sucharita, thanks for coming in this morning. final check on the markets. we're down about nine points right now on the dow. nasdaq is a little bit higher. >> nice hanging out with you, my friend. >> are you going have a drin snk. >> i've got some water. >> maybe some electrolytes. make sure you join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning. welcome to "squawk on the street." i'm david faber with jim cramer. we're live at the new york stock exchange. carl is on assignment. let's get to futures as we get set for trading a half hour from now. i always defer to jim on that because i don't know what it means. >> it's early. >> it's early. let's get to our roadmap. we're kind of on deal watch this

morning, but not the kind you typically think of. chevron warning its $53 billion hess deal could be at some risk. we've got the ftc and nine states, suing the block that kroger albertsons deal. kroger wants to buy albertsons. macy's and lowe's shares are falling ahead of the open. some, not really here, but there's always some who call it an ai tech bubble. jamie dimon says not so fast. i guess we agree with him. >> if you call it a bubble and it explodes, you look like an idiot. if you call it a bubble and it doesn't explode, you still look smart. >> we started the day so cynically. >> the idea it's a bunl and the idea that the "wall street journal" has a piece saying everyone sucking up to jensen

huang. we have very serious people like jamie dimon who directly to go jensen and say i need this, because this is how you detect fraud -- maybe we have a new paradigm. maybe every single chip we have is an inferior chip. maybe everything is conventional bombs and oppenheimer comes along. we still need conventional bombs because of the way the world is. >> we're going to talk a lot more about that. i do want to start on something else that we have obviously discussed in the past. it was something unexpected later in the day yesterday. it's at least the possibility, slight though it may be, that chevron's acquisition of hess is in some, let's call it, jeopardy as a result of something we were not made aware of until the proxy and the 10k were filed yesterday. >> does that bother you? >> no. bother me, no. it doesn't bother me. it was a surprise for those who obviously follow this. >> i didn't mean to interrupt.

>> one of the biggest deals we've seen in quite some time, $53 billion, all stock. not a huge premium from hess at the time. followed right after exxon's deal to acquire pioneer. what is a question here is a right of first refusal that was part of the joint operating agreement when exxon and shell began their development of what has become an apprised property, namely that offshore oil reserves of guy anna. i've been there, got there on a helicopter, went to the platforms. there i am.

it's the most important asset at hess. >> hess has good relationships with the president of guy anna which doesn't matter. >> it's confidential, this right of first refusal. simply put, exxon seems to believe or believes that a change in control of hess represents a change in control in guyana because that 30% represents so much of the company's overall value. chevron, what i'm hearing and i assume you're hearing the same -- again, we can't see the language. i'm told there is simply no way that's true. the language is not in any way indicative of a change of control in hess, being that it doesn't say that and they've made it clear. the two sides continue to talk

about something having to do with this. >> is it possible, david, that exxon wants something in order to go away, that this is a negotiating posture? if they block it, they don't get anything. >> that's exactly right. if, in fact, this were to go to arbitration and an ash straighter were to rule in exxon's favor and say, yes, we agree with this language that it is a change in control, then chevron would walk away. it's not as though exxon, to your point, jim, would be in position to buy what it doesn't already -- the 30% of guyana. that's what we'll call it, the star project. it will just go away. i'll put it to you. the talks that are apparently taking place and the concern that is raised in the market, you can see hess shares are trading down. what do they want? what is exxon conceivably going to get out of this? >> if you step back, david,

talking about the ftc, but to me it feels like, okay, so exxon and chevron, they're in a room, they control the oil market, they'll do what they want. isn't this exactly what the ftc was really starting to stop, there's all this all kind of old boys' club. i don't know about that. this is not what you want. >> taking a look there at the water lapping up on the walls around guyana. >> the amazon dumps out into it. it's brown. >> it's not sag uponic? >> no. wish it was. >> you have spent a lot of time with the ceo. >> yes. >> until this i thought he seemed like a reasonable man. >> darren woods is a reasonable man. a few things here, their lawyers at exxon who are still in the

building, many of them, wrote this right of first refusal in 2008 when they put this deal together with shell at the time. it's since changed hands. they obviously know what they intended. jim, again, i'm left unfortunately not knowing what these talks that chevron and exxon both refer to. they talk about conversations. they say that will continue from exxon's perspective they want to make sure, of course -- you don't want to set a precedent here for their own joint operating agreements they have around the world. but if, in fact, sef ron, just to be clear as well, completes as it says it will, and it's not worried, the acquisition of hess, the road as currently constructed will remain. in other words, if chevron wanted to sell its stake in the guyanese project, so to speak, exxon would still have the

opportunity to step up, increased tax bases or any number of things around it. >> let's step back because you've been covering this for a long time. tell people how highly unusual it is to have this kind of deal where chevron has worked it out nine ways to sunday, looks like it's not going to be a problem. chevron and exxon have had joint ventures before, they talk. suddenly out of nowhere darren woods is adversarial after years -- >> it is unusual. it was a condition that we were not aware of. when you look, it was something that was referred to, but it was not -- it was a closing condition -- it was another condition set forth on section 8.1b/2 of the parent disclosures. sadly, we don't know enough -- we haven't looked at the language. if we had the language of this, then we could have any number of

different people opine on exactly what it says. we'd have a much better sense as to whether exxon has any real leverage here in a significant way. what it is exactly they may want, given it's not clear that we'll end up being able to buy more of gouyana as well. >> this was one i first thought, well, maybe chevron hadn't done its homework. >> chevron was well aware of this throughout. again, their contention, from what i understand, and i'm sure you do as well, is the language is in no way indicative of what exxon seems to believe which is a change in control of hess represents a change in control of guyana. let's talk about the deal yesterday that got held up. neither of us surprised. kroger trying to buy albertsons. they have crafted a defensive

ves divestiture plan that has not met with approval of the ftc. we've talked about this. both of us aeptd the ftc would sue. does kroger have a shot of winning in court? >> no, i don't think so. i think you get to page 20 and 21 of the grievance -- very well written. >> the complaint. >> the complaint. very well written. it talks about the last time albertsons did this, selling 168 supermarkets to resolve the competition concerns when they did safeway. stores sold largely to hagan. the divestiture did not reserve competition -- cns which is piggly wiggly, unlike hagan that was not a shrewd operator, piggly wiggly has money here. >> they do.

a number of important players backing including softbank. there's the expectation they have the wherewithal. >> i don't know that jonathan kantor feels -- i explained this to rodney mcmullen, the ceo of kroger, the one thing that kantor and khan have in common, they feel these deals sell when you carve off and say, we've taken care -- they've said point-blank, jim -- well, i don't speak to khan. but, jim, this kind of deal wasn't fly. this is a deal we're going to block no matter what. i think a judge might say, you know what? they've been pretty rigorous about this, and the law says that you can't have something that fails. it's got to be -- look, this is not --

