everything else. let's take a final check on the markets before we hand things over to "squawk on the street." the nasdaq closing at an all-time high on friday, it and the s&p 500 looking at five weeks of a winning streak. the dow was down last week by 2 1/3% we'll see you back here tomorrow right now it's time for "squawk on the street. ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is back at post nine of the new york stock exchange holiday shortened week apple and nvidia up 2 to 3%. nasdaq looking for a sixth weekly game. pce ornl on friday kashkari telling cnbc he's in no rush to cut rates saying he needs many more months of

positive inflation data before making the move. >> new numbers are showing apple iphone is on track to open in positive territory for the first time this year elon musk raising the mistakes in the ai wars his company xai receiving $6 m billion. >> let's talk about the tech rally following the closing highs for the nasdaq on friday this open ai thing will feed into that flywheel >> a great way to look at it when you see that valuation, that's a confirmation against of what happened last week. there are a bunch of notes today. there was an analyst this morning talking about a $10 trillion evaluation. >> i saw you give him a shou shout-out. >> it wasn't a completely absurd valuation. you can't really take them on.

the index -- ai is going so quickly that perhaps this is the biggest story ever it's even bigger and aggressive than even jensen huang starting with ai, we like musk he has a valuation there's no -- let's just say there's no governor on what people can say last week on ai >> to your point, musk raises -- i've been aware of this at least from a couple people who have been on presentations made a while back for musk's xai, raises to $6 billion where do you think that's going? my understanding is they're building as much as a million square foot data center in tennessee. i'm hearing this secondhand, but how many -- you tell me how many h100s are going to be in there most of the money being raised here is going to end up in,

where else nvidia. >> yes, nvidia we know musk left that and now he's come back when you talk to nvidia, you don't get about their ai business what you get is they're developing autonomous machines that aren't really -- they don't think of them as cars. you layer this in. this would be part of an autonomous machine i'm confused, david. i'm con confused by how much of this new company would be used by tesla. >> i think you're right to be somewhat confused. i don't have the answer for you in that way. they're separate, the ai efforts at tesla in terms of self-driving and xai in fact, i think the union here would be more closely x, twitter, the old twitter and this because you can use the data set from twitter which is realtime and it's very valuable

potentially for a large language model. so that may be more where you see it obviously he owns all x. it's a private company he can do whatever he wants with it maybe there's more opportunity for his efforts again in ai which are competing against the much larger still, that we know about, obviously open ai and you go on from there in terms of everybody else, whether it's meta, whether it's microsoft with open ai and its own we'll see what apple comes up with, and obviously alphabet which was the leader so long ago with deep minding. >> a cynical person could say had there been in issue involving its pay package, that maybe this would be within tesla. >> we'll get to the pay package in a minute because glass lewis, somewhat influential proxy

advisory firm. it's an interesting question you raise, jim. >> to go back to your point, carl, i just feel like what's happened is, if it's ai, whether it be del, to have the ai pc whether it be apple where you can say, people are saying it's just a matter of time before they have ai you don't find anyone -- any skepticism it's interesting -- that's why i mentioned frank holland. there was no skepticism on the $10 trillion valuation microsoft is nowhere near that >> no. but it's not -- i guess it's not inconceivable, jim, as hard as it seems to imagine. i can remember when apple's market value crossed a trillion. that seems as though it was a

number we would never see again. here we are with any number of companies far in excess of that. obviously apple now back above three, right >> i come in this morning and there would be people to say, whoa, nelly. nvidia is a fantastic company. you know what? we have to have some sense that it could run out here. i'm a believer, but i've been a believer with nvidia since the 30s. i thought there would be some -- >> bofa points out it was up 9% on thursday, up 3% on friday, up another 3 today. bofa, by the way, is the street high at 1320, jim. i see moelis, who i know you love to listen to, saying this adjusted margins in the near 70

t70 range. we don't see anyone challenging the margin in a major way for two years. >> i got in the car and started reading that why, that was going to be my rap. ben is in my head, ben is in my head right now >> yeah. what's he saying, jim? >> what he just said >> oh, sorry >> welcome back, david >> nice to see you i appreciate the fact you guys missed me. >> did someone say that? you're in my head? >> you were doing my usual -- i felt like you missed me. >> i did miss you. >> by the way, guys, on this subject i was at a couple of conferences over the last couple weeks and all anybody really wants to talk about is ai. >> and the impact. >> these were broader conversations in many ways about the impact more broadly, and not just in terms of what we talk

about so often the business impact, but also the societal impact. this thing is coming so fast and it's unclear to me certainly and many of the people i've heard speak about it recently that people are fully prepared for what is coming and the fact that we're going to have something that exceeds human intelligence at some point. there's plenty of arguments around this, and then what is that going to really mean for humanity. >> i'll tell you what does it mean for professionalism. we had a gamestop, they issued $900 million of stock. i go to chatgpt, the most recent version and i say is it possible for a company to offer stock and then immediately buy back that stock? it has an answer that would be like what i would get from paul

whites it's an unbelievably thorough answer yes. there's a safe harbor that allows them to buy stock back right now. i'm thinking that would have cost me maybe $20,000. and there it is. >> there it is >> -- knowledge workers, any number of things it's going to be potentially destabilizing. >> destabilizing the productivity gains you just laid out, they're ap poxful. >> is it possible it's wrong it's possible anyone is wrong. i was going to come out and say it then, no, i ought to admit i cribbed it from chatgpt. chatgpt is so damn thorough, it's incredible. >> i encourage everyone to watch the presentation a couple weeks back where they introduced 4.0

scarlett johansson is not very happy about it it's staggering to watch it in realtime in terms of what it can do and how it does it. >> i find myself thinking these are questions that chat knows the answer to that i might have to spend a huge amount of money finding the answer to, and now i don't. >> we're still here. i'm able to do my job. i got a little news this morning that we'll bring on. >> that's substantive. i. >> i haven't been replaced by a bot. elliott, the biggest player in activism, 65 billion hedge fund, made a $2.5 billion investment in texas instruments. >> no. >> yes to improve free cash flow -- >> that's so smart they've always say i've got the plan the plan is the plan. >> elliott proposes texas instruments introduces what it calls dynamic capacity

management, a strategy that would allow the company to achieve free cash flow elliott says of as much as nine bucks a share by 2026, about 40% above the current consensus, what is the world's largest maker of analog semiconductors. they use the word in the letter, rigid adherence to a capital expenditure plan put in place in 2022, greatly reducing a metric by which ti is judged, namely free cash flow it was 6.40 a share in 2022. it's running what's expected to be a buck 83 a share this year elliott maintains ti alienated investors who might otherwise gravitate to what is a very significant position serving the automotive and industrial complexes with its analog chip the stock price has suffered as a result it trails by substantial margins

over the last two, four, six and ten-year periods the focus of elliott's letter is on the 2022 capital expenditure plan, calling for it to ramp to as much as $5 billion a year, bringing spending to as much as 22% of revenues from what had been capx spending far below that, somewhere around 5% of revenues the allocation will allow the company to almost double its current annual revenues. it would have as much capacity to support as much as $30 billion. the problem is the reversal in demand for the chips will result in capacity levels that are 50% above consensus revenue expectations in both 2026 and as far out as 2030. elliott suggests the company either communicate more forcefully, why it believes such an increase in capacity is

