it is 5:00 a.m. at cnbc global headquarters. here is your top five at 5:00. shuging off the inflation data as the s&p climbs to another all-time high. futures are looking flat striking a deal. a group of bipartisan senators reaching agreement on the infrastructure package as they now prepare to sell it to the respective parties president biden and g7 leaders kicking off the summit as leaders make a deal to combat

covid-19 we are live overseas. gearing up to go public. formally files the ipo paper work in what could be the biggest tech offering this year. and apple's electric vehicle shifting into high gear. the new hire from one luxury automaker. it is friday, june 11th, 2021 you are watching "worldwide exchange" here on cnbc good morning i'm dominic chu in for brian sullivan today here is now your global markets are setting up s&p is implied higher by 3 points the nasdaq is indicated higher by 7 points. this is after the s&p 500 rose

to another record high yesterday. investors largely shrugging off the inflation report taking a look at the meme stocks right now. a number of the big names among the reddit crowd losing serious steam yesterday. right now, you see amc up 3% gamestop up 5% the bed, bath & beyond is up a bit as well. and cryptocurrency showing bitcoin up higher 1% $37,047 was the last trade with regard to coindesk now look at copper on the commodity side up 29% so far this year. it has fallen 5% over last month. maybe the commodity cost

pressures coming off a little bit. we'll keep an eye on copper and lumber a number of key mining players down amid the copper prices. freeport falling 3.5%. alcoa down the same. rio down 3% as well. material stocks are lower on the particular week. now to the top stories that bipartisan group of ten senators working on an infrastructure package say they struck a deal. the plan will cost $1.2 trillion over eight years that is below the $1.7 trillion price tag on president biden's plan the senators plan to help pay for the package by using unspent covid-19 funds and raising revenue by indexing the federal tax on gasoline to account for inflation. it would not include tax increases.

g76 is announcing a pledge of 1 billion doses of the covid-19 vaccine. the move comes after president biden vowed to super charge the battle against the virus with the donation of 5:00 million pfizer shots. and a new law aimed at countering foreign sanctions the legislature approving the measure in response to u.s. and european efforts to pressure beijing on human rights, trade and technology under that chinese law, chinese entities and individuals can file lawsuits in courts seeking compensation by foreign sanctions. investors appearing to shrug off the hot inflation data your next guest says the market response was surprising. she cautions don't count inflation fears out yet.

erin gibbs, thank you for joining us this morning. let's talk about why the markets can take inflation data running the hottest level in years and say push them to record highs. >> it wasn't a head scratcher, dom. it was not what we expected particularly when the cpi data came out so hot compared to expectation. i think investors are equity investors are looking at what they have been telling us for months they have been convinced that inflation is transitory and this is something that will be able to overcome. i think investors are reassured by the positive job reports. that report tends to be volatile for the last two months, equity investors have been behaving differently from bond markets and yields have been down.

you see the equity fears hovering i'm not sure that fear may not come back into the market again. i'm not sure it is completely out of their system. so, i'm a little cautious that we have really gotten over it and the equity markets are confident that inflation is not an issue when it comes to companies being profitable going forward. >> erin, we were talking about rising interest rates over the course of the last six to nine months and how it affected some of the growthy aspects of the markets. especially in equity technology stocks, some of the big names in communications and media stocks which are higher valuation. they get crushed because interest rates go higher interest rates are now going lower. doesn't it stand to reason that maybe we are justified at these levels and technology stocks and communication services stocks are powering these gains in the nasdaq all over again?

>> the problem is they have done so well in 2020. they do have difficult comps and difficult hurdles to achieve spectacular growth going into 2020 people really just piled in. there wasn't a lot of breadth. so, they do have more difficulty in justifying that type of growth when, one, they did well in 2020. two, you have companies that are doing so well and really spectacular growth coming out of the pandemic this pent-up demand type of trade. it is still very difficult to justify the mega cap valuations. there are exceptions in general, i think mega caps need to come down as we see broader strength across the u.s. market when we have an economic acceleration environment. >> erin, if from is an economic

acceleration environment and pent-up demand trade and if it stands to reason the economic recovery story still has a runway left to go and we're just in the middle innings, where do you go for that value? in the past it is the small cap stocks is it the same case now? the reopening trade part 2 or 3 going back into the small caps are they due for record highs? >> in general, yes you are still looking at the small caps positioned for the best recovery and best type of growth at a reasonable price going forward. although we had about nine months value of out per fformin growth and small cap better than large cap. the trade is not over yet with the components that say this is the environment where small caps

win. i advise investors if they have an overweight in mega caps or large cap position is overweight, it is still plenty of time to take that money off the table and transition into small caps for the next six months to a year because they are the ones that really do look more valuable while still having double digit growth for the next two years. >> erin gibbs. we're showing one-year charts of the s&p 500 small cap index up 75% over the year. thank you very much. we appreciate you being here when we come back on the show, china taking steps to curb the growing covid outbreak in guenjae. and vertex pharmaceuticals is plunging in the early trade and later on, brian sullivan's discussions with governor greg abbott and andy

