. Its a nobrainer that remi should have the most nutritious and Delicious Food possible. Im investing in my dogs health and happiness. Its 7 00 a. M. On the east coast. Youre watching squawk box on cnbc. Im melissa lee with andrew ross sorkin, joe and becky are off today. Among todays top stories, tesla will ask shareholders to vote again on elon musks multibillion dollar pay package. A Delaware Court voided the package three months ago. More on this story coming up. The Biden Administration directing its trade office to consider tripling tariffs on imports of chinese steel and aluminum. Well speak with Jared Bernstein about the move in just a few minutes. And shares of asml falling sharply in premarket as the company missed sales forecasts but stuck to the full year outlook. The ceo calling 2024 transition year for the company and expects net sales for 2024 to be similar to 2023. Lets get a check on the futures this morning as we head into this wednesday session. Were pointing higher across the board. The dow is looking to be up by 170 points. The s p looking to add 20. The nasdaq higher by 57. To dom chu with a look at this mornings premarket numbers. Hey, dom. Good morning, melissa, andrew. Lets kick things off with a check on the friendly skies. We have got United Airlines which is flying high to the tune of 5 plus around 30,000 shares of volume. This is americas third Biggest Airline by market value and it reported a smaller than expected loss for the most recent quarter on better than expected revenues. So beats on the top and bottom lines. It also forecasts Current Quarter profits that came in ahead of analyst estimates. United at the same time lowered its expectations for how many aircraft it will take delivery of this year given some of the production issues that playmaker boeing adding that it will expand the use of least airbus a320 nio jets. So up 5 . And well get much more on that story later on this morning, 8 00 a. M. Eastern time hour when united Ceo Scott Kirby joins squawk box to talk all things air travel. Next up, shares of take two interactive, fractionally higher, just about three quarters of 1 . Very thin Trading Volume so far. This is the video game publisher behind titles like grand theft auto. It intends to cut 5 of its Global Workforce and slash certain video game projects in an effort to try and trim costs. It is all part of a broader costcutting campaign at take two which says those cuts should be finishing up by the end of the year. So taketwo shares up three quarters of 1 . Well end with a check on one of the most popular if not the most popular ticker search on our cnbc. Com website. Thats trump media technology. Dgt. This is the Parent Company of former president Donald Trumps social media platform truth social. Were down about 1 or so. This is following a 14 drop yesterday on the heels of it announcing it is going to look to launch a streaming Video Service that will look to showcase news, product, religious and Family Friendly content, that sort of thing. Now, that move could put it into a very, very and highly competitive and expensive space for streaming content. So, trump media shares very much in focus, guys. Melissa, back over to you. All right, thank you, dom chu. Lets talk more about the markets, joining us is barry nash director of rusesearch at ironsides macro economics. Im not going to ask about your backdrop today as youre normally asked. Im going to ask whether that changes your outlook on the markets, what he said yesterday seems to match up with what the markets and the economists have started pricing in, and that is fewer rate hikes rate cuts, excuse me, this year. He didnt change anything specifically yesterday. It has been very apparent since we got the march data flow that the fed was not going to be in a position to start the easing process in june between turning positive for the First Time Since september 22 and payrolls and cpi. The path for the fed to be able to cut to 4 , the level that i think would painlessly disinvert the curve and remove all this pressure on the Banking System allowing them to finance Small Businesses, construction, real estate developers, and ultimately the federal government, which is the real issue here, which is being able to place all this treasury supply, there is just no path for them to get there right now. And the data really sealed that, so were in a bit of a sticky wicket. The only question is does the pressure on the treasury market, real rates in particular, become acute enough that we have a retest of 5 , like we had last october, tenyear real rates moving toward 2. 5 , the tips yield, that is. That caused a fullon risk off that drags not just small caps and banks and Interest Rate sensitive parts of the stock market down, but, you know, the whole market, like we like the 10 we had last fall. So how do you assess that riskreward in terms of getting to the 5 threshold which may be a real deal breaker for an equity rally . You have not only the fed now saying that, you know, it is going to take much longer for us to get to rate cutting at this point, and then you have the issue of treasury issuance and the terrible options that we have seen. We have all these forces pushing yields higher, do you see that risk is actually a greater risk today than it was, i dont know, two months ago, one month ago, one week ago . Well, it is definitely greater for the Second Quarter than it was for the first. If you think about the actions of the treasury over the last couple of years, it had a bigger bearing on the direction of the bond market than has the actions of the fed in some ways. When janet yellen was draining the treasury general account in early 2021, that offset the big increase in supply related to the american Recovery Plan last year when she announced she had an additional sale, that kicked off the higher rates. They moved to increased bill issuance which is ending right now. The reason they had to slow all the bills that they were selling is because it was draining the rp program and causing the fed to slow qt. So, the way this whole thing is interacting, but my point is there was always going to be far more coupons for sale in the Second Quarter than bills, they were going to reduce bills, and that was going to need to be absorbed in order to absorb it you need the Banking System. And the Banking System can only buy, you know, fiveyear treasuries at 4. 5 or 4. 6 , if they believe that the curve is going to disinvert, the fed will cut to 4. This is always the sort of make or break moment and the data just didnt cooperate. So, yeah, i see that risk as really elevated. Next week we could very well have what i would call a belly ache and what i mean by that is that issuance next week is all in the belly, socalled belly of the treasury curve, 2s, 5s and 7s. And it may not go well. We wont get any more real negative data until we get to the next round of payroll data and thats a couple of weeks away. So maybe the market can absorb it without going straight to 5 on 10s, but were in a difficult period where the fed is in no position to disinvert the curve and help the Banking System be able to absorb all that supply. Right. We havent even talked about earnings season. Sort of getting to the thick of. Barry, great to speak with you, thank you. Barry knapp. All right, melissa. Other news breaking out of deal book this morning. U. S. Federal trade commission preparing to block coach parent cap in tapestry. The reporting suggests that they are planning to block this deal as of now. And you can look at that stock right now, Capri Holding sale off about 2 on the back of the news. Coming up on the other side, President Bidens economic pitch in pittsburgh and his threat on tariffs in china. Jared bernstein is going to join us to discuss their plans on these tariffs and maybe well debate some of the potential impact on inflation as well. And then later, the state of housing, Home Improvement and the price surge in everything from property taxes to Mortgage Rates, the Property Brothers are going to be our special guests in a little bit. Were coming right back. 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. Business. Its not a ninetofive proposition. Its all day and into the night. Its all the things that keep this world turning. The gotos that keep us going. The places we cheer. And check in. They all choose the advanced Network Solutions and round the clock partnership from comcast business. See why comcast business powers more Small Businesses than anyone else. Get started for 49. 