numbers that were stronger than anticipated and you see the ten-year at 4.46% this morning. the two-year is at 4.88%. oil prices have been hovering around $80. now it's well below that, actually, $76.13. that does it for us today. we hope you join us right back here tomorrow. right now, it's time for "squawk on the street." ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. we set the table for a big week. cpi, fed decision, tesla's annual meeting, futures getting dinged a bit by higher yields in europe after sunday's parliamentary elections. our road map going to begin with this big week on the street. investors preparing for that big batch of inflation data. apple holding its long-awaited worldwide developers conference today, expected to unveil some new a.i.

products. we will continue to monitor musk and that major tesla shareholder vote as one of the company's largest shareholders n announced they will be voting against the $56 billion pay package. let's begin with what we said will be a busy week for the markets, jim. fed in the middle of it, cpi tomorrow. >> yeah, i mean, it's odd, because it's june 10th. maybe it's before the end of the summer, but this is some week, and the worldwide developers conference has been something that we follow periodically. this one has major import for reasons that have more to do with the new phone but also with the sense of what happened to vision pro, which i believe there could be a business-to-business angle. i feel like i'm the lone believer in it, but i think it's exciting because we all kept our phones. i don't know anyone who switched to the -- best buy says that samsung phones is very popular. but they never lost that, even though -- i think there's a

loyalty involved. the tesla, there's no loyalty involved. here we have a guy who built a company, and it's heads, the bears win, and tails, he loses. i just find it's unfathomable that this is a person who built this thing, and he's going to lose, i think. b bernstein had a good piece. >> tony did write a piece in which they suggest he won't get it and that the stock could fall 5%-plus if people are worried that he leaves. >> tony sacconaghi puts in this very good analysis that the dilution that comes from him winning is horrendous, so you cut back on the dilution, but so what if he leaves. it did make it pretty stark that it looks like he's going to leave is the way i felt it. that would be devastating. there is no tesla without musk. i'm sorry, there isn't. it's just nothing that i want to see. the fed, i think, doesn't

matter, although it only -- there are still people who are holding out for more cuts than i think are realistic. >> we did see some forecasts trimmed last week. i know jpmorgan and citi are now back to september/november. we only have a few firms that have no cuts. jeffries, mizuho, all first cut in '25. >> if you go over friday's number, it was a nightmare for the bulls, and yet it didn't seem to matter in the stock market. it mattered in the bond market. the thing that i thought was most disconcerting is there's a whole cohort that the jobless is growing and it's the cohort in their 20s. it seems like if you make it to a certain level, you're good. if you don't, you're dead. and that's something that i think the fed's going to have to be thinking about. >> it was really, actually, a really interesting quirk in the data friday. some say maybe it's a one-off, but has all kinds of interesting political ramifications if, in fact, it's actually happening. >> oh, my. it makes me go back to larry

fink's incredible letter from blackrock, which talks about this lost generation. now, i thought that generation was going to be sitting pretty because baby boom inheritance. in the interim, though, they seem to be losing on the capital side. they're losing on the job -- let's say the promotion side, and suddenly, i realize we do have two classes. i don't want to generalize too much as to what happened with gamestop, but there just does seem to be this generation that says t man is letting us down or the man is sticking it to us, and i saw that in the friday numbers, and was like, wow. what happened to the upward mobility of a particular generation? maybe larry fink is right, that there's tremendous disillusionment. >> it's not just an american phenomenon. i know you took note of the elections in the european union yesterday. macron is going to have snap pulls. >> it seems like there's a revolt against the current

order, and the current order was one which said -- it was like a so-called popular front in the 1930s, and it was, like, hey, listen, we're for everybody, but the right is saying, oh, no, you're not. you're just for what we regard as being a period where we just spent a lot of money so we can handle as many immigrants as possible. and i think that we see that here. we see that there. and i think that the difference is that they have snap elections and can do something about it, but we have one every four years. >> macron is going to take his chances and try to teach le pen a lesson, but no guarantees. >> this is somebody who's been on the fringe and is clearly not on the fringe. if anything, it's now a mainstream vote, but not a mainstream candidate. it's just all over europe. there seems to be a sense, all right, this thing has gone too far, let's pull back, but the pullback is by hard right. i mean, this is not, like, a right-wing old republican.

>> no. >> it's a hard right. >> now, some did argue this morning that the center right basically held. >> yes. >> and that the far right is chipping away, but at the edges for the most part. >> that's -- i think that that would be the mainstream media's approach to it. somewhat in denial. i think they're in denial, because i think that no one's used to having a right in europe that is as close to that we've seen to the '30s, not the '40s, and i think we're all kind of like, are you kidding? but no. nobody's kidding. and there's just a note of rage in these elections. i saw rage, and i think the mainstream media doesn't want to call it rage. >> all that said, jim, it's not like -- we've been dealing with political uncertainty for a while. we keep hovering below all-time highs. >> by the way, the bonds of all those countries are awful versus ours. a lot of time i hear it's our --

that we have such a big deficit that our bonds are therefore, you know, that there's a great yield to be had and it's going higher. i don't know. i mean, i don't want to be in any of those european bonds, but let's address the all-time high issue. i thought it was insane. i mean, i thought that interest rates are going higher, and we've, you know, friday was a divorce of interest rates. that's not been the case. and it looks like today is a kind of a reckoning that we realize maybe we got a little too bullish. in stocks versus bonds is what i felt. >> right. we'll see. there is some discussion this week about very short-term seasonality, back half of june is usually not too hot, whereas the beginning of july, fresh second half money comes in. are you kind of prepares for that shop? >> i like that. i like that. i think we have to rest a little. here's what i don't buy into, and i did a piece for the club. there were so many -- the equivalent of "get out now" pieces, but they're couched,

these pieces, chwhich say, the whole thing is run by nvidia or small group. if it broadens, there's a bad thesis, and you sold ahead of the broadening. why does it have to narrow? is it going to go down to nvidia and that's it? i mean, no. you can't make that judgment. that's a faulty judgment. let's say you add in the chaos of gamestop. you know what? that's -- if david were here, he would say, that's a side show, you might as well bring up southwest air. and i don't think anything's a side show. i watched the presentation of gamestop. >> right. >> and while the stock was down, how do i know it wasn't down because ryan cohen sold a lot of stock? now he's got his own spac with a lot of money, and you want to be in that spac. do i think that -- i think no judgments about what i saw in that video. >> really? >> no, because i think if you are a big reddit follower, what you got is your pal having fun because that's who we know him as, a pal. i'm not part of reddit, so i don't know him as a pal.

i was -- i didn't want to be judgmental, because he made a lot of money. maybe others did too. i hadn't thought that. >> i guess -- joe made a great point this morning on "squawk," and that is that, all right, this thing had a lot of viewers, 600,000 livestream viewers, and it got our attention and we talked about it at noon, but if that happens again and again, don't the markets' nerves get a little deadened? doesn't it become an eroding novelty over time? >> i think that it would only be eroding if ryan cohen wrecked the stock, because the followers of this man are people who feel that -- that wall street establishment must be defeated via gamestop, and we don't have as many shorts as we used to because they're afraid. they're afraid of the redditers. i respect the redditers, wall street bets, because they got a stock up on a company that i think is not worthless but really bad. it's a moribund homage to hard

video games, and i look at that, and i say, before i make a judgment on that, i say to myself, you know what? there's a considerable cohort that is amused and that it's okay to be amused. we don't think so. we don't think that amusement should play a role in stocks. maybe i'm just old. maybe i don't see the fun in stocks. >> but you're saying the entertainment value is part of the value. >> yes. that's -- that's better than i put it. >> this commingling of gambling and investing? right? >> yes. >> for lack of a better word. >> this changed everything. robinhood changed everything. remember, they got -- they made it fun. they made it exciting. they made it -- i mean, look, if you go and you talk to jason robins, i think jason robins would say, listen, my draftkings is far more serious than their robinhood. but robinhood got away with it. look at the breakdown of robinhood. it's like crypto and options. but they got away with it, why?

