it is friday, july 14th, and "squawk box" begins right now. good morning. welcome to "squawk box." we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe kernen is off today. it is friday. after a strong week for the markets, you are seeing maybe a little bit of a give back. maybe a little bit of exhaustion from the momentum trade that we keep watching. this morning, the dow futures are indicated down by about 228 points. s&p futures down by 15 and nasdaq down by under 10. this comes after yet another record day for both the s&p 500 and the nasdaq. you've been looking at interday highs and both indexes on pace

for their best week since the end of april. it's all coming as treasury yields pulled back pretty significantly and coming after we saw ppi data that showed inflation was weaker than had been anticipated. jobless claims a little bit higher and that means the fed is more likely to cut rates sooner than later. at least that is what the market is playing out of at this point but not what we hear from roger ferguson. the yield on the ten year is all the way down to 4.2%. that is a big decline from we were earlier this week. the two-year is at 4.67% and those yields across the board, the two-year all the way through the 30-year looking at their lowest levels since april 1st. a big ullback in what we have seen. andrew mentioned apple shares up nearly 11% the last three days and believe it or not that adds about $324 billion to its market capitalization across that span and that is more than most of the s&p 500 stocks as they stand

alone in their entirety. that actually lifted apple's market cap above microsoft's for the first time since january. earlier in the week, apple closed in third place behind nvidia. we heard what they are trying to do with artificial intelligence as they call it apple intelligence and sparked quite a rally. >> fascinating to watch how much they gained off the back of that. on one economic data point to watch. at 8:30 the latest read on import prices and may data expected to hold steady after a jump of 1% in april. bank of japan overnight saying it would trim its bond purchases. it did not announce by how much but it did say it would announce a detailed plan next month to reduce the balance sheet. weakness in the yen pushes up import costs. at the meeting, the bank of

japan shortened -- maintained its short-term policy rate as expected. it also left unchanged that pace of month bond buying at about $38 billion. we can see some additional weakness in the yen on this news i . earnings of $4.48 per share of adobe and revenue in current quarter guidance coming in higher than raise and raising full-year guidance and results of customers adopting new a.i. based tools. see if they accept a new acceleration through the rest of the fiscal year. tempus a.i. priced its ipo $37 a share. the top of the market range will give the company more than $6 billion and it begins trading on the nasdaq under the assemble tem.

the company's founder and ceo will be with us the next hour on cnbc. you may remember eric lefkofsky. he was a found of groupon. his wife was diagnosed with breast cancer and he has a fascinating story and we will talk to him lab it. >> looking forward to that. shares of gamestop. keith gill known as roaring kitty appears to increase his ownership in the company. he reflected a stake of more than 9 million shares and over $6 million in cash and compares to 5 million shares and 120,000 call options against gamestop on june 2nd when gill started reporting his gamestop positions. not clear whether he sold some or all of his gamestop call contracts or he exercised some of the option early. we had seen earlier the volume had picked up and a lot of traders were speculating that

that was him liquidating some of that call option prediction. yest yesterday's meeting were interrupted by problems with everybody trying to logon. >> i do know what to make of this but we should talk about about this. former president trump meeting at a quarter meeting. he says if he is elected in november they will see tax cuts and curtailment of business regulations. he want to bring the corporate tax rate down to 21% and a plan to eliminate the tax on worker tips that he proposed last weekend. earlier in the day, trump told meeting of house republicans to

eliminate income tax. spoke about using tariffs to leverage negotiating power over bad actors. i talked to a number of ceos at that meeting. do you know why he chose when he was asked why he was choosing the 20% versus 21%? >> no. >> he thought it was a prettier number. a round number. >> one way to say -- i think what he is actually doing is trying to contrast himself with what you can anticipate from president biden if he is re-elected. they said they are going to be raising corporate taxes and that is their goal. i guess instead of maintaining as it is and saying the contrast keep it as is versus that saying he is going to lower it. >> i was surprised. i spoke to a number of ceos who i would say walked into the meeting being trump supporter-ish or thinking that they might be leaning that direction who said that he was remarkably meandering, could not keep a straight thought, was all over the map, and that they --

maybe not surprising, but what is interesting to me because these were people who i think might have been actually presgp predisposed and walked out of the room less. one person said this may not be any different or better than than a biden thought if you're thinking that way. that was very interesting. >> from what i heard, there wasn't any short of shocking situations. there wasn't that moment where they were like, oh, my gosh, not necessarily it didn't surprise me the message that came out of it. look. he is there on a mission to try and woo some of them over which is why he is talking about lower taxes and probably, more importantly, getting some of the regulations -- ceos i talked to are more concerned about that than the tax base, especially when you're talking 1%. it can be billions of dollars

for big companies but i think when they really look at things, it's the what they feel is a tight regulatory virenvironment be in. >> we will talk to republican house majority leader steve scalise for his takeaways from the meeting later on today. one stock to watch. shares of rh are falling in the premarket. the company that was formerly known as restoration hardware and reporting a wider than expected first quarter loss and sales below expectations. they continue to get hit hard by the housing market slow downand higher mortgage rates and a stock that did very well during the pandemic. a lot of people ordering up and probably pulled forward some sales, too. the stock is down 11% this morning but year-to-date is off more than 15%.

when we come back, elon musk's reaction to yesterday's -- at yesterday's shareholder meeting after investors voted to reinstate his pay package. we will tell you what he had to say. he was pretty happy about it. we will talk to the former s.e.c. chair jay clayton after this. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

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i just want to start off by saying, hot damn. i love you guys! yeah. ♪ >> that was elon musk in yesterday's tesla shareholder meeting after investors voted to restore his pay package and move the company's incorporation to texas. joining us right now is jay clayton, cnbc contributor and a lot of people may think okay, question resolved. the issue they didn't think shareholders knew enough about this and reaffirm with this vote but maybe not so quickly. has to go back to the delaware court. >> the court case is ongoing. the judge founds procedural deficiencies in the first vote. this was a separate exercise by the company to say, okay. whatever those were, remember recommended them and doing the vote again and we have the results the shareholders said and said he deserves the pay package and back to the court.

the question is how moot is that shareholder ratification make the existing case? >> yeah. i mean, if the judge's point is that this was excessive and the shareholders didn't really know what they were voting for, how can you make that same claim when they just voted for it again? anybody who doesn't know what it's about, really hasn't picked their head up. >> you make that great point and then the second great point is even if you say that there was something procedural deficiency the first time, what is the right remedy? >> right. >> so part of any court case is what is the appropriate remedy here. one of the remedies that she could have ordered or delaware courts could have ordered is do it again. they have already done it again. so, you know? what is interesting is in delaware, there is a principle that the stock price does tell you something when it was originally nullified, the stock went down. >> okay. >> now the stock is approved. it's bun data point but an

interesting one. >> the lawyer in the case that brought the case was seeking something on the order of $4 to $5 billion, prit? right? he won the case. typically you pay a lawyer something for winning the case. >> pay the lawyer for delivering. >> delivering value. right. i'm saying, typically you get something for winning. in this case, it appears he won the case but the vote has now shown that the shareholders think that he actually created no value. in fact, i could argue that he created negative value, negative value to the company because they just spent millions of dollars to go to have to go through this circus to actually get to this point and the shareholders voted again for it. so i'm going to make you the judge for the day. the lawyer comes in fronts of you and says i won the case, judge. i won the case. you told me i won the case. i should be paid something for my services. i just did this for you. and you're going to say you did

this but -- >> for who? >> you created no value. how much do you pay the lawyer? >> i think the lawyer's best argument for being paid, it's a legitimate argue, is as a result of my efforts, there was much more sunlight on this process and -- >> what is the value that you want to ascribe to that? >> you know, look. i think you can do it in all sorts of ways. but it has to be related to the value to the shareholders. >> he is not getting $5 million. >> yeah. i'll take the under on that. >> would you take the under on 500 million? >> i'm thinking 5 million dollars! >> one of the measures at the -- with the successful verdict of a lawyer like this, one of the measures at the bottom of the range is, you know, times, times a rate. so whatever amount of time they spent times a rate, that is probably where the bottom of the range will start.

but it's not 500 million. >> okay. >> that is a lot of hours and a lot of lawyers! >> you made the point in the notes that, look. a question about whether musk's early tweet, i think it was two days ago when he tweeted the vote was going his way. is that problematic? if so, why? >> i think any time someone like this communities to the marketplace, people will look at it and see if something is wrong with it. recognize any time a proxy vote is going on or vote over a merger, people atalk all the time. >> they whisper. that happened to me. >> disney. >> they had proxy advisers who were kountscounting this stuff sure were paying to do this. >> elon musk knows as well from the case we brought when i was at the s.e.c., when you speak,

you have to speak truthfully. >> an issue there? >> every indication is that -- >> everybody at the same time by saying it on twitter and not like he was telling certain people and that and not others? seemed like fair disclosure for the whole thing. >> the whole thing. >> okay. so do you think there are additional lawsuits that could be brought on this, or does this silence some of those situations? >> it's america. there are always opportunities. >> this is why that lawyer shouldn't get paid very much money, if something to be gained in it, it only enhances the idea for others to come after it. >> i think the really interesting thing here is tech. tesla is a tech company. you know? and musk is a tech entrepreneur. one of the things the judge

found that i think has gone a little bit unnoticed is the super ceos have some additional obligation because they have so much control over these companies. that is an issue that is going to be fought out and continue to be fought out in the courts. >> you mean they should be held to a higher standards? >> if you read the person in layperson's terms that is kinds of in there because he has so much influence over the board and so much influence over the company. he is such a force that he somehow has an additional obligation. >> is that the truth of any founder of an entrepreneur. >> this is kind of a new question. >> that is weird. what is the higher standards here you're expected to be at? >> that is why you can't really hold on to it. the other side if he is that valuable, then maybe he is worth all of this money. >> anything else that we can take out of this? >> well, just go in to tech and,