justified or move to a more dynamic approach to capx to build the new fabrication facilities but be more about equipping them they say that at least in their opinion would allow for a more precise response to market demand so, guys, we'll see what the response is from ti. i would also go on to just say that the letter itself from elliott is not particularly hostile in any way it's incredibly complimentary of ti, incredible business the company has had, and really only briefly on page 11 does it take to task the board saying that they should have been more mindful of prudent capital allocation policies, and that they hope they, in fact, will be in the future. so it doesn't appear we're setting up for any sort ofa

board fight in the near term or elliott looking to try to push management out in any way. they are simply introducing this idea of, hey, maybe you can do a better job either communicating why you feel like you have to spend all this money or perhaps starting in, let's say, 2026, start cutting back significantly on it so you can get to a much higher free cash flow number. >> when you're on a texas instruments conference call for the quarter, i don't want to say it's belligerent basically we don't have to answer to you, we have our own game don't throw us off our game. this rattled a lot of people during the period where every auto company couldn't get one large form factor and had to go to taiwan. what disturbed me is during a period when you really needed their chips, listen, this is our plan, we're not going to throw ourselves off our plan i think, david, what could happen here is it could get

negative because of the doctrine nature of texas instruments and the unwillingness to veer off their strategy. >> you're hitting on the key points, jim, and it oogs unclear from elliott's perspective as to how they'll be able to get here in terms of will they get a willing awudience. i know analysts have felt similarly. you guys have a 15-year plan, but i kavenlt necessarily tell people to buy your stock when you're talking that long out >> again, it is one of where you can ask them questions and their answer is biden administration irkly pound sand this is how it goes. not vicious, but at the same time i'm very grateful i never have to be on one of their kals. >> elliott doesn't typically go away easily. >> no. this company is worth so much more than it's selling for

>> we'll watch that and talk a little more tech as well between apple and this china news today. take a look at the premarket we'll get to other news on sports betting, paypal, the memes, of course, got a new target on netflix and moves on the cruise lines when we come right back trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab. power e*trade's easy to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market.

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i don't want you to move. and stay on top of the market. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene.

transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with xfinity. minneapolis fed president neel kashkari weighing in on rate cuts. listen to what he had to say on cnbc europe earlier today. >> the u.s. economy has remained remarkably resilient gdp growth much stronger than forecast most people thought we would be in a recession toward the end of last year. that didn't happen

instead we had very strong growth consumers are resilient, the housing market is resilient. i think we should take our time and get it right. >> pce on friday, jim. if it comes in miline, it wouldb the lowest in a year. >> we're starting before and it fooled us, versus a whole, let's get out of this whole rate cut talk and say, we have a good economy and we're fine why do yes have to risk the economy overheating. right now it's not when we have this debate on tv, it does nobody any good. i think it's much better to be able to say, listen, unemployment goes higher and the economy slows down, we will take action right now why? i think it's commonsensical approach i like it.

i now the it was very smart. >> so what, hang around 4.5% for a while, for a long time >> i think so. until things break down. he's saying don't use a timetable. immediately after he said it, there was a very good manager i've known for 30 years, come on, there's two cuts, one in september and one -- no. he's not saying that a all he's saying, look, here is the game plan. the game plan is not going to change until something changes in employment or makes it so we actually have problems, and we don't have problems. so why do anything i thought it made a lot of sense. >> meantime bofa with a great chart, the best time for equities is with a decelerating gdp and reaccelerating eps we got almost 6% eps growth. >> it is a halcyon time. we don't want to believe it because of all the problems, but

they're not influencing our markets. >> we'll talk similar geopolitics after an eventful weekend. cramer's mad dash, count down to the opening bell as we srtta off a holiday shortened week don't go anywhere. daughter: it's a lot of fence. dad: you wanna help me? dad: aim at the wall, but get closer. daughter: (gasps) what the?! daughter: alright. dad: side to side. when you work with someone who knows a lot and cares even more... you can do this. ...you're unstoppable. (♪♪) wow... are you kidding me? you can do this. at truist, we believe the same is true for banking. at enterprise mobility, our experts always see another road.

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as we move forward, i'm so optimistic about what lies ahead. it has been a privilege to be with you let's do it. take a look at q

100 gainers. texas moving on david's report by elliott nvidia, qualcomm we'll get to the paypal news as well with a 2% premarket gain. you can catch us any time, anywhere listen to and follow the "squawk on the street" opening bell podcast.

let's get to a "mad dash" before opening bell. first trading session, but it is a tuesday, don't forget. cruises. >> look. i had norwegian cruise line on last week. they tell a good story they're all booked up. it hasn't meant anything to anybody. all of a sudden this morning we have a couple firms come out and say you've got to buy. mizuho says you must buy norwegian cruise the no wake zone upgrade to buy, there's a host of positive notes about viking david, what's so interesting about this is this is epicenter

of covid everybody has forgotten about that, people understand the bargain of cruising. these guys, a lot of people felt they took on too much debt. >> that's my question. what does the capital structure of these companies look like given the fact that they had to stay alive >> still a huge amount of debt too many terms they need to pay a lot down. norwegian cruise has a payment to make that they have no problem making this one is the cheapest relative to debt it is an exciting company. they go worldwide. it's not norwegian carnival is probably my least favorite royal had been my favorite, but norwegian has this management that is telling a great story about the stock moving yet. >> to your point, viking is a new entrant, a public company. >> people like viking. when you're in the industry, they all say viking is a very good company no kids, no gambling

it's a so-called adult one i think these have room to run and i think norwegian is a very good call. i really do. i loved them last week, carl i was shocked the next day when it wasn't high shocked. >> not to mention we did set a new record for travel on friday. [ bell ringing ] [ cheers and applause >> two tiers of america, people are saving and trying to make due and people who are still spending what you try to do, are they spending within their means or not. people spending not within their means are people who either lost someone during covid or realized they're leading their lives wrong. >> meantime at the big board, it is t. rowe price celebrating the fourth anniversary of the active etfs it is microsoft's asian employee

resource group celebrating asian american native hawaiian pacific islander month i don't know, jim, if you saw jensen pitch at taiwan heritage day when the a's played the astros >> i watched it multiple times it's starting to annoy me. david, we're not jensen. >> no. >> that's what it's about we're not jensen we're not da vinci look at this david, i remember when you tossed the ball. >> please don't remind me. >> apparently he threw a strike. what else would he do? >> still keeps me up at night. >> when jensen develops the robot that can pitch a perfect game -- >> the athletics may be one of the few teams worse than the mets though. are they even moving are they moving to vegas where are they going >> lost the second game to the giants last night.