because, like, why shouldn't they? we had gary gensler on. he didn't say, "i think robinhood is bad for the market." there's two tiers here. there's the old, which we all think is right because it represents trying to find a really good stock of a really good company, and there's the new, which just says, what the hell do you care about the company? don't you understand momentum? don't you understand the way you take it to the man? i sit there and say, i want to judge those people, but who the hell am i to judge them? they won on gamestop for a couple of days, and i'm reluctant to is say to that man who is at the left corner that he's a foe. maybe he's an abstraction. but there are many people who say he's a folk hero, and we're losers. we're losers because we make a judgment of a man with a bandanna and a beard. now, i think portnoy, whom i like very much, is a serious

character. i didn't find this man serious, but that's just a judgment -- >> it is highly subjective on your part. >> that just shows that i'm -- like, who the heck am i? i'm an older guy who doesn't understand the new zeitgeist? i talk to a lot of redditers this weekend, people who read him, and everyone one of them to a man or woman said the same thing, which is that, man, you got to -- you got to start reading more. you got to start understanding more. you represent the old view. and i said, well, what's the new view? gamestop stock doesn't matter. it's the old versus the new. >> that doesn't mean you're going to turn your back on fundamental analysis. >> not at all, but i don't want to be as judgmental. i think that the new is not going to make as much money as the old. >> right. >> but i'm not going to say the new doesn't exist. or the new is misleading or the new is -- are fools. the new are not fools. the new are angry. they're upset. i think they lose. >> sure.

>> but they're angry and upset, and i want to acknowledge that they're angry and upset in the same way that i want to acknowledge that the people in their 20s are the loser from friday's number, and the people in their 20s have little hope, a la larry fink, and this man comes along and he's like, at least i'm amusing. >> that's a sharp point of view, jim, having an open mind. >> i just have been bombarded by people who say, geez, are you just oblivious to what's happened? >> you don't want to be ever truly out of touch. >> we're dumb money, and they're smart money. and i never regarded myself as dumb money, but in the eyes of these people, i'm stupid as all get-out. i went to a really good school. god, that makes me really bad. remember the scene in "dumb money" where he went to northwestern? don't mention that. elite versus not elite? my head is spinning, and it's the exorcist. >> that's a good way to kick off the week. when we come back, we'll get to southwest getting a boost

this morning on this reported stake out of elliott. take a look at the premarket. also get to a couple high-profile downgrades of some tech names like amd and adobe. >> very important. >> when "squawk on the street" comes right back. >> consequential. it's a pillow with a speaker in it! that's right craig. a team that's highly competent. i'm just here for the internets. at&t it's super-fast. reliable. you locked us out?! arrggghh! ahhhh! solution-oriented. [jenna screams] and most importantly... is the internet out? don't worry, we have at&t internet back-up. the next level network. i sold a pillow! ah, these bills are crazy. she

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don't miss out on our fastest speed plans yet! switch to comcast business and get started for $49.99 a month. plus, ask how to get up to an $800 prepaid card. call today! shares of southwest moving higher premarket following this "journal" report, confirmed that elliott has taken a near $2 billion stake in the carrier, jim. calls for upgraded leadership, comprehensive business reviews. they want change. >> yeah, they do, and there's an excellent deck out if people want to see it, calling for a stronger southwest. they embrace the idea that there's a lotof upside to southwest and that it did well over a long period of time and kept the balance sheet during covid, but everything else, frankly, is just underperform, underperform, underperform. bottom tier of unit costs. lot of empirical analysis of the operational meltdown and how poorly the company has been run and how it lost wall street. that it's losing employees, that

it requires change, and i would tell you, carl, when i -- my view on southwest is that they won't be happy unless wholesale change. this is not minor change. this is not even what i saw in -- with texas instruments where they kind of just got -- they got the heisman, like -- i think this is basically a genteel group of people and a board that's genteel, and i think that elliott needs -- believes everything -- everybody has to go. >> a couple of questions here. there's a look at longer term charts. i think it's down 45% over five years. how do you separate their operational issues from what boeing has handed them? >> it's a great point, because i think one of the things we respect about southwest is they've never kicked boeing under the table. never kicked them to the curb. but they did say they were going to hold boeing accountable, and then they just said, all right, there's nothing we can do. let's -- we're lovers, not fighters. and i think that elliott would

believe, why would fighters? you got to come to terms with what's gone wrong, and this is, like, the great don budge, who was this tremendous tennis player, who said, listen, when things are good, don't change a thing. when things are bad, be willing to change anything. they're not willing to change anything. you've got this set mindset which is kind of a religious cult, and they come in, and i'm sure southwest is going to say, we appreciate the fact that you're a large shareholder. fwh we're not changing anything. this could get raucous. i don't want to say ugly. i think the only difficulty is they're -- i know i don't want to sound like what i say about that pat ge gelsinger, but they very nice. i have confronted mr. jordan many times about, how can you do this? his response is, you're right. we haven't delivered. we're going to deliver.

there's a really bad page -- a page that shows you on page 29 of all the interviews that bob jordan has had with us, many with me, many with phil, where he says, it's strong, i'm very proud, and the biggest problem is we had a great '23, bob jordan told cnbc, and it was all. awful. we had a strong first quarter '24. it was awful. and one of the greatest lines is, this is, again, page 29 of the deck, q1 '24, "we had a strong first quarter despite the financial results." >> is there something else? >> this is a stock. >> right. >> we had a strong first quarter. we lost a lot of money. we didn't do well, but that doesn't matter. i think the painful thing here is that you really wish southwest well, because they -- i think when we have them on, whether it be gary kelly or herb keller or bob jordan, you want

them to get it together. you could blame boeing, they didn't, but that, in the end, doesn't matter. they didn't deliver. this document is filled with a disconnect from reality, which is what they call it. leadership calls for change. entrenched views. the board, they view, i believe, as incredibly lightweight. there are people who have done a good job in life on the board but maybe they're not the right board. >> it's funny how we look them as a simplified model, one type of equipment, hub and spoke, corrective force on pricing for the industry at large. those were all positives. >> they're saying, listen, a lot of that is out of date. it's obvious that something's not working. the idea that they have been the leader empirically says -- is false, and it hasn't bolstered profits, so whatever they're doing, i think elliott would say, it's not working when it comes to finance, but i think that that quote is so important. "when it comes to finance," like

that's not mattering enough. and it matters to shareholders. and i think that what elliott says is, you know what, i think you run a good airline, but you got to make money, more money than you're doing, and i totally respect their view. i think they're right. the company's stock has been awful, and the company's -- how it's viewed on wall street is awful. how it's viewed on main street may be okay. but what matters is, in the end, they've got a good balance sheet. and they've done very poorly, much poorly than every other airline. it's like, let's say it's a football team. it's like, listen, guys, you used to be in the playoffs every year. you have not even been in the first part of your division. don't you think we need change? >> i know, and it's not like you can blame the backdrop of travel demand >> no, you can't. as you mentioned, travel demand's as strong as it's ever been. >> we'll get cramer's "mad dash," countdown to the opening bell, get one more look at the premarket on this monday as we get set r a ghfohi-impact week of trading. stay with us.