99 a month plus ask how to get up to an 800 prepaid card. Dont wait call today. New this morning, President Biden calling on his trade representatives to consider tripling the tariff rate on steel and aluminum imports from china. Joining us is council of economic advisers chairman Jared Bernstein. Good morning, jared. Good to see you. Lets talk about this plan, because it is a big increase, if you will, in what that tariff looks like and what the impact will be. We talked about what it may mean for folks in the u. S. , in terms of manufacturing fees, but it also could have an impact on consumers. Well, great to be with you this morning, andrew. Ever since i worked with President Biden, and ive been working for a while now, hes recognized the importance of investing in American Manufacturing and hes followed through on that as no modern president has before him. And american steel, which by the way, is among the cleanest, lowest, emissions steel produced in the world is key to our manufacturing agenda. It is also the case that we have to protect those investments and the workers who make that steel from unfair exports associated with chinas industrial overcapacity. And thats whats behind what you just described. His directing or trade representatives to consider tripling the steel tariffs on china, specifically. Can you speak, though, we were talking earlier about were struggling with inflation, in this country, which i want to talk about more broadly in a moment. To the extent that this could have an inflationary impact on the on the price of steel, price, right. Yeah. Doesnt that trickle down to the consumer, isnt it going to trickle through the economy . Always important to make that consideration right now as cutting inflation and cutting prices in fact is a key priority of ours. In many ways, this is a targeted intervention that should hnt he much impact at all on inflation and it is the case that the amount of chinese steel that we import is actually quite small at this point, but given their investment in excess capacity, and particularly the high emissions, the high Carbon Emissions inherent in their steel, this intervention is important in a preventive sense. Im sure youre well aware of the problem with economists that have taken the poll that china this is what happens when you ignore a country that excessively exports excess capacity, excess savings, back into our country, leading to a real hollowing out of manufacturing during the 2000s. We want to get ahead of that curve in this case, take action that we dont think is going to have much inflationary impact at all, given the magnitude. But if we dont take action, were putting at risk one of our most critical sectors. What the president calls the backbone of the american economy, the bedrock of our National Security, and thats domestic steel production. Jared, on the broader topic of inflation, can we just talk about how this administration thinks about inflation right now and really in the context of the campaign, look, the trend lines were all going, it seemed like in the right direction and that was a narrative and a story that was positive for the administration to tell, it is now going the opposite direction. When you look at it in a sort of totality way over the last three and a half years, it is true that there are large parts of the country where wages have not kept up and theyll look at this period and say theyre behind, not ahead. Speak to that, to the extent that you have thought that there is an argument that the administration would make around it. Well, first of all, let me just argue with you about one point there, which is on real wage gains. So for the last 13 months, real wages for middle wage workers, year over year basis, have beat inflation and beat it by a good bit. Thats one of the reasons why we had such a strong recovery in gdp and consumer spending. So, it is critically important right now that as inflation has eased, and youre correct that it that pace has slowed, but, of course, it was 9 , now it is last seen at 3. 5 , thats below the rate of wage growth. So wage growth beating price growth. Shelter prices which are such a pressure on inflation, we continue to try to implement an agenda to lower housing costs and, in fact, housing costs have come down. If we look at the cost of goods, commodities and thats related to our discussion were having today, the improvements in supply chains has really helped there. Where we have seen some pressure is on the services side. Here we have a very strong labor market, again, solid wage growth, it is beating price growth. And some of those Service Components have, i think, been unusually high lately. If you look at auto insurance, medical services. Some of those we expect to come down. So, look, the dominant forecast is still for inflation to get back on trend and continue easing. In the meantime, we have to do everything we can to lower costs directly, whether it is insulin, prescription drugs, healthcare, clean energy products, or for that matter going after junk fees everywhere we see them, thats an aggressive agenda that were going to pursue. Here is the piece that i think is hard to get around. Im just curious what youre thinking, which is, yes, over the last 13 months wages have outpaced inflation for many americans. What im suggesting is that even with that, it doesnt make up for the two years prior, and so, you know, we look at the people look at the data, and they say all the trends are in the right direction, but then to the extent you see them in the polls, you see americans say they feel they are worse off than they were before. My question is, look, i think thats the math for better or worse. What do you say to that . Well, im not 100 sure what youre getting at, so, we have had obviously had a very sharp inflationary episode, wasnt just us, a global inflation, very much impacted the pandemic and of geopolitical conflicts, and, you know, that inflation went way up and it has come way down. Were not back where we need to be. We have more work to do. But i dont see any other path for us than continue to work to lower prices on behalf of households while we maintain the tightest job market we have seen. As you well know, andrew, there are economists telling us there is no way youre going to be able to maintain an Unemployment Rate for 26 months in a row and get almost 6 points of disinflation. But, in fact, thats what happens. That strikes me as the correct agenda here, to maintain strong economy, while doing everything we can to help lower costs. Now, if thats the correct plan, getting back to your question, we ought to see sentiment indicators improve as those trends persist. And, in fact, we have. Now, again, were not back to where we need to be, but if you look at the university of Michigan Sentiment index, it is up 30 over the past four months. That suggests to me that this plan is, in fact, tracking as we expect it to. Okay. Jared bernstein, thank you. Appreciate it. Thank you. Still to come, if youre worried about a. I. Going after your job, you should also worry about states using it to go after your taxes. The details are next. And later, fed chair jay powell warning cuts could come later than expected. The question for investors is will they come at all . Well discuss that. Squawk box will be right back. Announc meoworerti n f todays aflac trivia question. What year did boeing become a publicly traded company . The answer when squawk box returns. Good thing i had aflac. Hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. It really helped close that gap. Go, go, go yay go aflac go duck get help with Expenses Health insurance doesnt cover at aflac. Com wish we had aflac on our team. You can voya there are some things that work better together. Like your Workplace Benefits and retirement savings. Voya helps you choose the right amounts without over or under investing. So you can feel confident in your financial choices voya, well planned, well invested, well protected. Announcer and now the answer to todays aflac trivia question. What year did boeing become a publicly traded company . The answer, 1962. Welcome back to squawk box. Insurance company travelers just out with Quarterly Earnings coming in at 4. 69 a share. Below the streets 4. 90 estimate. This was driven by an elevated level of catastrophe losses of 712 million, that compares to 535 million last year. The revenue also short of estimates coming in at 10. 18 billion, that stock off close to 3 on the back of that news. If youre worried about Artificial Intelligence taking your job, or taking over the world, states are using a. I. To go after wealthy taxpayers. Robert frank joins us now with more. Of course it is. Of course. They always find a way to use a. I. Tax day may be over, but audits for high earners are rising fast and one reason is a. I. High tax states like new york and california have been sending out hundreds of thousands of audit letters to high earners. It is up 56 from the previous year. Accountants and tax lawyers say they have seen audits increase dramatically over the last six months. Theyre doing more audits through a. I. A. I. Programs are helping them find patterns with high earners who may be underpaying or underreporting their income. The big focus here is high earners who moved to other states during covid. Tax authorities are challenging many of those moves saying those moves werent permanent and those folks still owe their state taxes. Another big target is remote workers. New york is going after workers who technically report to a new york office or new york headquarters but live and work entirely in a different state. Californias deficit is now 38 billion, new yorks expected to hit 10 billion next year. So these states are going where the money is, which is the high earners. Add to that, the irs is nearly doubling audit rates on high earners as part of the 80 billion funding they got to hire more enforcement. High earners getting it from the states now and the federal, so unless youre a w2 earner, if youre a high earner, youre probably going to be audited by either the state or the federal government, if youre in a high tax state. Do we know at this point whether these a. I. Audits are more accurate or if they yield a better result in terms of money back . Thats going to be the big question. Both the irs and the states are deploying a. I. , and a. I. Has been very