>> the best record in baseball. >> four ahead of atlanta. >> and they just lost -- i think they lost -- >> jensen, it's just been a great time for that, carl. >> he'll be in taiwan. might be already as the congressional delegation goes. >> carl, you've got to throw out the first pitch now. >> i'm okay. i'll watch you guys. jim, speaking of which, sports betting, this illinois sports betting tax. >> out of nowhere. suddenly they want a much bigger take i didn't even think you could get in and then they could change that. i guess when your state is probably one of the worst-rated states, everything is game that is why flutter and draftkings are going down. people are saying, wait a second, celeste and new york maybe we've got to rethink how much money the states are making auchl gambling i've liked draftkings for a long

time wow. new york 51% tax rate, was considered to be onerous, and illinois obviously less. carl, this is an industry where now i wonder whether california just doesn't have it yet california, listen, let's do 60%. holy cow next thing you know it's going to be -- they're going to do like the u.s. government anybody on draftkings knows it's got the best app what are you doing >> i'm looking through my tesla pay package file i want to talk about that. shares of tesla down 2.7%. we're getting closer to that vote there's two votes, one on redomiciling in texas that requires 51% of shareholders in

favor. if they don't get people to show up at the polls to vote, that's a problem. one requires a lot of participation. the other, it's a majority votes of whatever has voted. musk is not able to vote this is on the pay package, 2018 pay package. why is the stock down here one of these proxy adviser firms in this case, glass lewis. we haven't heard from the others, iss is the most influngsal, they say no, we're against it remember this is -- this is a pay package. it's options, it's granted, approved by 73% of shareholders. that's unaffiliated shares it was thrown out by the delaware court they are now putting it back to the shareholders and it's an important vote because there are some who believe or at least question, well, what's musk going to do if this thing gets

voted down what will the company have to do or what will it do in order to make sure they keep him happy given he's a pretty important employee, so to speak. >> why if someone voted yes would they now vote no >> i don't know. that's a good question, jim. we're talking about roughly $45 billion worth of stock when he exercises the options. by the way, an important point here, most ceos are compensated with rsus. that's restricted stock. in this case it was options, it might have been a big zero, of course, given the move from the stock price from 18 to even the current, it's not near zero. it's the biggest pay package anybody has heard of, $45 billion in shares is going to be dilutive glass lewis for its part simply says -- i'm trying to find my underlines here. they don't believe that it is

justified in part because of that dilution, and they simply don't think -- they think the size of it is concerning that said, jim, it does come far above any dilution we've seen with other grants made to chief executives could be as much as 8.7% dilution: the company has detailed presentation on their website at this point from the board talking about everything they did and why they did it elon is required to hold the shares for five years after he exercises the options. they believe his award is fully aligned with the interest of shareholders then he would say why shouldn't he get his money >> this is one of those, hey, elon, heads we win, tails you

lose i don'tunderstand why anyone - didn't have anything at risk here >> what was he going to be paid if it didn't go up. >> don't you wish every executive -- the guy at boeing, what's he pulling down 30 >> talking dave calhoun. >> i was trying to just kind of make the point, like guys and dolls. >> he did inherit a mess to be fair. >> true. i'm saying in america, if you're a ceo, you pretty much start at 30 what ceo makes less than 30. i need to know. >> a ceo not being paid enough clearly. >> what ceo doesn't make more than the first 20,000 people hired by the company remember in 1980 when reagan -- 1981 when reagan was president, ceos didn't make that much more. >> no. they made 400 grand.

>> they gave away half their salary to the workers there would never be a strike. >> the media business it's more. pay the cfo 30 million. >> you're in the media business. you want to detail who is paid like that? >> no. there's so much value created in the media business that these guys are all well deserving. >> reverse split >> i'm coming slowly but surely to the end of my time here. >> not slowly. not slowly that's the big problem you have. >> jim and david, worst memorial day box u office in almost three decades if you strip out '20 and '21, garfield infewer owes sew is all the studios had to offer. >> fall guy, streamed it i spent $50 trying to watch with my wife. >> i went to see that in the movie theater. >> who knows maybe it's an older person's

movie. >> ryan gosling. he's a movie star. >> i think oppenheimer looks like a distant past. >> we'll see there was the strike and there was an emphasis on quality over quality. >> evercore takes netflix from 650 to 700 as they do some work on this sun setting of one of the tees. >> it's interesting that apple plus puts out things it means nothing because apple is so good. >> nvidia could issue gone with the wind and wizard of oz and it wouldn't mean jack there's just nothing -- the mega caps, it doesn't matter what they do. but if you're in a movie studio, remember when universal whad things like "close encounters. >> "jaws" was a good one for

universal. >> yeah. you could. mie old friend sumner redstone, they had the movie company he would get a look at the movies before as a result of the exhibitor and would go out and buy the stocks. >> did he really he bought it ahead of godfather 2? >> i don't remember. you could actually make -- it actually mattered because there were so many of these publicly-traded companies where the next move was an important one. by the way, mary poppins for disney back in 1966, there was nothing more important $30 million at the box office, back in '66. >> i liked it. i went to see it at radio city music hall. >> disney shares were absolutely moving on that in fact, warren buffett was looking at buying them at that very point.

>> nelson peltz felt the same way in '85. >> not really moving shares of imax amc was up 5%. >> that's a meme stock people don't realize they're useful idiots, to keep the company alive. >> what do you term the people sending nvidia up another 5% we're talking about it now approaching 2.8 trillion in market value i want to keep in mind, that would exceed everything other than apple and microsoft in terms of market value. nvidia, near $2.8 trillion >> david, if you're going to take over the world, you should get a higher valuation. >> i guess. >> only $7 trillion to go. >> blackwell, david, kind of like plastics. blackwell. >> by the way, the next version -- i remember when

jensen -- he was musing about something and i was trying to pin him down well, there's a 20-year plan here it started 20 years ago. it's not like he woke up and said let's do this in 2004 he had this plan. >> no shortage of capital going toward any startup made up of former nvidia engineers who say they're going to be able to do something to compete >> going to have so much capital. when ithrew out the first ball i started at 20 feet, 30 feet, 40 feet, 50 feet, 60 feet, so i threw a strike did he naturally throw a sfliek. >> first of all, you were nowhere near 60 feet i'm the idiot who tried to throw from the mound. >> another useful idiot. two of them in this show >> oppenheimer today, jim, nvidia worth more than meta, tesla, netflix, amd and ibm. >> oh, my god.