you know, what we follow all the time and six companies or 30% of the s&p 500 and what is going on here and let me try to lace that together with the g7. the u.s. stands in an incredibly unique position. we were talking off air about people coming out of poverty. every person in the world that comes out of poverty, first thing they get is one of these. what happens when they get one of these? one or more of those six companies gets revenue. they get incremental revenue for every person that comes out of poverty. >> he took out a cell phone for those not following along on the radio. >> this is an incredibly powerful thing that we are seeing here in the united states. we get an equity dividend. not a marginal cost but equity dividend for every person who comes out of poverty and these six companies are delivering that dividend to all of the american investors. that is why we are seeing, i believe so, at big macro level a dislocation from those tech

companies and the rest of the market. >> it's brought up so many questions about whether you should -- whether the s&p 500 is still the same level of risk that had been before because the reason you invest in the s&p 500 is you don't want to put too many eggs in one basket. you want to be in a position you are very diversified and 500 different american companies feeling as they can't all go bust or down at the same time. but while the s&p 500 and the holders of the s&p 500 index have benefited greatly with the six companies taking off, it does change kind of the idea of what you're buying. it's more of a tech funds than ever was before and, you know, it's not the same thing. >> it does change the concentration, although as an advocate for all people having a diversified investment portfolio, go back ten years. those six companies were a tiny percentage of the s&p 500 and by continuing to. >> grow. >> grow. >> you don't want to kick them out. >> i think where you're going, tell me if i'm wrong, is the

idea that we, as a country, i don't want to say attacked, but questioned the size and scope of those companies that you're saying maybe that needs to be rethought? i think where you're going. >> you're exactly right. we should question the size and scope but also we should recognize their importance and unique importance to the american economy. think about of the revenue from the rest of the world those companies collect. >> i get that but i've been say a lot. i like the idea these companies have had the great success they have had and i don't want them not to have success but i'm aware of what i think is the boeing problem. i think the boeing problem, boeing's problems you say what does boeing have to do with this? boeing is one of the great national champions in america. we decided as a country effectively from a regulatory standpoint to allow boeing be basically our only major manufacturer of wide body planes in this country because we

thought we were going to compete with airbus. there became no competition. no competition. i would tell you that this is a company that got lazy, got, you know, decided they were so entrenched that they didn't have to actually do all of these things. i do think that there is some value to making sure that there is a competitive market, a demonstrable competitive market in the airline world. >> you said good polls to look at. a big difference between boeing airbus. airbus is a state-owned entity in a lot of ways. boeing versus six companies competing like hell against each other each and every day. >> we were talking at the round table yesterday and trump visited and said he would take corporate tax rates from 21% to

20% and idea tipped income no longer has to be taxed. it's popular with people who are in the service industry. then he talked about lighter regulation. i don't know. it's nice to hear everybody getting everything they want but if we are talking about a deficit that is out of control, it's hard to imagine lowering tax rates at the same time. >> i think one of the questions that people really don't ask is what the optimal tax rate for revenue and the tax cuts and jobs act did something remarkable we don't talk about. as a percentage of gdp, we are collecting more revenue than in the last 25 years. so we cut rates, broaden the base, and actually are collecting more revenue. >> that what you're supposed to do. >> which is what you're -- to handle this. >> why would you cut rates even lower and have entire classes that you say, okay, we are not

going to tax? >> my question is what will be the result of revenue as a percentage of gdp? if it's going down, you know, that is questionable. but if this is another reform of broadening the base as an overall package that increases government as a percentage of gdp, that's what you want. that is what you want -- >> do you think it does? to say tipped income no longer counts as income, i get it. i used to be a waitress too. if you get handed cash it's great not to report that but different in this era everything goes through a machine and you can track everything and people don't like that. use should that be treated than w2 income? >> let me put it this way. if there is going to be some kind of relief for tipped income my expectation is that it would be capped. right? >> okay. >> you know? you're not going to allow somebody to make six figures in tipped income and not pay taxes.

>> capped to $2,000? >> no. you know? >> has to pass congress. >> it has to pass congress. >> thanks, jay. >> thank you. >> we appreciate it. a lot more. we have news just cross is right now. tesla revealing the vote count in s.e.c. filing. musk pay package passing with 77% of votes cast in favor. 1.76 billion shares voted versus 529 million against. some vocal against. we kept hearing about them. a tiny portion in total. more than 73% that had voted in favor of the pay package. back in 2018. so overwhelming on the retail and institutions as well. we will talk more about this. someone who has a different view than you, jay, anne lipton will be with us and see what she has got to say about this. coming up, cocoa crisis has more than doubled since the start of the year and tell you about the maker of oreos is

handling the chocolate crisis. outgoing cleveland fed president will join us 8:30 a.m. eastern time. you're watching "squawkbox." this is cnbc.

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good morning. welcome back to "squawk box." we are live at the nasdaq market site in times square. it's a friday. maybe a little bit of exhaustion from the markets this morning. you are seeing a little bit of a pull-back after a very strong week to this point. dow futures down 270 points now. s&p futures off by 20 and nasdaq

off by 13 but it comes after a very stronger week for the markets, especially the s&p and nasdaq which have set new highs for several sessions in a row. check out crypto prices this morning. bitcoin below 66,000. >> former president trump meeting with republican lawmakers and business leaders in washington yesterday. let's go over there now and emily wilkins joins us with the biggest takeaways. >> reporter: trump's ceos and lawmakers discussed a wide range of topics. when it comes to the 2025 agenda the things we will see next year. taxes are near the top. that is because major parts of trump's signature tax bill back f 2017 will expire in 2025. trump wants to make comhanges wh companies and individuals permanent and lowering the tax

rate to twrint and eliminate taxes on tipped wages. it not only could help him get blue collar votes in nevada and republicans pick up the senate seat in nevada and flip the senate if they were able to do that. trump threw out ideas that raised eyebrows. he proposed all tariff policy and suggested that it could lead to getting rid of the income tax. that doesn't seem likely to happen but it is in line with trump's push for higher tariffs. another big takeaway from yesterday was really the unity around trump, including from some of his biggest critics like senator mitt romney who attended the meeting and senator mitch mcconnell was shown shaking hands with trump and they wished happy birthday to trump and had cake and they even sang! he turns 78 today. >> i talked to a number of ceos

at that meeting yesterday. curious what takeaways you heard from them on background or otherwise. >> i think for a lot of the ceos, they went into this meeting, they wanted to focus on the policy implications, get a sense of what trump was doing. in d.c., we have heard a little bit of kind of back and forth on what is going to happen with this corporate tax rate. could more of a populous republican party and trump want to raise taxes? i think one of the big headlines. that trump wants to lower them from 21% to 20%. kind of shows the influence around him even though you might see a populous of the republican party wing rising up but still a bit of influence from the business world and from your classic republicans. >> emily wilkins, thank you. when we come back, we will take a deeper dive into some competing tax plans, including what we heard yesterday from former president trump and what

gop lawmakers have proposed. that is next. a reminder. you can get the best of "squawk box" in our daily podcast. follow us on your favorite podcast and can you listen any time. i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

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welcome back. time for a deeper dive into some competing tax plans. robert frank is at the table this morning and he joins bus a look at the proposals from trump, biden, and, yes, lawmakers. >> good morning. so much tax news yesterday. former president trump floating ideas. he proposed using tariffs to lower or eliminate the income tax. he talked about exempting tipped wages from income taxes. tax analysts say both proposals would reduce revenue. the big question how he is going to raise revenue if you extend

the 2017 tax cuts that expire the ends of next year and cost over $4 trillion the next ten years. some propose taking the reduction on state and local income taxes to zero and would generate about 1.5 trillion mainly from blue states and other propose cutting green energy and others say the extended tax cuts would pay for themselves with stronger economic growth. yet, independent estimates say even faster growth would only offset about 1 to 14% of that revenue lost. now, biden's plan calls for extending cuts those making less than 400,000 a year and he is proposing more than $5 trillion in tax hikes for company in the -- you were talking to jant yellen yesterday how much is tax increases on the wealthy company and it's $5 trillion. you have two different approaches how you deal with the expiration at the ends of next

year. >> what about just collecting taxes under the two potential presidents in the next term? if you think about it, if you think there is 6 or 800. >> tax cap, you nmean? >> the tax gap. irs fundsed, defunded and where they find that money and i think most of that money will be found in corporations and complex partnerships. more complex partnerships. >> large partnerships, absolutely. >> than the waealthy per se. >> interesting how they will raise revenue and maybe republicans cut costs now 60 billion left over from the 80 billion given to the irs. it's not a lot of money. i think you get more per dollar paid to the irs in returns. whether 1 to 5 or 1 to 6, but there will be an effort to cut that spending even more on the

irs. >> stay here. mark short is joining us, the former chief of staff of vice president pence and former trump white house legislative affairs director and cnbc contributor and ernie is here at the budget lab of yale university. good morning to both of you. mark, what do you think of the idea taking the corporate rate down to 20%? >> well, andrew, i think stepping back for a second. when we reduce it from 35% to 21% in 2017, it was, in large part, because we have seen a lot of jobs go overseas and companies and pharmaceutical industry going to ireland and manufacturing to china and mexico. an effort to bring jobs back. two years after signing that legislation, 5 million jobs were created in the united states. i think it was a great success. i think donald trump always goc advocated to bring it to 20% and he thought a round number he

could market than 21%. i think it will have an additional time to additional tax cuts because i think congress is going to be vel divided after significant margins on either side after the elections. i also think politically it's smart to show a contrast between somebody continue to advocate for tax relief i think the biden campaign will be advocating a significant tax hike. >> ernie, the biden administration will be advocating for a significant tax hike. having said that, it appears if you go back in time that the corporate world was prepared and almost happy for a 24%, 25% tax rate, that that seemed to be acceptable to them. in fact, so many of them, if you remember, were surprised when it was put at 21%. >> yeah. you know, the fiscal year 2025 budget has proposed 28% corporate tax rate that sort of splits the difference between where it was in 2017 and where it is now. that would still be very competitive worldwide.