good, they tell me, at finding patterns of people who in the past have underreported, they find a similar profile of other people that they havent caught before, so you would think it is going to be better than humans at finding the big Data Patterns where, yes, this is probably where the money is. So, but, again, you know, 771,000 letters in 2022 and increased vastly from there since. So a lot of audits for these top earners. Robert, thank you. Coming up, new this morning, on tesla, company is going to ask shareholders to vote again on musks pay package. Were going to talk about it and debate it in a moment. In the next hour, United Airlines scott kirby will join us, a lot of big news on that company today, their latest quarter, travel forecast, what is going on with boeing, and more. Squawk box returns after this. From pep in their step to shine in their coats, when people switch their dogs food to the farmers dog, the effects can seem like magic. But theres no magic involved. dog bark its just smarter, healthier pet food. Its amazing what real food can do. Welcome back to squawk box. Some big news this morning. Tesla isgoing to be going to shareholders asking them to vote again on elon musks multibillion dollar pay package that they had already granted back in 2018. But a Delaware Court had voided that package about three months ago. Joining us right now to talk about this on the squawk newsline, jay clayton. The appeal is going to happen in parallel, theyre going to continue that. But it appears that such a vote, if in fact it was voted in favor of, would make any type of appeal moot. What do you make of this, this idea that theyre basically going to attach the decision to the proxy and say, hey, we just if the judge didnt think we disclosed everything before, we disclosed everything now . Well, i think youve captured it exactly right, andrew. Here we go back out to shareholders, and we say you have the facts and now you have the benefit of all this hindsight, and if you vote in favor of the same package again, it, to me, im speaking just very, you know, 30,000 foot level, it does obviate the need for the appeal. And, look, appeal process, court process, is fairly messy, and if you go to direct to shareholders and they have all the information, that seems to be a much more efficient way to deal with this, if, in fact, shareholders want to continue with this pay package. What ill note is, you know, this is all part of, i would imagine, retention of mr. Musk Going Forward as well. And thats the big leverage point in this, which is to say, you know, i think the shareholder has to worry or would have to think about whether they should be worried that hes going to focus his attention elsewhere. Having said that, as the judge said, he already owns a huge portion of tesla, is he incentivized to keep going, if you will . Well, shareholders made the judgment. Look, whether shareholders knew or did not know of the conflicts and what the judge cited was lack of process and the like, when shareholders voted on this in 2018, they understood the economics. It was widely reported, i think it was a 25, to 30 to 1 shot this would pay off, the expected value at the time was 2 billion. The shareholders, the so fist separated shareholders knew what they were voting on. In 2018, everyone thought this was a completely shoot for the moon, you know, as i said at the time, skin in the game program. But the context was different. Everything was thinking, you know what, if magically this actually were to somehow come to be, god bless, you would be very happy to pay it. However, as you know, there are lots of people when they get in a position and they can look back and say, do i need to pay all 50 billion, if i can cut that by 10 billion, 20 billion, would i . I think thats going to be the question today, and, you know, they did say tesla, that there are four of the largest shareholders in the company that want this vote and want to vote in favor of it, but im curious how you think shareholders should think about this, even the ones that voted in favor of it the first time . I do believe, and im not an expert on the terms of this pay package, i believe there is a retention element if the shares are awarded as planned in 2018. For five years. That was one of the reasons i thought that the program was actually still aligned, he has not been granted any of the shares yet and even if he were to get them today, he would have to hold them for another five years. Hes with the shareholders for the next fiveyear ride. So i think youre right to think about this in both ways. What was originally granted, if youre a shareholder, what is the laicke likelihood it is goie reversed on appeal and what is the likelihood you have to replace it if it is not reversed on appeal with something similar . A rational shareholder may say lotte lets vote on this and get on with it. Are there no issues to be looked to . Can a company put up for vote a pay acpackage for work that was done in the past . Thats unusual. How do you think about if youre still at the s. E. C. , how would you think about this . The s. E. C. Is a disclosurebased organization. And the real question here is the disclosure sufficient for people to make an informed voting decision . Yeah, in this one, of course the s. E. C. Is going to look at it and think about it. But this may be the most disclosed and examined pay package in the history of pay packages. Final thought, jay, there was obviously a plaintiffs lawyer that brought this case and we were talking about the possibility of the plaintiff lawyer could actually become part of a proxy campaign against the approval of this. What would happen to the appeal if this, in fact, were to be voted and approved, do you think that tesla says theyre going to continue withthe appeal. Part of that would be because they have to pay the legal fees for the plaintiffs lawyer, right . Look, lets separate lets separate that from, you know, the shareholder voting process. It is america. Wonderful thing about america is were going to hear all sorts of opinions on whether people should vote yes or no with the disclosure. In terms of how the court plays out, and whether the plaintiffs at the end of the day added value for the tesla shareholders, that will be that question. Did this process add value and should they be compensated for it. We got to run. Maybe were playing it down. I dont know. The texas piece of this, theyre going to move to texas, that had been telegraphed. Do you think other companies will follow suit . Andrew, Corporate Governance has been evolving for 50 years between the states and between the federal government. And the like. And there has been competition for shareholders and corporations as to where theyre going to incorporate. I do think that texas, nevada, others are challenging delaware. And, look, our federal system, it is appropriate to have competition. And i dont think i dont think this is necessarily a race to the bottom. Right. Okay. Jay, thank you for jumping in and helping us through this. Appreciate it. Thanks, andrew. Coming up, fed chair jay powell reversing his Interest Rate pivot, more on that after the break. The next hour, a bipartisan bill being introduced that would provide a Regulatory Framework for stable coins. Well hear from the creators of the bill in the next hour. Lets look at furetus. Were still looking at a higher open across the board with the s p looking to be up by 17. Nasdaq higher by 50. Squawk box will be right back. The all new godaddy airo helps you get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo encore energy, americas clean energy company, now in production in south texas. Energizing america with reliable and affordable uranium for Nuclear Energy fuel from our environmentally friendly extraction process. Encore energy. Your record label is taking off. But so is your sound engineer. 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 im gonna hold you forever. Ill be there. You dont. You dont have to worry. Welcome back to squawk box. Jay powell making his first Public Comments since last weeks hotter than expected inflation data. Want to get to our senior economics reporter Steve Liesman with more on the message to the market. Steve . Yeah, andrew, good morning. After speeches by the fed chair and the vice chair yesterday, based both on what they said and didnt say, there is a case to be made that the feds base case is no longer to cut rates this year. The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence. On the plus side, powell didnt threaten rate hikes, but added the fed can maintain a restrictive rate as long as needed. It was equally important what the chair didnt say, both he and vice chair Phil Jefferson declined to repeat the phrase that rate cuts were likely to be appropriate this year if the economy cooperated. Of course, the economy and inflation have not cooperated. Inflation has gone sideways the past three months, meaning the fed will need several more months of slowing inflation to gain that confidence to cut Interest Rates. Ben emons wrote, it is incredible, but true, powell reversed his december pivot. I would add to an extent. The markets have two cuts priced in, no probability for may or very small. Small for june. Under 50 for july and it is only september now that the market has a greater than 50 probability of rate cuts this year. Theyre not, by the way, off the table entirely. Theyre still possible with several consecutive