>> how big a setback is this for rodney mcmullen, at kroger they continue to say their long track record is producing prices. invested 5 billion to lower prices in the last 20 years or so. they continue to talk about this. if, in fact, as many of us anticipated, the time it was announced that it does go by the wayside because a judge agrees with the ftc, how big a setback? >> it's a big setback. the world has changed. he's going up against walmart and costco. they're bigger, they're more powerful. by the way, his outfit is union, and he does say union jobs are preserved, and that's to get biden on his side. if you're going up against costco and walmart these days, you've got to have scale. >> they're not going to be able to get scale. so they're boxed in. >> yes, they are. they're boxed in. people will say, jim --

>> you're saying both sides by the way, on one side you're saying you understand. >> i'm saying one side has been very rigorous about their view, but rodney is telling me -- kroger is telling me, they don't understand that costco and wall particulate are the enemy, not the local guys. he's right. he's right. costco and walmart could wipe out anyone, and that's what the ftc should be worried about, not hig gan's safe way. at the same time, listen, i don't like these deals. i think the world has changed, david. when you look at costco and walmart and amazon, that's the big three. there's no room for kroger. >> well, another reason why we are focused on this deal. it's not unimportant. >> a new world. it's happening very fast. >> we had a little deal chat at the top of our show. i liked it. >> this is american capitalism at its heart. >> it is interesting. we're going to talk more about

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i think he's having a midlife crisis that's how you business dii'm not.y. you got us t-mobile home internet lite. after a week of streaming they knocked us down... ...to dial up speeds. like from the 90s. great times. all i can do say is that my life is pre-- i like watching the puddles gather rain. -hey, your mom and i procreated to that song. oh, ew! i think you've said enough. why don't we just switch to xfinity like everyone else? then you would know what year it was. i know what year it is.

>> this is not hype. it's real. people are deploying at different speeds, but it will handle a tremendous amount of stuff. we're going to get better, faster, smarter. we have to build the systems to counter the bad guys. it's being used to combat cyber right now, used everywhere. it's not hype. this will be for the rest of your life. >> jamie dimon with our leslie

picard yesterday. that was in miami. that was his take on ai, of co course. i'd love to know what it means for jobs when you hear jamie saying things like that. but not a surprise, right? >> no. jensen huang, the ceo made it a very big point at nvidia. all the verticals that can be changed because of this helped with vertical change for a lot of the younger companies and none of the older companies. what he's saying is you have to look at everything and figure out what would it matter if it ran much faster? what would it matter if it burned less? almost everyone will conclude, well, it's better. then you look at the price tag. it's very expensive because there's not enough -- it's very few versus how many are needed of the h100. we'll have the h2o 0 soon.

>> why didn't you like the journal article, the article today you're talking about? >> look, i don't know jensen well. i know him to have dinner with him. >> you know him better than many of us. >> i know him to admire him greatly, and to mention that he now has a lyft, someone drives him. if mark zuckerberg is your biggest customer, are you going to say, listen, mark, i'm sorry, i don't talk to you. he does it because he's a cordial man and a kind man. i feel it made it sound like he's a changed man. >> what is interesting, and the journal does talk about it a bit and others do as well, isthe idea that his customers are also trying to compete with him. it's very much unclear whether they're going to be successful in that effort, whether they can accrue the talent they need, not to mention how you sort of make up for the huge lead that they

have. it's not like nvidia is stopping its innovation, but amazon and meta, they're all trying to -- they're all designing their own chips. >> again, these articles make it seem like everyone is chafing. jensen has never said don't develop yourself. he said, listen, my biggest competitor is amd and i respect how great she is. lisa sewell respects jensen. jensen has said to me over and over, thap want development, that's great. we want to try to make as many as we can of ours. we're concerned about our business, not their business. when you speak to businesses, othe they typically say, look, if amazon which is a great client

wants to do something to make it so they bring stuff in-house, that's fine. it's their business. by no means -- that's why i didn't like the tone of the article. by no means does he say, you know what, if you develop that, we'll cut you off. we're finished. it's so not godfather. if you watch this crucial interview with jensen and frank slug gan from snowflake. it's an interview at a con sglens is it available online? >> yes. it was a critical moment. frank is a very tough guy. he said, listen, why don't you rent this stuff before you buy it. jensen is not disagreeing with that either. that would be the reason i know there's no bubble, because if you try it, then you can go

long-term with somebody, with amazon. the people who are trying are all like ian. how do i call it a bubble if snowflake's customers are enthusiastic. >> in my mind not equal to what we saw with the admin of the internet -- >> oh, my god, that's painful. i think he has to work hard to not be changed. >> all right. get ready for your "mad dash" please? >> are great athletes supposed to change when they win? it's hard. >> the real ones are just huge competitors. they're relentless. it's like i want to win next year, i wantwe to nt next year. you think mahomes is like, oh, i'm done now. >> thank you. great way to put it. more benefits. more growth. when you realize you can give your people everything, and more. thank you very much. [applause] ask, "now what?"

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welcome back. you've been working furiously during the break. you want to do a "mad dash" on macy's right? >> tony spring just took over. >> who took over? >> tony spring, from blooming dale's. a smooth transition. i like what he had to say today. first of all, the numbers were fine. they were not promotional -- very little inventory and i like that. what tony is doing is what a lot of people hoped would happen. given he is from blooming dale's and their sales numbers are better. he's going to be closing up to 150 macy's. macy's had many -- look, there's 500. they're unperforming. >> is 500 going maybe now to 350? >> 350. blooming dale's has 85 stores.

you can see among macy's and blue mercury which is -- [ cheers and applause ] [ bell ringing ]. >> people like that. they'll get out of some malls that are underperforming. >> let me do this. that was pensky celebrating the upcoming indy car season. that was 2023 indy winner, josef newgarden who did the opening. reservoir media and hip-hop group dela soul.

finish your thoughts on macy's. again, the headlines are relatively new ceo, as you point out, had been on the blooming dale's side of things, has come in and now talk about another 150 macy's store closures. >> what you're going to be doing is changing the mosaic to where it's a little more related to bloomy's. you have a billion in cash, 1.3 billion in cash flow. you end up with a story that should not be this low. it's very exciting. >> it's very exciting. macy's is very exciting? >> well, yeah. i don't know, yeah. i think so. i like bloomy's very much. >> let's slow down for a second. we're going to move to lowe's.

let's talk about it. i'm getting the numbers out here. what did you like, what didn't you like about the quarter? >> if you've been following what home depot said, then you would know that lowe's was actually quite good. they had it a do it yourself problem. that has a lot to do with the weather being really bad. marvin allison has delivered a very good quarter. the propensity of retail is to sell down when they initially report and then rally. all you have to do is look at the panning that home depot had when it reported. marvin ellison is doing a terrific job. as far as i'm concerned, the consumer is robust, but they may not be doing as much at their home by the admission of marvin ellison because the weather, but also, david, we don't have a lot of homes changing hands. >> no, we don't.

