and "squawk box" begins right now. ♪ all right, good morning, everybody. welcome to "squawk box" right here on cbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is in washington, d.c., for the cnbc council summit. he'll be joining us a little it laer in the show. let's check out what's happening before we complain any more about our show. you see the dow up by 30 points, s&p 500 up by 12 and nasdaq up by 85. we saw modest advances for all yesterday. if you take a look at treasury yields, which have been driving things for as long as we can remember at this point, the 10-year is sitting at 4.74, the

2-year at 4.78. a little higher than yesterday at close but lower than what we've seen in recent weeks. go ahead, go back to the phones. >> i don't know how long it affected us, but illustrated how dependent on phones we are. if it went out for a week -- if the chinese has something up its sleeve -- at&t had an outage that prevented customers from completing calls. at&t described the problem as interoperability, an issue between carriers. it appeared to begin around -- i was thinking about what happened -- 2:00. so i was able to get text messages and one of them was, i think i'm going to start crying. >> oh, no. >> she has things -- you know,

there's things going on. >> i was trying to get something brought home for dinner. >> there's no crying in baseball. it can be disconcerting and you can kind of panic. >> we've become so reliant. we both remember days before cellphones when you had a plan, a backup plan, a place to meet people. >> i remember beepers and pagers. i remember dial phones. >> oh, yeah, me too. >> i remember cranking. >> no, you don't. >> no, i don't remember cranking. the fcc said it was looking into the issue. at&t suffered a massive outage back in february that brought down the servers for thousands of customers nationwide and later offered a $5 credit to affected customers. you can go get -- maybe they can give you half of a latte, you know what i mean? with the $5?

>> you don't get any added cream. >> what it tells you is how much we rely on it and how much americans will be willing to pay their cellphone bills over car bills when push comes to shofl. >> when push comes to shofl. pinching is not allowed anymore. you realize that. >> i do. in a filing intel said the transaction allows intel to unlock and redeploy a portion of its $18.4 billion investment in the factory to ore parts of its business. the factory, which is nearly complete, will affect things. the stock up by 1% not only for the day, but up point 6% for one year.

>> shares of hewlett-packard enterprises are sharply higher. revenue of 7.2 dlrsz. the company's also raising its full year earnings fwiepds ansz citing artificial intelligence servers powered by nvidia hardware. >> nvidia. >> still people are saying nvidia. >> i wasn't just saying because it's like inner peep pointed it out. it's obvious if you're in that business and you're doing research rmgs you ought to know it's nvidia at this point, right? >> so if somebody says -- immediately -- >> don't yell at them.

in the back of their mind, they don't know what they're talking about. >> someone said that very recently. elliott management targeting softbank again. it's pushing for the company to launch a $15 billion buyback. the report says elliott is currently engaged with softbank management. he tyke a chance. they ramped up the pace of buy backs. ee because is going to drop american express cards as a payment operation because of, quote, in this woirds drn plan to note phi customers about the change the week. i assume there's not an america

express. it's american express? >> yes. >> the "n" was just not there. overnight, there's a suspension of asylum claims allowing u.s. authorities to reject those who enter the country unlawfully. the ban will remain in effect. the number of crossings has dipped to below 1,500 people. israel has waged an influence campaign. it says the co-vertz campaign used hupp drawn up hundreds of it. it focuses on larms who are

black and democrat with posts urging them to continue funding israel's military. chatgpt was used to create many of the posts. i guess this is done all the time. it's a little troubling. every day that passes hamas knows its's going to become harder and harder for us real to do what it needs to do. i can understand why you would try to influence public opinion, which is what everybody does it. >> it's one thing to do it, and it's another to pretend you're something you're not. this is a problem. we've seen it from many countries who try to intervene on foreign policy. coming up, jobs data is in focus. did you know it's jobs week?

>> oh, you hadn't mentioned that. >> but it's wednesday. >> tomorrow we get the jobless claims. friday we get the big jobs number. >> it may or may not be big. >> it's big in terms of its import. >> and we're going to talk crypto regulation with cnbc share. later in the show you don't want to miss ron baron and barry sternlicht. he's going to tell us and hopefully update us on some of his gloomy forecast 18 months ago? 2022? some day. "squawk box" will be right back.

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it's jobs week in america. later today we're going to get -- now i think they're just messing we many. we're going to get adp's read. on friday we'll get the government's employment report. in case you didn't know, in case you're living under a rock. lindsey is covering the equity angle and steve with jpmorgan, a private bank -- i don't want to have a bank that would have me as a client, but i definitely could not be represented by -- >> we'd love to have you.

>> liar. >> lindsey, we haven't talked to you in a wheel. what do you think? >> i think the economy is still sticky. still very solid. the consumer is still spending. that's going to be difficult for the fed to justify a rate reduction. i think they're on track, but increasingly it looks like a 2025 event to me. >> you said a lot there. >> i did. >> you said there's on track for an eventual track. there's a lot of people who say as -- its double link the slightest bit, it will be okay. if you can tell me the next move is a cut -- >> jerome powell has set the bar

high. we have to see a meaningful reversion of inflation, meaning 6% before the committee would be willing to reengage and not just to lay eventual rate cuts. >> are you on the same page? >> we get a cut in december, but it's one cut for the year. but it's one move and that's it for the movement of cash. >> that would be the consensus and the big worry. i think when the market sells off, it's because it ee sinking -- it won't be the 70s. they could have ended too soon. we might not be restrictive. we don't know for sure. there's no signs in the economy. maybe there are. are there signs in the economy that it's starting to bite? >> no signs in the market.

>> i think we're seeing loss of momentum. we have seen this cooling effect. the labor market is tight, but still tight. the consumers are spending but at a noticeably reduced pace. we're starting to see the loss of moe moan item or derivative decline. but the overwhelming balancing is still justifying the relatively high levels -- >> it's a soft landing. >> softish. we're not there. part of the soft landing is the eventual return of price stability and we're still above the 2% tar debt and no confidence that we'll return to that trend. >> nasdaq, new highs, up 7%. memes stocks back. bitcoin's over 70,000. where are you not seeing sort of excitement and liquidity? i don't see how suddenly people are telling me that the risk of a slowdown is equal to the risk

of renewed inflation? i don't think it's even close. >> one, we think this is still a great environment stocks. fundamentals look good. growth is slowing a little bit, but still at good pace. inflation is easing. we think that's a good environment for a company growing earnings at a really strong pace. one of the things we look at, how are frostable companies doing relative to unprofitable companies. in some of the past bubbles, what you've seen is some companies tend to outperform significantly. over the last year as we've seen a rally in a broader market, that's not been the case. that's one of the signs that we're watching for concerns around a bubble and we're not seeing it right now. >> okay. friday, what's going to happen? >> i think after a disappointing number last month, we were down to 175. i think we do inch slightly higher. around 185. pretty much with what the market's expecting. still, we talk about the solid

labor market conditions but a loss of momentum from where we were in 2022, 2023 on average. the unemployment rate still below that 4% threshold at 3.9d. this is now the lowest stretch, below 4%. we have to go all the way back to the 1960s. so we are continuing to see this idea that labor demand is still outpacing labor supply, adding further uncertainty to that longer-term outlook for inflation that the fed is desperate to return to that 2% tar get. >> disappointing to whom? the 175? a lot of people liked it. you've got to define your terms though. >> it supports the notion that the economy still growing. >> we are looking for weaker numbers. >> we're looking for weaker numbers in that we are at that sufficiently restrictive level. i do think the fed with its hyperfocus stopped short of where we needed to be to ensure a return to price stability, not

just sit on the sidelines and hope for it, but ensure a return back to 2%. >> stephen, i think they's it. they've got to move the goalpost. we can see it. powell actually said that. we're getting close. >> i think the trend is the thing that's the most important. when it comes to this friday, we're focused more on the headline itself is what's happening with the wage data. there's a lot of signs that inflation pressures are easing. the thing that could throw a wrench in that is if we see a re-acceleration of wage data which would cause the fed to give a little more pause. >> what's the estimate and what would concern you? a tenth of a percent higher? >> right now we've been averaging around that 3% pace. that's enough to, again, sustain the consumer, but when we look at wage pressures even globally, we continue to see the surprises to the upside, which may throw a

wrench not in terms of the fed's longer-term pathway but the ecb as well. >> the ecb is going to do it this month. >> they are. but if we see any further surprise, that could certainly slow their progression and grow that timeline between the expected reduction this week and the next rate reduction by the end of the year. >> i just think watching the fed might be what slows the eb down. >> that too. remember, this global policy divergence is likely a reflection of differing economic conditions. we've seen much slower growth oversees as opposed to the u.s. and that disinflationary trend has been much more robust overseas than it has been. i do think when we look at these different central banks around the world, there's justification for easing abroad that we're not seeing here at home. >> so you are fine with one cut. you're happy, you think stocks are going up, good environment. you don't need five or six. you've weaned yourself off -- not you in particular but as a

wall street guy, it's not all about cuts for you. >> yeah, because we actually think the one cut is a scenario that reflects a strong fundamental growth environmental more so than the reflection of, you know, potential weakness. we don't think that this economy necessarily needs that boost because there's enough natural positive tailwinds that are going on that are supportive of markets. >> are they natural positive tailwinds or is it a lot of excess from the fiscal side of things? >> no. i think -- yes. fiscal has been a big telling, but if you look at the private sector, both corporates and individuals, they're in fantastic shape both in terms of their balance sheets, income growth or earnings growth. these are really positive signs. earnings are what are driving our expectations. we think over the course of the nether yoo, you can get 8% to 10% out of the s&p on top of the rally that we've seen, and that's entire will because of

the earnings outlook. >> is that because the companies are able to raise prices and gouge as we hear constantly, lindsey? i mean, middle and low income consumers are not feeling income growth or earnings growth. >> they're feeling it. inflation has come down from peak level. >> it's in the positive. they're lower than they were. >> there are. consumers are feeling the pinch of the high consumer costs. they're seeing the shift in their basket month to month. but, again, underlying momentum, consumers are still spending in the marketplace, and 2% growth is still indicative of the overall demand. >> they might be getting that $5 if they have at&t. so they can buy a dozen eggs. >> yeah. and then have a little change

leftover. >> they've got that going for them. >> i always say steven parker. i said steve. what do we do next time? >> my wife says stephen. she thinks that's classier. >> stephen. we've been talking about that. we'll go with stephen. stephen, thanks. >> thank you. >> lindsey, thanks. thank you, both, for joining us on this jobs week in america. when we come back, betting big on texas, we will tell you about a new stock exchange that's hoping to take on the new york power players. that's next. "squawk box" will be right back.