months of inflation progress. Looks like fed officials have lost confidence in their own forecast for inflation to decline and thats shifted their base case away from the likelihood of those rate cuts, andrew. Steve, always smart stuff, we appreciate it very, verymuch. Look forward to talking to you again very soon. Thanks. Coming up, the Property Brothers, they are here, well lko them about everything from the Housing Market to Home Building expenses. Stay tuned. Youre watching squawk box and this is cnbc. People couldnt see my potential. So i had to show them. Ive run this place for 20 years, but i still need to prove that im more than what you see on paper. Today im the ceo of my own company. Its the way my mind works. I have a very mechanical brain. Why are we not rethinking this . I am more. Im more than who i am on paper. My name is oluseyi and some of my favorite moments throughout my life are watching sports with my dad. Now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. Giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. Welcome back to squawk box. Homeowners see affordability falling to its lowest level since 1980. Joining us to talk about what share seeing in the Housing Market, the Property Brothers are here, Jonathan Scott and drew scott. They are the scott brothers, global cofounders. Good morning to you both. Good morning. Whos who, thats the question. Can you tell us apart . We can tell you apart . You can tell us apart . Heres the big question im trying to understand. It is the question we talked to Jared Bernstein about in some ways, it is an inflation question and mortgagerelated question, maybe to the question we talked about yesterday, which is at this point, given how high Mortgage Rates have gone, there seems to be asense there is no mobility, people feel those folks in their homes feel they cant leave their home because it is just going to cost too much. Yeah. Maybe they shouldnt be leaving their homes anyway. It used to be you get a home and youre in this for your entire people would be in a home for 50 years, 60 years. Now they say the average person moves every three to five years. I dont know who the hell loves moving that much. But you got taxes, real estate fees, insurance all this stuff. It is a better idea for people to stay in the investment, thats why we say if you buy a house, get something you know your family can grow into and spread those expenses out over a longer period of time. Like youre saying as well, too, there is a housing crisis, trying to create more density. Incentives for people to convert their garages into a rental suite or basement into a rental suite. Something like that can make it more cost effective. Anyone who paid off their home is in a great spot. There are people who had low Interest Rates and now their term is up and they have to refinance something that is going to be their expense is over double what about all the folks who are thinking of doing renos because they thought they flipped the home, in the next two years. Now you dont do the you say ill do the reno because i want to do it for me, because ill be in this, but also i might have to redo the reno in seven or eight years. A lot of people are realizing it is more expensive than they thought. Even if it is converting a garage, i have 50, 70,000, ill renovate a garage. A garage conversion is the cheapest we have been able to do, it is crazy how much things are costing right now. When you started, it was what year . We were 18 when we bought our first house. 95, 96. Youve seen the lowest of the lows. The calculus is different. The incentive to convert the garage to rent it, but if it costs you 300,000, what can you rent it for, the ability to recoup that money is a much longer term plan. What are you finding in terms of the opportunities to do the same traditional flipping that you have become known for . You need to be aware of what is available to you. In some states, i believe new york is one of them, they offer a cash incentive for people to create an adu. You need to know what is available. There can be up to 100,000 available to you to put toward that. Thats an extra piece of property on the property . Yes. Converting your garage into a rental adu or building an adu on your property. I think thats going to be a huge part of the solution and if you look at the expenses a homeowner has at home, if you have additional revenue coming in from someone renting a garage space from you, thats more valuable than just looking at the Interest Rate youre paying for your mortgage. Okay, but the folks renting the adu, this is just what does adu auxiliary dwelling unit. Just a garage or something. Right, a grandma suite. Are you doing this as an airbnb style of thing or longterm rental . Longterm. Shortterm has its benefits, but has some drawbacks and headaches and certain areas of the country have restrictions on what you can do for shortterm rentals. For us, for my rental portfolio, we for every ten houses that we add to the portfolio, we have one or two we end up flipping. The numbers did work, but it doesnt seem like a flipping market. You have to adjust into what makes more sense for the current market and the rental growth there is rental demand, it made more sense. How long do you keep things in your portfolio now . I dont look to flip. The rentals we dont look to flip. We had other opportunities we had where we ended up stabilizing and selling. Im on tiktok and on instagram. Ive seen you do the dances. Very good. When i see the guys who are desperately trying to tell me how im going to become super wealthy by doing this sort of airbnb game, im going to actually either buy property and rent it or rent property and rerent it, you know what im talking about. But there are restrictions. What do you make of the whole phenomenon . 99 of all the get rich quick people that you see online are full of beep. If everybody could do this, everybody would do this. It doesnt stop me from watching it and thinking about it. There is potential. We bought our very first house, we bought it for 250 down and people are, how is that possible . We read every book we could, infomercials and discovered we could do a vendor take back mortgage and found a situation where that worked. Su assumed the mortgage. You didnt have to qualify if you assumed the mortgage, now you cant do that, but all kinds of other but they get in over their heads. Because theyve been watching those tiktok videos. They spend in the worst way, theyre not organized. They end up in over their heads. Whats the biggest mistake . Not being organize zbld just not being organized. They dont realize as soon as one of their subs dont shows up it snowballs. Another huge mistake, someone who listens, my brother jared said, whatever it is, dont listen to random idiots who have no idea about real estate. Usually the loudest voice in your group is who you listen to and then you make big mistakes. Is there a market do you think is the next big one to take off . I think detroits amazing. When you look within a city, a certain area of the city thats starting to redevelop, so much potential, lot of money gets invested, that area becomes a valuable part of the city. Detroit, so much money pouring in, so much redevelopment happening. I bet you in 20 years its going to be one of the most technically advanced cities. I think canada, the government there has incentives to encourage developers to work with multifamily housing as well as rental, i hope they can do some incentives down here because its really making a dent in the housing crisis. Jonathan, drew, detroit, dan will like that. Thank you very much. Coming up, a look at bitcoins big move. United Ceo Scott Kirby will be our guest. Well be right back. Hi, im kim, and i lost 67 pounds on golo. When i go out with people, they expect me to eat like a bird. They are shocked by the amount of food i eat while losing weight. With golo, i dont need a cheat day because i get to eat the foods i like any day of the week. Welcome back. Bitcoin, reduces the supply of new bitcoins currently price sitting at 62,720. Want to talk about the halving. The runup in the price and also the flip of that which we saw last weekend, you were kind enough to tweet back at me trying to understand some of the movements. Explain to the audience what has happened in the runup and the move lower. Talking about bitcoin is crashing to 64,000 was a dream, were up significantly, since the last halving today, four years, were up 800 , incredible performance this year to date, about 40 , compared to gold, gold is up 7 . The reason i bring that up, you actually have lost purchasing power if you held gold. Inflation has outpaced gold. For the last five years when we Start Talking about this price runup, all of a sudden, why is the price going up . Etfs is a big piece of it. Halving is a big piece of it. The government said theyre going debase the currency the United States has a debt problem and were going to debase the currency. Over the weekend the price sells off. First, when theres a moment of fear, everybody panics, they still buy dollars. The second thing is on the weekend even though the bitcoin market is open the bank system is not open, so you cant get net new dollars into your crypto account to buy bitcoin, if youre Holding Bitcoin you can sell it. A very interesting dynamic, even though you want to buy more bitcoin youre closed out of the system youre saying that people would have bought bitcoin they want the