that's when you go to lowe's, when a home changes hands. that's been the big negative. i think a lot of people are worried that the price of homes keeps going up. that's a supply issue. i don't want to by any means say home builders are in a room holding back development so they can make a lot of money. it's actually the opposite. if you listen to doug yearley, the unbelievably good ceo at toll -- >> new homes as a percent of overall are far higher. >> but not back to where they were -- >> i think i have the numbers somewhere. we've discussed this many times. if you have a low-rate mortgage, you're unlikely to want to move, even if you want to move you perhaps are not going to. >> right. >> home sales market historicallies that been 90% existing, 10% knew. it's now 70% existing and 30%

new. >> in talking to a lot of the home builders, if you want to drive the price of homes up, make mortgage money more expensive. the most inflationary thing that can happen at this very moment is for the fed to increase rates. >> if and when rates fall, is lowe's a buy? >> absolutely. that's why i think a lot of people are jumping the gun and presuming rates will fall. i think that's a tough call. but i do know that's the prevailing wisdom. a lot of times i think people at home are confused between what's happening now and why people are doing whatever they're doing. but there is just a perception overall that there's no doubt about the fact that rates are going to fall. so, therefore, let's buy lowe's now. >> lowe's $133 billion market value. >> when i looked at master card the other day, 400 billion. >> lowe's is obviously one of the largest retailers as a

result of that. i wanted to ask you about something because we don't talk about it as often which is capital return for a company like that. 133 billion. they returned 8.9 billion in capital, 2.5 billion in defensive vendz, also bought back 6.3 billion in stock, recently spending another 404 m -- >> marvin is unsung, the ceo of lowe's, one of the least promotional people in the world. he lets the stores do the talking. i know in the do it yourself era -- i'll send hick pictures of the stores. he's intensely interested in how the stores look. if the stores look good, he takes share from home depot. home depot is known for the professionals. along comes builders first source which carves out the professionals, and then you've got a very serious competitor.

>> you love that builders first source. >> i do. they're an amazing company. they're not in new york, so that's why you don't see them. they're also a wholesaler. that's where the home builders buy their stuff. if you're a home builder, you don't go to lowe's. when you think of lowe's, you think about treks, hammers, nails, paint. some of them are doing very, very well. lumber is up and down. overall these are companies where christmas is in another month and that's why it's very dangerous to sell them. their christmas is april, may, june. >> let's move on to a few other movers this morning, particularly around earnings. zoom, a name we've discussed many times. nothing quite approaching what it once was as a pandemic darling. zoom shares are up 9%.

also, do you have the ceo on tonight. >> the cfo. one of the problems with zoom is, if you have a microsoft, this morning there was a refresh and you had to -- basically your system is working slowly when you refresh. when you refresh, it drove you right to teams. it's almost impossible to get out of the teams orb. i think about this as a lawsuit we've seen before. >> that microsoft -- >> it's very hard to get out of teams. no one is suing on that. there is a lawsuit in europe about slack. i find teams is very hard to get rid of. >> it comes up. it won't let you -- >> no, it won't. i'll ask kelly about that. the company is interested in what they're doing, that they need to develop more apps, need to develop more ai. when you look in zoom, one of the things you get out of zoom, let's say you work at goldman

sachs, i'm trying to teach you, and we do a call. in it they can very quickly tell you whether you're doing the right thing. that's a good app. but it needs more apps. it also needs more long-term contracts. it's an important company, generates a lot of cash, but it's got a docusign feel. >> that doesn't sound so good. >> anything that has a hangover from covid, the sooner we get out of it the better. it's a very good company because people like the product. as you know, when someone says, i want to see you -- set up a webx call. >> it's like a verb, let's zoom, but it doesn't mean you're going to use zoom. >> exactly. teams won't stop. >> you don't sound that particularly positive on the future for this company even

though the stock is per forming well this morning. >> you don't buy a stock for a buyback. they do have a lot of cash. you buy the stock because of vision. i want their vision traced out tonight. that's what i'm hoping for. kelly is a straight shooter. we'll talk with her. >> free cash flow is 1.471 billion for the year. >> my stepson worked for them. >> he's no longer there. >> if i don't say that, someone will say why didn't you mention that. >> that was a long time ago that he worked for them. >> i'm not disclosing it because -- >> i think at some point you don't have to disclose it anymore. what i'm saying right now, this is the last time you need to disclose it. >> i'm done with that. how about chevron down 3 as people obviously believe this thing is going to drag out? >> again, chevron has -- we spent a lot of time on it. we don't need to do that again, jim. it is very interesting. i'm trying to look at previous times when exxon has done

something similar. >> how far are you going back? >> i'm going way back potentially. the bp/arco deal, when lee raymond was running things at exxon, apparently they blocked that due to the risk of control of the oil and gas cap in alaska. then they settled. the question here is what exxon thinks they have, what hand they have to play and what these talks are actually about. >> exactly, exactly, exactly. well put. >> to jim's point, chevron down 2%. hess is also -- >> pioneer is also in play. >> -- down 3.5%. >> not in play. it's getting bought. >> i just find the dealmaking in oil, a lot of it is people are saying it's because they don't want to find new places.

that's kind of rational. >> by the way, this moves on exxon stock because it's an all-stock deal, as we know. that is the case with hess as well. chevron has been an underperformer a bit, jim. so when you are talking about what hess would look like without the deal, certainly it might decline, but it was only a 5% premium to begin with. so there may not be as much downside. again, chevron is not saying anything close to this deal is in any jeopardy. they're saying the opposite. >> let me get quickly to another deal that i've been following or potential deal, tiny, tiny bit of news. i get called on it all the time. remember the possible endeavor by its shareholder. >> i disclose i'm a client of them. after you ctied me about zoom, don't give a damn. darn, excuse me. >> i haven't talked about this

in some time. remember they own the majority of tko as well which reported. they report earnings tomorrow morning. i think there had been a hope and a thought perhaps it would get some sort of a bid here from silver lake prior to or in conjunction with earnings. that won't be the case. that said, i am still told by people familiar with the situation who i do believe that there is an expectation that it is going to be made. it is taking quite sometimes. when these things take longer and those investors who care get more concerned, there's a lot of financing that needs to be lined up, maybe they're trying to pre sell assets. again, there is still an expectation on the part of the special committee that is waiting that there will be a bid presented. that's all i can tell you on endeavor. however, it will not be today or tomorrow or this week. we're talking march now. of course, march begins very soon. that's all i've got for you. >> that's important.