>> just like babe ruth >> that quarter was not initially greeted with anything other than, wow, a typical nvidia beat. as people looked at the substance of the quarter, they realized how much -- there's no one closer anyone who is closest just involved with the easier part, the inference, not the training, and people started thinking maybe it's got software, then it's a platform. next thing you know, we don't know any company that's able to make what they're doing. david, i know that there are companies that are supposed to be nipping at them jensen made it clear, amazon, whatever, he's happy with that watch dell dell was the implement the stock doesn't quit come on, 52. >> dell up another 4-plus percent as well. >> they also have the ai pc which, by the way, individual is

in. >> don't count michael dell out. >> a lot of roads late to michael dell. >> he was at the conference. >> still one of the most important people in business and technology. >> humble. seeks no limelight. >> gets reiterated as a buy over we will get hp later in the week as long wsz a slew of specialty retail. >> hp has to tell a very specific story about how the partnership -- it's a partnership of microsoft not just that they are a dumb machine that microsoft has taken over enrique lawyer res has to say we have better ai now, dell has a huge ai franchise. >> jim, when it comes to earnings, we're also getting salesforce, aren't we? >> the stock has been a drag it's just been one way. >> i have a question for you this hub spot. >> the junior salesforce. >> there's been many reports

about hub spot being in conversations with google. my understanding is absolutely true, potential deal for alphabet to acquire hub spot my question to you on it, would salesforce have interest in hub spot because there is some sense that it's somewhat competitive with them in a certain area, and perhaps they would be taking a look >> it would be great to have the small and medium-sized business all under one roof it seems like to me adobe canada, which is you've got the less developed and merge it with the more developed adobe the government didn't like it. if google -- if alphabet moves in here, that explains this endless drip, drip in salesforce, endless. >> it's tied to the chatter we're getting about why software is the weak spot in tech snow, workday, palo alto what happened last week? >> i have to tell you, i went over workday's quarter, i didn't

think it was nearly as bad as people felt. maybe it was not well told but the business is not bad. what happened is they have human capital business and the financial business this is incredible you're absolutely right. software is no longer eating everything i find, by the way, palo alto, cybersecurity come back after what people thought was a weak quarter, judging by billings. >> we've talked about the impenetrable nature of the metrics that they give every quarter. >> yes oh, come on. >> what kind of day is today it was up huge at 5:00 a.m what happened? what kind of negative people, they came to work and said, i had a lousy weekend. >> nvidia on the s&p is now flat texas instruments which we reported on, elliott taking that $2.5 billion stake -- typically it's not just stock, they use swaps. ultimately $2.5 billion saying you can do a lot to improve your free cash flow

the stock is doing nothing, absolutely nothing it's flat. >> are you serious >> yes it may be in part because you said how texas instruments is not interested -- they're like, fine, keep your opinion to yourself. >> elliott can buy more. elliott has never been known to say, they don't want to talk, let's just go away i think texas instruments deserves to be higher because their business is humming. they had very, very little inventory was the call that's what drove the stock up the inventory was burned off that drove the stock much higher it is a great company. it's just an uncommunicative company. it has very rigid rules in a world where rigidity has been a fault, not a positive. >> that was the word used in the letter, rigid, in terms of capital allocation, in terms of the capx plan to spend $5 b billion last year, this year and next year, to build capacity

that elliott says is going to far exceed the revenue opportunity given the marketplace. texas basically says we'd rather be two years early than two months late. >> they got that inventory low i'm loathe to criticize a company, a store read company that's done very, very well and didn't fall prey to intel problems. >> as we go to break, check out bonds today. a busy day we got kashkari on the tape. lisa cook this afternoon, conference board in about 12 minutes. two auctions at 11:30 and 1:30 eastern time stay with us oh, charades! - okay! - love it! umm... first word. - tonsillitis! - nostril!

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it will be another busy week of retail earnings and check out deckers. we talked about their quarter last week with jim truist today goes to buy it's not just the stock but deckers versus nike over five

years -- >> oh -- >> went different directions >> that and -- they're saying nike is a share. it was devastating >> pretty amazing. >> hoka is king. >> we'll get stop trading with jim in a minute. don't go away. engineered to minimize noise. and built for adventure. which can also be your own quiet cabin in the woods. the fully electric q8 e-tron. an electric vehicle that recharges you. how we get there matters.

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. it's time for jim and stop trading. >> i was going to be nvidia but enough airbnb, a note from wedbush, upgrading from hold to buy this is really important a lot of people are down on airbnb they have this growth, they've been down, but people feel saturation, look at travel, marriott didn't have that good a quarter, hilton was okay you have an event, you have the world cup, you have so much going on and it's just an inexpensive way go i think the note is good waited until the stock is down and well-timed note on a long-term company and on brian chesky who keeps is surprising i urge people to go to the site and look at the dream vacations. >> the icon category. >> my thought we're going away looked at this, it's like, you know, a dream come true vacation, no surprising on it, but brian is so creative this was on the place where

x-men were made. that's like in westchester i'm not going to westchester westchester! >> that's not a vacation. >> that's work. >> yeah. >> you would be calling me every day. what do you think of the texas instruments. >> no matter where you are i call you every day you can't get away from me. >> i'm glad our partners, i go to westchester, you go to kyoto. i go to west chester >> you will have comic to kick around. >> i have cloudflare we're seeing price competition in cyber look at c-scalar, downgraded and this is the one bastion where everyone said, listen, there's so much business, you do not need to worry about competition and that is proving untrue only crowdstrike has been immune from competition. >> cars, walmart, amazon, target, fast food where the discounts are showing up fast.

>> i read somewhere that, you know, the big mac, fries and diet coke was $9 at one point. $9 texas roadhouse has a steak dinner for $10.99 if you go there early. >> i got a large fries are from mcdonald's recently it was 5 bucks. >> that's because he used doordash. >> it did it at the counter. >> you did. >> i was on the highway. >> interesting. >> five bucks for fries. how about biggy fries from wendy's. >> see you tonight, jim. >> thank you. >> dow down 14tota ts tuesday. don't go away. of dry age-related macular degeneration, can irreversibly damage your vision. it can progress faster than you think. when ga threatens your eyes, take a stand. slow ga with syfovre. syfovre is an eye injection that was proven to slow damaging lesion growth over 2 years with increasing effect over time. it's the only fda-approved treatment to slow ga

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♪ good tuesday morning welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, all back together, at post nine as always from the new york stock exchange take a look at stocks here in the early action as we start the holiday

shortened trading week, s&p little changed nasdaq is higher as tech continues to lead. nvidia up again. up 0.2% on the nasdaq. dow down about 140 points. take a look at treasuries as well a few auctions coming later today. we look for indigestion. 10-year note yield higher at 4.479. the 2-year yield i'll be watching is below 5% a reach above 5% might be cause for concern on the equity front, but we are below that number and getting a little bit of buying in the early action. 30 minutes into the trading session, here are some movers we're watching gamestop, shares are sharply higher after friday's close. the company said it made more than $930 million by selling 45 million shares and that works out to a sale price of roughly $20.74 per share the stock had been trading below $11 at the start of may. going higher again apple inching from turning positive on the year on pace for its first monthly gain in 2024

more on apple and tech coming up in the show. and then draftkings in the red alongside fanduel parent flutter. legislators in illinois passing a budget that hikes taxes on sports betting in that state and fallout ahead on the show as well let's get conference board with rick santelli this morning. hey, rick. >> hi, carl. these are our may read for conference board consumer confidence, expecting a number around 96 on the headline. buckle up, a significantly higher number. 102.0. now, before everybody stops exhaling, let's put a face on this last month's 97 moves to 97.5. 97.5 the weakest since july of '22 the new number pops all the way up to 102, but it's still only the strongest number since march, when we were at 103.10 which underscores how weak last month's drop was now if we look at the present

situation, 140.6, by the way, was the weakest number since november of last year, pops up to 143.10, the strongest number since march because we had such a big drop last month. finally expectations, 74.6 that's the best number since february, not march, and last month's 66.4 becomes 68.2, which is still the weakest number going back to july of '22. to sum it up we're seeing interest rates pop up a little bit because the numbers are better than expected, but it's coming from a significantly lower point last month, and as was pointed out, we have two auctions, one at 11:30 coming up a two-year at $69 billion, never had a bigger one, the second $69 billion in a row, and then at 1:00 eastern, the second auction, five-year at $70 billion, second $70 billion auction, never been one larger sara, back to you.