i would go even further back. i'd go back to 2001 which was the last year that we ran a budget surplus in this country. you know, we had social security and medicare at the time and aging pressure on those programs but the debt trajectory in 2001 was still downward. what has trachanged in the trajectory is tax cuts. a responsible budget the tax cuts since 2001 have added 8.4 trillion dollars to our debt. so i think what the biden campaign and what president biden has proposed is a way of writing that change, and fixing our fiscal trajectory by overcoming some of that. >> mark, the 2017 tax cuts were a tax cut for everybody. you know? a lot of democrats say it's only the wealthy companies that got a tax break. everybody did. they will be expensive if you

extend them once they expire next year. how would republicans -- how would you pay for that extension? >> well, i think that ernie's point, i think that democrats are always looking to say for americans to keep more of their hard-earned dollars, we have to pay for it. whereas, if we want to do an inflation reduact. i think back to 2015 and congressional budget office, they projected the tax relief 1.9 trillion dollar cost. halfway through those projects, they are now saying they underestimated revenue by $2.6 trillion. revenue has increased every year to the federal since passing that tax relief except covid year 2020. both parties continue to spend way more than we should and that creates the deficits. it's not coming from tax relief.

i stay halfway through it, they are now projecting we are actually going to have the ten-year window $2.6 trillion more than they forecast. the deficits are not being created by lack of revenue. they are being created by overspending from both parties. >> the reason why they are projecting more revenue is because growth has been stronger than private analysts have expected over the last couple of years. you know, revenue declined relative to gdp the reason it was enacted. it was corporate individual income tax revenue was 9.7% of gdp in 2017 and fell to 9% of gdp in 2018 the first year of that and that is almost what they projected it to be. you cut taxes, you lose revenue. growth of facts offset a little bit of that, you know? 10 to 20%. but here in the real world when

you cut taxes, they don't pay for themselves. >> mark and ernie, we will have to continue this debate. thank you. appreciate it. robert, thank you for joining us. >> thank you. when we come back, house majority leader steve scalise will take us. outgoing cleveland fed president loretta mester will also be joining us at 8:30 on cnbc. accelerate growth, predict trends, you need to begin with trust. introducing watsonx governance. helping you govern any ai, as data, models, and policies change, so you can scale it responsibly. let's create ai that begins with trust, with watsonx governance. ibm. let's create.

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all the dads out there. i feel bad. i don't know if we did this for mother's day. we should note that companies, interestingly, are becoming more generous with paid parental leave for secondary caregivers, particularly fathers. those in the russell 2000 offer 70 weeks. s&p, etsy offer 26 weeks, zoom, dropbox are next at 24 weeks.

when we come back, a lot more. take-aways from the g7 meeting in italy.

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president biden has announce add ten-year security agreement for military aid to ukraine. that deal was signed on the sidelines of the g7 summit where leaders announced a loan to ukraine of up to $50 billion. joining me is michael froman.

a lot of focus on that $50 billion loan that could be going to ukraine. it sounds like there's still a lot of details that are a little hazy around the edges and maybe some concern still in europe and beyond about who's really going to be on the hook for this if those assets are given back or unfrozen. >> i think this is a pretty meaningful step to bridge the gap between the u.s. and europe. the u.s. will underwrite the loan. it will be paid back from interest and earnings on the $300 billion of assets that are held mostly in europe. there will be funding available for reconstruction, for helping ukraine build up its military industrial capability and that gives it greater staying power.

now we've got a framework for moving forward. >> the sticking points, you don't think it's going to be a problem. i would assume there's pressure to get this done before an election, because if president trump came back -- >> the fact that the u.s. is going to underwrite it fundamentally -- >> does that mean the u.s. is on the hook? >> everybody expects at some point russia will pay for the impact of the war. europe has been reluctant to release those funds now. >> every six months it's up for another vote if they continue to hold them and it has to be

unanimous. >> i think provided that they're not handing over the $300 billion itself to ukraine -- >> you think it's a good loan, meaning, it's a properly collateralized loan, meaning if something changes, you may not be putting out money that you may not be getting back. >> there was a possibility there would be loan forgiveness over time but here it's backed at least with $300 billion of very strong assets. it allows some of the money to be released and the reconstruction and investment in ukraine to begin and actually reduce the dependancy on u.s. congress to have to vote for more and more aid.

>> axios said this isn't the world leader meeting, it's world leaders. biden 37%, macron 21% and kishida 13%. how much pressure does that put on this group? >> everyone has their domestic political pressures at home. you've seen with the european parliament elections last weekend a shift to the right, election coming up in the u.k. as well. these pressures are always there. just look back over the last few weeks. you've got elections in india which showed good democratic process of checks and balances.

you have mexico with a consolidated power. there's a lot to follow in this year of elections. all these leaders have challenges at home. they come together and marshall the resources the countries together. european elections demonstrate that some of the feelings about immigration are important with this right-ward shift. >> thank you. it is just past 7:00 a.m. on

the east coast. tesla shareholders voting in favor of elon musk's record-breaking pay package. in total 77 shares voted in favor. that's more than 43% that supported the pay package initially back in 2018. tempus set to begin trading on the nasdaq under the symbol tem. then linkedin rolling out some new ai-powered features this

week. linkedin owned by microsoft. check out the futures right now. dow looking down , s&p 500 down >> we're look at adobe right now. second quarter sales and profit both beat estimates. adobe also raising profit and revenue guidance for the year. the ceo says the company's approach to ai and product delivery is creating more value for customers. big jump on earnings right now.

we're also watching shares of gamestop. he's holding more than 9 million shares and just over $6 million in cash. shares are down about 3% in the premarket. bank of america, analysts are forecasting net interest income, the spread between loans and deposits. net interest income is going to increase by about 4% next year. bank of america shares up over 15% year to date.

when we come back, elon musk prevails in a historic pay package vote. former president trump meeting with lawmakersin washington. steve scalise will join us.

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from delaware. joining us to talk about the legal hurdles is ann lipton a professor of business law at tulane. we've been speaking with you for several months as this has progressed. were you surprised by the outcome of the vote? >> not really. i think until very recently, most people were projecting the package would be approved. i'm a little surprised by the vote in texas. i thought there might be more opposition, but in fact, more shareholders voted for the pay package. >> given how apparently overwhelming the vote has been, how do you see a judge in delaware viewing this entire situation? is this now a moot issue, or do you think it's much more complicated? >> i think it's much more complicated. the numbers are almost identical to what they were in 2018.

but i think there are more legal hurdles. on the one hand, there's the emotional component. the shareholders voted again. she said the first time they were mislead. i think there are strong legal arguments that this vote was strong armed or it's not particularly economically productive to tesla in light of the fact they might give a new pay package to him, very likely will. we'll have towait to see how it plays out. >> i've read this decision many, many times. the central component that has the most weight was about the disclosure issues, about the process, about the idea that the shareholder was somehow

hoodwinked to believe that the deal was done at arm's length, and her argument was that it was not. once that issue is taken off the table, the other issues you are raising become much harder to defend, no? >> i think the original decision had two components. that was a big part of it. but another big part of it was how close the ties are between the directors and elon musk. it's very difficult to get past that. >> the secondary issue was the close ties. i agree with you about the board. but the issue that was raised was therefore about disclosure or an understanding that there

were these ties. what i'm saying to you is, given what has now been exposed, available for shareholders to see about the close ties, all the shareholders got to read about how close the ties were, how they all might be together, in cahoots, whatever you want to say. so now you know that and you vote in favor of that, i'm trying to understand how that unto itself is still an issue in this context. you could still debate whether governance at this company is appropriate. that's different than this particular issue. >> because both components are really important to the decision. it wasn't just about disclosure. additionally, it is not 2018. it's 2024. we have to ask is this set of disclosures sufficient.

even with full disclosure what happened in 2018, it's not 2018 anymore. now if he doesn't get the pay package, does he take artificial intelligence to other companies? now we have this additional set of issues about the process by which this vote infolded, coupled with the original taint of the close ties of the directors to the original pay package. that can't go away as easily. >> i just don't understand given this was about as open a book as you can imagine. we all saw it. yeah, we've heard ai this and ai that, but that was out in the public too, frankly. >> i don't think it was much of an issue in 2018, but the issue here is that we don't leave it solely to shareholder voting

alone when there's reason to think there's going to be retaliation from a powerful controlling shareholder. and that part of it hasn't gone away yet. that's why the shareholder vote alone can't ratify the pay package. >> it sounds like if you were the judge you would strike this decision down. >> i do not know what i would do if i were the judge and i'm not making a prediction, but i do think there's a long legal road ahead. >> if you're the lawyer that brought this case and the vote is accepted by delaware court, he is asking to be paid effectively for trying to create value for tesla shareholders. you could argue if, in fact, the vote is accepted that he not only didn't create value for the shareholder, that he created negative value for the shareholder in terms of additional costs. how much would you pay said

lawyer? >> i won't put a number, but i can tell you what the issue will be in that situation. delaware recognizes a therapeutic benefit. by improving corporate governance, you have brought a benefit and corrected a problem with the way the corporation went about things, and that is worth a fee. they adopted, if the court so holds, proper process. that's worth something. so it doesn't mean they don't get anything, but probably a reduced fee. >> ann lipton, i think we have to set up a dinner with you and elon musk. we appreciate it. >> thank you. up next, the energy information administration lowering their forecast for crude prices for the rest of this year. we'll talk energy prices after

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oil prices on track now for their first weekly gain in four weeks as markets assess the impact of higher for longer interest rates. $84 per barrel this year. here we are in the summer and in a political season where we're going to get the billboard that is the price of gas wherever we go. what's it going to look like between now and november?