i did not know that. i saw the stock drop. i didn't know where it was. >> people were starting to say, wait a second, there had been this hope we'd get something before earnings. when yesterday there wasn't, they started to wonder. that's all i got for you. i wish i had more. >> i wanted to give a little consumer read-through. when norwegian up 13, carnival up 8%, royal up again almost 5, that's a sign of a robust consumer. it's absolutely true that cruises are -- they're a relative bargain versus, say, going to stay at a marriott for ten days, going to stay at some place that we know -- >> they were the leaders of the s&p before we started trading. >> i continue to think this shows that the consumer is traveling. southwest air, whether it's frankly united, there's just people going on planes, going on cruise ships. i don't want to lose sight of the fact that there are people

who continually come on air who talk about the weak consumer. >> that's not a weak consumer. somehow tesla is bottoming. >> don't lose track here. finish your thoughts on the consumer. >> i was watching david who was on another network and he was speaking, saying the weakening consumer. i'm beginning to think, david -- i don't like to talk politics having been from a household where the father was goldwater and the mother was mcgovern. you didn't talk politics without ruining a meal. >> i can see that. >> i do feel we'll begin to get candidates -- >> you don't think the consumer is weak. >> i don't. >> when i hear the consumer is weak, i ask please show me

because this is an example -- the consumer, they don't need to go on a norwegian cruise. that said, it's a relative bargain. i booked one to go to alaska. it was the last week of february of 2020. >> i was down in miami, as i said the other day and watched -- those cruise ships, they are -- the size of them -- >> the empire state building. >> it's incredible. incredible, just watching them. >> and they're filled. >> as they go through the channel and out into the ocean. >> they're a great bargain, very exciting. >> just an aside here, it is stunning what we can do as a species, building those things. let's go with cava. i'm going to come back and give you a little praise here. i remember when it went public, and i was like, oh, who knows. you were positive. it's hung in there. >> positive because it's an

ethos story. >> it's an ethos story. >> we want casual, it's good for you. they did have same store sales of 17.9, opening 17 new net cavas, there's 309. 30% year-over-year growth. what matters is it's the heart health humanity mediterranean diet people like so much. i have said over and over again that until i stop seeing the cs in the window. there's been cs. >> i'm sorry. what? >> having owned a restaurant. >> a c as in a, b, c. >> right. that's a bad thing. >> give me a c, got it. >> c is very hard. i got a b when we opened bar stand miguel. b, b, b. >> i want to go there. >> they come in with theglove.

i worked hard to get an a. >> talking about the new york city health department grades on restaurants. i don't know how we got here. maybe talking about cava. >> you can look on the website. >> the one right down here. was it a b or a c? it was a c. that's horrible. >> chipotle, if they don't have an a, they close the store until they can figure it out. >> you don't want a c. >> a gentleman's c. >> a gentleman's c. a bouncy c. that was an snl set. >> can i stay for your interview with jamie zuul la. that's sara. you think she'll let you come in on her interview? >> yeah, i do. >> what world are you living in? >> i have other things. trust me. >> let's give you a quick look at the bond market as we head to a break. treasuries this morning, you

ask, what are yields looking like? ten-year 4.299 pressing against the 2-year at 4.7. we'll be right back.

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faster than eli lilly's glp-1. >> it's a glp-1? >> yes. >> this viking? >> here's the problem, david. when you have these things, the fda wants to favor the incumbent because it's been approved. eli lilly has a similar formulation. third, what seems to be left out constantly it's hard to build all the plants you need to get this. you have david ritz, who is very good, who knows how to build the plants. viking has to do a tie in -- >> we need to show shares of viking therapeutics. it's a $6 billion company. >> up 26 points. >> bktx back in the control room. the stock this morning, jim told you on the back of these phase 2 trials for its weight loss drug. wow. >> yeah. well look, enjoy it while it lasts. there's many challengers. amgen was a challenger. f pfizer was a challenger. >> amgen is down 3% today in

part on this? >> it is. amgen is going further away. people were hoping they had a once a month injectable and they thought they had a pill. everything that viking has dave is working on at lil and has something. phase two is very, very hard, very expensive. >> so while investors may be joysing at viking's science. >> unless pfizer comes on and buys them which is unlikely. >> i don't know. you never know. get into the weight loss drug -- >> you never know. it's a very exciting category, and a lot of companies want to be in it. people have to understand i've worked with the fda. the fda, once you have a drug, they're not -- they take their time with the second sddrug. >> there's a therapy out there they don't need to rush. >> when working on a migraine, they wanted to have the word out. i find the fda to be incredibly responsible. >> real quick, what do we have

on the program today? >> him and hers up very big, and i'm trying to figure out how much of that is weight loss. they have weight loss, they have healthy sex life. i'll have the guy on. >> why not. all good things. >> right. it's like sex life and having a good time. it's like it's a good time. i think kelly from zoom, but him and hers intrigues me. 15 million people want to have a time, but it's health. i figured out this morning, i should say it, it's funny. >> is it? >> yeah. >> okay. we got to go. >> incredibly active sex life, not. >> all right. more on that tomorrow when you join us on "squawk on the street." coming up in the next hour, goldman sachs' chief u.s. equity strategist david kostin will be on. >> fantastic. >> looking beyond the magnificent seven. ar. rock star? what do you know about rock stars?

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good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with david faber, live for you as always at post nine of the new york stock exchange. carl is on assignment. take a look at stocks this morning. dow down about 100 points. the s&p 500 little changed and the nasdaq up 0.2%. this has been a pretty good streak for the market. we had a pause yesterday. up 15 of the last 17 weeks. take a look at treasuries. it's interesting this has happened given the back up in treasury yields. the 10-year yield comes off a little bit today below 4.30. the 2-year yield the policy sensitive one moving up lately pausing up 4.69. 30 minutes into the trading session. here are some movers we're watching. shares of unity software sinking after a disappointing first quarter forecast and the company says going forward it will only provide revenue guidance for its

strategic portfolio which includes its game engine cloud and monetization units. restaurant chain kava popping after beating estimates and same-store sales up 11%. nearly double what analysts were expecting. a news outlet pushed the numbers a day early. penalty box. and auto zone moving higher. profits at the car parts retailer rising on higher sales. more on the state of retail coming up. >> i look forward to that. first let's get consumer confidence data out just moments ago. rick santelli has that for us. rick? >> yeah. excuse me, february confidence from the conference board, headline number expected to be 115. disappointment. 106.7. that's the lightest confidence level going back to november of last year. and last month's january downgraded from 114.8 to 110.9. present situation, 147.2.