>> okay. rick, thank you very much. we're going to watch those auctions later this morning and this afternoon rick santelli. as far as what else is ahead of us this week, first of all we have a lot of fed speak. as usual we'll get the beige book tomorrow which is always a good color around what's happening around the various fed districts on inflation, on the economy. i'll be looking forward to that. thursday we get the second look at the first quarter gdp the gdp that came out a lot weaker than expected, 1.6% or so, 1.5% and then the big number is going to be the pce, the fed's preferred gauge of inflation which comes out late in the week, because the fed needs to see more progress on inflation the expectation we get a number that's around 0.2 to 0.3% gain on the month, that would sort of be in line april again was better than the first quarter, the first quarter where we saw the sticky inflation and the fed wants confirmation and so do investors we're back down to consensus

numbers and seeing progress on inflation. that's going to be the biggy as far as the market setup, guys, and you've been talking about the strength we've been seeing in big tech leading the way, winner take all kind of mentality in the market, tony pascrell lo the trading note from goldman sachs had a great chart in it that showed the ten largest companies as a share of the s&p 500, in terms of market cap, that's the blue line on top, and in terms of earnings, which is the bottom, the orange line, and continues to go higher and higher it's now -- the market cap is 35% of the s&p 500 in total. this is just the ten biggest companies and their earnings represent 26% of overall s&p 500 earnings that whole -- what was it, carl, when everyone came on and expect the rally to broaden out, expect the small caps to play, forget it it's tech, winner take all kind of environment that keeps going higher on news like last week with nvidia earnings. >> yeah. meantime, tony also reiterated

his long-standing narrative that u.s. consumer is going to defy the bears in his terms. >> that's a question, yeah we'll see how income and spending look later in the week and see what restroigsz gdp look like those consumer confidence numbers that rick reported good sign on that front the fed is trying process two things right now whether there's enough inflation progress for them to cut rates and whether the labor market is really weakening so that they would have to get ahead of that to cut rates overnight we heard from minneapolis fed president neel kashkari who spoke to cnbc europe and asked him what it would take to get one or two rate cuts this year. here's what he said. >> the economy has remained remarkably resilient gdp growth has been strong much stronger than forecast. most people thought we would be in a recession toward the end of last year and that didn't happen we had very strong growth. u.s. consumers have remained remarkably resilient the housing market has remained resilient. i'm not seeing the need to her

grind rate cuts. i think we should take our time and get it right. >> he's not a voter this year, but he's become one of the more hawkish members of the fed what we learned after last week's minutes there are a lot of folks on the fed, david, perfectly content with waiting and are going to wait it out. >> the housing market has remained resilient i'm sort of curious -- >> pricing. >> i guess pricing not activity. >> activity has been weak, but pricing has been strong and rental, both on the rental front and on the housing -- on the home front because of inventories. >> the rental market, yeah. >> has been hot and strong and we'll talk to tore shen shock from apollo, his policy the easier financial conditions in anticipation of rate cuts is fueling more inflation in places like housing because it has brought rates back down. we are seeing rates a little bit down there's an interesting discussion developing at the fed around -- so they're now

tapering their qt. you're interested in the balance sheet. >> always. you know me. >> michele bowman a fed governor, always gets a vote, made her position clear this morning, speaking at a bank of japan conference and she was saying, well, it's important to slow the pace of balance sheet runoff as reserves approach ample levels n my view we are not at that point yet. barring -- and then said that she thinks the economy is strong we need to continue to shrink the balance sheet but the thing is it's been decided so they've announced next month they are going to start going from letting 60 billion in treasuries run off to 25 billion, that's how they taper >> that's a sizable reduction in - >> they will keep the 35. >> reduction in reduction. easier financial conditions theoretically, but i think the fed is pretty content to let this go in the background to monetary policy. >> where are we in the size of the balance sheet slowdown in. >> i mean it's come down i can check, but, you know - >> we're still - >> still in the $7 trillion

range. as high as $9 trillion after the covid pandemic they've made some progress, but someone like bowman would like to see them have a bigger cushion if they need to ease going forward, if there is some sort of economic downturn. it's interesting about all this the fed is having this debate about when is appropriate, the economy is so strong, and europe, they're set to cut interest rates next week ecb has got -- >> talking about a subsequent cut. >> now talk, yeah from an ecb member, about -- here's from the economist of the ecb, barring any major surprises -- they've been so clear in telegraphing this -- they're going to remove the top level of restriction, i.e., cut interests next week. the effect of this euro weak against the dollar and u.s. companies are now issuing more debt i keep hearing this color out of the bond desk in euros, instead of dollars, and a flutter of activity on that front because

they're getting now lower rates. >> right. >> over in europe. look at the euro/dollar. >> euro denominated debt. >> is popular. >> makes sense. >> because the fed -- ecb is ahead of the fed i think that will be a question ultimately for the fed, is how much longer can they wait as the last man standing on major central banks, if bank of england, ecb, bank of canada start to cut rates before then they have to make policy for the u.s., no doubt about it, and our economy has been stronger and inflation stickier, but that differential is something people are paying attention to. >> you mentioned goldman moving their first cut from july to september last week. citi is the only major desk looking for july we'll see what we get this summer if anything. >> not talking like a july cut, the fed members. >> not really. the s&p, nasdaq coming off five straight weeks of gains and our next guest tweaking some ratings and ratings. joining us is oppenheimer's chief investment strategist. john, greet have you back.

5500 you are make changes within the index. talk about that. >> making a few changes. the primary one is we brought utilities up from an under perform to a market perform. while u.s. weighting is below where we had anticipated it would go within the s&p, it's outperformed a good number of sectors here we brought it up to a market perform. but we still think the favorite sectors are technology, consumer discretionary, which we think is much too much based on the resilience of the customer in addition to that we like industrials, communication services and financials. so we feel comfortable with this of course the industrials, because this is the year we got to see some spending hopefully of all that money that's been allocated to the infrastructure bill. >> right is the fed an overriding factor in your playbook or at this

point trying to design one that will work whether higher for longer or a cut sooner rather than later >> carl, we've been big fans of the fed. unlike a lot of our peers, we have felt that the fed this cycle has been remarkably sensitive in applying its mandate. the only time it was aggressive was in 2022, when it had to raise -- it raised four times consecutively, 75 bits at a time, the benchmark rate, but generally speaking, it's been a mix of 11 hikes and 7 pauses, and as a result of that, you know, we think the fed is bringing this thing in so far without a recession, it may be able not to do -- it may be able to do that without a recession, and this should be good for stocks revenues and earnings growth, particularly earnings growth, remarkably good. you look at q1, eight sectors positive earnings growth six of those double-digit