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a group backed by blackrock and citadel's security is planning to start a new tox exchange in texas taking on what they see as onus expectations. they say the texas stock exchange has raised $120 million from individuals and large investsment firms and plans to file documents with them later this year. the texas exchange backers say it will be more ceo-friendly, have lower compliance costs than new york exchanges, and won't have rules like the nasdaq's

targets for board diversity. the texas exchange will be entirely electronic, but plans to have a physical presence in downtown texas. separately, nasdaq's market subsidiary is going to be the first in the united states to give companies the option of holding ipos. bloomberg is reporting that i thatter ooh having conversations with several large capital and private equity firms. it would give them the opportunity to divest stakes in the employment portfolios. i would have access to the company's financial information before participating. the nasdaq is eyeing the second half of this year for the first of these deals. i guess we haven't seen as many ipos, maybe this is a way to do it in a little more orderly fashion, a way to be able to get back access. that's been the big question. it used to be if you were a private equity, you would hold

on for seven years. that time has gotten exteblded with higher rates being the big culprit for it. when we come back, longtime tesla investor ron baron will weigh in on next week's shareholder vote and whether he'll weigh in on elon musk's compensation package. that interview just about an hour away. right now as we head to the break, will it ooh is take a look at yesterday's s&p 500 winners and losers.

good morning and welcome

back to "squawk box." we're live at the market site in times square. as we take a look at the futures, so far, so good. s&p futures up by 12. take a look at the memes stocks. game stock and amc, right now both trading in the red. not down by a lot, especially when you consider the gains we've seen. game stock back below 30 bucks. 26.33, that's a decline of just 17 cent this morning. amc is off by 11 cents, which is a 2% drop. new fund-raising data revealing which candidates the billionaires are backing. megan cassella joins us now with more. good morning. >> good morning, joe. former president donald trump has the edge when it comes to donations from the billionaires. we had opensea carets crunch some of the data for us.

so far in this election cycle, trump and the republican national committee have raised more than $42 million compared to $35.5 million for biden and the democrats and puts trump at a $7 million advantage despite funding from about half as many billionaires. as we look at half the financial sectoring people in finance traditionally support republicans over democrats, but the history here is interesting because that's except for the past two cycles with biden on the ballot. but at least so far this cycle, wall street is reverting the trend, sending about $5 million more to the gop than the democrats. all of this shows how the momentum is on trump's side right now. his campaign said he raised $141 million in may alone and a number of those who swore off trump have come back to him.

tickets have sold out. joe? >> there was a huge gap three months ago, i think, megan, and it almost looked insurmountable. do you know total right now what the two camps have in the bank? i think biden still has more, doesn't he? or has trump actually caught up at this point? >> the most recent data is a little bit dated at this point. you're right. even though trump did youts raise biden by the 1st of april, biden has more money in the bank. but we're seeing a shift. the verdict last week sent a lot of momentum to trump's side. yesterday i was went ken goldman, the former cfo who used to manage eric schmidt's office. he said folks he talked to where he lives in silicon valley and new york as well, there's really been a shift in support. he calls it undercurrent support because people don't want to really raise their hands, and it's not so much that it's pro

trump. it's not a huge amount for trump as it is against biden. in the last few months, there had been a big league. now there's worry about the corporate tax rate and regulations and folks are starting to change their mind a little bit. >> yeah. we've seen it on an individual basis as well, the evolution of bill acklin. watching him had more to do with president biden and his age. guys like elon musk, if you're not -- if you have a big meeting in the white house of ev makers and you don't invite elon musk because he's not union, that's going to be tough to patch up, i would think. some of these guys have their own individual issues. schwarzman. many have -- >> they're coming back. the other thing that's interesting as we get closer to

november is that folks start to put their money behind the candidate that they think is going to win. everybody wants to support the winner. you want to have some influence in the next administration. so even regardless of personal feelings -- like you said, some who said never trumper have come back. they're certainly helping one they never thought they would support again because maybe they think he's going to whip. so i think that could be part of this shift as well. >> i meantime goes fast, megan, but i don't know. five months -- i'm gearing up. i know you are too. thank you. we're going to love it. it's going to be great. it's going to be very interesting. interesting times. >> coming up, cftc chair rostin will be coming up. follow squawk pod on your favorite pcaodst app and listen any time.

we're coming right back.

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bill that still needs to make its way through the senate. for more on the current regulatory environment and markets on crypto, we want to bring in the trading commission chairman rostin behnam. great to see you. >> great to see you, too, becky. i want to start with crypto. it's caught so much attention and looks like it will make progress in washington. i thought you'd be happy about this because it hlooks to give more oversight to cftc. this is not a bill you're recommending, why? >> there are elements of it that

certainly impact the cftc. there are elements that impact the s.e.c. i've largely weighed in as as i've said publicly, this is a bill about filling the gap and accomplishes the goal, giving us regulatory powers to regulate them and bring some transparency to this particular side of the market that involves commodity tokens itself. >> so you are in favor of it. >> i'm supportive of moving forward with legislation to fill in the gap. there are some issues i raise with members of congress about the bill. as you said, it's just one step, the senate still has to take up the bill. the white house has weighed in and says it wants to work with congress to fill the gap and further support both innovation which, you know, is outside of my purview and there's gaps and regulation issues. >> but you're in favor that it does give power over the

cryptocurrencies themselves. >> 100%, and we've said that all along. as defined, what we've experienced at the cftc for over a decade is the gap in regulation where we don't have tools to regulate the market and it's leaving a pretty significant chunk of the market unregulated. you're talking about 60% in the entire market cap of the crypto to market. and with that in mind, i think we have a serious issue in terms of filling that gap, and this is what this legislation achieves. >> what are some problems? >> there are some areas i'd like to deal with, specifically funding for the cftc. how we transition from legislation passing and writing rules and having folks come into compliance. i wouldn't say anything majoring but there are things that need to be addressed in the next step.

>> is part of it you need more funding? the knock on that is the cftc doesn't have neil the oversight that that the fcc has. >> that's a rational conclusion. if congress is going to give us more authority or tools or bigger mandate, we're going to need more resources, you know, similar with any issue with the action that congress takes with respect to the executive branch. these agencies need more moneyful we're going to need more personnel, hardware, software, expertise, so we can build that up. >> that was the knock from critics. they chose the e cftc because the light touch.

>> i differ with the light touch. our enforcement level speaks for itself and it's specific and prescriptive in parts and we've been the toughest cop on the beat going back to 2015. laugh half of our enforcement docket last year was crypto. the light touch is a bit of a narrative in washington. you have two market regulators and a legal framework that defines tokens and securities and compomodities. i'm just out there making sure that folks understand what the risks are and we need to fill this gap. >> what kind of pressure did you feel from overlords? are you totally independent? ? i can't understand sometimes gary gentzler. he knows about crypto. he was at mit. i wouldn't say it with us 180, but he certainly got -- it

seemed like he changed a little bit on what he thought about bitcoin, crypto in general. and then you look at senator elizabeth warren. take your pick maybe on either side of the aisle, i guess. seems like more on the left are against crypto. i dare say some of the bad actors, it wasn't about crypto itself. if you had an open mind, you could have had regulations. but because he had this default that all crypto was bad in the first place, where did that come from? did that come from the administration? did you hear similar things? >> look. i can't speak for what overs in the administration are saying or thinking, but you take these jobs. you have huge responsibility. you have a lens into markets that very people do, whether it's derivatives? >> do you agree with gary g

gensler. >> my opinion should not be what i think or like. it's my duty as a regulator. we have this legal frame woc that defines commodities in a certain way, we have tokens that the way they're constructed fall within the definition of the law. we've seen the way the markets emerge. we've seen it by institutional investors, and right now we've seen sustained enforcement actions. my number one responsibility is to protect investors and the economy, and when we see continued manipulation and fraud in this market, when half of my docket is crypto in an area when i don't have traditional are egg la torrey rules, that is in my mind a huge red flag and something i need to speak up and i ebb gauge with continuation.

you used the phrase overlordes. i have authorizing committees in the senate. i have to report to them. i have to tell them what i'm seeing, what i need from a budget respective is with regard to writing the law. >> we all have overlords. we all have overlords. let's talk about something else that you are kind of cracking down on. i won't say you don't like it if you're looking at this and seeing a problem. we're in an election year. you're seeing a lot of contracts on who ease going to win this election frmgts you're saying this is not anarea you want to be the enforcement cop on. >> yeah. this actually goes back a few decades to the early '90s. there's a universe in the midwest that wanted to list

these contracts as a prediction market to support the sort of polling information we get. ultimately in my view, the law is clear. it prevents and proehibits contracts in certain areas, war, terrorism, gaming, anything that's against state or federal law. through that, we took action to ban rule proposal contracts on elections. as you point out, becky, for a number of reasons, most notably betting against state law and public interest, which i hope we could all agree we feel pretty strongly and these contracts s should not be allowed to trade. we have enforcement derivatives. we also have enforcement authority over cash market if there's fraud or manipulation. so in the case of an election contract, if there's alleged fraud, you know, and it could be

news about a candidate at the local level, at the federal level, it could be news about a polling station and potential fraud or manipulation that's happening there, if there are allegations of fraud or manipulation, we would then at the cftc have to police that because one could connect that alleged fraud with the polling location, with the news story, with the manipulated price. >> we look at predicted because there's more money being placed and that tells you more than the polling does. >> one would assume if you're putting money down, you're betting more than if you were voting with your heart. >> there's an rpc average too. it's not predicted. i don't put much stock in it, although, betting market shows dead heat when biden was up by the same amount that trump was,

biden, clear winner. you can't believe anyone. you have more to do than just crypto. >> unfortunately it consumes a lot of our time, and i would say -- i'm going to speak at a conference later today, and you think about the past four or five years with covid, the geopolitics we're dealing with in the middle east, they've performed quite well and this is a good result. >> throw in ai and deepfakes to really make it fun. >> a lot coming at us, but we're managing it the best we can. >> rostin behnam, thank you for coming in. i think i understand a lot better your position on this. >> i don't understand why you take the job. >> i'm still asking that myself. thanks. ron baron is going to weigh in on next week's shareholder vote and whether e he's going to back reauthorizing elon msk.