lighter than expectations. lighter than the rearview mirror which was downgraded and this is the smallest present situation confidence level also since november of last year. finally expectations at 79.8. you guessed it. the weakest since november of last year with a downgrade of january as well. also, richmond fed manufacturing index at minus 5. believe it or not that is the best level since october of last year when it was a positive number, positive 3. finally on the business conditions or the service side minus 7. minus 7 is the weakest going back to november of last year. we see that interest rates are down in the short maturities up a little in the back, reversing the more negative yield curve action of yesterday. and finally at 1:00 eastern, we complete our $169 billion in supply with seven-year notes, 42 billion, the first two auctions, 2-year and five-year were on the

soft side. back to you. >> rick santelli, thank you very much. continuing to report on the data which is showed a mixed picture. the narrative in the markets right now that stocks are moving up despite the fact that rate cuts are getting priced out because the economy is in solid shape and that's a good reason. helps earnings and helps the economy. the atlanta fed gdp tracker for the first quarter is tracking for 2.9% growth. that's very good. we had a great jobs report as well in the month of january. not all the january numbers have been super strong. i did a comparison of just some of the january numbers because it's been a mish mash we've got son far. the good jobs report on the left you see the good data. it's actually ism manufacturing was -- ticked up a little bit in the month. s ism services even better. cpi came in hot. industrial production a miss, negative, housing starts were down. retail sales, remember for

january showed the biggest drop since march 2023. is the economy accelerating? is it a soft landing? is it a no landing? we're still in this mode where we're trying to figure out is january an anomaly because it's got some weather issues and some give back from -- >> the consumer. >> the holiday. >> consumer seems pretty strong. jim and i talking about the cruise related company stocks continuing to soar on strong numbers. >> nor weep began was the latest. it depends on which part of the economy you're in and where consumers are prioritizing. the dallas fed survey, manufacturing survey, was out and they go through some -- here's norwegian since you mentioned, exceptional demand for norwegian cruise line brand with bookings and pricing at higher levels than 2023 for all four quarters of 2024. that's a forward looking indicator right there. >> the stock is up 12%. >> the dallas fed it's funny they do comments from some of

the survey -- some of the businesses they survey, participants, and there's one in the -- that i noticed in the plastics and rubber products manufacturing sector of dallas that said, i have no idea what is going to happen, which i do think speakses a little bit to this idea that things are going well and much better than expected, but it's hard to see around the corner. one positive -- >> is that different than any other time? >> i think it is because you have these headwinds right now, like all the tightening in the system, which is driving up rates, which is driving up rates for consumers, credit cards and auto loans and they're paying back student debt and the snap benefits are running out. there are mixed things that are happening right now on the consumer. one good sign, though, is that inflation is coming down from those high levels and morgan stanley put out a good note about corporate mentions of inflation versus cpi and they track and you can see, cpi has come down more, but we continue

to see this earnings season that mentions of inflation coming down. so that's a good thing if you're still worried about like an overheating economy, that that might not be a worry. we don't really see any kind of perk up in inflation expectations, long-term inflation expectations, which is maybe why -- we're kind of looking for why the stock market keeps rallying despite the fact that fed cut expectations have gone from 6 to 3, bond yields have moved up to the highs of the year. >> yep. >> and there are questions about whether the fed is going to have to go even higher or just stay high for longer. >> even? really? >> the hotter inflation and we'll get pce later this week on thursday, it's in the market's mind of what the fed is going to have to do and is tightening conditions if the fed just stays long, you know, stays high for long and they don't start cutting rates. >> speaking of the consumer, you usually have sound from some of

the conference calls and the like. macy's and lowe's anything interesting? >> macy's was bullish on the consumer. here's what the ceo said. >> throughout the year, our consumer proved to be more resilient than expected. while there was pressure from ongoing reallocation of spent and nondiscretionary items our focus on new and relevant and national brands enabled us to compete. the likelihood of a recession is now lower than it was a year ago. inflation has slowed, but so has labor and wage growth. as such, we expect our consumer to remain under pressure. >> under pressure but less chance of a recession. another one from cracker barrel from their release. while margins remain pressured we were encouraged by the improvement in our traffic trend during the quarter. we mentioned the norwegian. we have sound from lowe's as well on what they're saying from the consumer. listen to that. >> november and december trends

improved from the third quarter followed by sharp drop in traffic during periods of extreme weather in january. macro economic factors like persistent inflation and a stagnant housingmarket continue to make diy customers and consumers hesitant to spend on big ticket purchases for the homes and those who did engage took on smaller, nondiscretionary projects with a heightened focus on value. this impacted demand for bigger ticket categories like kitchen and bath, flooring and appliances. >> bigger ticket diy projects not in cruise bookings in. it's where you're prioritizing as a value consumer. >> let's talk about the economy and also the broader market. our next guest published a report that suggests hedge funds and mutual funds are looking beyond the magnificent seven some shared stock favorites of both groups are uber, plaster card and servicenow.

goldman sachs chief equity strategist has a target of 5200 here he is david kostin. nice to see you. >> nice to see you. >> let's talking about the mag seven and get this right, $6 trillion of positioning data suggests hedge funds and mutual funds are looking beyond the mag seven. what does that mean? >> so david, for almost 20 years, every quarter, we look at the positioning of mutual funds and hedge funds and go through about $6 trillion of individual positions and we understand where it is that fund managers position themselves. one of the observations is that the concentration a in the hedge fund community is very significant in the mag seven. >> no surprise. >> not a shock. basically, david, it's not just that they own them, that it's one of their top ten holdings. pretty much if you own amazon it's a top ten position. microsoft, meta, google. that's a really important statement because that's what drives their performance. on the other hand if you look at the mutual fund community, mutual funds tend to be underweight these positions. they own them but less than a

benchmark weight and relative performance versus their benchmark has been challenging. this time they're actually significantly underweight apple, tesla, which has been -- benefitting them into not a great performer. >> so that's part of the analysis we look at. just how are they positioned. the second how are they positioned generally speaking in terms of risk on versus risk off. another way of thinking about that, we look at the gross leverage in the hedge fund community, the net exposure running now at the highest levels in several years. in fact with all-time high in terms of growth exposure. on the other hand mutual funds they have reduced their cash positions. one of the lowest cash positions they've had in four years. that's another -- evidenced database evidence that they're significantly invested in the market. the third item that i think is worth highlighting is it's the shared favorites that you should be owning as a portfolio manager. statistically they tend to

outperform by 3 percentage points in a year. >> what is shared favor? >> mutual funds and hedge funds, both agree on those. you're looking at master card and visa, work day, you can look at kkr. those are some of the positions that are the congrew once between the mutual funds and hedge funds. that's an important observation. >> all that said, both those parties have under performed the s&p for years. i can probably go back a long way and find very few instances where they've outperformed. >> you can see situations where like in 2022 when big cap stocks, the magnificent seven were down 40%. >> yes. >> that, obviously, is a situation where the mutual funds tend to do better relatively speaking because they were underweight the stocks. the point is how the stocks tend to perform. in this environment those companies have had terrific results as you chronicled well on this program and others. they've had terrific performance in the fourth quarter results and looking forward they're expected to have revenue growth