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got some action in the semis today as morgan stanley makes some calls, resumes coverage of broadcom and cuts amd down to equal weight. jim's going to give us his take

on that and this downgrade of adobe in just a couple minutes. opening bell in out urabfo minutes. "squawk on the street," stay with us.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. morgan stanley with a very thoughtful piece about advanced micro today. it's downgrading to equal weight, so hold. a.i. bar remains high. this is a piece which says, amd is doing very well. they think they can do $4 billion next year in a.i., but they think the street is at $6 billion, so it will be a disappointment no matter what. they also think that they've gotten the attention of nvidia, and nvidia's lowering prices to make it so that they can defend their turf, and they also talk about how amd is really good at the inference, which is the end. we need training if we're going to do a.i. and inference. inference is the easy part. training the chip to understand things, the harder part. and they're saying they're not up to that. now, i would think that amd would say, well, look, we're a

viable alternative. give us a break. but i think the bar is too high and that lisa su is doing a remarkable job. this does not give her, i think, the credit to that. but that's okay. i mean, the time to make the point that it doesn't matter. lisa su is doing great, but wall street's gotten ahead. i think what wall street expects is currently unfair versus -- >> that's a good note. something to keep in mind as we get the opening bell here at the big board. it's the international cricket council and rws global, a live event producer, celebrating that cricket world kuchltcup. at the nasdaq, it is adp, celebrate 75 years, jim. as for nvidia, we do get the ten for one. a lot of revised targets go to 140 at td cowen, a good example. >> look, they picked today because there's more talk about it. my work on ten for ones, which there haven't been that many, is

that people tend to sell two or three shares because they have suddenly a lot of shares. it's a sell event, not a buy event, and i think there's a lot of people who feel it's a buy event, that there's new money who comes in because it's so much lower in dollar value. that tends to happen later this week. you have to get the people to say, wow, this is free money. now, i know -- my analysis is not simplistic. people like to do a three for one. when you do a three-for, nobody sells. >> it's hard to part ways with one of the three. >> this is a ten. but the stock was so high. so, you -- it's a clearing event. you'll get the people who take the profits, and then the stock could begin a march again. >> david kostin at goldman takes a crack at what splits do for liquidity over the long-term, and he argues, i think, he would argue over the longer term, it is a positive. >> absolutely. you don't want -- all ceos say this, but there's a cohort that's come back to the market of individuals, and they don't

want to own a fractional share. this whole fractional share thing, which is a canard. it's not what people want. i think in theory, it's what people want, but there's ago emotionality to splits that we all want to -- i used to sit with my friend herb greenberg and break a pencil and say, look, how you have two pencils. it worked to show there was no value created. it was meaningless, because big psychological plus, it's like, i can get in there finally. i couldn't get in there before. >> meantime, evercore with this remarkable chart, our suggestion that nvidia could become, one day, 15% of the s&p. right now, it's about 6%, let's say. >> look, jensen's got a 20-year view. he's always had the 20-year. if it's 2005, he's in 2025. jensen is not -- i don't want to say he's not one of us, because

that's patronizing. if you look at what can be accomplished -- there were a lot of people i talked about, people ask me about him all the time, and i say, listen, you ain't seen nothing yet. what you're getting, if you go to the mellius piece, it says enterprise software, look out. this is the way swaoftware's gog to be created. it's a downgrade of adobe. adobe does have a terrific suite, but the suite is expensive. i'm a big narayan fan, but that doesn't matter. that piece fundamentally says enterprise software was great from 2010 until now. look out, this is the way software is going to be made because this obviates the need for all that enterprise software, which has been what wall street has lived off of, because that's where the ipos are. he says, look out, be careful. >> especially the subscription model, which based on seed count, it's going to matter more

about what your outcomes are. he says, look for continued pressure in workday and salesforce and snow, which he doesn't cover. >> no, and i discussed with jeff marks today, look, salesforce has been a core holding of ours since we basically started the trust, and i respect ben's work enough to be able to rethink how long will it be, can salesforce pivot? the problem is he's using, again, we've got these people who have cyclical. we have people who just say, tactical. and then we have existential, and this is an existential threat, and i think that jensen would say, no, it's just the way things should be. you wouldn't have to have coders. it's codeless. i remember when i once spoke to it, and it, like -- i spoke to it. i don't know coding. i wish i knew. twilio tried to teach me. lot of good that did. and i feel like the whole point of it is that you don't need any of these companies, and they're very expensive. >> at the very least, he would

argue, melius, that is, that it's going to make it easier for a start-up to create software with minimal engineering. >> if you blank slate, wouldn't use them. i think that apropos of what the employment numbers showed, nobody wants to hire because everybody thinks at least 1 to 3% of their people are not necessary. we just don't know which 1 to 3%. >> that's the -- that is the hard part. jim, we got some inclusions to the s&p. crowdstrike, akr. >> holy cow. george kurtz last week -- here's something. george kurtz is a winner. what's he a winner of? last year, he won le mans. he actually won. i have a picture of him with the trophy. i asked them that, where are you going? he said, i'm going to le mans. i said, what's it like? he said, well, when you win -- >> i said, no, i know when you win, but what's it like to watch? and he won. he won here too.

crowdstrike is a remarkable company. i know that we have been partial to palo alto, which has done very well for the trust, but kr crowdstrike has been a huge, huge winner. kkr, i think there's not enough float to handle without a big move, and godaddy is a conundrum. there's just a black box to it, but i think godaddy is a company that's not that well understood on wall street. and i'm being polite. >> replacing robert half, comerica, and illuimina. >> i'm eager to find out why that thing keeps going down. illumina is a change of pace. comerica is the worst regional, is my feeling, and that's a shame. it's a growth area, and comerica is a once-great company, and i would like to think they could be great again >> we did get an initiation of axp, to citi, neutral, great model, but the bar is high. >> i thought that piece was

gratuitous. i think that we have a terrific ceo in squeri, and that was a piece that basically said, squeri can't do it. and i think squeri can. i continue to believe that that stock goes higher. >> meanwhile, as we watch consumer, jim, i know you saw this upgrade of walmart out of jpmorgan. >> makes a ton of sense. when you roll back the prices on 7,000 different goods, that's the place i want to shop. i think that one of the things they never talk about -- and i wish they would -- is how much fun the stores have been. like, when i mentioned to him, they're on point. say, listen, we offer value, jim. it's not about fun. it's about value. and i have -- like, i want to say to them, lighten up. lighten up. what is that in bentonville? don't you understand you made the stores fun? they don't. they disagree with my analysis, my rigorous analysis. >> best performing dow component this morning as they basically argue they've got -- they've got the consumer barbell to work

with. they've got other profit pillars they have barely tapped. >> yeah. walmart.com. there's a lot of upside there. if you want upside, costco.com has -- costco is predicated on the idea that you have to come to stores, and costco's got much more upside. but look, costco and walmart, they're the winners. tjx and apparel, winner. what's winner? lowest price. everyday lowest price. edlp. those are the three. i have to tell you, when you go to walmart -- i remember when i used to go to walmart, there was one really good one in jersey i would go to off 78, and there's always something they were giving away. it would be, like, wow, look at the price of that rubbermaid ice chest, and it would be -- wow, they must lose money on that. that's what costco did. costco loses money on a lot of things, but walmart's got -- i urge people. i killed them on a dicky's