price to go down to buy more of it. What have we seen since then . We didnt go up a lot. Were basically flat so no one is buying on the heel of the middle east tension. Now, bit coin is being pulled into the legacy system. High frequency traders when the news hit twitter and the sentiment changed you saw a massive amount of tweets about drones, rockets, a very quick selloff. Theres got to be some algorithm trading going on where people are trading on headline and the folks who are selling likely are selling actual bitcoin, not the etfs because this was happening over the weekend. Then the question seems like the natural followup, why were not back in the market to buy etfs and on the back of what i imagined, a bullish sign on the halving piece. I think markets are forward looking. Part of my analysis, we went up 40 because people are already pricing some of this stuff in. Russia invading ukraine, hamas israel, iran israel. At some point theres a less severe reaction to each one of these geopolitical events. I think people are starting to say, there are problems in the middle east, again, that doesnt talk down the severity of what happened. But i think the Financial Assets themselves are becoming less sensitive to those movements and in terms of buying more bitcoin, theres this interesting dynamic, that everyone i know in the hardcore bitcoin community, they bought as much as they can. What is wall street . Theyre not rushing to go buy bitcoin today and lot of folks on wall street dont understand the halving. Over the next 12 to 18 months well see the impact. The only reason you wouldnt buy today theres an argument that a lot of firms dont have an offer yet. Also the view i think by some that the prices still going to come down. I mean, what do you see as the window where the price sits right no. Price movements themselves, bitcoin is down about 8 , 9 . There was 13 drawdowns of 10 or more in the 2020 drawdown. When you see that big drawdowns 8 is a pretty small drawdown. My expectation here wall street is trying to time the market to understand, looking at the price levels, but over time what we have found in these drawdowns theyre getting less and less severe, the asset itself is becoming less volatile. The upside gets more limited. Forthe next 12 months for you, potential high upside. Potential downside. I think the downside is pretty muted at this time. Id say i dont see it going below 50. O maybe we can get to 150 to 200. But we go up from here. Anthony, thank you, sir. Absolutely. Its now just after 8 00 a. M. On the east coast. Youre watching squawk box. Among todays top stories the big one thats everybodys talking tesla is going to z shareholders to revote on the pay package on elon musk, the same Compensation Plan that was put in place and then a Delaware Court voided, meantime President Biden calling for a tripling of tariffs on imported steel and aluminum from china and House Speaker mike johnson indicating hes going to move ahead on foreign aid package in congress, this despite mounting frustration from some republicans that could threaten his job. Plus, a look at futures, pointing to higher open across the board. S p 500 up. Nasdaq higher by 35. As for treasuries, on the 2year yield, we crossed at 5. Dom chu with the premarket movers. Tesla, shares right now are moving to the upside by a percent or so. Now, the details, the company is going back to shareholders to ask them to reapprove a pay package for ceo elon mufshg. It was voided by a delaware judge back in january, that package gave musk a record 56 million worth of compensation if all conditions of those contract were met. The deal was rejected after a judge in delaware called quote unquote, an unfathomable sum. They asked shareholders to moving the companys state of corporation from delaware to texas. Those shares up two thirds of one percent. Meanwhile, the world of high fashion, a couple of stocks are on the move. Shares of Capri Holding are down about 2 right now. Parent company of michael kors, jimmy choo. Its being acquired by tapestry. Regulators in europe and japan have signed off on this deal but the New York Times deal book is reporting that regulators will look to file suit to block that deal according to sources familiar with the matter. Shares of tapestry are rising on that news. Well watch that development. A check on tech giant in europe, asmi holding, dutchmaker of computer chips. New order bookings fell shy. A more cautious spending regime for some computer chipmakers. Asmi holding, the talk of europe and and here in the u. S. United airlines now reporting quarterly loss of 15 cents per share. Forecasting better than expected profit for the Current Quarter. Want to get over to phil lebeau whos joined by the ceo. Phil, nice to see you. Good to see you, andrew. Lots of questions for scott kirby. The First Quarter, much better than expected. What happened that wall street failed to appreciate going into the earnings report. You know, i think United Airlines was a good First Quarter, lot of issues and challenges. But theres a structural change in the industry. You can see it. Couple of airlines that are outperforming. United is one of them. Picking up customers. We had great domestic performance. Put all that together even with the challenges, we had a really good First Quarter. But youre expecting better than expected profits in the Second Quarter relative to street estimates going into yesterday, this is coming as we go into the summer where youre going be fighting capacity limitations. How much is that limiting your ability to grow . Yeah, so, you know, theres a lot of challenges in the industry, capacity limitation, its pretty remarkable we started this year with deliveries. We planned for 101, were now planning for 61. The biggest impact is on our cost structure. We hired enough employees to fly 101 airplanes. How long do you expect the pilot unpaid leave offer to be out there and the pause in pilot hiring, is that a twomonth situation or we might have to extend it further. Its the seasonality of our business. We need them at thanksgiving and christmas. Its a benefit we offer. For that small minority who can afford to its great opportunity for them to take a month travel the world, use their flight benefits. With regard to pilot hiring i think well be back on track this summer and this was just about, youknow, when we had fewer aircraft. Take a couple comonth pause. Last time we talked, last quarter in houston, you said, look, were taking the max 10 off of our expectations and order book, youre leasing 35 airbus, how tough was it to put that deal together. When youre United Airlines most of the aircraft you tried to buy from airbus. We talked to airbus, theyre sold out to the end of the decade. Very tight market with the challenges happening at boeing. What weve done is get our fleet in a much better place. Well have consistency, steady deliveries, important well have steady for the operation on pilot hiring and training. You know that consistency is really going to help us. First of all theres a whistleblower testifying on capitol hill today. Saying the dreamliner is not safe. Look, hes on nightly news saying these things can fall out of the sky. When you hear that whats your reaction . Theres thousands of these airplanes, theyve been flying for decades. Im totally confident the 787 is a safe airplane. With the faa audit of your Maintenance Issue as these were taking place what did you say to your staff and the faa . Safety at United Airlines is the number one priority, always has been. By the way, thats true across all u. S. Aviation. At united, we have safety training, reporting culture, it goes well beyond the standards that are required. It ands true while they were unrelated we had a cluster of several highprofile incidents and because of that its an opportunity we may have a high safety standard. How can we take this standard even higher . Were working very well with the faa. Were embracing this as an opportunity to take the high standards to an even higher level. Look, for cnbc viewers who are watching, our focus is on the safety process internally at united. Our numbers were able to operate well while we do this. Scott kirby, ceo of United Airlines. Well send it back to you. Coming up, a bill being introduced to provide reg regulatory. Tech investing and Redpoint Ventures Founding Partner geoff yang. Squawk box will be right back. Encore energy, americas clean energy company, now in production in south texas. Energizing america with reliable and affordable uranium for Nuclear Energy fuel from our environmentally friendly extraction process. Lifes daily battles are not meant to be fought alone. Were not powerless. So long as we dont lose sight of whats important. Dont be afraid to seize that moment to talk to your friends. Cloud, you okay . Because checking in on a friend can create a safe space. The first step on our new journey. You coming . Reach out to a friend about their mental health. Seize the awkward. Its totally worth it. Welcome back. Futures here pointing to a higher open. S p looking to be up by 11. Nasdaq, higher by 31. Treasuries were watching that 2year yield as we reapproach 5 . 4. 