around 12% for the next several years and the rest of the market is closer to 3. much faster sales growth and the stocks trade at 30 times earnings. some of these shared favorites are slightly less value, less highly value, than perhaps a more risk adjusted return opportunity. >> do you think the market is getting rerated because of generative ai and the impact it's going to have on productivity and the economy and industries? because we were talking about the market has been steadily marching higher despite the rising bond yields and taking out the fed cuts and wonder about inflation again. i wonder if ai is playing a role here more broadly than just nvidia and a few other stocks? >> i heard just before i was coming on the program you were referencing the forecast. the u.s. stock market is pricing as though the u.s. is growing at more than 3%. that statement is based on the rel relative performance of cyclical stocks and defensive stocks. that is giving us an indication

the stock market and investors are pricing economic growth. your observation is that attributable to ai, to general broad economic activity? just untangling that as to why it's higher you can debate that a long time. >> the why is important. we wonder after the great run up should you keep buying or take profits? >> there's modest i would argue modest upside to 5,200 at the end of this year is 3% upside. therefore, the idea of looking, for example, the shared favorite stocks that generate 3% out performance is a meaningful observation because in an environment where the market overall trades at 20 times earnings, and earnings are growing at 8%, that is suggestive there's modest upside and perhaps the better opportunities are the broadening of the market something beyond the magnificent seven. >> or maybe the bond market. >> or rates moving to 4% at the

end of this year is part of our assumption in terms of valuation, maintaining around 20 times earnings. >> quickly, david and i invoked you a few weeks ago during earnings season. seemed like there were a lot of buyback announcements and you track that and we're wondering is that a sign of confidence from management? is it higher than normal? >> part of it you look at the year over year change in uses of cash in corporate america, one of the things we saw is that capex has been receding quarter over quarter, looking back, and for the first time in a year, we actually saw an increase in buybacks. that had been down about 20%. companies pulled back, scaled back dramatically and now that increased in the fourth quarter by 6%. observation looking forward this year expecting buybacks to be a significant amount almost a trillion dollars of cash for the s&p 500 companies will be directed to repurchasing shares. it's probably the largest source of demand for shares because the

mutual funds and hedge funds are already very significantly invested. we talked about that a minute ago in terms of drawing down their cash position, taking up their leverage and we're looking for sources of demand and one of the sources of demand is shared. >> thank you. >> thank you. >> david kostin. >> knew you would have the numbers at your finger tips. here's our road map for the rest of the hour. the read on retail, lowe's and auto zone out with earnings. what investors need to know about the group. >> the ftc sues to block the $25 billion deal that kroger was -- or is still banking on to buy albertsons. we'll discuss what it means. >> the ai arms race. jamie dimon is bullish on it but investors are raising questions about alphabet. we're going to discuss all of that. big show ahead. "squawk on the street" will be right back. dow is down 135. the nasdaq is being helped by tesla, netflix and meta. we'll be right back.

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the business model according to kroger is immediately applied to merger companies. albertsons also responding, merging with kroger will expand competition, lower prices, increase associate wages and protect union jobs and enhance customer shopping experiences. both companies are arguing the decision will strennen other retailers like walmart, costco and amazon and the ftc says allowing this merger will kill off competition, raising prices for customers, threatening jobs for the unions. clearly the kroger and albertsons are going to litigate this. >> they are going to litigate. it's to surprise, we have been sitting here talking about the strong possibility that this would be something that would be opposed by the ftc. >> correct. >> and when the lawsuit came yesterday, i think few were in that camp saying whoa. the question is the case and the strength of the case and the strength of the divested assets to compete and represent a real

competitor in terms of price snooze ftc really shot that down, didn't they? >> they did. they thought it was not a credible -- a mish mash. what were the words? >> along those lines. mish mash of competition that won't amount to -- >> this get its to kroger's plan to make this more competitive, would be to sell off some of the kroger and albertsons stores to cns. the ftc is arguing cns is not a significant third player. >> they have the backers to give them the wherewithal to see compete we have seen previous divestitures of similar deals not to compete. that gives the ftc concern as well. >> what kroger will argue, they're trying to make the market more competitive, selling it off to a well-funded company. what is the founder worth a few billion colors, and that it is a really good solution. the other core argument, look, we knew this was political because grocery prices high and

americans feel that. the last thing the government wants to do is okay a mega merger that could potentially raise prices on consumers and hurt union jobs. what kroger is saying, though, and this gets to the core of their argument, they have a very proven track record of keeping prices low. they price check off walmart. they don't price check off albertsons. >> they invested $5 billion over the last 20 years to make sure prices are lower. >> they want to use the efficiencies and savings to lower the albertsons prices. >> what's the stake here? i asked this of jim earlier what's at stake here. it wasn't as though people weren't questioning the deal from the very outset, and he said we will persevere. >> it's about competing with walmart, about competing with costco, about competing with amazon and dollar stores, and that is what is pressuring kroger's business. not competing with albertsons. so i think one of the core arguments they're going to use

the ftc is looking at an industry from several years ago when it was a kroger, albertsons, safeway industry. it is not that and that's not how americans shop. kroger has been under pressure. >> if prevented from doing this deal they would be in a difficult competitive position because they can't get bigger. >> and they have the union. they're the best capitalized union grocer as well and that's a key part of their argument as well to protect union jobs. if albertsons stores have to close or they have to get sold to an amazon or anything else, do you think union jobs -- >> defeats the entire purpose of the blocking of the deal if it gets sold to a walmart or a -- >> it would be harder for albertsons and kroger to compete if they are not merged and that's at stake for them. rodney has earnings next week, kroger has earnings next week. we'll talk to him about all of this. how many cases has the ftc won? they've lost most of them,

right? >> the track record of late has not been strong. this is one where a lot of antitrust experts have wondered. many curious cases brought by the ftc. this is not one of them. >> well, kroger has felt confident from the beginning about this and i think it rest on the strength of the ftc case and we're not lawyers, but we'll continue to talk about it. >> of course. never stops us. >> right. >> we'll follow it closely. as we head to break, names reporting today, macy's, auto zone, smuckers. what are those numbers saying about demand and the key names to watch after the break. we're back in a minute.

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lowe's beating fourth quarter expectations on the top and bottom line despite falling sales and the company expects revenue to drop again this year. autozone beating estimates showing resilient sni a challenging environment reporting double-digit growth in its international business. michael lasner, retail analyst has a buy rating on both stocks

and $250 price target on lowe's and 3100 price target on autozone. generally we started off talking about the consumer and whether the consumer is accelerating or weakening. a consumer confidence number at the top of the hour that showed less than expected. what's your sense so far from retail earnings? >> so far we think for retail sales there's a few trends going on. the lower income consumer remains under pressure. lowe's mentioned it's seeing lower end appliances doing well. the bifurcation of consumers persist. second, the big ticket spend related to moving into or out of a home is just not taking place right now. there's probably millions of consumers who are either entrenched or embedded in their existing home as a result of these high mortgage rates. that creates a lot of pent up demand for when the housing