>> there's a lot of unknowns, but really we're in a very steady environment here around that $85 level. we're going into summer. refinery runs are going to be super strong. that kind of leaves around this $85 level. opec has come in and essentially put a floor on prices. >> we're stuck in the 80s. you were given the bullish case and the bearish case. which side are you on? >> not as bullish as a lot of people are. the risk is to the upside. >> not to the downside, though? >> correct. >> what is the downside at this point? >> very limited. you had that opec meeting last week that was first interpreted as bearish, but they had three

tranches of production cuts. they rolled two over until next year. the third one they said maybe we'll start to unwind in q3 if we need to. >> but the risk to the upside, you say is higher. that's good for bulls. for the customer, not so much. >> correct. >> what do you think that upside looks like? >> fairly limited. >> what's that number? >> we could get up to 90, but we'll come back down again. we'll not go to 95. by no means are we going to $100 a barrel here. >> so you were a company trying to hedge these problems, you would actually do nothing. >> right. >> what are we worried about? >> the election coming up, right?

you could have some type of interference there. the biden administration, as you say, they're so focused at the price at the pump. we're right around $3.50 a gallon there, no concern for that sticker shock as you drive past the gas station. saudi is going to be keeping barrels off the market this summer because they used a lot of direct crude burn for power generation. so their exports are going to drop. >> do you believe that saudi basically wants a trump administration and therefore is going to be trying to push up the price of oil? do you buy into that sort of theory? >> i'm suggesting that if they wanted a trump administration, they could do things to support prices. >> do you think that they will? >> i think they need to keep oil off the market anyway. they need to reduce their exports to be in compliance with

the opec deal going forward. >> matt offering some fascinating thoughts here on what's going on, politics at the intersection of the energy ecosystem. thank you. >> thank you. when we come back, majority leader steve scalise will join us to talk about his meeting with former president trump. and at the top of the hour, now that the shareholder vote is out of the way, what's down the road for tesla?

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well. it had been on a tear, of course, as a sort of pandemic play that is now petering out. coming up, house majority leader steve scalise. then later we talk inflation.

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welcome back to "squawk box." on this friday morning, you are seeing some red arrows. it's a bit of a turn for the s&p 500 and the nasdaq, which have continued to set new highs just about every day this week. the s&p futured off by 17, the nasdaq down by 15. the dow is the big loser this morning off by about 215 points. former president trump made his first visit to capitol hill in over three years yesterday. the former president met with republican house and senate members, including our next guest to talk about the state of the republican party, taxes, the economy and much more. joining us is house majority leader steve scalise. leader, we have heard from a lot of different people who were at this meeting. why don't you tell us what you heard, what the priorities were that the former president

espoused? >> sure. good morning. great to be with you. it was a really upbeat message by president trump. we talked about the election, what's at stake in november. the president has been talking about some of the same things he's been talking about on the campaign trail, the need to secure our border, how we can lower inflation and keep tax rates low and get the economy back moving again for families who are struggling. he talked about some of the things he's been seeing on the campaign trail. he's been out to a lot of the swing states. for those of us who go out to swing districts, we see these same things. the enthusiasm is really high, but there's a lot of concern. just yesterday morning -- and president trump touched on this -- you had a russian ship right off the coast of florida. the world is a dangerous place, and president biden has not met the challenge. a lot of the world is in worse positions today, ukraine,

israel, taiwan. we need to win in november so we can turn it around starting next january. >> for our audience, a lot of focus on taxes and what that might mean. not only in his meetings yesterday, but with ceos, he brought up ideas about lowering the corporate tax rate to 20% from the existing 21%. also talked about not taxing any tips as income. that is something he mentioned last week at a rally too. obviously, he would need congressional support to get those initiatives passed. is that something you support? is that something the majority of the people in the room yesterday would support? >> yes. we've been having talks already about these big cliffs coming next year because of budget reconciliation. a lot of the tax cuts under president trump in 2017 are on the table again. president biden has made it clear he wants to raise those

tax rates. if you raise the corporate rate to 35 or 40%, which president biden has talked about, that hits families and small businesses. what president trump wants to do is go down around 15% when we were lowing rates last time. there's limits on what budget reconciliation allows you to do, and we were at 21%, which made the economy get moving again. you saw the president when he was in nevada recently getting rid of taxes on tips. do all tip wages really get reported anyway? can we address that? that's something we're looking at. that would also help the economy. it surely would help a lot of people who work in the service industry to have more cash in their pockets. >> i don't understand why tip income would be different than w-2 income. somebody who's a blue collar

worker getting all their money on a w-2, to say you've got to pay all of your income in taxes, and tips -- granted, sometimes it's hard to track. but if you talk to anybody in the service industry, it's gotten much easier, because people pay with credit cards right now. all of that is tracked through the restaurant and beyond. it's not like way back when when a lot of the money wasn't reported. >> tip workers are getting w-2s, so they're paying taxes on w-2. >> you only get w-2 from the income that you make. it's below minimum wage they're often paid, maybe $5 an hour and you make up for it in tips. >> you have two sets of accounts you need to keep as a worker, and one is partially tracked

through credit cards and the other is through cash. at the end of the day, it's one of the items being put on the table. there are a lot of other good ideas too. president trump talked about lowering the corporate rate iercheven more. that helps families, by the way. we have a debate coming up in two weeks between joe biden and president trump. joe biden wants to raise those rates. then he's going to try to tell you if you're making less than $400,000 a year, that it won't effect you. of course, it will effect you. it will especially help low income workers. we lower tax rates for everybody. when we did it in 2017, it got our economy moving like we'd never seen before. let's put the focus on creating jobs in america and not how to sic a new army of thousands of

irs agents in america. >> nobody likes paying taxes, me included. but if you lower the tax rates, it definitely boosts the economy. that's a clear argument to link to it. the problem becomes that you don't make back all the revenue. maybe you make 10 to 20% of the revenue back. the question becomes how do you pay for that? you can grow the economy. you can bring up the revenue numbers, but not make back everything you have heard for higher rates. we have not heard about cutting spending. where do you find the money? >> that budget reconciliation process requires you to pay for it. a lot of people in washington don't like remembering the facts of history. when we cut down the tax rate to 21%, the federal government took in more money than ever in history. we still have other problems

within our budget. one of the things we can do to help pay for it is get rid of some of the radical regulations adding costs to families. reducing the size of the federal workforce, that's something we've looked at in the house. when you look at the massive explosion since covid in these agencies, many of these workers aren't even showing up for work anymore. there's been a report that over 70% of the federal workforce are still working remotely and that work isn't getting done. passports for example, the biggest calls members get now are about passports not getting processed, irs checks not getting to people in two years because people aren't showing up for work in those agencies. so if you reduce the size of that workforce, that puts

billions of dollars in the pockets of families to get the economy moving again. >> president trump has touted the idea of replacing tariffs. >> this is something we discussed eight years ago when president trump was in office. you saw back and forth and ultimately tariffs were put in place in very specific areas. the steel industry is one where we were losing our steel industry. china would undercut a lot of other countries, including the united states, and they wouldn't play by the fair rules of the game that all countries around the world agree to. so what president trump did is use tariffs to, in essence, enforce fair trade agreements. when you look at where he ultimately came down, it was to allow american companies to be competitive and not allow foreign countries to take advantage of us. where we really need to keep the focus is, what are the gaps, especially in the tax policy?

the tax code got fixed in a lot of those places. we still have some more work we can do on international tax policy so all of our companies in america that do business internationally can be on even footing. that was not always the case. we also need to go and look at more trade deals. one thing president biden's administration has failed to do is get trade deals. our friends in europe and asia want better trade deals. president trump negotiated a new nafta and got us better relationships and trade deals with mexico and canada. there are deals to be made in europe and asia that will help american companies compete. again, that reduces the need for tariffs in some of those areas, because you address those gaps in trade deals. >> i understand using tariffs as kind of a weapon in trade talks, but what he floated yesterday was pretty different, this idea that you could raise enough in tariffs to actually get rid of the income tax on americans.

obviously we'd be paying much more on goods imported into this country. i can't imagine the sort of trade war that would kick off. does that sound like a viable plan to you, or do you think this is kind of a test balloon that probably doesn't go anywhere? >> a lot of these are items that are being put on the table and let's go through and see what makes the most sense to get our economy moving again. the one thing president trump has been consistent about is how can we get our economy moving again and reduce costs for families. inflation is the number two issue next to an open southern border that president biden has created. but president trump is talking about how you can lower food costs for families, how you can lower energy costs. we can control those things. we can get smarter energy policy surely than we had today. we had it under president trump. joe biden shut off a lot of our ability to produce oil, natural

gas, a lot of things that make us rely on opec nations, on russia, on venezuela. it will help us around the world too. a lot of these ideas were put on the table in 2017. we came up with the tax cuts and jobs act that many people will tell you was one of the most significant and important pieces of legislation passed. you're going to see tax cuts 2.0 come out next year in 2025. that's going to work incredibly well for families, especially lower income families that are struggling under this biden economy. >> one of the ideas we talks about in terms of paying to expend those tax cuts would be to get rid of the state and local tax deductions altogether. it was lowered to $10,000 under that last tax change. is that on the table? >> by addressing s.a.l.t. the

way we did, it probably brought in about $800 billion to lower rates than anybody. five states were benefitting, 45 other states were paying higher rates because of that. that helped us get down to a 21% rate for every american. >> but is the existing $10,000 allowance on the table right now? is that something you see being scrapped? >> that hasn't been talked about being on the table. renewing where we are and addressing additional cuts to overall rates for every american is being discussed. >> okay. leader scalise, thank you very much for joining us today. >> great to be with you. thanks. coming up in just a moment, microsoft president brad smith testifying before a house committee yesterday on the company's cyber security failures and how they plan on improving security after hacks into federal official e-mail