jacket. my kids said it's an 80 there are jacket. i got it for $26. i crushed walmart. they don't know it. >> that gain is almost three times the s&p's return this year. >> they're so well run, and the humility is daunting, because i want them to talk themselves up, and they just -- i said, how about some reactions from last week? no. we have lower prices. how many? 7,000. well, how about some excitement? no. that's not what we're about, jim. and i'm like, well, that's kind of what i'm about. they said, yeah, but you don't run the largest retailer. we do. >> exactly. >> oh, okay. sounds good. >> helping the consumer today, gas prices, three-month low. we got some m&a, more consolidation in noble diamond. >> yes, now, there's a deal that actually -- the stock did trade above that in '23. but i'm sure that if you're diamond, diamond's a long-suffering one, and that was one that never really -- you

know, hit its stride many, many years ago. but was a -- this is one where its time has come. sometimes i think, is this a deal that because they think that trump could win? because i think that every merger's going to -- most mergers will be contested between now and the election. that would be the typical nature of the way an agency works when it's threatened by the end of a administration. and so, maybe they challenge that. i think it's a -- look, i have been waiting for consolidation in the offshore/onshore for a long time. slb stock has really been pressured. >> meantime, we got berkshire adding to occi as we got the disclosure on friday, jim. >> yeah, yeah. i guess warren can't get enough of that. i have to tell you, if you think he's a buyer of that aggressively, i urge you once again to buy the stock of chubb. chubb sells at 12 times earnings. it's by far the best, by far,

and if you talk to people, the two things you hear about in the insurance business is, one, evan greenberg is the best there is. he's the ceo. and two, it's the cheapest versus its reputation. reputation being everything when it comes to insurance at 12 times. i would think that a 6.4% position of buffett is nothing versus what he wants to do. certainly a much better company than occi when it comes to balance sheet. balance sheet, they're superb. >> couple interesting pieces over the weekend about homeowners just going without home insurance because it's too expensive or can't get the policy written. home builders, four-month low at this point. >> they reacted viciously to friday. i thought, how can lennar be so bad and yet the rest of the market whistle past the lenna toll graveyard? people think mortgage rates are headed higher and these things are hostage to mortgage rates.

people just use more cash. and the stock's a little oblivious to the new buyers, c which say, toll, your houses are a million, i'll pay 1.1 and i'll bring cash to the table. i don't want to go against those stocks. they're run differently than the old days. i'm sure people would say, this time is different. it's killer, jim. don't do that. these are very good companies, and they all amalgamated and owned the country. >> we saw an upgrade last week, jim, of 3m, and today it's an upgrade of honeywell at ubs. >> let's talk about that. honeywell is a position we own for the trust. 3m, i think there's a lot of value there. i think mike roman got rid of the two great overhangs. the honeywell was -- even though we own it for the trust, that guy has been right. it was the worst performer of the major industrials, and it has somewhat caught up. i don't think -- look, i totally

agree that it's time -- he doesn't say it's time to buy. he said, okay, it's caught up, i want to cover my short. his short's been right. why do we own it? because we feel that it's too depressed, and that some of the cycles are -- the short cycles taken in. this is a very inexpensive stock versus the cohort, withich has d a big run based on reshoring and the i.r.a. as for pharma, lilly, all-time high. moderna on "squawk" today for its phase 3 combined vaccine result. >> lilly, congratulations to annette ashkenazi, great package from google, totally deserved it, the great cfo. eli lilly, there's a lot of what i regard as a misleading narrative on friday that there's a narrow -- the fda is having the big discussion today -- that there's a narrow approval. the issue is whether it would be approved or not. and i don't care how narrow it is.

i think that if you can prove that your parents have it, you have some plaque, you're going to get it. i think that the problem is that if everybody were to get it, you'd break the system, because the system -- it's not glp. this is just -- these drugs cost a fortune, and everybody wants to avoid alzheimer's. so, we all kind of want it as a vaccine. it's not going to be a vaccine. it's going to be very targeted and very expensive. but dave ricks, one of the most responsible pharma guys, the ceo, i'd never put it past him not to find a better way to handle things. >> ben sell this morning talking about htheir vaccine. he says, there are higher risk and comorbidities but if you're not in that group, you might want it for fear of contracting long covid. >> the conventional wisdom is if you're a certain age, you got to get them both. i'd like to get it once. i got sick from getting both by just the cavalier nature of, hit

me again. i was like, at the casino, i had an 18. hit me again. no, jim, there's one, two, three -- but he hit me again, and i toppled. thank goodness it was on a friday. missed a day of work, would be just horrible. >> david's back tomorrow. >> i'm sorry, i'm sorry. i meant to turn this way. just kidding. he works really hard. >> planet fitness, new chief starts today, i think, jim. jeffries ups to buy as well. that's a 5% move. >> that's been leaderless for a while. we never -- i don't respect companies that don't tell us what happened to a ceo that i had on many times. i don't respect them. here's a company -- i had, i don't know, eight times, and then he disappears. no. this is not "hitman." i won't give away the ending. this is not one of these situations where that didn't happen, that person didn't

exist. no, that person edid exist. that was a man who came on the show and existed. you can't just erase him as if he's stalin assistant going to vladivostock. don't disappear him. >> you want them to complete that circle. >> i'm a big believer in dignity. that's new for me. just kidding. >> we'll watch. we'll see. didn't see the reasoning behind the jeffries upgrade. >> no, look, you know, people want to be in shape? i don't know. i think there's -- it's glp-1 versus health and wellness, versus exercise and diet, i'm sorry. i mean, one of the things that glp is about is, listen, diet and exercise didn't really work, and those who it can work for, planet fitness is a nice, inexpensive alternative. i always liked it. that's why i feel the way i do. i always liked it and this gentleman who worked his way up from the front desk -- look, just say what he did. if he did anything. or he didn't do anything. because right now, you don't presume the best. >> right.

>> i mean, do they not acknowledge that this was the person who came on cnbc over and over again? >> we'll see what her introductory commentary is like. >> just have some dignity. offer the man some dignity. as we go to break, dow is down 50, holding 5,332. watch bonds. not a lot of data today, but cpi and the fed decision on wednesday. it will be busy throughout the week as we get ppi thursday and umich on friday. ten-year, just south of 4.46%. stay with us.

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it's time for jim and stop trading. >> congratulations to dave and his family, his daughter for graduating high school. one of the greatest days ever. it shows me you did it right. so we say that arm holding, saying that this is the setup for the shares that they really liked. i totally agree with this. i think arm holdings, people want to find the next nvidia. there is no next nvidia, but we'll have the number of arm chips. remember, they are a software. they're not really hardware. the chips are made elsewhere, but the number of chips that will be in everything is tr extraordinary. nvidia tried to buy them. they're the winner of the cpu side. we'll talk about the law and how they're going to president winner. they're not. arm's going to with the winner and the renee haass is a remarkable ceo. >> just one more reason why semis have been where it's at

this year, jim. >> yeah. i mean, look. i think that the numbers for arm could dramatically higher, in underwriting, in retrospect, they gave that money away. that will not be what renee cares about. they made a lot of money. i think, again, another humble man doing a great job. >> we talked about how well priced some of these deals in the last couple of quarters. >> i still like it have, very much, and not just because of what i said, and it has loyal users and i respect the people on reddit. do i respect wall street? i respect the people on reddit. >> sounds good. how about tonight? >> this is about -- i want to talk about enrique lores. aipc is not getting enough attention in part because pcs have been in such a down cycle and nobody wants to be touching them. maybe they should be touching

them and nvidia is doing it as well. they have big ambitions to be in the pc. let's not forget. >> it seems like just the other day, you said best buy. >> something -- blind squirrel finds a nut. i'll go with humility. i was babbling. >> that was a great, tactical call. >> there were some good ones, but the best buy worked very well, and a lot of that is because of how great corey berry is. people should get on board. i know there's a lot of shorts piling on and i'm not trying to do a short bus. i'm just saying, listen. this one has got a -- they have the pcs. that's where you'll go. >> yeah. jim, that's good work. we'll see you tonight. >> thank you. >> "mad money." we'll talk apple and tesla with bernstein's tony saganaki. don't go anywhere.