market eventually normalizes. we think lowe's will be an outsized beneficiary of that condition, along with home depot and those are stocks that you're going to want to own. >> i mean which is telling. the stock is up right now, michael. i was going to ask where the biggest opportunity is when it comes to the consumer right now? do you stick with the categories that are working or do you bet on recovery in places like home improvement and others? >> so, sara, i think you need a balance. i think you need some exposure to those retailers that are experiencing or will experience a recovery like home improvement and you need some retailers who are performing well like a walmart or a costco. a name that we would highlight with risk-reward dynamics is target where it should stand to benefit when things like blenders and vacuum clearance and consumer electronics improve, but at the same time, the food element of its

assortment should keep some stability in its overall results and has a margin improvement story wrapped up in a reasonable multiple. we like target a lot here. >> thank you very much. >> thank you. >> keeping it short today getting through earnings. let's get over to dominic chu with more on some of the biggest movers this morning. what are you watching? >> we have fairly stable markets right now. but if you look at utilities, consumer discretionary and real estate they're outperforming in today's trade so far. you have laggards like technology and health care kind of pulling up the rear here. technology, health specifically. on the health care side of things this continues a trend where the sector has lagged the broader s&p 500. now today's trade, though, has seen some of the biggest names in health care lagging. notable under performers like amgen, pfizer, regeneron, abby and eli lilly. the eli lilly story revolves so much around those glp-1 antiobesity drugs.

eli lilly's weakness today might have something to do with viking therapeutics up massively in trading so far today because that company has announced some positive trial results for its glp-1 anti-obesity treatments. those shares up 5775%. -- 75%. viking has a perhaps promising candidate on the anti-obesity front. we'll see if that changes the dynamic of the business. i'll send things back over to you, sara. >> thank you. still to come, bitcoin's rising tide lifting all boats in the space this morning. the crypto currency seeing highs we have haven't seen back to 2021 overnight. more on at dvi ts vewh'sringhimo after the break.

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welcome back.

i'm kristina partsinevelos with your cnbc news update. this morning a senior hamas official dismissed president biden's suggestion that talks in gaza were close to a resolution. the hamas official went on to accuse the united states of leaking proposals for a pause in fighting to pressure hamas' leadership into agreeing to a deal. in other words a pressure tactic. the presidential campaign shifting to michigan where republicans and democrats are holding their primaries. on the gop side, 16 delegates are up for grab, the only 39 dolled out at a state party convention on saturday. some democratic voters plan to cast uncommitted ballots to protest pipe's handling of the israel-hamas war. tiktok is accessing more music from its app. the popular video streaming platform removed songs by artists signed by umg and taking off by universal signed artists. tiktok says up to 30% of its popular songs could be pulled.

david, back over to you. crypto currencies are rallying. bitcoin topping 57,000. that's a 27-month high. crypto related stocks such as micro strategy, coinbase, also up nicely. over to kate rooney and find out what exactly is driving this action. kate? >> hey, david. the bitcoin mover we're talking about is about risk appetite. the flood of etfs out there that were approved and becoming a way for some institutions to add risk to their portfolios. the etfs have seen record trading volume this week aside from grayscale's bitcoin etf the biggest by management andassets under management has seen outflows, sort of the outlier there. blackrock and fidelity funds have $6 billion and $4 billion in their funds and jpmorgan says this morning in a note they expect the flows were inspired by bitcoin's rally that started over the weekend. more evidence of institutions buying based on larger purchase

sizes. f fundstrat among those. one software company micro strategy bought $155 million worth of bitcoin. then there is a crypto specific dynamic that's worth mentioning calling the halving which cuts the new supply or rewards of bitcoin in half and happens every four years. bullish momentum behind that. amid all of this, guys, there's less volatility in bitcoin which is good news for the long-term money managers, not as great for the traders that might be chasing volatility. coinbase, though, a lot more volatile than bitcoin this week rallying in sympathy there. cathie wood's arc among those taking profits in this name. back to you. >> there goes the correlation with the dollar. the dollar has been strengthening this year. it's not an anti-dollar. thank you. kate rooney. a lot of fed speak this week as well as key inflation data due on thursday. former kansas city president tom honic joins us with his take and tom, i guess the debate has moved on to -- from seven cuts

or six cuts, what the market expected to three where the fed is, to maybe even fewer than that, given some of the data. what's your outlook? >> well, i think it's yet to be determined, obviously, but i think fewer rates are more likely the outcome. number one, the economy has been surprisingly stronger than most people thought it would be. i think that's important. now some of the numbers coming out today on manufacturing have been weaker, but that's been the case all along. the consumer has been driving this economy and continues to drive it to some extent. unemployment still low, wages still rising. i think that's a big factor. the other thing i think for the fed is, with that environment, inflation, which has come down and everyone talks about it, has been stubbornly in the cpi at least 3% in that range for over six months and that's what most people watch.

so inflation is still a problem for them. i think if their target is 2%, and i think that's a big issue going forward. finally i would point out that their balance sheet you were talking about liquidity, the balance sheet provides a fair amount of liquidity into the market and that factor i think shouldn't be forgotten as we go forward from here. i think it's -- i think three cuts would be a surprise now. probably one or two as the economy continues to slow, as they expect at least, and we'll see how that plays out. >> what about this idea of a preemptive cut to protect the economy from going into recession with the fed being more confident that inflation is coming down? is that -- are you for preemptive cuts or against? >> well, like most things in life it depends. i would say i understand the desire for preemptive cut because they don't want to get behind the curve and cause a

recession and remember the banking industry i think is vulnerable. there's a lot of reprising going on, unrealized losses on the balance sheet. that's in play here. one other thing i would point out to you, if you look at the real interest rates if inflation is stubbornly 3% and the rate 5 1/2%, real rates are 2.5%. the other part of this is, most people given the amount of government borrowing and the economy thinks that longer run equilibrium run for interest rates is closer to 2. that means you've got only a modestly restrictive policy right now. that should discourage them from cutting rates too quickly given how strong the economy is. i don't think this preemptive necessarily has a role to play yet. >> it all comes back to the u.s. consumer. always does. that's why we're reading the tea leaves from the consumer earnings and look at delinquency

rates. it's all stronger than expected, certainly where we expected it to be this year and last year. >> yes. >> do you have confidence it can continue, given some of the headwinds we talk about and the impact of a tightening rate environment? >> well, i think the economy is slowing. now much more modestly than people had thought, but it is slowing. there will be a time when they can do that, but the consumer i think is still going to be a pretty strong booster of the economy over the next six months at least. now, there can always be surprises. if the banking industry becomes more real and starts to cause problems, then that may cause the fed to change its mind. if there is a shock to the economy coming from wherever that could change its mind. as it stands right now given the modest slowing in the economy which some ways is very

beneficial, then they can be i think cautious and they want to see that inflation number yet closer to 2%. i personally want to see the cpi part of that, the major inflation coming closer to 2%. >> some would argue pce is important. no one pays owner equivalent rent, it's not an accurate picture? >> the pce is preferred by the fed, but it's also genuinely and systemically lower than the cpi. the cpi measures, i think, what people look at day to day in terms of what they find important, including rents and cost value and so forth. i think that is a better measure in the long run for judging really where inflation is. now people differ, obviously, but that's why i think of it as it's the measure that people watch most closely. the -- say the man on the street or the woman on the street that's what they seem to look at more closely. a lot of other things are

indexed to the cpi. >> got it. very helpful and timely ahead of the pce report on thursday. really appreciate it. former kansas city fed president. >> thank you. still to come, jpmorgan's ceo jamie dimon not mincing words when it comes to ai, arguing it's not a bubble or hype. investors, though, continue to raise some questions at least about what alphabet is offering when it comes to ai. we're going toisss t r dcuheisks and the rewards after the break. you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world.