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visit xfinitymobile.com to learn more. doc? microsoft president brad smith was grilled on capitol hill yesterday over the company's security practices. this follows cyber attacks on the tech giant that compromise federal agency including the e-mail accounts of gina raimondo and chris burns. j he ran u.s. cyber policy for microsoft. chris, thank you for being with us. you have a huge depth of knowledge about all the issues surrounding this. first, explain what happened. what was the particular attack and attack team that exposed

this? >> the hearing yesterday was called in response to a report by the cyber safety review board, which is a department of homeland security entity comprised of experts from the private sector, academia as well as the federal government. they were researching an intrusion by chinese cyber threat actors last year into a microsoft product known as exchange online. they were able to get into e-mail accounts for a number of different federal government agencies, including the department of commerce as well as the department of state and access e-mails. the report was fairly damning and detailed a number of security failures inside microsoft. brad smith, the president and chief legal officer, stepped up and showed up in front of congress yesterday and answered the many questions from the member of congress. and i think, in typical brad

smith fashion, he did as good of a job as any witness could do in that setting yesterday. >> he threw himself on the sword, said they accepted all of the criticisms in the report, said they had to do better. different tack than some companies and some people take when they go before congress. >> that's right. >> take a look at what actually happened. i've heard different conflicting reports. some people say, look, these are problems that exist in every one of the large companies trying to do service on this. you're never going to be completely secure. if you have chinese or russian hackers that want to find you, they're going to find a way to do this. >> the cyber safety review board called out very specific failures inside microsoft from a very basic security perspective, not having multifactor

authentication on certain accounts. this was not just a chinese threat actor attack. there was also information on the russian svr, the same group that got into solar winds back in 2019 and 2020 that was able to access accounts through very basic attack techniques. microsoft, cyber safety review board how she disclose that information to government partners, as well as to private sector victims as well as the public in general. that was a key point of contention yesterday in the hearing. the delay. six-month-plus delay when microsoft issued a statement on how the attack happened with the chinese actors. with, they corrected in their public blog. a failure of transparency there. >> one of the other issues seems to be the setup itself. the idea would you sell cloud service, cloud services to the government or any other vendor, any other customer, and then selling security as an add-on feature? i think microsoft is changing

the way they look at this to some extent at this point, but here's the product. if you want it to be sage, not hacked, paythis much more. >> again, a key point that surfaced yesterday. both in how they issue licences and products and services that come in certain licences, in the mid-tier range, we call it e3. e get additional security features at the e5 level. guess what? it costs more. a concern around a monoculture. i.t. monoculture and perhaps stacking up too much responsibility and concentrating risk on microsoft products when you think about operating systems, productivity, email and, yes, now security. and you know, i think throughout the security community there is a sense that more players, more participants in the market leased innovation rather than piling everything up into one single basket relying on one security team across an organization to deliver the

results everybody wants. >> thanks a lot for the update. >> thank you. >> helping us understand. and coming up, tempus ceo joins us and later loretta mester, cleveland federal president joins us. we are coming right back. with every swing and block, your game plan never changed. ♪♪ some still call it luck. let them. because you know what it's always been. inevitable. ♪♪ ♪♪

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welcome back to "squawk box." tempus a.i. going public today on the nasdaq listed under ticker tem. priced at thes 37 a share. top of the range. joining us for an interview founder and ceo eric lefkofsky. good morning to you. >> thanks for having me. >> a big day for you. >> it is. >> just talking whether this day would ever come in terms how this company started and where you thought you'd be. >> yeah. it was -- it's been an incredible journey. i never would have imagined we'd be here. what i'm saying. i thought early on could have been a nonprofit. kind of incredible it's turned into this kind of company with this kind of scale. >> talk where it is now, but before we do that go back in time and explain the genesis of this story. >> yeah. so, i mean in my case, my wife was doegiagnosed with breast car almost ten years ago and i was

surprised how little information. we were picking up bottles and more technology for that they physicians. set out bringing benefits of art fib technology to diagnostics by essentially conceptualizing laboratory test results around the patients with this disorder and that technology began to take off. people began to order the tests we were offering through the sequences doing for cancer patients, business began to grow. began to hire people and he we are eight years later. >> now it's considered an a.i. company, but before would you have thought of it as a a.i. company? or a machine learning company, or what? >> a great question. i mean, we've been focused on machine learning and big data and technology and algorithms and models since our inception. so back then, eight and a half years ago, processing, and recognition and large machine-learning models.

obviously as a.i. evolved, especially large language models, focus of the business and ability to use a.i. changed. we've been thinking about a.i. in diagnostics for some time. >> but the -- the advent, if you will, of generative a.i., has that completely and fundamentally shifted your business, or is it actually not that different than it was before the, you know, before chatgpt was revealed? >> i think it's a natural evolution. i mean, we filed a -- it's interesting. we filed a patent for a technology called tempus one. basically a doctor can talk to a laboratory test result and ask any question. eventually a patient. it will give you an answer. that technology is essentially like chatgpt for a laboratory test result. this will work for a blood test, a cat scan, a genomic test and the benefit to patients is extraordinary when physicians are armed with all the data they need to make a decision. >> and i think one of the biggest problems is -- the

fiscal constraints, the doctors' offices and hospital space. ceo of cleveland clinic here last week talked about hospitals work on profit margin 1% to 2%. that doesn't allow for a lot of spending on capex to go after newer, better, greater technologies that lead to more. how do you make this affordable? make it something they can say, okay, we absolutely have to prioritize this overall? >> it's going to take private companies. no way this system can bring innovation without capitalism. it's impossible to fund this. like, if you think about it. this is directionally right. the nih invests something like $35 billion across all diseases to make us healthy. google probably invests three times that just in making search work. there's a reason that search is like, really good. and patients are still suffering. we just have to switch the

economic model. bring technologies and tools and benefits of a.i. like tempus to the hands of physicians. >> how do you make money on that? who pays? >> the system is riddled with so much inefficiency. again, this is directly right. we spend, like $3.3, $3.4 trillion a year in this country on health care. by many accounts a third is wasted. which means there's $1 trillion or more just wasted. companies able to kind of use data and technology to route patients to the right therapeutic will be able to capture some of the savings generated. >> eric, for this business specifically, it's still unfortunately, a money-losing business. >> like most technology companies. >> a money-losing business. the money losing is less than it used to be. >> yes. >> but still over $200 million. >> yeah. >> what do you need to do to get to at least even if not massive profitability? >> i think on a really good trajectory already.

as revenues have been growing quickly, still growing quickly, we're not investing all that, you know, gross profit dollar growth back into the business. we're generating improved leverage every quarter. just trim line this out we expect sometime in 2025 to turn the corner and be both cash flow and ebitda positive. we'll see how that plays out. it's impossible to really know what's going to happen in the future, but the trend line look goods, and every intention is to keep that company working. >> going public. curious. have you at any point entertained the prospect of selling the business? >> no. i mean, i don't really think -- i don't spend a lot of time thinking about, like, we should go public or we should sell. i spend a lot of time thinking about the problem. the problem's unsolved. there's still 1.8, 1.9 million patients diagnosed with cancer. 600,000 still die. 629,000 still died years ago.

this problem is massively unsolved and i believe technology and tools like tempus it route a significant amount of patients into the right therapy. >> i got ask a question about history for a second. you were one of the co-founders of groupon. one of the great darlings of the internet for a hot minute and then it wasn't. what was the lesson for you as a business person, manager of a business, and how does that relate to this? because i'm sure that's a question investors will be asking. >> yeah. i think every success and failure you learn from and they're all lesson. in the case of tempus, we took a very different approach. we decided to grow this much slower. we're predominantly focused and cancer, predominantly focused on the united states and that's our focus for now. we'll turn nine in august. so almost nine years. in the case of groupon, we were, weren't in one country in like 50 countries. it grew very different.

that business model kind of, i think, required that kind of growth, because it didn't have the same bear yorearriers a come tim tempus has and it's a very different story. look, in every experience, this is my fourth time i think taking a company public on nasdaq. some go well, some don't. you learn and hope you just get better. >> i asked you when you sat down how your wife is, diagnosed ten years ago. >> she's great. >> fantastic. >> did you see her today. >> she's here today. >> thank you for joining us. >> thank you. just after 8:00 a.m. on the east coast you are watching "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin. joe is off today. among the top stories, shares of adobe sharply higher. earnings of $4.48 a share beat the street's expectations. revenue in the current quarter earnings guidance also came in better than expected. check it out.

stock up by almost 14% and raising full year guidance and more customers adopted its a.i. tools. talking to an analyst about this in a few minutes. the bank of japan holding its short-term policy steady as expected opinion but it did say it would start trimming its bond purchases and would announce a detailed plan next month to reduce its nearly $5 trillion balance sheet that did put additional pressure on the yen this morning. and shares of rh are also falling in the pre-market. the company formerly known at restoration hardware reported a wider than expected first quarter loss. it's now forecasting current quarter sales below what the street was expecting, and that stock is now off by 12% this morning. futures so far also in the red today. it's a friday. may be the moment of trades, a little tired. maybe traders tired at this point. you can see the s&p and nasdaq down. both of those index,s set new highs yesterday.