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new york governor kathy hochul is quietly maneuvering to delay a controversial congestion pricing plan. just weeks before it is set to take effect, this is according to the, like, so unbelievable, according to "the new york times" report, it said governor hochul still believes the plan, the pricing is good for environmental policy. emissions and the like. but has concerns it might hdete

commuters from returning to the central business district, which has not returned yet. we're begging, commercial real estate, we're begging for people to come back to new york city. let's charge them $15 to come back. the plan would charge -- >> on top of what you're already playing. >> you wonder why politicians -- why people don't like things like this. the plan would charge drivers as much as $15 to enter manhattan south of 60th street, scheduled to take effect june 30th. it is not clear the governor's new push to delay the plan could win the approval from new york's state legislature. but if you're thinking about, you know, starting a business here -- >> every time we talked to the proponents of the plan, they say business is behind. it will hurt business coming into restaurants here, it will hurt -- like the parking garage. >> it is like 20 $17 or $18, ye.

when we come back, a.i. chip competition heating up. but can intel and amd catch up with nvidia? we'll tackle that question next.

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intell and amd stepping up competition with nvidia, all three announced new a.i. chips this week. joining us now, paul meeks, harvest portfolio management co-cio. i think we talked about this issue last time, paul, in detail, and the moat, maybe, that nvidia does or doesn't have. what do you think of the news

from -- let's start with nvidia. i'm still getting up to speed on the blackwell, and now i got to figure out the rubin. have you figured it out yet? it is not a sandwich, i know that. >> yeah, these are named after famous female scientists, which i think is cool. >> it is cool, yeah. dark matter. the person that discovered -- or postulated dark matter for rubin. >> you're well schooled, joe, i love it. >> not really. i have google. anyway, go on. >> so we have this computext trade show, a big daddy trade show, taipei, taiwan. at that show, of course, jensen huang is always going to be the marquee speaker or one of them. we only announced blackwell in march. and here we are, less than three months later, and we're announcing rubin and also giving some hints to the product

platform thereafter. so right now we're covered for essentially '25, '26, and '27. and this is really unprecedented when a semiconductor company, particularly dealing with such sophisticated products and manufacturing goes to the next platform. this is usually a couple years. they are cranking these out on a yearly cadence, which is going to keep them ahead because that is really tough to do. now, at the trade -- same trade show, amd announced product, you know, they're racing hard, and so did intel, and so did some derivative plays on qualcomm and a arm. i think nvidia will stay ahead. it is a very, very big pie. amd is a well regarded company, they will get a slice, but nvidia will still stay top dog.

intel is a company, at least on the manufacturing side, that has been the gang that hasn't been able to shoot straight for about 20 years now, joe. and so i think that they will make a comeback in pc oriented cpus, but all their claims about a.i., maybe they get there, but i will believe it when i see it because they don't have a lot of credibility with me. as of now, i think nvidia is still in a comfortable position, the stock is trading at about 32 times next year's earnings and should grow their eps at about that rate, so i think it is no longer a relatively cheap stock. right now, it has a peg ratio of 1. i think it is approaching fair value. i wouldn't be aggressive buying it here. but i would continue to hold it. i think these threats that have come out in the last couple weeks or purported threats and

at the end of the day, nvidia will maintain a big, big position, very lucrative, though amd will take some share. >> right. so, intel does regain some share in pc, cpus but you don't think they're credible in a.i. and it is a $30 stock and watching it over the years, i remember jerry sanders, i knew the guy when i was out in los angeles, at amd. no one would have predicted -- amd is twice the size now, market cap, of intel. they just left -- and nvidia is four times at least the market cap of amd. it is staggering what has happened. so the pie is big enough for amd to benefit a.i. pie, chip pie, but the pie is so big that nvidia doesn't even hurt nvidia in your view? >> i think they'll be hurt a little bit, but thaey'll have a major share and right now the

stock is run, revenue and earnings per share growth have been at least the pace if not ahead. i think it is actually a reasonable holding, if you have a tech portfolio, i still think even at this price, nvidia is an anchor. >> all right. we're going to leave it there. so, it is, in fact, my god, nvidia almost 3? 2.8? so it is much more than four times the size of -- it is almost eight times the size of intel at this point, paul? no, more. 20 times! let's see, if -- i shouldn't do math on the fly, nvidia is 2.8 trillion, and intel at this point is 127 billion, so it is just mind blowing. but i was just blown away that amd, after all these years, amd -- remember it was an also

ran to intel. this is not new. about five years at least. >> it has been very strong. all right, this is just after 7:00 on the east coast and you're watching "squawk box" on here on cnbc. i'm becky quick with joe kernen. andrew ross sorkin joins us right now from washington, d.c. good morning, andrew. >> good morning, good morning. >> among today's top stories, at&t says that it resolved an outage that prevented many of its customers from completing calls between carriers yesterday afternoon. at&t described that problem as an interoperability issue between carriers. it appeared to begin around 2:00 p.m. eastern time and it was resolved about six hours later. elliott management targeting softbank for a second time, according to the financial times. it amassed a stake of more than $2 billion and is pushing for the company to launch a $15 billion buyback. and intel and apollo agreed on a joint venture for an intel

manufacturing facility in ireland. apollo will pay $11 billion for a 49% equity stake in that facility. the factory, which is nearly complete, will manufacture the company's latest pc and data center chips. andrew? >> thank you, becky. look at the futures this morning. we're looking up about 30 points higher on the dow. nasdaq up about 67 points, looking at the s&p 500 up 9.5 points. right now, i want to get to dom chu looking at this morning's premarket movers. >> we'll kick things off with late breaking earnings news from this morning and that's dollar tree. shares of the discount retailer moving between gains and losses but currently down just about 2.75% over 80,000 shares of trading volume at this point. this is the parent company of its namesake stores, also family dollar outlets, that's important. i'll tell you why. it reported mixed results. it appears that profits came in just slightly below consensus and revenue slightly above consensus. sales growth established store locations across all businesses also came in below estimates.

but separately, dollar tree also announced that it started a formal strategic review of alternatives for its family dollar unit. that could include things like a potential sale or spin-off or other separation of that business. so on balance of those shares, still down 2.75%. also making moves in the premarket, a couple of tech stories. hewlett packard enterprise, up 13% on a quarter million shares of volume. the business tech hardware and solutions company reported better than expected profits and revenues after last night's closing bell. those results were driven in part by what else, better than expected sales of server computer systems and data centers and artificial intelligence oriented systems. hpe raised its full year revenue and profit forecast, that's the reason why those shares are up 13%. and we'll end with the move in crowd strike. shares of the cybersecurity company are higher by roughly 9.5%, just around 65,000 shares of volume, after it also reported better profits and revenues than expected after last night's close.

it also gave better than expected guidance as well. crowd strike was helped along by better van for products given the changing paradigms and business for how companies use technology given, yes, artificial intelligence applications becoming more and more front and center. so a.i. bigger theme among many tech trades these days. i'll send things back over to you. >> that is the trade of the day, the week, the month, the year, dom, thank you. joe? coming up, the ecb getting ready, looks like, to cut rates. the fed is expected to remain on hold. will jay powell be late to the rate cut party? that's next. and billionaire investor ron baron will tell us whether he will support elon musk's pay package. i think i can figure this out. he joins us at 7:30 a.m. eastern time to explain his decision. "squawk box" coming right back.

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the ecb is widely expected to cut rates tomorrow. the fed expected to remain on hold next week. steve liesman joins us now on whether the ecb is early or whether the fed is late or whether it just makes sense given the economic backdrop and the respective areas, steve. >> yeah, that's a good point, joe. but, listen, by one measure the fed is late. it is a little known inflation index, economists follow it. it allows europeancompared. it shows they are exactly precisely in the same place. the hicp, it is an international standard, it shows the u.s. -- as of march, u.s. and european inflation were the same. 2.44% year over year.

that is out to the hundredth decimal, even while growth is substantially higher in the u.s. than in europe as joe points out. ian shepherdson tells me business surveys say a downshift is in train and you should be looking now to trigger a policy shift because it takes so long for it to take effect. there is a real danger if you blink, you'll miss the soft landing. shepherdson points out the fed back to 1971 has typically cut rates months and months and months before inflation even peaks, 22 months you can see there in 1971, 6 months in 2001. if the 2fed cuts in september, t will do so 31 months after peak inflation. there are many who say the fed or -- nobody should use the hicp because there is no housing in it and the ecb could be making a mistake by ignoring it and the other side of the coin, they say u.s. housing inflation has really lagged and the fed should ignore it. whether the fed is late in the ecb will depend on the outlook

for u.s. and global inflation. i talked to bruce cashman at jpmorgan yesterday. he says personally, i think inflation will prove to be stickier so i think both central banks will be delivering less easing than the market has priced in. the market has a later start for the fed priced in. but see both central banks delivering about 110, 120 basis points of cutting or easing through the end of 2025. if that's the case and if both economies avoid recession, it may not matter when each starts. if there is a recession or a rebound in inflation, then, joe, one of them will have ended up messing up. >> i guess you know it is jobs week in america. you're aware? >> yeah. >> they keep reminding me. can you tell us -- >> the who wle week, huh? >> it is only wednesday. we love it. we love it when it happens. we heard the last one was disappointing.

and i kind of said, well, disappointing to who? not to people that are looking for hopefully a restrictive policy, finally, you know, finally catching or finally biting. is it 175 about right or do we get 185? what do you think we get friday? >> i'm seeing 190, joe, in terms of the estimates that are out. so, it is still strong, still seems like there is a pretty good demand for workers out there. pretty good interest in hiring, maybe not as much as before. these are still strong numbers, joe. and i don't think the fed is going to get too much solace out of a 200 number. 150 is a little bit better. and we're going to watch the whole wage story. as i said, i think a couple of weeks ago, joe, every report now is an inflation report. nobody cares about the growth story. it is all about how does this number impact the outlook for inflation? >> 3.9, too, 3.9 unemployment

and people say the risk is symmetric, that the dual mandate there are equal risk for the deal mandate. i don't see it. it seems like, right, we're at full employment, they don't need to do anything for full employment. they may need to do something for inflation still. thanks, steve. right? am i right or am i right? >> you're right. >> thanks, steve. steve will return at 8:15 a.m. you know who that was? ned. needlenose ned. "groundhog day." with today's adp employment report. coming up, roaring kitty, one state is launching an investigation now. is there a case to be made against this? "squawk box" coming right back. in my health insurance. gap in your health insurance? yeah, it didn't cover everything when i got hurt. good thing i had aflac. hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. it really helped close that gap.