earnings growth, only one of those -- by the way with the utilities the other thing we're seeing is the market is getting this feeling of anticipation, at least by year end, of one cut or two cuts, and in that, that would take away some of the stigma of bond proxy in advance you know as a discount mechanism buying utes in here and the utes a big play in terms of ai and the electric grid which they're likely to benefit from, but that's a longer term play. we think that's why we did get crazy and do an outperform for the year for the utes. >> never going back to utilities. only to utes, john. >> the utes. >> what about you said the earnings growth is strong. is it happening as -- i mentioned the gdp revision for first quarter, so if gdp is weakening, labor market is

weakening, and earnings growth is strengthening >> let's see how that gdp number actually comes out, as we go through the quarter and any revises that need to be made, but when we look at it , if i take a look at where earnings have come out double-digit earnings growth in the area of 30 to 40% in areas like technology, communication services, consumer discretionary, it's -- we don't expect a dramatic drop off in terms of growth. if anything, the resilience in business, the consumer and in jobs growth, even while slowing at this point in the fed funds hike cycle, points to a healthier economy than many people are giving credit to. >> yeah. we'll see whether this recent conference board number we got reflects any of that, john we'll see what this period gives us in between earnings seasons good to see you.

thanks, john. >> thanks. as we head to break, here's our road map for the rest of the hour nvidia marching higher again now up 30% just this month apple going positive this year where the record-breaking tech rally will go. >> activist investor elliott management takes a stake in one of the largest semiconductor companies. we'll give you the details. >> elon musk's ai company getting a big boost in funding, what that means for him, his company and e thai arms race as "squawk on the street" continues on this tuesday. this is remington.

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. ♪ elliott, the $65 billion hedge fund best known for its shareholder activism made a $2.5 billion in texas instruments and urging the company to improve its free cash flow adopting a less rigid plan for capital expenditures in a 13 page letter elliott producing texas instruments introduces what it calls a dynamic capacity management strategy to allow the company to achieve free cash flow elliott says could be as much as $9 a share by 2026, roughly 40% above current consensus of the analysts who follow what is the maker of nan log semiconductor

elliott believes texas instruments rigid adherens to a plan put in place in 2022 has eviscerated shareholder returns because it has greatly reduced the metric which ti has asked to be judged, namely free cash flow citing a reduction of free cash flow it had been as much as $6.40 a share in '22, coming around $1.80 this year elliott maintains ti has alienated investors who might gravitate towards its dominant position who serve the automotive and industrial complexes with its chips the stock price has suffered as a result and say it's trail what they say the peer group by substantial margins over the last two, four, six, ten-year period you can see number of those periods we're talking about. elliott goes on to say the key question for ti's management and board not, quote, whether they have a long-term strategy but is the fix magnitude and pace of its capacity build-out

appropriate given the expected level of excess capacity going on, suggesting the company communicate more forcefully while it believes such an increase in capacity is justified or move to the dynamic approach to capex in which you could build a new fab but perhaps be more deliberate about actually putting the equipment in it, buying the equipment for it, and allow for a more precise response to market demand. sara and carl, you can see it's not having much of an impact at all on texas instruments's stock prices one of the most storied companies in technology history as we said many times, 180 plus billion dollar market value at this point they like to do things the way they like to do them and put the plan in place and seem very much committed to it regardless of whether there has been a diminution in overall demand after the inventory supply problems and shots that came after covid and meeting that inventory supply, and so it's unclear what kind of audience i

think elliott will get here when they try to initiate conversations, as i believe they are trying to do in the near term here with the release of this letter. >> it is interesting, leading edge clips get all the love and attention, but it is a reminder of how much embedded analog is in the stack already and how much we depend on it now. >> yeah. it's a great point, carl 300 millimeter, which is what they are building, continue to build fabs to do, one of the more important suppliers in the world. you can't build a car without a lot of stuff that comes from that and/or many industrial uses as well. >> the stock hasn't done much but taken off since mid-april or so, i wonder, if that's when elliott was buying or the management has come up with some sort of plan around -- >> nothing new i'm aware in terms of communication from them there is some frustration among the analysts whether you look at the percentage of buys it's quite low. stacy we have on, who is the ax in this industry, downgraded them last summer in part because

he said great company, 15-year plans are great but a lot of investors are not going to be hanging around to see the impact of it. so, you know, again when you talk about long-term plans, intel is another one saying we have to spend a lot of money now and we'll get the return later not quite the same story as ti but you're also talking about sort of the promise that's going to come. >> is that an activist candidate? >> i don't know if there's -- what playbook would be. >> yeah. >> you know? what would you do? >> the stock has suffered. >> here it's simple, they're saying modify potentially your capex will enhance your cash flow enormously because you will build capacity that will not be near what revenue opportunity is, at least in elliott's opinion. by the way, we haven't heard from ti or any response they may have. >> great scoop we'll see how they return the ball still ahead, tech is hovering near some record highs, as the mega caps continue to deliver, except for tesla we're going to talk top picks with one guest who says the

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the street." elon musk's xai announcing a

major round of funding with deep pocketed investors and to steve and get details. >> carl a group of well-known investors involved in this deal, fidelity, sequoia capital among others the numbers, first, $6 billion raised at a $24 billion valuation. and the pitch that musk was giving to those investors according to a report over the weekend from the information, x ai will run on a super computer if you read between the lines, just sounds like oracle's cloud packed with a bunch of nvidia chips they plan to buy and x ai's is a chat both, musk pitches it as a chat bot with humor to it and open source as well to put the mega fund raise into perspective, we just got through two weeks of ai announcements from openai, google, and microsoft, and just this morning openai announced it's working on the next version of chatgpt, meantime xai is going to use

cash to launch products as well. right now xai is behind the rest of the others i mentioned. also you can bet a significant chunk of that cash they just raised is going to go to nvidia to scoop up its best chips which, of course, costs tens of thousands a pop and another chunk likely over to oracle or whatever cloud service that -- if a deal doesn't materialize there. interesting list of investors, fidelity and sequoia capital are also investors in the post-musk twitter called x, of course, and through its significant value destruction of their most recent high-profile bet on musk it sounds kind of like that kevin bacon moment in "animal house. thank you, sir, may i please have another >> you know, it was favorite in college. i am quite familiar with that movie. but, i mean, my understanding was -- i talked to some people when they were making the pitch, steve, a number of weeks back,

that he's talking about potentially a large facility i think in tennessee, million square feet, full of h100s to your point a lot of $6 billion going to nvidia to, obviously, help power whab it is xai is going to be powering. >> that's right. keep in mind, too, just in the months leading up to this deal, musk kept pubically denying he was raising $6 billion he announced he's raising a lot of money is going to tech as well. there's interesting beef going back and forth on x over the weekend between jan, meta's head of ai, talking about just a lot of skepticism around what musk is doing here. he was able to raise a ton of money to do this we should put it in perspective, doesn't sound unique than what we've seen from the other giants in the cloud and nvidia side. >> being able to use twitter or x as the data source for the large language model helpseful?