96 is where we are right now. Shares of lvmh are rising. Offset sales in other divisions, including jewelry. The company attributed that to chinese consumers spending more as tourists outside the country. Shares of adidas jumping in germany earlier this morning after the company unexpectedly raised its fullyear guidance in the First Quarter. Adidas has been selling off its inventory with kanye west. Lets talk about stable coins. New Bipartisan Legislation regulating stable coins. Want to talk to you about where they stand and just handicap whether this is going to get through, i know theres some talk by the way about adding this bill with some others that have to do with banker compensation, even marijuana and other things. Im optimistic, i think theres a certain amount of progress thats been made in this space, we have a great partners in the house, with mchenry and waters. So i think theres momentum, if we can include this with the faa reauthorization. It can be done quite quickly. Are we talking about weeks, months . What are the stumbling blocks right now. Were getting close to the time here in congress where politics takes over policy, and so i hope we can do it sooner rather than later, but if it lands on the side of the equation where we cant get through the political we might have to wait until later in the year. I have a question as it relates to geopolitics, lot of speculation that theres been money moved through stablecoin and the others, to places like iran and russia and others, how concerned are you about that and how that relates to a bill like this. Well, i think this bill is the First Step Towards really addressing ill lis it finance. This legislation creates a framework where it rests on to which the dual Banking System, it eases the protections of knowing your customer. This is a bill thats written to have 100 , one to one dollar backed. Custody has to be in a bank, so you have those protections in place in our ordinary Banking System, this is bringing that level of transparency and accountability into bloc chain and crypto currency. Take stablecoin and put it into a proper Regulatory Framework we can have Consumer Protection and transparency. The worst thing we could do if stablecoins are being misused around the world is to step away and not regulate them the whole purpose of this bill is to protect consumers while we acknowledge the existence and use of stablecoins. Further more, senator gillibrand inc included, a receivership could set up. Its co contemplated that with reserves we require and our decision not to allow stablecoins if something did fail we have that safety valve we also require that if a stablecoin is issued that its done by its own entity, a subsidiary, it has to be walled o off. All of this sounds very important protecting the u. S. Consumer. Im curious, because usdc, the stablecoin issued by circle is backed one to one u. S. Dollars. Tethered is the more popular stablecoin, more popular outside the United States, do you have data on how many u. S. Consumers are involved with stablecoins outside like a tether theyre not backed one to one. So, our bill is for u. S. Issuers and if youre not complying and not following the law, then you can be investigated. This has real regulatory heft and teeth. If youre subverting the law you can be fined a day. So this is going to preclude bad actors from being in the u. S. Based system. Senators, thank you for joining us this morning. Well follow the progress of this and hope to have you back as this moves through the senate. Thank you. Thank you. Thanks. Coming up, boeing whistleblower goes before a key hearing today. Well speak with richard blummen thal. Ay tuned. Youre watching squawk box on cnbc. 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 its time to feed the dogs real food, not highly processed pellets. The farmers dog is fresh food made with whole meat and veggies. Its not dry food. Its not wet food. Its just real food. Its an idea whose time has come. Hi, im denise. Ive lost over 22 pounds with golo its an idea in six months and ive kept it off for over a year. I was skeptical about golo in the beginning because ive tried so many different types of diet products before. Ive tried detox, ive tried teas, ive tried all different types of pills, so i was skeptical about anything working because it never did. But look what golo has done. Look what it has done. Im in a size 4 pair of pants. Go golo. soft music [alarm beeping] amelia, turn off alarm. Amelia, weather. 70 degrees and sunny today. Amelia, unlock the door. Im afraid i cant do that, jen. Why not . Did you forget something . My protein shake. The future isnt scary, not investing in it is. Youre so dramatic amelia. Bye jen. 100 innovative companies, one etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges expenses and more prospectus at invesco. Com. Welcome back. Some breaking news this morning, tesla announcing that shareholders will have an opportunity to vote again now on elon musks multibilliondollar pay package granted back in 2018, but then Delaware Court three months ago voided that package. Arguing that the Board Members were too close and that sh shareholders didnt get proper disclosure about the deal and how it was negotiated. Joining us now is ann lipton. We talked to you about this case before. This is a new development. Ann, it appears if shareholders vote again and vote in favor it would moot the judges decision. Its not even clear, i think this admit in their proxy what the effect will be. Theyre claiming that they can reinstate the pay package if they get approval. Im not sure thats legally correct. I dont think it moots the or original package. It actually, i dont know that theres much precedent for Something Like this. If shareholders vote in favor the legal favor is not clear. Im going to disagree with you, youre the lawyer, you can tell me, it seems to me if in fact tesla were to have a new Compensation Plan for elon musk, they would bring that new plan and this is the equivalent of a any plan if you will to the shareholders and how that arrangement was made properly no new case that the shareholders would bring against that new plan, why isnt that the equivalent of that. Because they dont say that. Its an interesting question why they didnt say it. The way they put it in the proxy is that this is a ratification of the old plan. Which means, what theyre saying is, we should give musk 55 billion less than that now because tesla stock is down for his past work. Its not clear to me that somethings they can authorize. Why cant they authorize, because at some point theyll have to pay him something. Well, they dont have to pay for past work and thats exactly the issue, what theyre saying, lets give you several billion dollars for work theyve already performed and that kind of generosity thats unnecessary, is could easily be considered waste legally and can only be approved by a unanimous shareholder vote. If 51 of the shareholders and tesla is saying by the way they believe four of the largest shareholders in the company came to them and said please put this to a vote and well vote in favor of it. In fact the independent shareholders, not elon musk and his brothers, if they vote in favor of this, the proxies, the decision is attached to the proxy, so you can look and decide that everything about this is bad if you decided and you still voted in favor it. Youre saying you dont believe thats legally viable vote. Yeah, because if its payment for past work, i mean, lets put it this way, a company decided, i want to the assets its framed as a payment for work hes already performed which means the company that doesnt get any benefits from it. Let me ask you a different question, if they came out and said, you know what, were going to create a new plan thats prospective, same plan, effectively, you basically have to do nothing for one day that would count as the last part, the last five years, and then theres additional payments for future things, would that change the dynamic absolutely. It would. It raises the question, why didnt they frame it that way . Maybe people would have accused them of dishonesty. A new pay package Going Forward for compensating him for work hell perform thats the kind of thing, shareholders can ratify. Do you not believe that he shouldnt be paid for the last five years. This is part of the decision, every time he increased teslas value he was motivated to do so. People like Mark Zuckerberg dont take a salary and thats why. Clearly, you a view he should not be paid. He has been very well compensated. In the fact that he owns im not making a judgment about that, my judgment, all im saying is that he absolutely was compensated in the sense of do you believe a judge should be able to determine whether a board or company compensates an individual decides to compensate an individual, this is the issue, whether you think the amount of money is too much or too little, this or that i dont understand. I think theres a fair argument you could make it, i dont think id agree with it, around the disclosure issues. Theres a disclosure issue. The question is, should a judge in any state be responsible for determining how pay is decided . The way this unfolded in tesla and i think that this is appropriate is that normally its not the judges decision, absolutely, and i think every delaware judge would agree. Its not the judges decision. Its the decision of the board and shareholders. The court only steps in when it believes those eventies were functionally disabled how are they disabled now theyre not disabled now. The problem, again, this is not a compensation decision anymore. As long as its framed as paying him for work he already did, its not a payment its not compensation for his future