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from selling a business to giving back to where you come from, a raymond james financial advisor gets to know you, your family and the way you bring people together. that's life well planned. welcome back to "squawk box" this morning. keith gill, the investor known as roaring kitty, re-emerging on the social media scene and setting off a frenzy around gamestop. some regulators taking notice and now massachusetts' top security regulator opened an investigation. joining us is the former branch chief of the chicago s.e.c. good morning to you.

we're all trying to understand what an investigation in this case could look like. and what kind of jeopardy he is in. >> so, this is definitely an investigation into whether he is moving the market. so, it is a market manipulation, the massachusetts securities regulators will be looking to see is he potentially coordinating with other people, is he engaging in, you know, any kind of illegal conduct. they'll look at his internal -- his communications with other people, his texts, his emails, his -- what other communications he's had maybe on other sub reddits, have there been direct messages on twitter. but they're concerned that this

is an effort to manipulate the market and for him to make money for himself through what -- through illegal disclosures. so that's really the -- >> right, let's just back up. let's say, let's assume for now that he has friends, and that he texts with them and maybe he emails with them and messages with them on reddit and other places and says, hey, guys, i'm thinking that i'm really getting more bullish on game stop. i think there is an opportunity. i'm thinking of posting something kind of funny, i don't know what you think if this is funny or not, but i'll post this tomorrow at noon. let's say he did that. and let's say the response is from his friends were, hey, that's a great idea, i'm going to try to load up on this stuff too. maybe -- is that agreement, now they're a team, i don't think they're a team over 5%, which historically would be a threshold, where does -- where is the line for this? he's not an insider.

>> that's right. he's not an insider, but if there is a group of investors or people who are secretly, that's really the big question here, is it secretly coming to an agreement about purchases and sales of the stock in order to make money, or is it out in the open? the big difference was back in february of 2021, everything was out in the open. so, people were posting, you know, diamond hands and don't sell and this is going to be a short squeeze. if what -- if all that is happening here is keith gill is posting something, saying this is what i think, then he's far less risk because the securities markets, the whole system that we have is based on disclosure. so, if you're disclosing stuff you don't have to disclose,

that's great. >> right. there should be a regulatory path. >> one of the things, though, i know people who are watching this, we talked about this yesterday are saying to themselves is this happens every day, every day there are millionaires and billionaires on wall street who are talking to each other by telephone, bloomberg message, by text, about different positions that they're thinking about making. this is not only no different, this is the little guy, i hate to call him the little guy, this is the consumer playing the wall street game. >> and that is definitely something that this retail revolution, this uprising of the self-called apes is about, that they are trying to get into the markets, they're trying to do things that, you know, have been done for years by insiders.

the problem is that, you know, if a bunch of millionaires are talking to each other about loading up on some stock before somebody takes an action, that's insider trading or, you know, they could be a manipulation. so, the apes and people who are bullish on gamestop have to stay clear of what is illegal conduct that often is hard to prosecute. because it is hard to get the evidence. >> lisa, we got to leave the conversation there. before we let you go, because i noticed a couple of things in the background, i like your background for a couple of reasons. i wanted to know what it is. it says ape. what does it say? apes together -- >> apes together strong, it is a documentary made by the mulligan brothers about this situation and i am in it. so they sent me a poster. so i keep it up there. >> fair enough. so i like what's to your right,

i think, which is you have a good copy of there "too big to fail." thank you. appreciate it. when we come back, a lot more here on "squawk box." 26 northbounder josh harris is the new player on the nfl field after acquiring the washington commanders. he's become a big, big deal here in washington, d.c. where i am. and that deal landed him the team and we're going to talk to him after this. you're going to see some of that interview as we talk about also the future of private equity in the nfl and also two big powerhouse interviews on the way. ron baron on all the drama around elon musk's pay package, that's minutes away. and starwood capital's barry sternlicht at 8:30 a.m. eastern time. what a big show we have on "squawk box" this morning. coming right back. >> announcer: time now for today's aflac trivia question. when was the first college world series held? the answer when "squawk box" returns. trading at schwab is now powered by ameritrade,

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today's aflac trivia question. which was first college world series held? the answer, 1947 in kalamazoo, michigan. >> welcome back to "squawk box." at the cnbc ceo council summit in washington, d.c. i spoke to 26 northbounder josh harris nearly one year ago led the group that purchased the washington commanders in a record-setting 6 plus billion dollar deal. i asked him about the difference between running a firm versus running a sports team. >> on business, the key is ebitda or stock price. in sports, it is about winning games. and delivering championships for the city. that's your first job. and your second job is to be -- create memories and to lead by example and steward these franchises. >> i also asked him about that record deal and how he made it happen going up against jeff bezos in an auction for the

asset. >> when the commanders were potentially for sale, i had moved on, and my friend mark eye said come on, josh, let's look at the commanders and i said, come on, i'm not going to price the commanders for jeff bezos. i've done this before. and we're going to spend a lot of time and get outbid and that started a whole process of first mark nagging me, introducing me to mitch rails, we created this incredible group and ultimately went through super complicated process which i can go into, but basically it was one of the harder deals i ever had to accomplish. >> the big issue in the nfl now is whether it is going to consider letting private equity invest in sports teams in the size of josh's deal. here is what he had to say about what may happen next in the nfl. >> created a little bit of a

wake-up call at the nfl that unless you're one of the wealthiest, not wealthiest 400, wealthiest 50 people that, you know, writing a $5 billion equity check is hard for anyone and that the rules that exist in terms of putting together a group to buy an nfl team are restrictive. raising that amount of capital was unique. had never been done before. and i think it may be leading to some rethink as to, you know, the consideration of, you know, letting private equity as an example or institutional invests near t-- investors into the nfl >> we talked about so much more, including in the world of private equity, where we are in the economy. he said thfascinating conversat just about what it means to be a sports team owner. i think everybody wants to be a sports team owner one way or another, and he is a big one, not just in the commanders, but also an owner of the 76ers and has a stake in the devils and so

many others. becky? >> yeah, he's got a good gig. that's a portfolio a lot of people would love to hold on to. andrew, thank you. we'll continue talking about this. i do want to hear later on when we have more time about what he said about why investing now in private equity. i want to hear more about that. whether we come back, elon musk's pay package is dividing tesla shareholders. ron baron will tell us if he's going to support the compensation plan when he joins us next. "squawk box" will be right back. not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? can ai help your people work... without all the workarounds? feel better. make customer service work the way customers expect? that one. make your old tech work with your new tech? thank you. and todd here is wondering, can ai do all that...

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all right, welcome back, everybody. our next guest is going to be weighing in on elon musk and tesla. the markets and much more. we want to welcome billionaire investor ron baron of baron capital, the chairman and ceo there, and, ron, it is always great to see you. thank you for coming in today. >> don't use the word billionaire. >> you didn't. you didn't. unfortunately we did. because we have to call it like it is. >> all right, multibillionaire. >> there you go. >> so before we talk about this, i just want to know, did you guys see over the weekend the article on the front page of

"the new york times," did you read "the new york times" at all? >> no. >> yes, i do. >> passing by the newsstand, you could have seen it, basically it was talking about how elon has brought the internet broadband satellite to the amazon in brazil. people don't have clothes and now they have the internet. unbelievable what he's done. unbelievable. changing the world. >> it has been a big deal in ukraine too, on the war front. before we jump into what you think about tesla and the pay package, whether you're going to vote in support of that, why don't we talk about how much you own. i was looking and it looks like -- i've known you've been a long time holder, some of your funds, 2.7%, 3%, 2.8%. the baron partners fund is almost 30% long position in tesla. so, you are a massive shareholder. >> also $13 cost, so, you know, so we owned it since 2014, 2016. between 2014 -- i imagine 2010,

2014 and '16, it took me four years. what took you so long? 2014 to '16, we made about $5 billion at the peak, now we made about $4 billion, sold about a quarter of our stock three years ago. >> how much do you hold now though in total? >> i don't remember the number. but it is a big percentage of our asset, 7% or 8% of our assets in total. >> so what do you think about this pay package? this is a pay actage that shareholders approved once. the judge overturned it and now it is going back to the shareholders again. how will you vote your shares? >> we're voting for. before i talk about that, there is three things i want to discuss with you today. one is contracts, of course. then i want to talk about elon's ecosystem. all the different things he's doing. and then elon. i want to talk about that, what he's accomplished. so about the contract, first of all, he was, you know, we started, these numbers are

pretty cool. we started when i met him in 2010, they were doing 2,000 cars a year. and then in 2014, 31,000 a cars. that's when we started buying. and 2016, 76,000 cars, last year 1.8 million. so, significant growth. and he made promises, if he met these metrics, of ebitda, of revenues, of market cap, that he would get this extraordinary compensation. and the compensation, when he started, the contract was signed, it was the company's market value was $53 billion. got as high as a trillion and is now $550 billion. i think in the next ten years, we'll make four or five times our money again in tesla. he's created tremendous wealth for people and he was paid -- his contract is enforced, which

i think it should be -- he's paid $56 billion. it is like winning the lottery. and joe was talking about it before, win the lottery, you don't tell someone, i'm sorry, you won so much money. >> i remember thinking at the time that the compensation deal was a crazy setup, but i also remember thinking at the time that i never thought he would hit any of the metrics. he hit every one of the metrics. so it is hard to imagine taking that back and clawing it back. >> exactly. so, that's exactly how we viewed it. i said, man, if he hits this, this is fantastic, we're going to do so well. again, we have another contract going from this point, going forward. so number one, the contract, so, 73% in 2018, 73% of the investors approved it. all of the disinterested parties who are directors, they approved it. and the people he has who are directors, these are not just, you know, flakes.