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♪

good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen, and david favor has the morning off. we'll start on the back foot. down two-tenths of a percent from the s&p, but that's masking some strength we're seeing this morning in utilities. top of the market, energy strong, and discretionary, those are all up. everybody is lower including technology. that's why the nasdaq is starting down a third of 1%. it's been a strong month, up 2%. strong quarter, up more than 4%, and obviously that's the context. take a look at treasuries this morning, still kind of digesting jobs. at the end of last week, and also news in european yields, pushing yields up. 4.465%, and the yield at 4.88%, and selling off bonds to start

the week. here's some movers we're watching. elliott investing in southwest airlines and plans to push for changes. more on what that could be. what comes next there later this hour. volatility continues in gamestop. shares on the move this morning after plunging 40% on friday. that said, the stock is still up 70% -- or around 60% over the last month, and watch apple today, kicking offer its highly anticipated developers' conference with many expected announcements around ai. carl, this is a really big week in terms of macro catalysts for the market, and wednesday is really the huge day because on wednesday, not only do we get the fed decision, with all the dots which are the projections for the next rates for where rates go, and how many cuts the fed expects, but also the cpi report is on wednesday as well amid this continued debate over how fast inflation is falling, and is it enough to pacify the

fed to get it to start cutting like europe and like canada, and then the wholesale inflation numbers on thursday. we'll get a few notable earnings. oracle this week, adobe, obviously ai, cloud stories, rh, the luxury consumer, but i think we have to start with what happened in europe because it is having a market impact. investors are paying close attention to some of these surprising results from the european parliamentary election, surprisingly right-wing wins. that was the star, and that was the takeaway over the weekend. if you look, the political uncertainty is showing up, especially in france where talk about a surprise. macron calling for a snap election that starts as soon as june 30th after he was dealt a pretty big blow in these parliamentary elections. his right-wing opponent was a winner. france is down sharply. the euro is also down. i read through a number of research reports this morning, carl, to figure out what it

means. because there are all sorts of market implications. some of these parties are anti-euro. some of these parties are more nationalist and there are implications for trade. here's basically some of the research that stood out to me. so deutsche bank said on the parliamentary election first of all, the center still holds. the status quo still holds. however, the shift to parliament, it's likely to have some impact on the policy debate and could flinfluence the shapef areas like migration and the green deal. the green parties, the environmentalists, they were the biggest losers across the board. capital economics on france says it makes a lot of sense france is down so much. it could make it more difficult for the gocvernment to bring don the fiscal deficit. it makes sense the spread has widened albeit only repeatedly

vowed to bring it down below 3% of gdp by 2027. those risks seem to be low. this comes interestingly after france was downgraded by s&p last month. there are some concerns about the deficit, and investors are clearly worried, i think more about the political just uncertainty of what a divided government might look like. no one quite knows why macron did this. he'll remain in power until 2027, ybut it might be much harder for him to govern. >> that's since july of last year. their own ten-year, highest yield, and so far this year. germany though, will not hold snap polls unlike france despite some of the wins from their own party. >> it was a blow against, yeah. not quite as stunning as maureen la pen that went double than

macron's own party, and i don't know. it just reminds me a little bit because he's coming from a position of weakness. it reminds me of david cameron as a way to sort of calm the opposition, and it turned out it was a big miscalculation because they voted to leave. i'm not saying anything like that in the stakes here. people are wondering what exactly the motivations are on that. as far as -- so we'll watch europe because euro's down six-tenths of a percent. it's all about the fed, and, you know, after that jobs report, carl, a lot of changes. i know you watch these desks of these economists. they're changing their views. citi, jpmorgan, the above consensus jobs. that means they're going from july cuts to the first cut in september. jpmorgan thinks the first cut in november. goldman sachs, you know, we talked to them on friday. he expects two cuts, but

interesting, and the first one in september, but they don't have a lot of conviction because the cut is optional. then inflation, he says, should continue to go down, but it's not such an obvious, for instance, decision. so the commentary from powell on how he's viewing the recent inflation reports and just weakness -- signs of weakness in the economy is going to be so key. >> yeah. he did say that the moves by other central banks, quote, raises the odds a bit, that the fed will do the same. they're looking for two this year. four next year, and then two in 2026. >> right. so that's the dots are important because we do get those -- well, important. they're notable because that's where the fed members project how many cuts this year, next year, and the year after. theexpectation is now, last time we got the dots, the fed members expected three cuts this year. now i think most of the wall street expects two cuts and for the neutral rate. for where they settle out to come in a little bit higher in the long run, although it's impossible to know where that

should be right now in my view. >> that's true. as sara says, it is an important week for stocks and inflation data. the fed decision on tap as the nasdaq comes off the best week since april and the s&p hovering here, just south of all-time highs. senior markets commentator mike santoli is here to help us get ready for the week. there's a lot coming our way. >> i mean, i think mostly it is the combination of cpi and fed, and, you know, as sara was saying, it's being characterized as an optional cut whenever it does come meaning that the cost of being patient and the cost of essentially doing nothing for as long as possible isn't perceived as very high, but that only % wo works as well as the economic numbers coming in. the camp coming into this week was, well, the better than expected payroll number on friday created some insulation against the possibility of a not so great cpi number. that means a strong economy if

you are going to have high inflation. i'm not sure that the takeaway from friday's jobs number was resounding enough that we have a hot economy because of the kind of stuff below the surface and the household survey and the fact that a lot of other stuff was showing a little butt of softness that we bought ourselves that much of a cushion on that front. that being said, we still have a market that is pretty much in the zone of -- we have a decent macro backdrop with risks on either side, fbut it's a very selective market. even today again, it looks like they're doing almost nothing. you have many more stocks down than up, and it has an eroding breath type of story, mostly because nvidia and the associated stocks working as a seesaw with the rest of the market and you see today, a lot of domestic signals doing well, right? you get carry-over from jobs and wages that are okay, and you see things like gm and ford up, and you see the big retailers up, but i don't think that amounts to a trend. it amounts to the way the market

stays settled at a time when nvidia's backing off. it sounds ridiculous to work backwards from, hey, we're going to assume a flat-ish index and high dispersion under the surface, but that is what the trade is right now until we get more clarity on the macro. >> in the column, you write about strong market, cracks under the surface. is this the main crack? >> it is mostly. the breath, and, you know, a lot of times that resolves positively down the road. in other words, it's not about, like, oh, no. this is a topping process because stocks are starting to create this gravitational effect upside beneath, but that is one of the sentiment as a big issue, and you see eruption of enthusiasm which didn't make a ton of sense. obviously the gamestop saw is in there, but i don't see it as pervasive. people don't think it's a bull market. they're acting accordingly, but, you know, it's a matter of yields have to stay in this zone of acceptable, you know, below let's say, on the tens to make the most of this kwief equivocal

environment. >> where do you think yields on the downside would revive interests? >> yeah. >> 4.25? 4.2? >> no. we have to be at the lower end and we're fine. when the market peaked and the breadth of the market peaked in march, you're at 4.2, and that created the differentiation. >> all right, mike. thank you. mike santoli kicking off the week for us. just a few hours away from apple's worldwide developer's conference kicking off in cupertino. our steve covac is live at the event. what do you expect? >> hey there, sara. this is going to be apple's most important software announcement in 16 years. that's when the app store launched. that's because apple is the only one of its peers that doesn't have an a.i. story to tell yet. that's going to change today. we have heard the reports, the partnership with open a.i. to