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that is where we find our reporter with the latest there good morning or good evening, a arjun. >> reporter: authorities are moving swiftly and the reason is they are worried about the delta variation of the virus which is highly trans miss able it started with a 75-year-old woman eating at a restaurant the west of the city is where it co concentrated authorities have moved quickly as i said, with drastic measures they have locked down this district known as liwan. they were sending in driverless cars to supply the area. one of the things they have done is shutdown restaurants and moved to takeout only. another is mass testing. you can see medical staff and

ppe. there were long lines of people waiting. there is another line of people back there they are waiting for the vaccines that is an interesting topic many people in china -- china is the victim of its own success. many people felt safe. i remember speaking to my barber a few weeks ago. he said it is safe i don't need a vaccine i'll wait a bit. as soon as the case came, he booked his appointments. authorities are hoping that vaccinations with the measures can contain the virus before it causes economic damage dom, back to you. >> arjun, has there been impact on the trade or economy with this new mini outbreak, if you will, in guangzhou i remember the pictures from new year's eve and wuhan where it looked like partying like it was 1999 has there been any slowdown now from levels we have seen earlier

on this year >> yeah, there certainly has, come, guang, szhou is a critical area for shipping. mersk said you can expect 15 days of delays that is global trade impacted there already. at the moment, it seems contained. the longer this goes on, the more damage. here in guang, zhou have fewer cars on the road and fewer people in the office you see that moving through here, dom. >> thank you stay safe. we appreciate it. still on deck for the show american airlines betting big on electric with one start-up going

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♪ anything for youuuu!! ♪ welcome back to "worldwide exchange." time for the big money movers. three stock stories of the morning. first up, chewy. a surprise first quarter profit. chewy is raising revenue guidance for the year. shares are lower as you see there. 1.5% pre-market as the company is facing labor shortages and supply disruption. stock number two dave & buster's reporting better than first quarter profits as revenue shot up 66%. the company believes sales may get back to pre-pandemic levels this quarter it is facing margin pressure due to high labor and other costs. shares up 4.5% in pre-market

finally, vertex pharmaceuticals. shares plunging by 11% after the company says it is halting development of the experimental drug to treat a rare genetic disease that affects the lungs and liver. not enough to provide substantial benefits to patients vertex shares down 11% in the pre-market trade the hotter in hell energy conference is taking place in houston, texas o oil and gas companies are discussing demand and output and operations during the pandemic brian sullivan spoke with governor greg abbott and asked about the bills passed to wea weatherize the power grid after the deadly winter storms this year. >> we come out of the session confident that we reformed everything that needed to be reformed in ways that will ensure an event like this with

regard to the power grid shutting down will never happen again. brian, this is the most important thing i can tell your audience texas passed reforms that completely reform not just what went wrong that caused the power grid to go down, but ensure that we have a strengthened and more stable system than ever before what caused it to go down, operator error, and, two, believe it or not, when you have the power shoutdowns. hospitals don't get shutdown and downtown doesn't get shutdown. it actually shutdown power generating and power transmission facilities. all you have to do is stop that and check off a box. quickly. we added accountability for ercot and the public utilities commission to ensure the operational errors never happen again. we put enforcement in the accountability to issue fines of

up to $1 million per violation to make sure businesses involved in the power system will weatherize because we need to make sure we are weatherize for the summer the power system of texas is weatherize to deal with hot or cold we added more capacity brian, we have more power generating capacity than in the history of the state to handle the growth we continue to see in the lone star state. >> it wasn't just that we have the hack on colonial pipeline the pipeline cap ital of the world. the colonial pipeline beginnings in houston 50 million americans live on that in the new york and d.c. area that is a critical fuel lifeline are you working with companies and saying what are you doing to protect yourself >> absolutely.