they are larry ellison, one of the wealthiest men in the world, hiro mizuno, the head of the japanese, you know, pension fund, largest pension fund in the world, $1.5 trillion. kathleen thomas, and robin denhome who came later. they approved this. they thought it was a fair agreement. basically, number one, that's the will of the company, the will of the company and the will of the shareholders, so i think he should be legally binding contract. and who sued? you had an individual who was a shareholder for hire, with nine shares. nine shares. and it took him five years to get the derivatives certified. but class action wasn't, so he doesn't really represent all the

shareholders. and the lawyer who represented them, when you talk about getting lucky, he has applied to the court for payment of 5$5.6 bil billion. and then he is asking for a payment to be made in shares of tesla stock, which are depressed because of this lawsuit. it is crazy. and so i think that, you know, it is really unfair the way they're addressing this and i think that he earned it and he deserves it and he should be paid it. >> you said for a long time, when we asked you what your biggest concern about tesla would be it is the key man theory that so much is riding on elon musk being there, if he's not there, you don't think the company is worth the same. what do you think happens if this package is not approved? what will elon do? >> i can't see inside of his mind, but i know he has created

tremendous value for everyone, i know he has a big stake in tesla. but, you know, when i started in business, in 1970, one of the people who really helped me at the very beginning of my career was jay pritzker. tom pritzker's dad, and the founder of hyatt. and we were talking about arrangements and he said, ron, if you need to have a contract, then you're doing business to -- you're doing business with the wrong person. you can't rely on a contract to do business -- and you have to -- he's a handshake guy. if i say i'm going to do something, i do something. we said as tesla as a company, elon, if you perform, this is what you get. how do you go back and renege on that, when all the directors and shareholders aproved it? it is crazy. so i think, you know, i lost your question, but -- >> andrew has a question too. >> hey, ron. as you know, i -- we are in

agreement together on this, i always felt from the beginning that this was a big skin in the game arrangement for elon musk, and that a contract should be considered a contract. having said that, i was reading "the wall street journal" this morning and they have a heard on the street column, where they made an argument against voting in favor of it. and one of the things they said, which was very interesting and i wanted to get your perspective on it, was it said a lot of the shareholders in tesla today are not necessarily the shareholders who were the shareholders in 2018. so the new shareholders. so they may not have the same sort of skin in the game or sort of feeling that you would have about this. maybe on the basis of the contract law, they should, but a lot of them may see this as frankly just an opportunity. it is an opportunity to figure out how much money they're going to pay elon musk and how much that is also going to cost them at least in the short-term. and so, i would ask what would you tell a new shareholder who

maybe wasn't there in 2018 how they should think about this and it is very unique, because the question is perspectively, they're paying for something that happened in the past, but in many ways they're paying for something that is hopefully going to happen for them in the future. >> you're buying in right now at half the price it was three years ago and in part that's because of this controversy over this contract. so, this is actually in your favor. and if he wanted to devote himself the way i believe he will devote himself to the company continuing, then you would be damaged as a new shareholder. you're buying into a company where you have one of the most exceptional, maybe the most exceptional executives in this country in the world running your business. do you really want to not treat him properly? you know,last year, there happened to be -- tesla has 140,000 employees to show you how desirable it is to work

there, the most number one and number two jobs that are desired by graduate from the top engineering schools are tesla and spacex. last year tesla had 12,000 new hires. and 12,000 new hires. they had 6 million applicants. 6 million applicants for 12,000 jobs. and so think about that. the reason they have it is not because the name tesla, not because of cars, it is because of him. so think about his ability to track these great people to come to this business to grow it and run it and make changes that are benefiting the entire planet, and you want to renege on a contract on a deal you made with him. >> let me ask you, i agree 100%, he should be paid what he was promised in this contract. and the shareholder is crazy if they don't do that. there are questions about what will incentivize him further, what makes him stay with tesla, what makes him keep his a.i. plans within tesla when he's

starting ex-a.i., an alternative a.i. startup, do you need to incent him further? he has basically said he thinks he should own about 25% of the voting control at tesla or he won't build it there. >> it is interesting elon -- so now to the elon ecosystem. and he has ex-a.i., which we'll be an investor in, and that comes about because elon needs compute, massive amounts of compute. >> you're an investor because of the ownership you have because you're an owner in twitter or x as well? >> and -- >> and additional money in? >> yes. >> what about for tesla shareholders who don't invest in all of those? >> they're going to benefit from the fact that ex-a.i. has been created because of the massive compute. they're going to build 100,000 gpu data centers. the data center business is the cloud business and it has been growing 20%, 30% a year in

units, cloud. that's what that is. and their returns on capital have been declining, 7%, it was in the high 7s, now it is 7%. and those are centers that are $300 million. >> we can talk more about this, but the issue that comes up is the potential conflict to have somebody who is partially at tesla, who is partially at spacex, who is partially at x, partially at ex-a.i., how are you knowing if you're getting your money's worth, instead of having it under one umbrella, how do you make sure there is not a conflict of interest. there was a cnbc story that took a look at ex-a.i. elon sending nvidia information -- asking that the chips that they were granted that were in line for tesla be given to ex-a.i. instead. and that raises the question of shareholders w s s who are not invested in the entire elon

ecosystem, do they run the risk of being short changed when elon moves things from one project to the next? if you have tesla employees working at twitter part time, if you have things that get moved around, how do tesla shareholders benefit from the elon infrastructure? >> all related party transactions are reviewed by the directors and audit committees and independent people to make sure they're appropriate and fair. and to every company. all these companies benefit each other. elon spends way more than half of his time on tesla compared to all these other entities and he's doing. and these entities are benefiting tesla. as far as the chips that went from nvidia to ex-a.i., it was because, you know, tesla has invested tremendously in data centers for themselves, 50,000 is one they're building right now, gpus, 25,000 is the largest built before and our guy is building 100,000, the new one. so, we think about aws, aws

comes about because they want to -- they have too much capacity for the cloud. so therefore they had excess, they sold it. that's where the ex-a.i. is. in addition to that, it creates grok. grok will be your assistant, drive around in a car. also tesla is going to be able to use the compute that has been produced by and owned by ex-a.i. ex-a.i. got those chips because tesla, so many xs -- that he has overordered. he doesn't need them right now. he's buying them later, so ex-a.i. needs them now. we have no way to store them at tesla. so ex-a.i. gets the chips but the next level is coming to tesla. it is who needs them right now and here is this -- >> it makes perfect sense for somebody like you who invested in all of these different things because you're going to win on either side of it. is there an argument that, you know, tesla shareholders should have a stake in ex-a.i. too?

>> they're going to be using the services, and then the ex-a.i. is going to be getting benefit of some sort for selling the services back to tesla. tesla is avoiding the cost that they would otherwise have to invest in chips, to invest in these data centers, these data centers are $3 billion or $5 billion now and they used to be $300 million. >> as long as an independent board oversees this, and signs on these decisions, it is okay? >> yes. that's the case in all instances and but he has this whole infrastructure now where all these businesses, whether it is -- one thing i was asking about, i said, well, gee, when he bought twitter, and renamed it x, where did that, you know -- he said he bought it because he wanted to have the ultimate truth-seeking algorithm. and then all of a sudden, we learned that we have data that x has that is unique, real time,

no one el hase has it. so what is unique about grok is this data. when he bought twitter, did he have in his mind that there is the opportunity to have this tr licensing? when he went, decided he wanted to go to mars for spacex, spacex, did he really think initially, hey, there's a real opportunity here for internet around the world? and it's going to be hundreds of bills bills -- billions of revenue? started tesla, did he really think this is going to merge into self-driving, make hundreds of billions of dollars in a year and rock, self-driving, connected cars around the world from space x? all of these businesses link up in the ecosystem. it's an elon ecosystem and interesting when you look at it

in that way. elon benefits where all of these businesses -- couldn't have attracted the engineers he wanted for artificial intelligence to tesla. he didn't want to work at tesla. remember, he's got open a.i., he's the founder. and chatgpt, that comes out of him. he just didn't like the way it was run. supposed to be not for profit and all of a sudden questioning governance and wants to it be a competitor so there's control over it so it can't damage hum humanity. >> i wonder as an investors, clearly he's been incredible what he's done for tesla. as an investors, i wonder do you worry about the future for tesla? not investing, no question elon has a halo effect and people want to come work for him. you a key man, would you invest

at these prices in tesla or other elon companies instead? >> the biggest investment is in tesla. >> and $13. would you buy at $176 or try to get into xai or spacex. >> xai $100 million invested. spacex from 2017 to now invested about a billion dollars. it's worth $2 billion 3. tesla wou tesla worth about $4 million, $5 million. if i had a chance i'd buy more. >> why not? >> limits how much i'm allowed to buy. >> you're full up. >> i don't have infinite capital. when i have chances to buy, i recommend, bigger positions, buy in tesla, i buy. in spacex, in spacex we're going to double our money, i think, in the next three, four years,

double again two, three years after that. in the 2030s make five times -- i make make 20 times in spacex over the next 15, 20 years. i'm 81. not many people are 81 thinking about 15, 20 years. i'm one of them. four, five, six times their money and can't put a top how much we'll make in tesla because so many businesses. robotics business is going to be unbelievable. robotics for him, i think that he's going to cost $5,000, $6,000 $7,000. charge money? ecosystem again. charged d every year for softwa using your robot that will keep getting better, better, better. think about a factory worker and all of a sudden have robots to do that. make all of these factory workers more and more

productive? elon says gdp is number of people timed product produced. you won't need people to produce the products. everyone's lives dramatically better because of a.i. and robotics. robotics a really big deal for tesla and not in the stock in any way, shape or form. >> i understand robotics, self-driving, a.i. and information tesla already has had a huge treasure-trove. less convinced using twitter/x as a huge treasure-trove just as i am reddit. you can have any number of opinions and any number of stuff that sometimes is special, sometimes it's not. that makes a little less sense to me. >> they have a new service. actually had it for a while on twitter. it was ignored called community spaces. i don't remember exactly how many people there are on it, but a community, they out-source, crowd source opinions. you have an opinion about a topic and someone posts that on

twitter or on x, that is contrary to your belief, you're notified by community spaces if you're one of these 70 outsourced people or an interest, post on it before, you're notified this is han posted. do you think it's accurate? it's outsourced. a very large percentage of, you know, postings have actually been taken down by the people who posted them when they've been criticized for being false. so you are having a truth-seeking opportunity here. and that -- that data they're going to have is going to help robotics for tesla. so everything feeds each other. every single thing he does is helping everything else he does. >> you are a huge believer in the ecosystem and have been since the start and made you an awful lot of money. for people just joining here, here today to say you are voting your shares in favor of elon musk's payback?