put the chatgpt technology into the iphone. maybe a similar deal with google as well, and on top of that, there's a long overdue improvement that siri expected. none of that matters if it doesn't improve apple's main businesses like iphone and services. bloomberg and others reported the a.i. features may only be available on the iphone 15 pro and better. that means if you didn't upgrade to a pro model last year, you could miss out on son-ime or alf the a.i. features that they'll announce today. if that pans out, the a.i. features will need to be compelling enough and get people to upgrade earlier than they would have. plus, we won't hear about the next iphone for a few more months. that could have even more exclusive a.i. features, guys. >> we get closer to the start of the presentation at 10:00 a.m. pacific. our next guest says don't expect

anything revolutionary from apple. t t tone sag -- tony sacconaghi. great to see you, tony. >> good morning, carl. >> a lot of discussion over the weekend about apple. i guess for lack of a better phrase, being behind the eight ball on a.i., but then others counter with the depth of their embedded stack, and that provides its own set of beneficial positives. what do you make of that? also in light of the fact that wwwdc has never been a real stock mover to the upside? >> absolutely. so look. i think the knock on apple is it doesn't have an a.i. story, and there's quite a bit of expectation for today, but i think it's important to remember what apple is. a apple is this dominant consumer company.

he has consumers in its installed base. those are generally demographically very attractive, aff aff affluent. consumers who spend a lot of time on their devices. apple has been very successful in effectively channeling the efforts of others, and being able to profit on that. so the best examples are its partnership with google where google is the default search engine and pays apple $20 billion a year for that privilege. similarly, you know, apple makes a pretty similar amount, you know, 20-plus billion dollars per year from app developers who are putting their apps on apple's app store, and so apple's a.i. strategy doesn't have to uniquely be apple inventing something new in a.i. it's bringing a.i. to the masses, and ultimately potentially collecting its whole

on that, and i think we'll see that today when we'll hear about these capabilities which has been waidely reported, and appl will effectively be, you know, that access point for a.i., and that's -- that's a very privileged and unique position that the company holds. >> can you help viewers understand the concern that has been raised, and that is if people stop, or use google search for iphone less, what that does to the billions in shared revenue they get from alphabet? >> well, i think that's a really big broader question which is, what is the future of search, and how does a.i. impact or not impact that? i think our belief is over time if, let's say google search was 100, and search on an iphone was 100, going forward, maybe that number is lower. it's 80 or 90, but a.i. might be

10, 20, 30, 40 in terms of queries going forward. so there certainly could be some share shift in terms of where users direct their queries going forward. i think investors have to believe that apple and its a.i. partners, whether they're open a.i. exclusively or open a.i. plus google or others, find a way to make those moves. those queries will be at a.i. companies like a.i. queries going far. >> tony, just because you cover december la, and it's a big week for tesla as well with that share meeting on the vote, and that pay package. do you think it passes, and if so, how does it affect the

financials? i think you're underperform still at 120. >> yes, sara. i think it's going to be tough to pass, and, you know, the math is relatively straight forward. you have to get a majority of votes of shareholders that vote, and part of the challenge for tesla is that not everyone votes. the highest voter turnout they've ever had is 63%, a very turnout might be 75%. and of that 75% of the vote, they have to get half of that, and it's certainly possible that the passives will follow the proxy advisers. they're almost 20% of the vote. they're a public, large institution of money managers who have said they're voting against the vote, and so very quickly you see a pretty big no cohort, and so i think mathematically it's going to be a real challenge for the pay package to be approved. now if it's not approved, there

certainly could be a further appeals process, but i expect the stock to potentially react negatively. there is a concern that elon musk would become, you know, less engaged. he's pleted -- impollicitly threatened he would be less involved. >> we'll talk more this week, tony. at least we hope so either before or after thursday. appreciate it very much. good to see. >> you thank you, carl. >> we'll ask a voter later. as we head to break, our road map for the rest of the hour. shares of southwest airlines flying high as a major activist investor makes a big stake. closer look at what could be on the horizon for southwest. nvidia's 10 for 1 split takes effect. where the stock goes from here with some updated targets. and we'll talk to the

biggest pension funds in the country about that elon musk pay package and how he views the market right now. still awe head, "squawk on the p illle ghba.it ck s&stl lower by two-tenths of a percent. we'll be right back.

southwest, one of the biggest gainers right now on the s&p. let's get to leslie picker with the details. good morning, leslie. >> good morning. acquiring a $1.9 billion

economic interest in southwest that represents 11% of the company and pulling out all the stops with the campaign. a presentation disclosed a short while ago. details the activist investors push for a change in leadership, a change in board composition and a change in strategy and operations. elliott says if the company were to execute on its trifecta t stock would be able to achieve $49 per share representing a 77% return on the unaffected share price. elliott says, quote, after 18 months of intensive research, they are convinced that southwest represents the most compelling airline turnaround opportunity in the last two decades. the firm blames this -- according to the letter, quote, poor execution in stubborn unness to evolve the company's strategies have led to deeply disappointing results for shareholders.

still about half the levels reached in the spring of 2021, and underperforming its peers over the last few years. ceo bob jordan overseaineingsom of that pressure having taken his seat in 2022. it sounds like management change is their top priority among those three that i outlined earlier. there's a while though before the nominating deadline in march of 2025, an annual meeting likely sometime next spring. so almost a year until we could see any sort of proxy fight, although i'm told that shareholders do have the ability to call for a special meeting here and on the subject of a proxy fight, elliott hasn't really run a proxy fight in seven years and i'm told it's not their expectation this time around, but of course, they will prepare for it if it comes down to it. we have not heard back from southwest after multiple requests for comment, but one would assume they are probably

digesting all of the tematerial from this morning, and we will hear from it. guys? >> a long chat with jim this morning on the nine, and we talked about some of the avenues that in this case, might be closed off or difficult, namely consolidation. >> yep. >> it's been tough to come by in the airline industry and even diversification away from boeing would be difficult in its own right. >> yeah. exactly, and i spoke with the people familiar with the matter. i heard that conversation in the nine about boeing, and i asked them, you know, it wasn't a big part of the presentation, not a big parking lot of the letter. a lot of highlights about technology inefficiencies after that 2022 meltdown, if you recall that that led to ultimately a fine, but in terms of boeing, it sounds like they're more just focused on what the financial performance has done, and the people i spoke with highlighted other airlines, namely alaska that have been better able to manage their margins in the face of some of the slower and inability to get the same amount of deliveries from boeing that has befallen

southwest, carl. >> it's going to be interesting, especially given southwest's well known culture, something they've held proud for a very long time. leslie, thanks. leslie picker on elliott southwest. a consumer spend and what it's saying about the state of the economy. isyoso nbe aerumrsft th short break.