it could be if you think x is full of valuable and trustworthy data, that is a great data set they have. risks to that. we've seen this with google with reddit data. there's always a chance a joke gets through as fact and things like that, so it will have to be grounded as well in reality, otherwise, you know, twitter, isn't the best source of information all the time, david. >> no, it's not. steve, thank you. >> thanks, david. >> steve covac tech is, of course, on a bit of a tear hitting new record highs this morning the nasdaq hitting new highs coming off what is fifth straight positive week, pushed higher by, what else, nvidia that stock's rally has it up 30%. that's just for the month. as for apple, it is looking to have what would be its first monthly gain of 2024, and is almost -- check right here -- almost positive for the year, down only less than half a percent at this point. joining us with more on the tech

rally and her top picks, the portfolio manager at advisors capital management joanne, let's start off with nvidia as it approaches a $2.8 trillion market value. has it got been ahead of itself? >> i don't think so, david it's always the case that, you know, a stock's price will build in its future, right, its future growth prospects are quite impressive put it in perspective, notice that nvidia's earnings over the last year have gone up 450, 460% its stock has gone up 250% earnings, you know, are leading the way. so actually the multiples come down in the last year. nevertheless, the stock continues to rise on expectations that its growth will, you know, will be more long-lasting than for many other companies in the market that investors can own. so that's why the stock is where it is, and we do see an awful lot of growth ahead of it. competition is coming, but it's going to take some years for

that competition to show inroads. >> what else to the extent that we sit here and talk so often about this opportunity when it comes to generative ai, beyond nvidia are there other names that you think are the greatest beneficiaries? >> there's a lot of ways one can invest around ai one is nvidia. but the other in the group is amd, developing chips coming out this year to do work in ai, more on the inference side, but that's a real opportunity and they continue to gain share against intel and servers and pcs. look at a company like broadcom. it's more diversified. it's not only in the iphone, but it's also enabling ai inference clips with the collaboration with google, so, you know, that's an opportunity, plus they're diversified into enterprise and cloud they have yet to report coming up in a couple weeks, look for weakness on the cloud and

enterprise side but their ai in cloud is strong and they generally have high margin businesses because of their deep technology moats >> we're in growth mode for all these companies in terms of adoption and demand, but how do you think about the sustainability of revenue growth for some of these companies that are in early and how long that lasts? >> you know, sara, so interesting to look at those nvidia numbers as just an exclamation point on how the world has changed. you know, you look at their growth last quarter, 460% earnings growth, boy, that's going to drop an awful lot this quarter only 260% earnings growth but this is just this big step up change in the opportunity ahead of them. a year from now, nvidia earnings are likely to be growing at 25 to 30%, in expectations. other companies that are just getting involved, right, will not see the same kind of step up this was a unique opportunity for nvidia looking at the software side servicenow which we own in our growth strategy is

a company deploying applications enabled by ai and so it's really hard to sort of get your head around some of these multiples because a lot of earnings and cash flow is ahead of these companies, and so, you know, this is an unusual time. it does take thoughtfulness about which companies really have developed applications that customers are paying for those are a few examples. >> joanne, there's been chatter to the degree there's a risk of a melt up, a lot of that will come from retail participating a lot more in equities we've got these robinhood metrics we watch, the memes are back, nvidia splitting ten for one. are you in that school >> yeah. you know, we tend to think that the market is going to be driven by the institutional investor. i think the potential nvidia and other companies that have done things similar helps the employees, enables them to stock options, et cetera in the company and we think that's useful, helpful for retail investors to be able to own some

of these things in their portfolios, but, you know, overall, what we're watching more broadly is the strength of the consumer and while they don't have that big stockpile of savings to work off of, they still are, you know, basically seeing a world in which they can get jobs if they want them, where their nominal wages are keeping ahead of inflation, so the spending power of the consumer is solid but on the flip side there are those concerns about how much they're borrowing against, you know, payday is coming up in the future through the new apps, concerns about, you know, credit card balance, although relative to income, they're not at high levels some segments of the consumer are clearly suffering and we're seeing that in the reports from some of the retailers who are talking about a little bit more price sensitivity among shoppers. >> joanne, thank you appreciate it. >> you bet after the break, ten reasons to be bullish on housing, plus the outlook for rates according to apollo's chief economist.

we'll be back on "squawk on the street." dow down 135, the s&p 500 is just barely positive thanks to the gain in information technology stocks. that's what's keeping the nasdaq going strong communication services also up today. we'll be right back.

♪ welcome back i'm pippa stevens with your cnbc news update. closing arguments are under way in donald trump's criminal hush money trial. the former president's defense lawyer todd blanche said he would need two and a half hours to deliver his case. he says trump's former fixer michael cohen is lying about the 2016 alleged payments that trump facilitated to adult film actor

stormy daniels. israeli forces pushing deeper into the gaza city of rafah today, despite global pressure to pull back after an israeli strike in rafah on monday officials say killed 45 civilians. prime minister benjamin netanyahu called it a tragic mistake. israel says the incident is under investigation. and melinda french gates says she will donate $1 billion over the next two years to support women and family rights across the world and made the announcement in a "new york times" op-ed it comes weeks after announcing she would step down from the bill and mylinda gates foundation >> quite a donation. thank you, pippa the nasdaq continues to push higher here hitting record highs again today. lot of fed speak, key economic data on deck from gdp. minneapolis fed president neel kashkari saying u.s. consumers in the housing market have

remained resilient, no reason to rush to cut rates. apollo chief economist torsten slok joins us now. we're talking about the idea, torsten, we haven't seen weakness in pricing on rentals and home pricing and plays a factor in why inflation hasn't come all the way back down to 2% is it getting worse? what's happening. >> i agree let's not forget that housing has a way of roughly -- weight of roughly 35 to 40% depending on how you measure it and housing is a critical component for the fed when they try to achieve the 2% inflation target. i should say for housing it really is the case that we have both supply and demand is still quite supported for the housing market overall supply quite weak, all measures -- [ inaudible ] across the board and across the country and on the demand side despite the textbook would have predicted when mortgage rates go up in the range of 7 to 8%, they have come down a little bit more recently and that should have

been creating more of a hit to housing. we have seen it strong wage, job growth across the board, the demand growth looks solid. the housing outlook as you can see case-shiller is up 7% year over year and still quite a significant risk it could put upward pressure on inflation over the coming quarters >> the counter argument the fed can't build more homes, can't do anything about the inventory problem, and, therefore, can't do much more on the pricing side of things. should the fed be waiting for more progress on housing before cutting interest rates, if these are the factors that are keeping them high? >> that's right. that's also why jay powell has been talking about super core inflation, super core excludes food, energy and housing to say housing we can't really control, so try to take that out of the e equation and remove that super core inflation in the last three or four months has begun

to reaccelerate super core inflation is airfares, restaurants, concerts, sporting events, auto insurance, medical services the service sector is having a tailwind, not least because of the $9 trillion gain in the market value of the s&p 500, since the fed turned dovish on the november 1 fomc meeting. the tailwind to consumption and particularly consumption services is strong and that's the challenge that super core inflation has been moving higher so yes, housing is maybe a little bit more challenging to control for the fed, but what they can control is broader consumption and that is still quite strong and the challenge for the fed as we look ahead. >> so i mean, super core worse than the cpi than the pce number what do you expect from that later this week and do you expect it to tilt expectations for what, what are we looking at now, september is 50-50? >> yeah. so as you know, of course, the market is now pricing only one cut this year, namely in september and no more cuts, so that's why, of course, as we all know too well from the beginning