>> in that favor and told i'm not supposed to tell anyone else how to vote they're shares, because of proxy solicitation. i'm voting my shares and i think that's the benefit. by the way, give you a feeling how others think about him. from nvidia, he says, technology that elon has for self-driving is remarkable. not like anyone else. mobileye competitor says it's amazing what they've done, this company. i also think that when you look at apple -- at nvidia, how did they make it? they made it because they had something good for games. for gaming. when amazon came along, what amazon had was, they were a book seller, and look what has come from them. tesla has cars. the cars are going to be like books or like the games for the other companies. cars are "a" business for them.

it's going to be enormous. i love tesla. >> ron baron, thank you for coming in today. >> chocolate pretzel time? when is that? got a while to go. can't there be will midyear chocolate pretzel. n'n.sectio cat answer. >> i will get you one. for your wife. >> i love those. coming up -- your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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it is 8:00 a.m. on the east coast is and you're watching "squawk box" on cnbc. i'm andrew ross sorkin along with becky quick and joe kernen. headlines to bring you now. dollar tree saying it will explore a sale or spin-off of family dollar. less than a decade after the merger of two last year the company closed more than 900 locations of family dollar. dollar tree saying it has not set a deadline or timetable with a potential sale. meantime, ebay saying it will drop american express cards as an option because of "unacceptable high fees" soon as august. according to bloomberg, ebay

notifying customers about that change this week. warner brothers discovery raising the prices for its ad-free options. monthly costs will increase by $1 to $16.99, and the new plan jumping $10 to $169.99. existing customers see the new cost on our around july 4th. joe? >> andrew, let's look at where p futures are on this jobs week. if we mentioned that. it is a jobs week. get that on friday. important number. liesman said 190. 190,000. well, last number was 175,000. a little slowdown, but pretty goldilocks, if -- i mean obviously seen the markets respond over the last month positively. responding this morning positively. triple digit gains in the maz nasdaq. treasurys, quiet. even though had inflation numbers. we have waited a while longer

than seems normal for the jobs report since, that was the 31st i think on friday. so it's -- not really a week late, but we've been waiting. looking forward to it, and the ten year is now all wait down to 432. let's get to dom chu with a look at this morning's pre-market movers. pine hearst -- no. never mind. go on. >> i do like the cradle of american golf. anyway, joe, kick things off with some of the late-breaking earnings news of the morning. campbel campbell's soup. canned soups and prego pasta sauces, cape cod potato chips, raised full-year forecast for profits and net sales as well. campbell's helped by demand for consumers looking for lower cost at-home meals.

the companyspecializes in. shares up. at&t down fractionally. around 20,000 shares of volume. gained 2% yesterday. nothing huge. outage preventing many customers completing calls between carriers yesterday afternoon. at&t described the problem as interoperability between carriers. around 2:00 p.m. eastern, resolveds around 8:00 p.m. a post on x, looking into the issue. at&t suffered a massive outage in february brought down service for thousands of customers nationwide and later offered a $5 credit to affected customers. end with semiconductor stocks. kla corp. and thinly traded. up earlier on thin volume. and making equipment use to make computer chips, both go up to equal weight from neutral from

underweight or sale-type weighting. price target for applied materials goes to 225 from 165. kla to 765 from 630. both catch-up calls you see the price there already higher. and better macro backdrop, more spending out of china, capex spending. u.s. market. other top calls of the day head to cnbc.com/pro. andrew, that tech trade is still very strong in semiconductor side. back downtown, actually, to washington, d.c., to you. >> we're in d.c. at the times square, all over the place this morning, but now we're going to talk about something else that's all over the place. super return natural under way in berlin known at one of the world's largest private equity events. our own leslie joins us. >> good morning, and good afternoon to you. it is afternoon here. orlando bravo managing partner

appreciate you taking time off the conference to sit down with us today. enterprise software. your bread and butter. in's recent weeks there's been a recent valuations for a number of publicly traded enterprise software names. salesforce, workday, adobe, snowflake. others reporting quarterly results that disappointed investors. a lot of people said that's because of this a.i. revolution and it's taking capital spend away from enterprise software. curious what your take is there? >> leslie, great to see you, first of all. this conference is unbelievable. isn't it? so loud. talk about private equity and the environment is very different than it dealmaking environment. really, for viewers, the statement you made, we're going to talk about enterprise software. not the consumer. the software sold into businesses. you mentioned great reports are companies that are disappointed. in our view, we owns $25 billion

of revenue from enterprise software companies that is not budgets being taken away by corporations for a.i. budgets. in fact, today, corporations don't have genai budgets. that's one of the issues. there's a lot of interest in that but that the is one of the issues. now, let's look at valuations for a second. the companies that you mentioned are the greatest. right? they're in the top 30 of the most profitable, most important software companies in the world. their growth has come in. there are some reasons why growth has come in. there's a challenge with selling products by the user. investors have to be very careful now in software for companies that price their products by the user, could be a lot less user, pressure on growth. saw that in the reports. overall companies growing roughly 10% a year, some of the ones you mentioned are in that category, a 20 pe multiple is a very reasonable valuation for

those companies. we believe many of those great assets are fairly valued today. i want to add one thing. 85% of the software world, if you look at $10 trillion of market cap in software, about 1,000 companies. apart from those top 20 or 30, the rest of the industry doesn't make any money. as a wrought have to trade often arbitrary revenue investors for some vreason give them that. that's the segment of the market that in our view is grossly overvalued. because those companies will not get profitable without transformative change. >> but for the rest of the crop that you sdib, in terin -- desc and seen valuations come don is that a buying opportunity for you? does this whole notion of a.i. versus enterprise software change your investing pieces at

all? >> it is a selling opportunity. large technology buyers need to buy great software companies that have scale, that have market leadership in their segments, and that have profitability to keep building their businesses. whenever growth is in the environment there's a bit of macro slowdown going on since second quarter 2022, they look to buy great assets. the last 18 months, where all of our sales came from. sales of large assets, to even larger technology and non-technology buyers in the industry. >> so you're a seller in this environment more than a buyer, you would say? >> we are always buying and we're always selling. here's the thing. we don't buy the index. we don't sell the index and certainly cannot buy the market. four to five companies a year and sell four to five company as year and look to see what's right in both of those situations. >> talk about a.i. and how it fits into your overall strategies. i mentioned software, core

focus, largely, a a.i. going to be a bigger part of that and looking for opportunities to deploy capital, how important is it it that there is an a.i. component in the assets you're looking at? >> it's a must. give you this one liner. genai will be transformative to enterprise software. we know and dream how it will be transformative for our lives and for the consumer. for businesses, transformative and a simple reason for that. look at history of enterprise software. ending in about 2010, enterprise software was limited, because it was on premise. hard to buy. it was hard to implement and even harder to use. starting with software to service, software became easier to buy, easier to use. across organizations, a friend. now with genai individuals, theoretically all workers at a company can communicate with your system and products in a human way.

using natural language. many of our companies released genai products within their port folios. >> right. orlando bravo, thoma bravo, thank you for joining us. back to you. >> leslie, thank you. when we come back we do have breaking adp data ahead of friday's jobs report. the adp number out in a few minutes. plus, later this morning, starwood capital's chairman and ceo barry sternlicht joins us. we'll ask about his reit. and other topics. you're watching "squawk" and this is cnbc. - so this is pickleball? - pickle! ah, these guys are intense. with e*trade from morgan stanley, we're ready for whatever gets served up. dude, you gotta work on your trash talk.

i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right?

people couldn't see my potential. so i had to show them. i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. today i'm the ceo of my own company. it's the way my mind works. i have a very mechanical brain. why are we not rethinking this? i am more... i'm more than who i am on paper.

welcome back to "squawk box." bringing an update to a story a couple weekation. columbia university coming to a settlement with at student that brought a lawsuit kens the

institution. the israel-hamas war protests forcing jewish and others off the campus. agreement to make them for secure on the campus and academic accommodation for those who couldn't access the campus to complete assignments and exams. not looking for necessarily money. looking for this. appears that the settlement in many ways, that they won their case of sorts. >> yeah. interesting thing to watch. quickly, we should tell you of a if aa -- alphabet has a new cfo. he's currently at eli lilly. the move set to take effect july 31st. staying on the current cfo but for about 20 years, cfo at eli lilly in charge of finances there. we are awaiting the may adp

data. futures right now continue to indicate a higher open, and it's always good to see the adp report. never know what it means about friday, steve, but we always get at least a data point in advance of the big number we're waiting for in a couple of days. steve liesman has the numbers right now. >> yeah. joe, 152,000. a little below expectation for the adp. put out there. a little below the estimate for the payroll on friday. 152,000 with all of the jobs, bulk of jobs in sfervice sector. just 3,000 in the goods sector. deline in manufacturing jobs. april adp revised slightly from 192 to 188. not doing a bad job, joe. errors between 48 and minus 25. plus or minus 50.

in that range. how we got there. small business down 10,000. medium-sized businesses up almost 80,000, and large business 100,000. looking at it by industry trade transportation up 55 educational services where we see a lot of jobs on the report as well. up 46. construction up 42. leisure and hospithospitality, 20,000. interesting movements in annual pay. 5%. still on the high side, but unchanged from last month. job changers up 7.8%, down from almost 9% or above 9% prior month. down second month in a row. leave it there, guys. see what it says about whether or not this suggesting maybe a lighter bls number on friday. but been in the range, joe. this adp number. >> it is, steve. stay right there. bring in chief economist at adp.