but the dow, which has struggling a little this week, off by about 225 points. so it is the biggest loser. treasury market, yields coming under more pressure. saw yields come down after weaker than expected inflation data this week, higher than expected jobless claims. right now the ten year is below 4.2% at 419. two year is at 467. right to mike santoli. he's standing by at the nyse and it has been an interesting week, mike. >> it has, absolutely, becky. some of the things you mentioned are plausible in terms of the trend being a little bit fatigued. also a couple times this week we have absorbed a selling flow from overseas markets in the mornings. then the u.s. market found its footing. eventually. you see the s&p 500. this trend is very, very solid. if anything, it's getting a little extended beyond its 50-day average. this other line here. it is due for a rest at, again, the headline market cap weighted

level. as everybody's saying, it's been a very top-heavy rally the last phase. fewer than half the 500 companies themselves are trade ago bov their own 50-day average. technical basis a bit of an uneven market and people are focused on that. for now not hurting index investors directly. part of that, of course, the a.i. theme, where basically investors continue to be dazzled by a sense companies are partoning. look at three here. three-month chart. guess where each of these companies had something nice to say about their prospects in a.i. this is broadcom, oracle, apple. all happening in the last week or so. and then you get these vertical masks. does it all make sense? is it all pricing in genuine economic value? who knows. but the market for now is very willing to do this. a good premium. you mentioned the yield moved. something different has been yields down and then the majority of stocks also down. meaning small caps down.

industrials down. banks down. that suggests there's a little more sensitivity to what it might mean in terms of growth prospects or at least softening up the trend. confusion maybe about the fed's reaction function. here is crude oil and u.s. two-year treasury yields over the last few. you can see kind of gone in a very similar cadence and now we have a sense of sort of a disinflationary flow. that's good news. obviously. long as it doesn't come with a breakdown in the overall growth trend. >> mike, thank you. see you later. meantime following tesla and the pay package. what are investors looking to next for the company? phil lebeau joins us with more this morning. phil? >> andrew, if you watched that annual meeting, elon musk gave you a lot. a lot to be excited about, if you are a tesla bull. i ean, he didn't give awe ton of specifics you could hang your hat on anytime soon, but, boy, optimistic about the future and came out of the gates

rip-roaring happy. >> i just want to start off by saying, hot damn, i love you guys! [ applause ] yeah. >> oh, it was an hour lovefest between elon and the tesla shareholders there. what do analysts think about what he talk about? specifics in a bit what he talked about. garret nelson said wouldn't be surprised by a sell the news reaction on friday. already seen shares pull back a little relative to the spike we saw yesterday when they were up 78%. tony from bernstein a note this morning saying shareholder meeting wan unusually and at times uncomfortably promotional. even by tesla standards. all right. what doid he talk about? autonomous ftechnology saying it's accelerating. incredibly bullish how quickly it's coming together, but didn't give timelines in terms of exactly when we, he expects to

see this fully autonomous robotaxis completely out there. cyber truck shipments. 1,300 a week. low-cost car progress? he didn't say a ton about this but alluded to future products. >> so obviously got some new products that we're working on. under the covers, and i think these are, these are -- um -- i think are going to be pretty special. so -- you know, some of them, i think people maybe at first may think, oh, it's not going to be that amazing, but just wait. it will be. >> all right. so when's the next "moment" when we get data from tesla? july 2nd. we get q2 deliveries. that will give a sense of, a., how much the ev market slowed down and b. whether or not they have to adjust full-year

guidance in terms what they expect, or whether wall street will adjust its guidance, guys. finally, adam jonas at morgan stanley out with a note this morning. summing it up for those who are looking for something tangible from tesla to hang their hat on. he said shareholders votes are important, but they won't get consumers to buy evs. that's the issue right now. slow down in the ev market. doesn't matter what you say about optimus robots or a.i., a lot of potential for tesla. no doubt. but -- in the near term it's about the ev market. >> right. phil lebeau, it was quite something to watch. your sense, by the way, that -- i mean, is it smooth sailing ahead? two different opposing views this morning legally, both one from jay clayton, who actually brought ta case originally against elon musk by the way we hundreds s.e.c. saying this should moot the point that the judge had made in delaware and that he expected, i think he was

just saying that he expected her to accept this new vote, but then we had ann lipton, professor at tulane who said, no, no, no, no, no. a lot of problems. >> yeah. she's been very vocal about this. who knows how this will shake out in the courts, in terms whether he finally gets the pay package approved. this vote, while important, it ultimately, this entire thing settled in delaware courts likely at the delaware supreme court, many believe. in terms of smooth sailing and the business, he gave a ton of things to be excited about if you believe in what elon musk has done and where he could take this company, but you also have to be huge leaps of faith in terms of how many people want to buy an optimus robot. the price that is might generate. the profits it might generate. he said the company could be worth $20 trillion to $25 trillion. the whole market is worth right now, andrew?

$45 trillion. >> phil lebeau. thank you. optimism. >> you bet. >> have a great weekend if we don't talk to you before then. thanks. when we come back, senator kevin cramer will join us to us talk about this meeting with donald trump. plus, cleveland fed president loretta mester on the fed's rate path, inflation and much more. that's coming up at 8:30 a.m. stay tuned. you're watching "squawk box," and this is cnbc. sure, i'm a paid actor, and this is not a real company, but there is no way to fake how upwork can help your business. search talent all over the world

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welcome back to "squawk box." former president trump back on capitol hill this week talking to republicans in both the house and senate. joining us right now with what his message was to republican senators, north dakota republican senator kevin cramer. good morning to you. what did you hear from the former president and what did you think? >> firsty all i thought he sounded great. he looked great. he was very upbeat.

obviously he was among friends, and for his birthday had a little cake to celebrate. but i was most impressed, frankly, just with how gracious he was. you know, the unity theme was more than just a bumper sticker. he was passionate about it. and he called on us to be unified, and laid out, really, obviously a high level message, but the message focused on policy. which i'd always appreciate. why i like your show. i like my politics in the context of policy, and, of course, we have this grand opportunity that the voters this year, you know, compared to two people who had been president and we've experienced, and so i think this is an election about policy. but the unifying message was, i think, the best part of the day and the most important part. >> just to clarify. a unifying message, i imagine, about unifying the republican party behind him in many ways

and behind these policies. unless i'm missing it, this was not a unifying message about bringing democrats and republicans together. was it? >> no. listen, it was a preparation for a campaign obviously. a general election campaign. the national republican committee trying to get the republican majority back in 9 united states senate. so we talked about the presidential election and the context of policies. mostly the economy. and how he can be helpful to us as we can be to him in helping us achieve our goals of a republican majority in both the house, senate as well as the presidency. >> what do you make of some of the polls which suggest that while it may very well be true that he could ultimately win the presidency, that he may not actually be good for the republicans down ballot? >> i don't buy that, quite honestly. that's where i think he -- you know, how he can help us. us being republican senators. given the fact we have a couple

of very high-profile -- might call it low-hanging fruit republican pick-up opportunities in places like west virginia and montana. even ohio. he talked about the role he'd like to play helping us get those next three, four, five or six. there are a good eight to ten competitive races where democrats currently hold the seat and we have, know, very good candidates. he talked about the role both the message, which by the way, isn't overly complicated. you know, again, the comparison between a biden administration and a trump administration, easy 20 to do given we've lived through them and can contrast them at a very personal level. i think for me, his willingness to do that, his offer to participate in our campaigns where we would like him to participate and the fact that he was, again, so optimistic, about the election. you know, he's feeling an awful lot of momentum here. i think he's got a better sense

in many respects of the national policy than just about anybody. >> you don't see him as a polarizing figure even within the party? >> well, listen. we've come through this entire, you know, season now of mostly, of the primaries where he has unified the party. and, again, the policies. he made that point really clear. he said, look, when you look at what we are for as a party, that's what unifies us. the other thing that unifies us is a common opponent in joe biden and what he's done to this country. yeah, is he polarizing for in people? sure. but now that the primaries are over and he's the nominee, i think you're going to see republicans come together and i think it's proven, frankly, he highlighted this point. it's proven by the fact he has been on a record tear of fund-raising since the convictions in the new york court. all the things they'd hoped polarize us i think are actually unifying republicans. >> are you not troubled at all

by the, both the verdict and the number of cases that are still outstanding against the former president? >> no, i'm not troubled by them. because, of course, first of all the verdicts ar a case litigated 2016 by the american public. >> but are you personally as a human being with hopefully some -- sense of character, troubleed by any of this? >> i'm troubled by the fact that a, an attorney, a prosecutor in new york would take up a case that other prosecutors had declined because there wasn't enough evidence or even really a crime. >> by wait -- senator, that's a -- by the way, that's a fair debate and people can have that. i'm asking a different question. i'm asking you as a human, as senator that represents folks and as somebody i imagine hopes to be a role model for kids and other people, are you not troubled by the underlying behavior that led to that case

and what -- the underlying behavior that led to the accusations around what's happened to the vote in 2016? that doesn't trouble you even in the slightest? >> so andrew, here's what i am. i get up every morning, grateful that god's grace is greater than my sins. and i believe in redemption, and this 2016 episode is way behind us. and i'm more future centered than that. and i feel, by the way, the same way about the biden family's troubles. never heard me criticize joe biden and hunter biden in the context of their legal troubles. we should be about the future. right now we have a binary choice. what i'm saying. we're down to a binary choice we have to make at americans, and i think it's crystal clear when you talk about peace and prosperity and security and safety i'm with donald trump and chaos and uncertainty and high taxes and a bad economic under joe biden.