welcome back to "squawk on the street." there's a read on the consumer. let's get to steve liesman with the consumer and this is tricky to figure out what's going on with the consumer right now. >> it sure is, but our cnbc retail monitor shows the consumer, sara, bouncing back strongly in may after a fairly average or lackluster april boosting spending, and several discretionary sectors are countering the story of weakening in the economy. we use real credit card spending data from affinity solutions and it shows may spending and gas rising by 1.4% compared to just a 0.3% in april. there was a minus number in april. that takes out food service

rising by 1.2% versus 0.4% in april, the year over year up 3% as well. breaking it down by sector though, you can see the non-store retailers. those are your online folks that were really strong, but so are restaurants and bars and food and beverage. clothing can accessories, over 1%, almost 1.5%, and general merchandise stores as well. building and garden supplies minus 0.6%. this is the strongest of the 20 months we've tracked this data, and it's unclear if it's a rebound from april, or maybe the start of a renewed consumer spending spree. from the report from friday. if this number is repeated next week with census, it's going to lead almost certainly to an upgrade in the outlook for gdp and growth for the second quarter while wednesday's inflation report, you guys were talking about is more important. the fed still looking for less growth and more economic slack between the payroll number on friday and our retail number

without showing much slack here, sara, showing a bunch of strength. >> very interesting. retail sales up next tuesday. steve, thank you very much for the up-close look there. >> thank you. >> the fed should already be cutting rates here, and it expe two cuts. moody's analytics's mark zandi joins us now. >> we're at full employment. the unemployment rate is higher over here at 4%. that's consistent with the full employment economy and i think inflation properly measured is at target, at the harmonized inflation measure excluding homeowners and rent. we can talk about that if you would like, but it's at 4.2% at 12 months. they've achieved their objectives and you have to ask yourself, where y do we need su high rate?

i agree with the folks that say the equilibrium, that is consistent with restraining growth, and it is higher than it has been, but it's not 5.5%, and as long as the fed keeps its foot on the neck of the economy, it runs the risk of breaking something, and again, why? you've hit your objectives. >> except they don't hit their target, the harmonized -- what did you say? the read owners equivalent rent, and they target the pce and it's not there yet. >> it's not, but it's off the trend line. it suggests it's helpedading int direction, and off the pce and where they want to be, it's oer, and that's the implicit cost of ownership, and that's difficult to measure in difficult times and it's impossible to measure in the housing market. this is topsy-turvy as it is today, and, in fact, in the rest of the world, they don't even attempt to go down that path, so, you know -- you know, we're there. >> that's fair, and pce is 2.7.

it's not that far off. the concern would be, you know, if we keep getting these strong numbers with wage numbers which was also a surprise on friday, and potential acceleration here in consumer spending, that they could risk another flare-up of inflation, and it would be worse to have been cutting when that happens than to wait. >> i don't think that's happening. i mean, the strong job numbers go to strong integration. you can see that in the household survey, and unemployment is half a point higher than it was last year. hiring rates are down. unfilled positions are down. jobs are done. hours worked are down. looking under the hood of the labor market, it's soft-ish. it's hanging in there, creating a lot of job, but it's not suggesting a lot of things would rev up here. i don't look at the data that steve was just showing very closely, but i did notice -- did you notice through year of year, 3%. 3% inflation on the cpi is 3%. so that means real growth over the past year is zero.

now i know if you look at the power consumer pie, but if you're looking at this piece of the pie, it doesn't suggest things are revving up to me. >> so you think it's misguided, the policy now, that they're not cutting, and they're going to wait until september. do you then expect a harder landing? do you expect because of that, that time, that they're not cutting from these restrictive levels we'll see a bigger impact on the economy? >> well, no. the most likely scenario, the baseline -- kind of in the middle of the distribution possible outcomes is still that they kind of pull this off the economy soft landing. i think the economy is resilient, but, you know, the risks are rising that they make a mistake here. they're not inconsequential and they're moving higher. i mean, so we mentioned job market, but the other thing we're worried about is the yield curve, you know, the difference between short and long rates is still inverted. that's a very uncomfortable place for bank and other solutions to be in, and so something could break. so no, i think the most likely

scenario is they pull this thing off, but they're taking a chance, and the risks are rising that they don't, and the question is, you know, why? why exactly do that? >> in france, and for italy for instance, does it change your growth expectations for europe or the expectations for the euro? >> no. i mean, the bottom line here is a center held, right? there's parliamentary seats, i think 720. there's still a majority. it's a little unwieldy, and things are shifting to the right all over the world including here in the united states. immigration is an issue, and of course, in europe there's more euro skepticism in terms of ukraine, and a lot of things going on, but at the end of the day, despite all of it, the center held, and i don't expect any major change in policy.

so no. >> it could foretell what a further move to come, but i guess we're not there yet. mark, thank you. mark zandi from moody's analytics. >> let's get a news update with dom. >> good morning, carl and sara. antony blinken is in egypt today as part of a push for the gaza ceasefire deal pitched by president biden just last month. israel has already accepted the proposal, but hamas has yet to act. the u.s. is open to a separate deal with hamas to free five american hostages if that deal falls through. hunter biden is surrounded by family today in court as the gun trial enters its final stretch. it's possible they will begin closing arguments today after they indicated the president's son was not likely to take the stand. he's accused of lying about his drug use on a federal form to buy a gun back in 2018. and donald trump is scheduled to sit down for a virtual interview today with a new york city probation officer. it is a requirement after a jury

found the former president guilty on all 34 counts in his hush money trial. sources tell nbc news he will take the interview from his mar-a-lago home with his attorney, todd blaenche by his side, and it'll be done with virtual security measures. carl, i'll send things back over to you. >> thanks so much. coming up after the break, the investing head by the nation's second largest public pension fund managing more than $330 billion in assets, one top holding is worth more than 4 million shares of tesla. what he thinks of musk's pay package in just a moment.

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the tesla shareholder meeting, sovereign, the latest to join that campaign. our next guest runs $330 billion and his pension fund also opposes the pay package. joining us this morning is the chief investment officer, chill

ailman. great to have you back. walk us through your decision on this front. >> hey, carl. we opposed the pay package last time it was put before us. i'm going to do my personal view. it's absurd. i mean, elon built the company. we were an early round investor. we were a venture invest wher t -- investor when this started back in 2000. i hung in there, and he went public. he's made a ton of money. it's a car company. we need to have a serious salary. we'll pay him 140 times the average worker pay. how about that deal? i think that's more than fair. this pay package is ridiculous, and i know he's mad. he'll say i'm absurd to say that. i'm sorry, elon, you know, he wants to go to mars. let's let him fly away. >> so it sounds like you have a difference of opinion on what the actual model is all about right now. >> i sure do. you know, the bottom line, it's a car company. this is not nvidia.

they don't make a.i. chips. even if these cars had a.i. on them -- in them, they are not worth 60 times earnings. that is absurd, and, you know, nvidia's only 40 times earnings which is still crazy, but come on. they're growing. i don't think tesla's growing that fast. >> it was always more than a car company though. it always got that premium valuation, and musk has always been sort of a -- the counterargument is he's been a lion with shareholders in that view, and he has become -- he's so integral. i'm not sure retail investors will agree with you. >> i doubt retail will agree with us, but come on. these are the big institutional investors. norway does it more than we do. they're almost a $2 trillion fund, but these are long-term investors. i love the fact that he owns the company. he's the leader. he is the star. he designed the cars. wall street's valuing it for more than a car company, but that's the product they make and sell, and we love them.

they're great cars. they set the ev model, but sara, this is a company that has not grown in the last two years. it's barely making money per car it sells. he needs to focus in either on cars, either on x, or on going to mars, and i think his heart really is in going to mars, and getting off the planet. >> so chris, are you prepared to see him walk? >> i would hate to see that. he owns the company. this has got his name all over it. i think it's still his passion. let the professionals run the company, you know, we've seen him throw temper tantrums before when it came to x when he was trying to buy twitter. he's brilliant. i admire him. i've listened to him recently at the conference. amazing speaker, but let's run this company. it's an auto manufacturer. let's go back to making cars and doing it well. he can run spacex and run his other efforts and say how those do. he's focused on starlink.

he's got a million balls in the air. focus on a few. >> well, i mean, some would argue this would help his focus on tesla if he is incentivized by this pay package. >> sara, if i gave you $68 billion, would you be more focused for us? >> probably, yes. >> i think so. you know, he owns the company. i think that's the point, is hey. warren buffett, take some advice from warren buffett. make your money in capital gains, not in salary. let's have a reasonable pay package. this is overinflating ceo pay yet again. this board governance is terrible. he needs more diversity on that board. he needs more outsiders. he had at least hiro mizuno, and now he's off. as shareholders, like i said, we have been in this company since 2000, so over 24 years. we have been here for the ride. he's made us a ton of money, but he's made a ton of money. make your money in capital gains by owning stock.