190 for friday, steve said, nela, does that sync up with what's reasonable, your view? >> lower, joe. generally a good number. plus 150,000 or so jobs in most economies is a great number, but there is a little weakness under that hood. there's weakness coming from traditionally white collar jobs like professional business services. we saw a loss in information services. we saw a loss there and losses and weakness tied to both producers when it comes to manufacturing, and consumers, when it comes to leisure and hospitality. 12,000 jobs numbers is -- lower hiring than seen in the previous two months. which has been strong. overall, it's a good number. not a great number and weakness we're really paying attention to. >> the fed probably -- not unhappy with maybe a little bit

of cooling in the labor market. is that -- the right move, nela? i mean, do they -- will this tighter environment bring inflation down? if it's not bringing inflation down, no reason to try to hurt growth or the labor market. so i hope we got something for this. >> yeah. right. what's the point? i think we're looking to see whether we can coast with our steady higher interest through the summer or if the economy is actually running out of gas. right now coasting seems most probable looking at other data. i note in weak sectors like manufacturing, seem pretty strong growth when it comes to job changer. around 11%, if you go from one job to another. even in manufacturing. wage growth for job changers in may still higher than it was in january. so this is still a big part of the story.

can't koucount out or global wa and keeping inflation higher than into the -- >> can you guarantee we're getting to 2% in the next two years? inflation? >> not my job, joe. sorry! i can't -- >> what do you think? you don't have to, but i worry. i worry that the goal posts need moved. there may be some structural postpandemic issues, and if they just are dead set on that, i don't know. they would have to cut by saying, we're still -- it's coming. it's coming, but they'd have to cut before they hit it. >> you know what? when i look at data, i've seen that the pandemic trends, those dynamics, had a permanent imprint on the distribution of the workforce. it's made the workforce a little older in some cases by really hitting those younger workers

hard. it took a lot to get low-scale workers back into the laker malaker -- labor market. customer-facing industries, all distributional changes affected the payroll. my view is may get to 2% but can't interest in our laurels once we get there. the workforce has changed and bouts of inflation changed as well. >> steve? >> you know, i keep thinking about the sacrifice ratio, joe. how much do you want to give up for 0.65? i'm thinking if i'm powell and say, you know what? every day that goes by i get closer and closer and more and more in danger of risking a recession. trading off my concern about my credibility, and i don't think at some point -- you would have to say, you know what?

i'll give up credibility to avoid the recession. talking to a bunch of folks in the real estate business last night. serious concerns. i guess you'll talk to barry sternlicht later this morning, i'll be listening closely to, we don't know how bad the market is, how much weakening is going on. we've seen real incomes started to become flat now. to me, i'm looking at the softness in the data now, joe, and this gets back to something you and i talked about in the last hour. if the first part of the inflation decline was supply, is this part right here, is this the higher rate starting to bite? are we either at beginning of that, slowness there? that's my concern right now. i would take out insurance against the downturn. >> all right, steve. nela, you're nodding at -- telling me we got to go, but that wasn't really a question,

steve. but, nela, do you want to respond for ten seconds? >> i think opening up what steve says makes sense, when you look at the numbers. again, great headline number, but weakness underneath. we need to make sure that that weakness is not sustained through the summer. if it is it puts us in a very different jobs market backdrop for that inflation policy than we are going into the year. >> nela richardson, stev esn an. e "squawk box" will be right back. old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

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welcome back to "squawk box." cnbc cnbc's ceo conference yesterday i spoke in a rare interview together with leading policymakers overseeing antitrust policy in this country, and i asked them if any of their rulings to date have hurt the consumer.

>> i'm not aware of any case that either of our agencies have brought where the consumer was worse off as a result of our actions. >> and we got into that conversation in part because the consumer standard, the harm to consumer they said was no longer the only standard that they looked at. we were trying to understand the differences. i also asked ftc chairman lina khan has she die fine defines a. >> many ways to access a company is a monopoly. to my mind one of the most probative ways is to look at whether a company is able to make things worse for its customers or its workers and get away with it. because if you have a functioning, free, competitive market, the idea is that if a company is being abusive towards

its customers, those customers can go elsewhere. but if you see a persistence pattern of a company raising prices, degrading service, making it impossible to actually get somebody on the phone. all of these big and small ways that the consumer experience is worse, and you don't see defections,similarly, same things on worker side, direct evidence of a monopoly make things worse without losing out in a market. >> last week exxon emotional completed pioneer natural resources for $60 billion but ftc order preventing the ceo from joining exxon's board as part of that deal. i asked ftc chair khan about getting involved in that transaction. >> so we were pleased we were able to bring that action. up know, that investigation surfaced, will be viewed as pretty troubling evidence of attempted coordination.

we know the purceruvian basin a opportunity to serve as a competitive check on opec and others. so allegations and suggestions that there was, in fact, attempted coordination is really troubling. we're scrutinizing a bunch of these deals publicly reported and i'll reserve comment in completed. we recognize the economic significance what's happening here. >> another big case the doj suit has been brought now against live nation, parent of ticketmaster. >> the fact of the matter is, competition for the intermediary services that bring a concert to a fan, that's what we care about. so if someone's paying a convenience fee that they view is excessive or not getting the customer service,s or an artist or venue doesn't have the choice if they're unhappy with the level of service that's provided to the fans, those intermediaries are supposed to

compete to deliver better products and services and make people happy. if there's harm to competition as a result of anti-competitive behavior, that's exactly the strike zone what we should be focused on. >> by the way, saying he is a swiftie. for those folks following taylor swift. a lot of people looked in this case as a referendum on the price tag many have been paying for taylor swift tickets, becky. >> yeah. talked a lot about it. how people are actually going overseas, cheaper to pay for airfare and tickets there. i wonder will they come down or just the american public that does this? >> still hard to know, to be honest. i tried to pin them down on that issue. nobody wants to say specifically, look, prices are 10% higher than they should be. 20% higher than they should be and in fact more competition. this is what would happen. in part i think it's a difficult

mathematical calculation to make, because of the question about who's krogging the venues? who's controlling sponsorship at the venues, on those tours? who's working with the artists gentartists? the truth is live nation is involved in so many of them. if there were different players in all of those elements, would prices come down? by the way, there are some, live nation might argue, prices would go up. >> yeah. andrew, thank you. checking in with andrew in a few minutes. down in d.c. where we're having the cnbc ceo summit and heading things up tl. up next, barry sternlicht. you don't want to miss this interview. you're watching "squawk box" and this is cnbc.

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final big guest of the show. barry sternlicht chairman and ceo of starwood capital over $60 billion under management and chairman of the largest commercial reit in the united states. barry, welcome. great to see you here. >> thanks. we made a faux pas. $15 billion under management.

before i start. joe, last time i came onset we brought you croissants. thex next time bring taco bell. so i brought you -- >> how much is this -- >> your agent told me you love taco bell. >> i do love -- how much -- >> a year's worth? i don't know. >> a year's worth for me might be -- >> barry, we have a lot to talk about. i appreciate you coming in today. let's start, though, with what you've been in the news for most recently. that is trouble that has been there at starwood reits. you all have started gaining to some extent not allowing people to take out as much money, redeem much as you had. 0.3%, down from 2% allowed in 2018. what happened? where do things stand? >> this is a category of products called non-shaded reits.

separate from fund and starwood properties. totally different entities. 90% of or portfolio is apartments and industrial assets. a very successful vehicle. income up 7% first quarter. fastest growing reit in the nation. but 80% of our clients had never redeemed. a group of people redeeming. what's happening, of course, non-traded reits born in an era of low interest rates. 5%-plus, tax adjusted almost9%. competing whets 0 reits. 5.5 in cash, fed raised. 5.4 competes with cash. with all the hysteria in the media people saying, i'll get out now and come back in later when the coast is clear. so we took a very tough decision. i decided that for the benefit of the 80% of people who never redeemed slow down redemptions. 500 a quarter to 100.

hope this is going to be a six-month thing. what we assumed was that, almost everyone did, rates would come down. i think powell actually thoughts rate could come down. started with six rate cuts. now a question of one, two, and we're talk about the fed in a second and unbelievably ineffective their policy has been. the real estate asset class is probably the biggest victim in unintended consequence of his access. talk about that in a second. >> and unintended consequence, they want to slow down the economy and anybody out there, leverage, making bets on this stuff pshgs listeneds to what the fed said you got burned. >> real estate wasn't overbuilt. mowing along -- we were fine. we weren't the source of anything wrong at the moment. our markets were healthy. we had the pandemic situation and we'll come back to that obviously. we weren't the cause -- we were facing a lot of labor pressures, because couldn't find contractors, and paying them a lot and wages were rising. no real problem with wages

rising, but we -- >> a problem with loans that were taken out that need to be renewed? and -- >> all of these loans were solid. everything was fine until he raised rates 500 basis points in the fastest increase in 70 years. >> did it to tackle inflation. that was the -- >> not only not working which i'll show you. you can see it's not working. right? he did take down the regional banks and mow down a lot of commercial assets. owned by pension plans and individuals, and there was a global phenomena. wrecked markets worldwide, and look, only one tool. it's the wrong tool. i don't really want to talk about that, because that's fundamental why even in this stag mant economy, which joe talks about, he should lower rates. i'll show you why. >> talk more about the reit first. i guess the question is, just liquidity. if you think a rate cut's coming in six months, the reason you're doing this now is because you think things bottomed? >> i think one of the -- in this market, think rates are coming

down. already credit spreads come down. interestingly, the markets s beginning to correct. i'll explain that, too. yes, near the bottom. better pricing in six months and i'm confident about that. >> let me ask about the cash position you have, because if you were looking end of april, reported $752 million liquidity. took out another $200 million for redemptions beginning of may. sound right? >> about $700 million still. >> 7% interest coming back up. i guess how long do you think? six months, no problem? >> we're fine. go to the portfolio, 70% growth first quarter. four years of debt fixed at almost 3.5%. no issue. on the debt. really a question of when do we sell assets to meet redemptions and if rates were to come down and now 4 instead of 5, dividends are more at ttractive.