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take a look at shares of google. they've been under a bit of pressure, not that much, don't want to overstate it. there have been rising concerns about the reliability of its ai offering, the head of google's deep mine division who oversees the suite of ai models signaling caution. take a listen. >> today, it's not an issue

because the systems are still relatively nascent, but if you wind forward three or four or five years and talk about next generation systems with planning capabilities and to be able to act in the world and solve problems and goals, i think society really has to seriously think about these issues of what happens if -- if this proliferates and then bad actors all the way from individuals to rogue states can make use of them as well. >> certainly a key concern. joining us with his take is former google vice president of a product for privacy and data protection, rob leather, served as meta's senior director of product for business integrity. you know, i want to get to some current concerns as well overall with alphabet's ability to compete. what is your reaction to what you just heard in terms of deepmind and those concerns about the development of this technology? >> i think google is in a pretty

interesting spot. i think people's expectations are probably rightfully that they have a lot of this technology that they're going to produce some of the best advances and integrate it into their products, but they've kind of been drawn into this issue around -- in their chat interface, new for them, having something show up that perhaps they have not anticipated. i think it's an interesting time for the company around some of the these products and how they operate. >> yeah. i mean, it's also an interesting time because there seems to be a growing chorus of those who o wonder where google or alphabet has the wherewithal to disrupt itself. it's had an unchallenged monopoly on search but that would seem changing. do you agree with those who wonder are they going to be up to the task as the seminole change sort of takes place in terms of the way people discover things? >> i think it is still a question, how these kinds of technologies get integrated into

their flagship products. search being one of the biggest ones. people are going to pay attention to. so far they have been, you know, pulled into starting to put this into various products. i think ap open question is, how does the ai-powered search experience change and how does that affect monetization for their search ads business, and what's the consumer response going to be? i do feel like it's poised, and we haven't really seen all the details of how the experiences are going to play out for consumers just yet. >> has it been your experience -- i know it's a while since you've been there -- that alphabet, perhaps, would move too slowly on some of these efforts? >> i think that is the case. they're not used to, you know, some other companies like meta used to executing under a ton of pressure, public scrutiny, able to, you know, roll with the punches as they make inevitable missteps and try to figure out products and how they work with the public. i do think google has less of a history of that, and they also

have taken a cautious approach with their non-search products over the years. folks are old enough to remember when gmail came out it was in beta for five years. beta is a marketing construct. they've tried how good gemini, previously bard chat would be, so they're in a spot where they're trying to manage expectations. it's proving difficult, at least the last couple of weeks. >> what about just cultural issues that are now being raised at google and at alphabet, especially -- i hate to use the word woke, but if you see some of these images generated by its a.i., the founding fathers, you know, the question that nate silver asked gemini about, what was worse for society, elon musk tweeting or hitler, and they came up with musk. have they gone too far? i do wonder if it's harmful to the innovation there that's

creating some of these problems with their products. >> do i think the success svp point out as a result of this, the success of portion sometimes does work against them for sure. you know, they had this opportunity to really make some changes. they did -- i'm happy that, for example, if you put in a generic image, it doesn't just show a white man. i think when it comes to historical query where there might be some accuracy issues -- >> george washington. >> yeah, exactly. especially when you consider that people trust google and trust google's search results. they're in a different position. openai and different companies can do things that people have different expectations of google. >> as someone who dealt with privacy and data protection, how concerned are you about bad actors and what they're going to do with a.i. and what we continue to hear about with deep fakes, certainly with this

coming election? >> google has a bunch of different places where this will show up. you could point to youtube or, perhaps, they received less scrutiny than some of the other social networks or content platforms have. deep fakes are a real issue and it will be something to watch for in the election season for certain. >> rob, thanks for your time. >> thanks so much. >> we have more "squawk on the street" right after this. oh no, a rash. maybe it'll go away. awww, how am i going to find a doctor i'll actually like? is that a qr code? dr. stafford makes you feel at ease. thanks rash! you've got more options than you know. book now. what will you do when the power goes out? power outages can be unpredictable and inconvenient,

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uh-oh. good bunnies. ahh! as we close out the hour, i want to show you what's happening with disney. it's up again. shares range bound this year but up 19% year-to-date. we'll talk more on "money movers" next hour. the former cfo jay rasulo will join us next hour. you may have heard that name a lot lately. that's because he's the former cfo that thinks he can fix disney, according to a new "wall street journal" report. he is backing activist investor nelson peltz in the proxy fight. also wants the board seat along with peltz on disney. we'll talk to him for the first time since he's been in this fight about why he thinks he can bring his experience to the board, make some changes that

trian is advocating for. >> we're a little more than a month away from the vote. as you might imagine, both sides digging in here. it will take time for disney management as well, the meetings with iss, shareholder services, proxy advisory firm and meetings with investors. it is distracting, to say the least. but they are adamantly opposed to mr. peltz and mr. rasulo joining the board. >> the interesting thing is the stock has been up this year. is that because of some of the moves that iger has made and some announcements they've made? there have been a number of them. or because peltz continues to put pressure on the company -- >> they would say the last quarter is a reflection of the efforts that have been made. if you give them another quarter, obviously, the vote will take place prior to the next quarter where they show even more progress. i think that's sort of what disney is saying. it has nothing to do with peltz. as you might imagine, nelson would say very much otherwise. >> yeah. and that the stock started moving when he got back in and started raising the fight.

>> it's all like pearlmutter shares. it's not trian's capital. >> why does that matter? >> typically an activist effort, you start an svp, here's our idea, let me give you a white paper or why we think we can do this change, you buy the capital, you buy the stock and then you execute. this is different. this is stock perlmutter has owned for a long time that he contributed into that vehicle which only has 6 million or so shares. >> it will come down to convincing a lot of retail investors, 30% of the stock and some institutional ones as well? we'll be all over it in thneho.t ur >> we're back after this.

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good tuesday morning. welcome to "money movers." i'm sara eisen with david faber. what a treat here at post 9 of the new york stock exchange. carl has the day off. disney's former chief financial offer, jay rasulo, is with us, citing with the activist investor as this boardroom battle continues to heat up.