>> chris, you mentioned the governance. you mentioned what you call a lack of focus on profitability. there's the added challenge of an ev adoption model that might be re-rating lower or at least extending out. why are you still in the name? >> because we own the market. you know, i love when you talk to jim cramer, and i love his trade ideas and boy, does he know the individual stocks, but i'm so big i own the entire u.s. stock market. if you look at norway, they own 9,000 stocks. they own the world and we're going to move up and down with the broad market as it is. so we're making money in nvidia, trading sideways in apple. we're losing money in tesla, but we're not going to try and trade it. let jim be the fast money. we're actually long-term, patient capital. we own the usa and we're okay with that, and i'm going to stay there. i'm not going to trade the stock. i'm going to own it. like i said, i have been in it for 24 years. i would like to see the teachers own it for another 24 years.

>> that's usually why we come to you in jgeneral, chris, to talk about the overall market. you think we'll enter a summer doll drum period, right? >> i do. right now wall street is valuing a.i. more -- more than they value the birth of the internet in 2000. think of that. so you've got all kinds of screaming indicators about the concentration in this market, the narrowness of the names, the top five names made up a quarter of the market, top 20 names make up over a third of the market or the s&p 500, and what's interesting to me, carl, is few back up and look at everybody's earnings estimates and estimates for what they think the s&p will finish the year, the market's already 60% above all of that. so in other words, 40% expect the market to go higher. 60% expect it to close here. so we're going to have a lot of rough patch with all the politics. you were just talking about

europe going right. we're going to have a lot of noise coming up with these conventions. we'll see where the u.s. goes. i think the economy is slothing along. obviously we saw last friday, numbers are good, and the economy's okay. i said that at a conference yesterday, and people moan when i said the market was at an all-time high and the economy was good. no one feels that way. it's crazy. >> no one feels that way. chris, just a fine point on the ceo issue more broadly, do you tend to vote against other ceo pay packages? because a lot of them have -- most of them have gone through, especially the high-profile ones. i'm thinking about black rock even though i think it was only 58%, but he won that one, and most lately have won. >> absolutely, sara. we vote against them. we use our vote very powerful because we're owners of these companies so we want to be heard, but more importantly, we write the companies. i don't come on your show and broadcast our vote very often because we want to talk to the

company, have a dialogue, explain why we think executive comp is too high. compared to the average worker, it is exacerbating the inequity of wealth in america which is creating social problems. we own, like i said, the united states, we're going to own it for 100 years. we want that long-term sustainability, but yes. we're very active in voting against many of these packages, having dialogues. executive comp really, honestly should be as multiple of the average worker to have a little fairness in america. right new it's just completely out of whack. >> we don't talk about it enough except for springtime when it becomes a real issue, a voting issue. we'll see what happens on thursday and we appreciate you sharing that with us. >> you bet. still to come, day one for nvidia posts that ten for one stock split, and the street is bullish as ever. we're ahead with one anastho yshecod gain 25% from here. we're back in just two minutes. car, this isn't the way home. that's right james, it isn't.

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nasdaq just went positive. things are looking a little better than they looked about an hour ago during the market open. that's thanks to broad com ahead of earnings this week, getting some positive commentary from the street. crowdstrike, microsoft, amazon, and meta worldwide developers conference, which kicks on of at 1:00 p.m. eastern time. information technology as a sector just turned positive. we'll talk about the prospects for nvidia as a stock split goes into effect with an analyst that likes it a lot when we come right back. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools

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welcome back to "squawk on the street." nvidia officially trading after a 10 to 1 stock split. our next guest has one of the highest prices on the street for nid, calnvidia, calls it the to pick. with a price target of $150. i guess the question is, after the stock split, if you're sitting at home wondering if you should be buying nvidia after more than 200% runup in the last year, is now really the right

time? >> thank you. good morning, sara. thank you for having me. i think let's discuss why this is happening. so, we think nvidia is on the right side of three very important mega trends. number one, the computing industry has discovered this very important new technology called generative a.i. or large language models. it's like discovering fire. you have this new technology that can help you extract a lot of insights from data. the size of these models is exploding. they're doubling every six months. up to 2 trillion, and i don't think the computing industry will rest until it gets these models to the size and accuracy of the human brain, which is 100 to 150 trillion. that's number one, complexity is improving. number two, you have a race between the large customer, the cloud service providers, to upgrade their infrastructure to this accelerated way of computing. we are still in very early stages of doing that. and number three, every boardroom, every cio, every ceo

of every enterprise company is talking about how we can incorporate more a.i. into our business framework, but they can't send their data to the cloud. they have to develop their own a.i. infrastructure and every sovereign country is thinking about the same. we think nvidia is on the right side of all these three trends. that's why we think the stock can do quite well. even at this point, despite the run that it has had, it is trading at a lower multiple than the day it was announced and trading at less than one times its earning, the s&p is trading at two times earnings growth. >> you make a lot of arguments that jensen huang has made for a while. i know you don't necessarily cover enterprise software, but are you and your software desk talking about the degree to which nvidia might co-op a big part of that industry? >> yeah, i think there are two different things, carl. first of all, with every industry there are these different cycles where there is

a cycle first of a lot of up-front hardware deployment. and then over time the software industry catches up and takes advantage of that hardware deployment. the upfront hardware deployment goes for three to five years. i think we're in the second year of that upfront hardware deployment and nvidia is leading the charge. i do think over time the monetization of this over time, i think that's where the software industry will absolutely be involved. i see this more as a cyclical issue as owed posed to a structural issue. >> you made the case and a lot of people are bullish, and it's turned around and higher this morning, it's so hot, it's so consensus, it's the best talk in the market. it is more and more of the market. the ceo is signing women's shirts. do you worry about that kind of stuff? >> i think those issues always have to be right. these stocks move because of fundamentals and because of sentiment. i think you have captured the sentiment. it's a very well owned stock. a few things we find in our

research, if youactually look at the stock's ownership among large institutional buyers, they're market weight on an average. they're not overweight the stock. they're essentially market weight. that's number one. number two, on the fundamental side, as i mentioned, stocks do move up and down just because of sentiment. they move when the size of the market is going and when the company is executing extremely well. i think that's where nvidia is checking those two points very consistently. >> thank you very much for joining us. making the ce.as "money movers" starts after a quick break. stay with us. ♪♪ ♪♪ chewy, a citi client, uses citi's financial expertise to help drive its growth and keep its supply chain moving, so more pet parents can get everything they need... right when they need it. keeping more pets, and families, happy. ♪♪ for the love of moving our clients forward. for the love of progress.

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good monday morning. welcome to "money movers." i'm carl quintanilla with sara eisen. today expectations versus reality. goldman moves back the timeline for a first rate cut. will a soft landing lead to more record highs for stocks? then, a gut check on the consumer. the ceo of tanger. a lot riding on apple's wwdc event this afternoon. can the company finally make a breakthrough on the a.i. front? first off in the markets, we've seen a little turn i