earnings. Thats legally very possibly a difference. I understand the argument youre making, but i also say to myself, if i madea deal with a company, said, look, andrew, im going pay you x amount of money and youre going to work for the next five years based on this assumption. At the end of five years, a court decided they didnt want me to get this kind of money, id say, that feels unfair by the way, in elons case he had other opportunities. He could have refocused his efforts on spacex. Hes an unique individual there are other things he can do. My question is, from a straight fairness perspective heres the problem. You dont get that money on that assumption, do you not believe the company should try to figure out some way to c compensate you. Can i challenge your hypothetical, you framed it as the company came to you and offered you this money and was taken away. What she found he went to tesla. He controlled his own package. In violation of his fiduciary obligation. At this point, if in fact this whole vote is put to a vote with everything thats known again, you cant manipulate anybody. But you cant paid for past work done. Thats a separate it becomes another set of issues at this point. Yeah. Paying someone for work theyve done and not providing new value is very possibly simply not something that a majority of shareholders can approve. It needs all of the shareholders. Ann, lets assume youre right, what happens next . What happens next is, actually, very possible we see the shareholder lawsuits right away. What i expect shareholders will ask for internal tesla documents, what are known as 220 documents, they have a right of inspection for internal documents. Now this proxy for the move to texas, the move the texas, theres a lot in the proxy, im not sure theres as much detail on the pay package, so theyre going i think what the shareholders are going to ask for is internal documents, and a not insignificant chance that the fcc will ask for clarification. The immediate moves id expect. Internal documents asked by sh shareholders and then clarification by s. E. C. Im not sure exactly whether there might be concerns theyre having conflicting incentives. Okay, its longer debate. I hope we have an opportunity to have it again. Ann, thank you for joining us this morning. Its fascinating and thank you for having me. Coming up, venture capitalist geoff yang will join us. Stay tuned. Youre watching squawk box on cnbc. Welcome back. French a. I. Startup has been speaking to investors about raising hundred millions of dollars, according to a new report from the information the can companys existing investors. Microsoft invested 16 million in the company back in february. It was last valued at just over 2 billion in a funding round in december. Its the pride of paris at the moment. This company. Its a remarkable thing. When you go over there for the olympics youre going to visit absolutely. Thats on my list of things to do. Along with the eiffel tower. Absolutely. Lets talk about investing in tech and a. I. Joining us is geoff yang. Founding partner at Redpoint Ventures. Theres a loft enthusiasm in this space particularly on the hardware side, can we call that side of the a. I. Picture a bubble and where are we on the other side in terms of software . Well, i mean, you know, every decade or so theres platform that comes along that unlocks enormous value. Everyone builds on the last and everyone historically has been bigger. This one i think could be the biggest. So theres a lot of momentum behind it. You see it in the market today. In the private market, the a. I. Companies are getting a substantial increase in valuation, maybe about 3x of other companies. Theyre growing faster. By our numbers, these companies are growing about 2. 5times faster. 450 year over year. So, we know this is a very large and vibrant opportunity. Do you think i mean, if were in a situation where Companies Start looking at their budgets carefully and we could be very well in that situation at some point in time, is a. I. Spending bulletproof effectively . Is this an Area Companies have to de not everything is butletproof, everything goes through highs and lows. This is going to affect pretty much every company and how they think about their business and how they go about doing it. I think, first, you start with the models and then you look at the infrastructure that helps implements these models. The companies that will benefit from the productivity gainsover build new Business Models are all new opportunities. Using enterprises a. I. It will be foundational in everything they do, its almost like the internet became foundational. I think thats how thats how it will be with a. I. Every trend builds on the other one. This one could be bigger. In terms of where were going to show viewers the nasdaq redpoint Cloud Infrastructure which you put together, it has publicly traded cloud companies, a lot of them have high valuations relative to the s p 500, geoff, in an environment where Interest Rates are higher and theyll be higher for longer, higher Valuation Companies typically come under pressure, this group is no exception. How do you start thinking about that in terms of impugning the value of the private companies youre putting new money into the public valuations are under pressure . So, lets talk about the indexes. We did this in partnership with nasdaq. Were tracking the Top Companies in the Cloud Infrastructure space. Very much you can think of Cloud Infrastructure of the picks and shovels to the modern economy. Powers every industry and everything we do, including ordering food and booking travel. In the category it spans three major vertical, operations and development tools, cybersecurity and data and a. I. , in many respects the discussion were having about a. I. Should be incorporated in this and we did it because we realized that the market was missing an index in building cloud native infrastructure. So a lot of the companies that youll end up seeing in this are going to be pure a. I. Companies in addition to the other companies that use Cloud Infrastructure as part of their business and today they have 600 billion market cap and theyre very high growth with the median of about 20 Revenue Growth in the area. And you know, you look at these companies and certainly theyre going to be, you know, the valuation because of all the Technology Companies in this space are going to be tied to what happens with Interest Rate and Interest Rate expectations. You see that certainly in the private market. We think over the long term the revenue gains and Revenue Opportunities are substantial for these companies. As i said, the Market Opportunity is enormous for a. I. And youre seeing it in the Public Markets with how the magnificent seven is doing and all of them have a profound a. I. Story. Geoff, before we let you do, youre a board member of a whole bunch of companies, you dealt with governance issue, this issue of elon musk compensation this morning, that plan put in place in 2018 that the judge overturned, shareholders being asked to reinstate the plan for work that was done prior, we had a guest on they thought it would be considered wasteful to pay him retrospectively like that. What do you think of this . Its a tough one, because, you know, you never seen packages like this before and theyre definitely the proposal is definitely carving new ground. But elon musk is somebody that doesnt come along very often and its, you know, a lot of things that theyre doing and a lot of things that he does really practically only something that elon musk can do. Its a tough one. Its hard to fathom a tesla without elon musk. But theyre also going in space thats never been done. I think the original package was very much tied to performance and what happened to the stock price and i think what theyre trying to do is reinstate something they decided to do before that, that the court stayed they couldnt do. I dont know what the right answer is, i think it would be very hard Comp Committee to be on, because its hard to imagine a tesla without elon musk at its helm. Geoff, thanks for your thoughts. Great talking with you. Thanks for having me. Coming up, connecticut senator Richard Blumenthal will preview a Senate Hearing today, its an important one, a boeing whistleblower speaking out. Dont go anywhere. Well back with that after this. To help you see untapped possibilities and relentlessly work with you to make them real. When it comes to investing, we live in uncertain times. Some assets can evaporate at the click of a button. Others can deflate with a single policy change. Savvy investors know that gold has stood the test of time as a reliable real asset. So how do you invest in gold . Sandstorm gold royalties is a publicly traded Company Offering a diversified portfolio of mining royalties in one simple investment. Learn more about a brighter way to invest in gold at sandstormgold. Com. Encore energy, americas clean energy company, now in production in south texas. Energizing america with reliable and affordable uranium for Nuclear Energy fuel from our environmentally friendly extraction process. Encore energy. Welcome back. Today a whistleblower set to testify in front of Senate Committee over safety concerns over assembly of boeing planes. Boeing has maintained theres no safety issue. Joining us now is senator Richard Blumenthal, hes going to be leading todays hearing. We gotten a preview of what this whistleblower is going to say, im