>> senator, i'd love to have you back to continue this conversation. it's a longer one. always good to talk to you. thank you. >> thank you, andrew. when we come back, more on tesla's approve the of elon musk's pay package, and what it means for the stock. 'lbeacafr quk break. (♪♪) the road to opportunity. is often the road overlooked. (♪♪) at enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. because we believe the more ways we all have to move forward. the further we'll all go.

quarks welcome back to "squawk box." shares of adobe sharply higher beating estimates raising its full year guidance adopting the new a.i.-based tools in a big, big way. stock up this morning. joining us to talk about this, a surprise to many. stock is up. how much higher can it go? >> good morning. certainly surprising reaction in the context of all the earned price software companies missing numbers over the last few

months. look at the stock year-to-date, it's been a big under performer. underperformed microsoft by almost 30% year-to-date. clearly a lot of room to go in terms of making up that lost ground. shares um 15% pre-market, we are not recommending it at these levels. we think mid-500s is a reasonable place. we're looking for more momentum in the class. last night we saw a good upside but that came from the document cloud side. to getconfidence the company is really monetizing a.i. and starting to extend their lead on the creative side, we're looking for a stronger result from the creative cloud side of the business. >> when you say the creative cloud side, which products are we talking about? >> things like photoshop, adobe end design. creative flagships products

designed for those professionals in the creative space. >> how do you think about them versus canva, versus -- a bunch of folks that are trying to eat at the heels of adobe, trying for a very long time now. >> yeah. that's right. we were actually just out at the canva flagship conference a couple months ago. the company has a lot of momentum. thinking about adobe, a company that's historically had a monopoly on this market and for the first time addressing this. released a number of new products over the last few months and years. so it's not like they're asleep at the wheel. our view is as these image modelsmodel modelis, language model come out, we're worried that -- >> how much of these products become oddly commoditized? photoshop always a unique

product offering. you know, now look at new apple product that, the new ios, in terms what you can do with a photo on your own, you know. adding people. taking people out of the photo. filling in the background. all things used to be things you could only do in a product like photoshop? >> yeah. absolutely right. so i think that is only going to continue. look at some advancements coming out of companies like openai with the video image generation. right? or texting to image generation tools even from microsoft, of all people. right? so it is going to be -- i think adobe will have more competitors. same time there's probably a broader audience they can sell to. you and i may not have been a traditional creative professional in our lines of work, but now with the ease of use of these tools, we could been subscribers over time. >> tyler, thank you for joining

us. appreciate it. "squawk box" will be right back after this. >> thank you. >> thank you. >> you bet. . boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. (vo) what does it mean to be rich? maybe rich is less about reaching a magic number... and more about discovering magic. rich is being able to keep your loved ones close. and also send them away. rich is living life your way. and having someone who can help you get there. the key to being rich is knowing what counts.

welcome back to "squawk box." rick santelli here live at cme hq. happy friday!

happy flag day! happy father's day! and import/export prices for may hitting wires. down 0.4% on import prices. that's month over month. of course, that follows an up 0.9. interesting here is that every month this year has been a positive number. we just reversed it. we finished last year with three negatives in a row and want to pay really close attention to all of the import prices. maybe it gives us a glimpse of demand. if you strip out petroleum it stays relatively the same. down 0.3% following up 0.7%. look at ex petroleum. export prices year over year basis expecting a number around 1.3%. up 1.1%. up 1.1% matching last month still unrevised. both combined are the best numbers in terms of the height

of import prices. highest going back to dec of 2022. you can see that these prices have been rather tame. now, if we look at export side of the equation on a month over month basis, this is a big miss. down 0.6%. we were expect an up number. follows a slightly revised up 0.6%. down 0.6 is the biggest negative month or month export price since end of last year. gives a glimpse what's going on potentially overseas. finally on a year over year export basis, and this is really interesting. coming in to this number we had 15 months of negative price changes on the export year over year. just broke that trend with up 0.6. up 0.6, the best, i shouldn't say best, it is the biggest export year over year price change going all the way back to january of 2023. we see that interest rates are coming up just a smidge, but let's really put a face on it.

right here at 467 on a two year, down three on the session. down 22 basis points on the week. let's go the long end. shall we? at 421. a ten-year right now is down 22 basis points on the week. it's down three on the session. and i heard you mention earlier the bank of japan. let's look at that yen quick. little change. as it sits right now it's down 11% against the dollar for the year. becky, back to you. >> rick, thank you. down 11% versus the dollar on the year, try to get that chart up, too. steve liesman looking through the numbers, too, and joins us with a special guest. >> quick, waiting for, and wondering if we would get a dollar effect to the import prices. it's early days one negative and say this is it. not unusual because of the strength of the dollar, to see some effect inside the import prices where we would be, have to have a positive effect on the inflation outlook.

and now after that, we have our special guest joining us now. cleveland fed president loretta mester. president mester, thank you so much for joining us. >> thanks for having me. >> it's been probably ten years we've been talking since you've been president that you are about to end your tenure at president at the cleveland fed. but let's start now with the short-term and then get to the long-term stuff. >> okay. >> we've had a couple inflation reports this week. how did you process them? >> hmm. no. it was welcome news. it was great news on the last foc i attended. wasn't it? look, we've been working hard to get inflation down. we've been restrictive on our monetary policy. we've seen really good progress over the last couple years on inflation. we're not there yet, but you have to look at the, you know, group of data and be happy that we're starting to see inflation move back down again after stalling a bit in the first part of the year. >> did the last couple months of better inflation reads make you feel like the first three months

of worse inflation reads were maybe just an aberration, a turn of the year kind of price change? >> so the january number weknew there wa issues with measurement and residual seasonality. but not really. take the data as it comes. we had a stronger economy and, you know, there was some balancing between supply and demand, you get readings and have to data as it comes in. why we savor data dependent. take the data think what it means in trajectory of inflation and labor markets and set our policy to calibrate to that. i didn't really change my view about inflation but helpful to see it's moving back down. we just need to see that continue a bit longer n. >> i want to ask an english and math question. okay? >> okay. >> first question. you said fed is restrictive. are you sufficiently restrictive? >> a good question.

that's obviously an issue we're talking about, and markets are talking about and this is about, you know, how restrictive are you? i certainly, if you look at the effect of our policy so far, you can see it affecting the economy. right? we've seen it affect housing markets, seen it affect growth rates. seen it affect and bring supply and demand in the labor market back together. definitely an effect. officially restrictive we need to be data dependant and assess when inflation is going. we've always said we really need to have that confidence and moving down on a path to 2%. we're not going -- it would be inappropriate to keep rates at current levels, until inflation gets to 2%. we're trying to always assess and looking forward. >> that's the math question. i've had a nice correspondence with former colleague jeff lacker both online and on-air. we had him on. he thinks the fed may not be restrictive enough. i think jeff has always thought. whatever, but -- and when you look at, what are you looking at

in terms of your baseline where the neutral rate is to judge mathematically how restrictive that is? >> so, you know, in the summary of economic projections, which each, know, participant on foc puts in, there's a non-fund included in there right. >> two seps ago i raised mine to 3%. okay? in recognition a lot of trends in the economy that may mean higher rates are probably the knewneutral rate going forward. but in any point it nime could be anywhere because estimates are all over the map. was sort of the neutral rate higher after coming out of the pandemic? i think so. for sure. we had disruptions in a lot of markets in terms of sort of the balance between supply and demand. had labor market participation way down. as the economy evolves, right, you really need to assess, like,

how restrictive are you? are you seeing inflation move back to 2%? are you seeing labor markets get into better balance? we are seeing that. right? now it's just a question of, you know, do we continue on the path that we're on? right? gathering more data. seeing inflation move down. and then once we get to a point where we're pretty confident that inflation is on a sustainable path, that would be a time to think about lowering the degree of restrictiveness. so i think we can't say at any point in time how restrictive we are but you see it as the evolution of the economy happens. we >> we spend a lot of time thinking a cut in november? december? sounds like you think about timing. if three months to the upside, wasn't necessarily enough to say, okay. we can't figure out a trend from there. how many months does it take of inflation heading down? >> again, this is the, how

comfortable are you in assessing where inflation's going? also the risks around that outlook. to me, i would want to see a few more months of good inflation data. inflation coming down. short-run expectation of inflation starting to move down. then you just need to start thinking about, okay, this may be the right pathway of data and, you know, for portfolio data, what's going on in the labor market and in inflation to actually move rates down, because if you wait too long. right? inflation's moving down, you're actually, by maintaining the current level you're actually becoming more restrictive. you have to kind of go-- >> you've gone from just under 1% to now north of, what? 2% when it comes to how we -- >> again, remember, right? it's not -- the economy's happening over here and other policy's happening over here. the policy is have an effect to bring that down. you have to have these calibrated. calibrate your policy to get that inflation on a sustainable

path. >> while watching unemployment and jobless claims, picking up a bit. >> exactly. if you go back and think when we started raising the funds rate, you know it was very clear inflation part of the mandate had to be key. the folk his to be on that. strong markets, inflation going up. going up at a fast clip. had to focus only on that. right? as inflation's come down we've gotten more balance between our dual mandate goal. you're exactly right. the challenge going forward is assess the risk to both parts of our mandate, watch what's happening in the labor market, take that into account. watch the inflation side of the mandate and make sure we're doing a proper balance. i've learned ten years as p president and before that always make sure you're in a good position to be able to address risk to both parts of mandate. we're in a good position with