hard. knew we'd take a lot of flak. investors, semiliquid things. weren't supposed to be like atms. other firms like blackstone faced significant redemptions, too. they've -- >> last three moss. >> actually went right back over 2% this month. it's -- you know, i think -- we're second biggest in the country in this product. i think this, too, will pass and investors happy with protected their capital. >> we all act in our own self-interests, obviously, we can't help it. i guess all talking our own book at different times and don't even realize it. you had me convinced many, many times with the great charts the economy was much weaker than it actually was. remember, was that -- how long ago was that? first the breaksto -- >> stick to it's, eventually

i'll be right. >> you see where hi'm going wit this. was that you talking in your book or did you really believe -- >> really believed everything about it. the key strip out rent from cpi you're at 1-6 today. fed numbers 5.5% rental growth and actual closer to -- >> very tight? >> powell expected it to flow through and so confident he'd lower rates. i don't know what -- >> don't use him! >> my beef with powell was our inflation was too much, too much money, too few goods. now the money's more or less drained. goods are back on the shelves. inflation was going to come down without a 500 basis points rise. could have gone to 3, 3.5. if it really was 160 strip out pce and rents only 17% of the index. not 38, which thare cpi. rent's, delay in rents is going to come and should be coming now. seeing rates deflate. a problem coming if he doesn't

lower rates. i got to tell you about it. >> andrew has a question and wants to jump in, too. >> barry before we go there, go back. indulge me a moment on this vehicle in a you have. i think it's actually a much larger story to be discussed about semiliquid vehicles not just in the reits space as you know blackstone and others talking about creating s semiliquid vehicles for retail in private equity and so many other things. this type of vehicle could be the future of the kind of things that investors are going to move into. the question i think that this raises is whether these type of vehicles and the structure of these vehicles is a, are good? whether this is a good model in the future? i understand things that are completely liquid, and i understand things that are not liquid at all. those things make a lot of sense to me. the semi-liquid model sort of tells the investors you can get out when you want to get out,

but by the way, may be can't get out is a more complicated one and also creates a sort of unique conundrum, which is, if people do want to get out, and you actually let them out, all of a sudden there is a fire sale on those assets, because you have to somehow pay them or go find new investors the way blackstone did effectively to replace the old investors. that unto itself seems like a broken -- i don't know about broken but a very complicated situation. >> do this -- >> the future of all of us. >> the spectrum, facts, data, private equity funds get out in seven years trade on the secondary market taking a big discount. right? in the middle non-traded reits supposed to peg value and offer monthly liquidity. nobody should think use them as an atm. i think this probably highlights they're in that, in the

spectrum, right? have some liquidity but the rsk is everybody gets out at once. you've seen this, andrew in hedge funds. decide to shut. gate. not lickquidate and don't want fire sale. those usually in the hedge fund world are liquidations. i mean, this isn't liquidation. this is, when do we bring assets to market if you have a theory of when will be the best time to realize good pricing? we have the luxury of being able to take our time to sell assets and don't want -- the only people selling assets -- transactions across the world are still down 70%. no trades. the only one trading is mortgage coming due and can't find somebody to res due them, sell it and the banks also are selling buildings in what are called short sales. they say, loan is bad in the office building. a building in florida. $100 million asset. loan 43 -- 53.

sold it straight. the borrower to sell it, short sale, sold for $43 million. the bank said, get me cash. i don't want a non-performing mortgage, office mortgage. >> what are prices at this points for things that are selling? >> every time there's a crisis there's a spread. buyers want to bargain sellers want yesterday's prices. today i'd say the came between prices. say apartments were five and seller wants a 4.5 or 4.75 or 5.5. spread coming in. markets healing. future getting clearer. chiefly apartments. build 600,000 apartments this year. build 400,000 next year. 230,000 the year after and 227,000. my problem with powell. right? this policy has crushed multifamily starts. we freed houses. we have a huge housing -- with only 220,000 houses coming in

'26, i will guarantee you rents will go up in '26. >> where would we be if powell hadn't moved? >> can can edo that? >> take a break. talk about the slides and where you think the fed should be. >> perfect. >> more right after this break.

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all right. right back to our guest here on-set this morning. barry sternlicht, ceo of starwood capital. >> the economy is stronger than people thought. i think -- i want to talk about the structure of the economy. this is not my parent's economy and not built that way. why powell is having such a hard time changing it. if you look at the employment market today and year-to-date what's happening in the employment market. 50 million jobs are in health care, government and education. and you see that's the biggest bar chart on that page. the third category, almost

100,000 jobs out of this year is construction. you're not supposed to see that. right? not supposed to see that -- >> spending. >> 500 basis points in rates and drops in multifamily and office and logistics dropping 70%. his rates are not impacting this job market and not getting the layoffs. go to the next drc-- >> if he wasn't doing this where would inflation be? all of the spending baked in -- >> would have gone down on its own. i believe. >> why? >> driven by lack of supply on shelves. i don't think he needed to do this. maybe 300 basis points. >> also battling fiscal spending. >> that's -- if you bring up the next -- slide, you'll see what's happening since he started raising rates. in the health care industry. completely insensitive interest rates, added 3.2 million jobs. in health care. since may of '22.

zero impact. 3.2 million positive jobs since may of '22 in health care. and still a nursing shortage. more inflation, more people looking for jobs. report this morning, adp. >> reporter: shows second category. this is the one that's completely shocking, construction. this is where spending comes in. it looks just like health care. we've added a million jobs in construction. you lost a million jobs in '0' '07-'08 in construction. why? datacenters. the transportation bill. the chips act. the infrastructure bill. so, he's not getting layoffs in the part of the market that are most sensitive. this is the most sensitive employment category to interest rates, and it's going the wrong way. his toolbox is not working. >> basically, he can't do it. it doesn't matter what he does? >> or he has to go after services, which is retail, lodging, hospitality, you know,

business trade. that is -- that is -- if he hits that, he creates a great recession. if he's going to knock those jobs out, which is a big category, he's going to have a serious consumer recession, which i don't think he can stop. that's when he'll get aggressive on rate cuts. the consequence of this is not small. the consequences, the federal government, and that was the thing i had, is the biggest victim. and you know rick rieder, he's a d guest of you all the time. he'll argue high rates are creating inflation. we're making $235 billion of excess interest income today. it used to be $70 billion consumers got when t-bills were low. $235 billion of excess interest income is going out and buying things like services. he's argued that the show used to be $100 and now it's $300.

goods are going down. services are going up because consumers have excess cash from the savings -- interest income they're getting from all the cash they have in t-bills. he's arguing that high interest rates are creating more inflation. i think it's pretty interesting to see, and the government will spend, as you know, interest income -- interest expense just passed defense spending and it's on its way, a third of our debt. so, he can spend 4% on $13 trillion or 5%. that's the interest expense on the amount of the debt rolling just this year. that's number one. the federal government's the biggest victim of its own problems. >> here's my argument with powell. he can only do so many things. he has two mandates. one is the inflation rate. the other is unemployment. those are the two things he's supposed to be watching. you're right that he has a limited toolbox in what he can do. >> very limited. >> i don't know that this is a fault of jay powell and the fed or if this is just -- there's only so much they can do. >> it's a tough job. with congress spending money the

way they are -- >> that would be my -- >> again, one arm of the government has their foot on the accelerator, and the other on the brake, and usually things explode when that happens. i hope it doesn't explode. the u.s. economy is being powered productivity, lot of jobs are part-time, not full-time. but i think he just has to be careful, and i think -- i think, because of the housing market with four or five million home deficit, and that is the biggest component of cpi, this deficit he's making even bigger will show up in a couple years with higher bank growth. he ought to smooth it out. it's a tough thing. you have the regional banks, and that's the second biggest victim here. >> one of the things people have said is that the economy is really good, the markets are really strong, the only thing that would cause the fed to actually cut rates at this point might be if there's something that breaks. >> i think there's two reasons. it's the regional banks and the

commercial real estate crisis that's coming, which is coming. you can see it. we don't talk about the office -- the amount of nonperforming loans coming to market is growing. and he's also impacted the whole world. we're seeing stress across europe because heretofore, they've gone up with us. >> first time since the euro's been created that they would lead us in rate cuts. >> they don't have the chips act, the infrastructure bill, those bills that are powering our economy past theirs, and a.i. is, you know, the datacenter business in the united states is insane. and they can't play. they don't have gas. they don't have oil. they don't have excess power. so, the differential between the u.s. economy and our growth and europe's is going to accelerate because of all the impacts in the coming decades of a.i. >> commercial real estate's already happened, hasn't it? >> the loans are coming due, joe. >> i know, but this is the -- we've been talking about this for a year and a half. some people think we're on the

other sided of the commercial -- >> still maturing in the next 18 months. >> i'm not sure what to think of the things you tell me anymore. >> we can talk about golf. >> talk about taco bell. i'm questioning your motivation. >> what happened? >> my motivation is actually the health of the u.s. real estate markets and the u.s. economy long-term. yes, i'm an owner of real estate, so i benefit from lower rates, but on the other hand, i also benefit from the opportunity set that he's going to give me for distressed acquisitions. i'm a little torn. my new funds will be really exciting. we're doing really interesting things right now around the world. we just bought 11 mohotels in t uk from distressed family, at a price i never could have bought them before. exploding with debt that got high coupon and he had to sell. so, you find situations like that in times like this. i'm excited about the new opportunities, but i think it's unnecessary. i think if you lowered rates, i don't think the u.s. economy picks up, materially. >> andrew has another question. >> hey, barry, i was talking to josh harris yesterday, and we talked about this a little bit on the air in the past couple of

weeks. this issue of where funds like yours are raising new money from in that so many of the u.s. pension funds are still waiting for money to come back to them, meaning there's been so few exits in terms of private equity and real estate that they seem tapped out, and in fact, everybody went to the middle east looking for money, but now, so many in the middle east are planning to spend that money not here in the u.s. but actually there in the middle east, and so where do you think the next round of funding comes from? >> fund-raising is harder. for sure. i mean, it's always the case when there's a bad cycle, and i think you're right. all of the -- whether it's vc, venture, private equity or real estate, or even any alternative infrastructure, they're not selling, right? so, they're not getting capital back to these clients. on the other hand, you're compounding it, the returns, the i irrs of the funds, so they're

not necessarily injured, but they're not getting the distributions they modeled for themselves. the largest investment base at the moment that's active is the middle east investors. for the most part, they're still quite active, but they're very picky and also directing funds to continue to grow the countries at home, which is kind of new. and the asian, particularly the singaporeans, koreans, they're active. and here, there are contrarian funds that are very excited to put capital out in this climate, so it's harder, but it's doable for the -- those of us, i think, that are veterans of the cycle. >> barry, anyove mh thk u ryuc for coming in. we really appreciate having you >> pleasure as always. >> barry certain likt. ew thinki. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real.

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good wednesday morning, welcome to sid"squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. adp becomes the latest in a series of soft economic prints this week at 152,000. ten-year drops to 4.31%. that's a two-month low, although oil does bounce a bit off the lowest price since february. elon musk confirming the cnbc.com report which says he redirected nvidia a.i. chip shipments meant fo