curious, what are you looking for and how it contradicts what boeing is saying . What well hear today from this whistleblower is a pattern of behavior that put profits over safety. The speed of production almost over everything else. And its behavior described as whistleblowers who suffered retaliation. Really shockin i ing reprisals. Which itself is worthy of further investigations by our committee, the faa and the department of justice and boeing at a moment of reckoning. A moment thats years in the making. It promised to be better after the plane crashes of 2018 and 2019 that killed 346 people and its still failing. Senator, what should the American Public think as they watch this hearing today, and would you step on a boeing plane . Not only would i do, i do step on boeing planes, and the American Public should not overreact, should not panic and should continue to value the great employees at boeing and the products that American Aerospace makes. But, at the same time, it should insist on a Corporate Culture that protects employees who have legitimate complaints about how to do better on the production line. How to put fuselages together better and how to produce products that are guaranteed to be safe, not produce more quickly but more safely. How much do you look at this as a failure of the faa in terms of its oversight of these businesses in. Ive been critical of the faa and your point is extremely important, the faa has failed in the past to exercise oversight, its now been insisting on stronger activity, stronger examination. The faa system needed an ja overhaul. Whats the overall message, though, senator, i mean, what do you hope for the committee to accomplish by hearing the whistleblower not just to make sure that whistleblower employees are protected but in terms of that Corporate Culture that doesnt value reports of potentially unsafe practices, what needs to happen here . What can you do to change that . First and foremost, accountability. There needs to be a continuing department of justice investigation about the possibility that the deferred t prosecution agreement was violated here, not jumping to any conclusions, but accountability is very important. Our committees going to have more hearings, and more investigative steps involving the airlines, and boeing itself ought to be called to testify, which we will do, but longer range, the standards applied for manufacturing have to be reviewed, and thats an faa function as well as boeing. The entire Aerospace Industry ought to be looking in the mirror and asking itself whether its doing the kind of work that it should be and really keeping faith with the great employees who are also, by the way, protected by unions in seattle, not in south carolina, in seattle, in the state of washington. Those unions played a part in protecting workers from retaliation that was absent in south carolina. So, if that deal with the doj was violated, senator blu blumenthal, what does that open boeing up to in terms of liabilities . It opens boeing and its management to potential criminal liability but also stronger fines. It paid a couple billionplus fines a couple years ago, but theres potential for reopening that prosecution if the terms and conditions of the agreement were violated. Criminal liabilities, meaning meaning what, specifically . This would be for the crashes involving the max, correct . And so, this would be criminal liabilities tied to the deaths of the people who perished in those plane crashes . The liability would be tied to those deaths, but also to the continuing pattern of a broken Safety Culture and manufacturing defects that were known and concealed or covered up through this pattern of retaliation, and again, not jumping to conclusions. There needs to be further investigation. Senator, before we let you go, just want to get your quick thoughts on whats going on in the house with speaker mike johnson, whether you think hes going to get a bill passed as it relates to funding for israel, ukraine, whether you think theyre going to be separate, whether hes going to keep his job, what do you think . Theres no mystery about what is needed. Ukraine is at a moment of the most severe peril. I visited ukraine five times in the last two years, and ive seen firsthand not only president zelenskyy but his military team, they will fight to the death, but they are severely outmanned, outgunned, firing only one artillery shell for every ten that the russians fire at them, so the need is desperate. My hope is that speaker johnson will have a package of some kind. It looks like this kind of Rube Goldberg combination of measures, but the simple solution here is simply to pass the senates bill, approved by a 70vote margin, overwhelmingly bipartisan, and whether hell keep his job or not, i think, is almost beside the point. I hate to be simplistic about it, but our own National Security is at a moment of peril. If ukraine falls, putin will keep going, and our troops will be fighting and dying just as the ukrainians are doing right now, and no one needs to talk about how important the aid to israel is. Senator, i want to thank you for joining us this morning and talking through all these issues. We look forward to your hearing today with that whistleblower for boeing. Thanks for having me. Coming up, we will talk markets and get you ready for the training day ahead on wall street. Stay tuned. Watch watch. Youre little more than half an hour before the opening bell on wall street, investors digesting comments from jerome powell. Joining us now is head of americas Asset Allocation at ubs Global Wealth management. Jason, great to have you with us. Good to be here. Higher for longer, something that markets have been dealing with, but its now longerer, if you will . Is that a deal breaker for this rally . I dont think its a gamechanger for the rally because partly why the fed is going to have to be on higher for longer is because the economy continues to chug along. The consequence, of course, is that is keeping inflation elevated. But if the economy is holding up at these higher rates, theres not a strong reason for the fed to cut. Its not a reason why the markets need to pull back significantly from these levels. What are we going to see from earnings season, in terms of companies dealing with higher Interest Rates, dealing still with higher prices in terms of labor at the very least, and im asking you this because part of the key to this, you know, chugging along economy is the consumer piece of it, and while consumers have been increasing their debt amounts, theyve been using their savings, taking out credit card at higher Interest Rates, as long as theyre employed, thats okay, but as soon as that stops, and that starts showing cracks, thats a problem. Well, what weve seen thus far, at least from the financials, when it comes to the consumer, is that the message is the consumer is still quite healthy, and were seeing that across a variety of data. You mentioned the credit card data. Its ticking up. When we think about overall wealth, just in the Fourth Quarter alone, total household weather in the u. S. Increased nearly 5 trillion. Total household debt, nearly 200 billion. The Balance Sheets of households in aggregate are in good shape. Theres some an ecdotes of stres but it seems to be more a reflection of mixed shift, a lot of Services Spending still, maybe not as much on the goods side. The consumer is holding up reasonably well. The economy should continue to hold up. We might be a couple of bad auctions away from a 5 on the tenyear yield, jason. As we sit at fivemonth highs at this point on the tenyear yield, and we could tick higher for various other reasons, is there a number where you think, you know, thats trouble for equities . So, i think we kind of think 4. 75 is a level where you can get some real stress in equities. Its not just a level. Its also the pace. If you get a move of 75 basis points in two months, thats a bigger problem as opposed to five or six months. If it does shoot up to 5 , youre going to see stress in equities. At the same time, i think youre going to see, like we saw last fall, investors step in and willing to buy bonds, buy duration at those levels and yields could pull back pretty quickly. Theyll only stay at those levels if we have a repricing of where the feds terminal rate is. I think that has to be the key catalyst for rates to stay higher for longer, so its a bit, you lose on one side, gain on the other. Great to speak with you. Thank you. Jason draho, ubs. Lets take a final check on the markets before we hand it over to our friends on squawk on the street. The dow jones looks like it will open up about 30 points higher. The s p 500, up about 20 points. Want to check treasurys real quick. 4. 635 on the tenyear. I want to thank melissa lee for another day of hanging out. Always a pleasure. All this big elon musk tesla news. Im sure well continue that debate. Join us tomorrow. Squawk on the street begins right now. Good wednesday morning, welcome to squawk on the street, im carl quintanilla. Bands pack together as cramer returns with david faber here at post nine of the new york stock exchange. S p is trying to snap a threeday losing streak amid a series of corporate misses today. U. S. Bank corp. , asml, travelers, jb hunt, market still digesting pauls hawkish comments from tuesday. Our road map begins with the fight against inflation. Plus, united is one of the biggest gainers on the s p in the