of the year saying six or seven cuts to one cut is quite a dramatic turnaround. when kashkari overnight is saying he's not ruling out rate hikes, i don't expect rate hikes for a number of reasons but i think the fact that he's even talking about the rate hikes should not be ruled out. that is telling us that the tailwind to the economy, not only from easing financial conditions and the stock market has gone up but let's not forget that we have a significant tailwind from the chips act, the inflation reduction act, fiscal policy remains brisk that this economy continues to power ahead and, therefore, inflation not coming down to 2% as quickly as the fed currently snothinks. >> what are you doing with some elements of disinflation or deflation. core cpi deflationary, consumer package goods below target, gas prices 5% below the average for this time of year. how does that feed into your work >> this is very important because it is correct, absolutely, that goods inflation, which makes up

roughly a third of the cpi basket, that is indeed weak, meaning it's essential zero year over year and deflationary goods inflation has certainly become -- where the fed is comfortable with this should be looking okay it is more the services side, the remaining two-thirds of the cpi and two-thirds of consumption that still is seeing a tailwind and that's playing into what we're talking about in housing and everything else. and on both housing there's upside risk and everything else meaning super core inflation there's upside risks yes, it is a very important analysis to ask the question, well what are the components doing and the genesis that the biggest component, namely consumer services, is still not quite behaving the way the fed would like it to. >> torsten, kind of a hawkish outlook from you there thanks for joining us. appreciate it. still to come, sports betting stocks taking a hit today. we'll find out what the state of illinois has to do with all of that when "squawk on the street" continues.

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we're keeping an eye on some of the sports betting stocks today. you see a couple right there illinois lawmakers drafting a new budget that includes a sharp increase on sports betting operators. contessa is here to tell us what all that means. >> the surprise was how sharp the increase really is fanduel and draft kings falling as illinois senators approved that budget proposal for a progressive tax hike on sports betting operators. operators in illinois have paid a 15% tax since sports betting went live in june 2021 and the new proposal would increase that tax rate on a range of 20% to 40%, depending on gross receipts the largest operators, the ones whose shares are getting hit today, fanduel and draft kings, would be taxed the highest the smaller operators would be taxed on a sliding scale based on the revenue if this passes, it has to go through the house and the governor has to sign it, it would make illinois's maximum

tax rate the second highest behind new york and new hampshire's 51%. illinois is the fourth largest state for sports betting revenue and bettors waged $1.2 billion on sports in march in one month alone. the sports betting alliance, which is a group of leading sports bettors called the proposal extremely disappointing, that will cause real harm. sports books would have to reevaluate their level of investment and participation in the state. in fact, jason robins was asked about this on a recent earnings call for draftkings and says look, what's going to happen is we're likely going to see the burden shift to the consumer btig analyst out with a note this morning saying they don't see momentum for similar tax hikes in other states, but oppenheimer analyst jed kelly says if it catches on in other states this could accelerate draft kings and fanduel's consolidation given their cost efficiency you might see the big getting bigger in illinois, they have those two

have about 75% of the market share in illinois. in new york where the tax rate is 51%, they have 90% of the market share so it -- you might think that it would help the smaller operatefers they're paying less. that's not the case. the other people that it helps is all those run offshore sportsbooks because they don't pay any taxes at all they still capture far more of the market share than the legal operators. >> sounds like a bit of a loophole/opportunity >> you know, if states are looking for additional tax revenue, if they think that the gambling could provide state coffers more money, the industry is hoping that what it might do is lead them to legalizing online casino games. where right now there's only about seven states that permit online gaming, igaming what they think is the igaming is so much more profitable, the tax revenues potentially are so much bigger, that if you're

looking for additional money, maybe that's the place to look rather than creating barriers in sports betting >> so, how do they pass it onto the consumer >> well, there's two ways. the odds might change. they might make the odds to fall more in the house's favor. what you'd likely see it fewer promotions because in a lot of states the way it works, if you offer customers, say you're going to get $10 for betting $1, the sportsbook might actually get taxed on that like total revenue, because it's part of the total handle so, what you might see is fewer marketing spend, fewer promotions that target the consumers. they actually could see fewer tax revenues coming in because of the way the sportsbooks shift their spending priorities. >> well, illinois' budget has been a problem for a while >> that's not the only state. >> contessa, thank you big reaction in that stock. still ahead, nvidia is now worth more than meta, tesla,

net netflix, amd combined after big gains this month it's driving massive wealth gains for some we have new eye-popping numbers next stay with us

i want to point out the nasdaq because it is above 17k right now. first time ever. it's up another half percent it's being propelled by the likes of nvidia, up another 5% amd, alphabet, amazon, all the heavy weights. this brings the nasdaq's gains to 13 -- >> 13.25%. >> so far this year as it continues to outshine the major averages, thanks in part to this big tech rally there's nvidia, $2.8 trillion stock right now. it added nearly $340 billion to its market cap just last week as mega cap tech continues to power higher it's not just investors enjoying the rally. robert frank with a look at what it means for the ceo, jensen huang, who has become a very rich man >> very rich, sara adding $10 billion to his wealth after those earnings last week

he is now worth $94 billion. that makes him the 17th richest person in the world. he's now ahead of the walton family this year he has gained $50 billion alone. that's more than any other billionaire when you look at it on a dollar basis. it has been quite a ride for a man who once washed dishes and cleaned toilets for a living he has added $91 billion to his wealth over the last four years. he owns 3.5% of nvidia, which as you mentioned has a market cap of $2.8 trillion for him to become the richest person in the world, nvidia stock would have to top $2,400 a share or $240 a share after that june split that would put him above bernard arnault, the richest man with $211 billion i would say that kind of increase is out of the question. given the nvidia stock, maybe, maybe he could get there >> you never know, robert. given the accretion of value,

which is just -- we rarely, if ever have seen anything like it. it certainly seems a possibility. i don't know that arnault is sweating too much at this point. robert, thank you. robert frank of course, reporting on all those incredible net worths. for the overall market, we have the s&p in positive territory. you just heard about the nasdaq. vegetrghahd.t more market cora sait ea you need an idea. it's a pillow with a speaker in it! that's right craig. a team that's highly competent. i'm just here for the internets. at&t it's super-fast. reliable. you locked us out?! arrggghh! ahhhh! solution-oriented. [jenna screams] and most importantly... is the internet out? don't worry, we have at&t internet back-up. the next level network. i sold a pillow! i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put

finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

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good tuesday morning welcome to "money movers." i'm sara eisen with carl quintanilla. today the nasdaq hitting another record high. does the divergence between tech and energy this year make it time to reposition your portfolio? we'll talk to one fund manager who is bracing for possible consolidation over the summer. could higher for longer rates cause the government to intervene in a struggling office market plus, why new data surrounding iphone sales sending apple stock higher we'll get to that in just a moment first as far as stocks, nasdaq star of the show again, and it's also lifting the s&p because information technology, that sector, up