policy right now, if thing ease involve differently than we anticipate either on the employment side of things or inflation side of things we're in a very good position with monetary policy right now. >> one of the things we spoke to janet yellen about yesterday was the housing market and given high mortgage rates, the lock-in effect that's happening. >> yes. >> as that also relates to the labor market. which is to say, if you're locked in your home you may not actually go take a job somewhere else in the country or possibly somewhere else even in your own state. how much do you think about that, and as it applies to housing, how much do you think -- not something here and now issue, but three, four years from now depending where you think interest rates are, do you think there's going to be a problem for folks who have to roll out of their mortgage? >> all things you're pointing out are certainly things that are part of discussions right now in terms of how much is that affecting things. you know, we have an inflation research center at the cleveland

fed and their work basically looks at how long does it take the moving down of rents and new leases, to feed through the housing and inflation? that's going to take longer than perhaps old models would suggest, because of some of the issues that you're pointing out. you know, right now the labor market's still very strong. right? so in some sense that's probably lower on the list of things that we're concerned about, what i'm concerned about, but it's something as you think how thing ease involve that's certainly one of them and mads they cycle interesting in the fact a lot of underlying structural sides of the economy influenced where the economy was going. think about the pandemic. a lot of those effects of the pandemic are still with us. they're having long-lasting effects in terms of labor force participation, just think about what happened there. certainly not back up to where it was if you look at the total labor force. >> right. >> right. that's long-lasting and will influence how you think about the balance between full, maximum employment and

inflation. and that's what makes this a challenging time. but also as an economist and interesting time. >> some people are afraid you're going to miss the turn and missed it always in the past and now are going to miss it again. they look, for example, at the inflation rate, which i get is part of the base effect kind of thing, but you guys, you've missed the inflation progress last year. now you're even forecasting as a group, the average official, inflation rate that is higher than what we're probably going to get end of may? so are you missing it? >> i'm pretty confident that the committee is doing good work here. we're a learning organization. right? we learn through time. we took an onboard sort of where inflation went, you know, and it went higher than we anticipated early on. right? and then we took action. again, that's why i think it's really important that we maintain, you know, a good place for policy, because the economy could have evolve differently than that mogul or median output

in the s&p. so we put in s&ps every other meeting. we'll be doing that. the committee will be doing that going forward. i don't think that, you know, the discussion around the table feels like, you know, we're totally out of whack with what's going on with the market. look sort of where the market is and where our assessments are, they've come together over time. so, again, you know, we continue to assess incoming information. review, where the economy's going, and where the economy is going and the risk around our forecast influences our policy decisions. >> kind of have to wrap but i wand to give you a chance to reflect on 39 years at the federal reserve, and 10 years central bank. what's the best call you made economically, would you say? >> i don't know whether i could say a best call. one thing i've learned over those years is that the fed is a very strong institution. as i said, it's a learning institution. you come to the take with your best analysis and your views,

but i've learned something at every meeting i've attended and i've attended under four different chairs and have seen a lot. and the chairs of course all have different styles but all come at it with the same view that we're working for the american public. right? we have a very important job to do. and that's what's in that room. i've gotten asked this a lot of times. well, politic las to come into it. i can tell you in 39 years politics does not come into that room. >> does it concern you, though, that a tax against the federal reserve have increased over that period of time i think there's, always questions about the federal reserve from the political viewpoint, through the political lens. no president likes to see higher rates when running for re-election in particular. do you feel like things have gotten more politicized over that time period? >> not really. i think this ebbs and flows, and the best thing we can do as an institution is to really focus

on the dual mandate and doing the best analysis, bringing the best judgment to those discussions and really putting everything else to the side. >> what do you think? i mean, front page article of the "wall street journal" two months ago effectively said president trump becomes president wants to, i don't know if it's true, but wants to effectively end to some degree independence of the federal reserve. >> in terms of monetary policy decisions is very important. allows us to set policy really focused on having the strongest economy we can have for the american public. so you know, the structure of the fed, it's been preserved over many years, and my hope and my -- my feeling is that people will realize that this is a very good institution and it will be preserved. >> thank you for your time. >> i'm going to make a guess here. this is not the last time loretta mester is going to sit

in that chair. maybe not at president but we look forward to having you back. >> well, thank you. >> congratulations on your tenure. >> and thank you for all your years of civil service. >> retiring not because she wants to necessarily because that's the rule. >> yeah. i'm ancient. >> is it 65? >> known to be president when i'm too old -- >> really a 65 -- >> yeah. you have to adjust that rule. you have to -- seasonally adjust that rule for life expectancy, i would say. >> agree. >> coming ghrit back with more "squawk box," right after this. ♪♪ citi's industry leading global payments solutions help their clients move money around the world seamlessly in over 180 countries... and help a partner like the world food programme as they provide more than food to people in need. together, citi and the world food programme empower families across the globe. ♪♪

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welcome back to "squawk box." take a look at the futures right now. the dow off about 219 points, nasdaq basically flat. marginally in the green but not even. and the s&p off about 15 points, becky. let's get right over to frank. he's been taking a look at this morning's premarket movers. >> we're going to start with hasbro. those shares are higher, up

2.25% on a bank of america upgrade to a buy. the price target now, $80, implying a 35% upside move from where it's trading right now. analysts say the toy maker's digital business is accelerating and the business has increasing upside overall for 2025. shopify moving higher on an evercore upgrade. this is making an attractive entry point. they go on to say that shopify is a best in class e-commerce play with the ability to sustain revenue growth around 20% and free cash flow approaching 20%, bringing it closer to that so-called rule of 40 for saas stocks. today, a lot of talk about evs with tesla. stellantis down almost 4%, moving lower on comments from the auto maker's ceo about arrogant mistakes in the u.s. market, including manufacturing issues at u.s. plants and holding too much inventory. despite all those issues, ceo

carlos maintained guidance and said there would be cost cutting, including reduce head count. shares of stellantis down about 4%. becky, back to you. >> frank, thank you. have a great weekend. coming up after this, a top tesla analyst is going to join us to talk about what he thinks of the approval of musk's pay package and how it could impact the stock next. take a look at apple. shares are up nearly 11% over the past three days, adding some $324 billion to its market cap across that span. that lifted apple's market cap above microsoft's for the first time since january. now, earlier in the week, apple closed in third place behind nvidia. "squawk box" returns after this. , old school hard work meets bold new thinking. (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

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welcome back, everybody. tesla shares are higher after the company's shareholder meeting where elon musk's $56 billion pay package was approved by shareholders. joining us right now is tony sacanagi. do you think this is a positive for the stock? >> good morning, becky. yes, i think it is a positive for the stock and we're certainly seeing it in the form

of a relief rally both yesterday after elon preliminarily announced that the package had been approved and then again this morning. the vote swung largely because blackrock and vanguard, who are 13% of the votes, decided to break rank with the proxy voting recommendation to vote no, so it was a 26-point swing out of about 75% of the share base that voted, and that's really what tilted the vote. >> okay. so, that's a big deal. having said that, even though you think this is a positive catalyst for the stock, you have an underperform on it and a $120 price target. that is well below not only where the shares are today but even the 52-week range, the lows of the last 52 weeks. what makes you think that the shares are going to come down that far? what'd you hear yesterday at the shareholder meeting? >> fundamentally, we think tesla is struggling so, tesla still

believes it's going to grow its units this year. we believe that units will be down, and if tesla does try and grow units, they'll have to cut price pretty materially, eating into earnings and cash flow. but the stock, you know, we believe the stock will do less than $2 in earnings this year, so it's trading at about 90 times earnings, about 75 times our number for next year. and this is a company that's not going to grow this year and will likely grow very modestly next year. and we think there's a disconnect between the fundamentals and the current stock price, and i think part of that is driven by the fact that this is a aspirational company and that's what we heard at the shareholder meeting yesterday. elon wants people to dream the dream, and the dream ultimately is, you know, that tesla is going to be a robo taxi company. tesla is going to be an intelligent robot company. and those are big markets and can ascribe very large

valuations to that. and so, that's the implicit tension in the stock. today is not particularly good. elon musk is casting a vision of what something really good could be in the future, and this is a really retail-oriented stock, and so we see some enthusiasm for that. >> tony, the only thing is, people who have bet against the stock and against elon musk have lost their shorts. >> historically, they have. certainly, this year, that's not been the case. the stock's down almost 30%, market's up double digits, so it has been a significant underperformer this year. as i think its growth trajectory has slowed and my belief is that could continue to be the case. >> tony, one final question, your biggest takeaway from that meeting yesterday, the things that you heard. >> i would say there were a couple of things.

one was, i was struck by how promotional elon musk was at the meeting. i've been an analyst for 25 years. i've never heard a management team or ceo be prescriptive about a valuation or endorse a third-party valuation before repeatedly, and i think that cultivates the shareholder base this is largely retail focused. and you know, trying to paint the picture of what a dream could be. that was pretty striking to me. i think the other thing that was notable was that there was a picture of three uncovered models foreshadowing that tesla will bring to market three new models. i think elon said some people may not think -- or will think they won't be amazing, which suggested to me that these will be sort of incremental tweaks on amazing models, rather than truly new models. >> got it. tony, i want to thank you for your time today. we appreciate it. >> my pleasure.

by the way. >> yeah? >> happy father's day, andrew. happy father's day to my father, to my husband, and to all you dads out there. >> that's very nice of you. thank you, thank you. maybe we get to sleep late. we'll see. >> what every dad wants. final check on the markets. we only got a couple seconds to do it. dow off, nasdaq off. s&p 500, off. but we will see where we end today. have a great weekend, everybody. happy father's day. join us on monday. "squawk on the street" begins right now. i just want to start off by saying, hot damn, i love you guys. yeah. >> elon musk celebrating yesterday at tesla's annual meeting after the shareholders did ratify his 2018 pay package. good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. futures are soft. europe's under some pressure. our focus once again on france, equities not able to enjoy more