this was a wake-up call. people have known about this challenge before now yes, there's great collaboration in the state in public sector and private sector to make thusure other businesses like pipelines are not pipelines like what happened >> all right thanks to brian sullivan and governor abbott of texas check out brian's interview with the governor at cnbc.com still on deck for the show, president biden set to meet with fellow g7 leaders with a number of issues on the agenda. steve sedgwick is on the ground. and if you have not already done so, subscribe to our podcast. check us out on spotify or apple or other podcast apps. we are "worldwide exchange." we'll be right back. fwlarp

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markets shrugging off hotter than expected inflation data with the s&p 500 hitting a new record high. morgan stanley is here to say why they need to separate optimism from his t histeria. president biden at the g7 summit we have steve sedgwick there

and going public for the ipo from china and didi. it is friday, june 11th, 2021 you are watching "worldwide exchange" on cnbc. welcome back to the show i'm dominic chu in for brian sullivan on this friday morning. here is how your money is looking halfway through the 5:00 hour stock futures are pointing to modest gains in the overall market the dow implied higher by 60 points s&p implied higher by 2 points nasdaq gaining 2 points as well. this is after the s&p 500 rose to an all-time high in yesterday's session with the investors shrugging off the inflation report showing the increase in pricing pressure a look at the meme stocks. losing steam in yesterday's session. right now, generally speaking, shares of amc and gamestop and

bed, bath & beyond and blackberry seeing gains. we are seeing a rally this week in otherther areas cybersecurity stocks this is among the ransomware attacks. fireeye is up 12%. crowd strike is up 8%. a different story for the home builder stocks pulte and lennar and dr horton are down the mortgage numbers are coming out at 7:00 a.m. eastern time. and didi is filing to go public in the united states. reports say it could reach a valuation north of $70 billion no word yet on which exchange it will use on. it will use the ticker name

didi it owns 13% of its shares. softbank's vision fund owns a 20% stake. aerospace is going public in a spac deal. the company makes electric and vertical takeoff and landing aircraft its investors include american airlines which would buy 250 of vertical planned flying taxis. and apple hired a former executive of bmw who focused on electric cars. this is all speculation over apple competing with tesla in the ev market. now the today's global story. g7 leaders are meeting in cornwall today we have steve sedgwick with all of the headlines you need to

know coming from the gathering good morning, steve. >> reporter: dom, rightly our viewers will question the worth of the meetings. the g7 and formerly g8 when russia was involved. we have the issue when boris johnson and joe biden got on it was the first overseas trip since the inauguration of president biden. he called joe biden a breath of fresh air. harmony on a host of issues and the relationship was a strategic importance big tick for johnson there has been anxiousness and worry over the key relationship with the uk underlined by the fact they re-sign the atlantic jobs agreement reinvigorating that for a host

of cooperation on democracy and collective security, et cetera, et cetera. it was on vaccines that the president made headlines 500 million doses given to developing worlds by the u.s. by the middle of next year. very interesting here what joe biden had to say about how u.s. is handing these vaccines out. listen in. >> let me be clear just as with the 80 million doses we previously announced the united states is delivering these with no strings attached let me say it again. no strings attached. our vaccine donations don't includ concessions. we are doing it to save lives and end the pandemic that's it. period >> reporter: why did i feel that was important, dom it refers to trans pacific

negotiations they have been handing out to friends. joe biden said we are not in favor. i think this is the western alliance saying we will give the vaccins and taking up the global responsibility we don't do it because we want relationships sorted out that is what the chinese have been doing >> steve, let's talk about some of the relationships it has been good relationships so far generally speaking. are there any battles lurking once the summit formally gets going between the u.s. and uk or the u.s. and other countries or the uk and other countries what is the dynamic at play now you once this meeting gets going this weekend >> reporter: i think you are spot-on. it will be different let's be honest. joe biden is old school. he is like a bush or mr. obama in terms of style and diplomatic style. whether you like it or not, mr.

trump did shake things up. we did it on a personal level. we know how he made it so personal you will not see on the surface level that joe biden and leaders in europe having rows. the same mr. trump had what about the security issues and the fact that germany gets vast power and energy from rush russia, but defense from nato. talking of nato, we had macron talking about how it needs realigning in terms of who its enemies are. we know that is an old soul for the u.s. i think there are issues there underneath the surface, despite the fact that boris johnson and joe biden had a good set of first meetings there is contention over the northern ireland peace process we mentioned yesterday, george mitchell was a large part of

that in the late '90s. mr. decclinton in dublin. joe biden played a lot on his irish roots. that is bubbling under the surface. we heard in recent days u.s. diplomats in london, we don't have an ambassador at the moment, tore a strip of the uk government they fwere breaking and inflamin tensions i don't think we will see on a leader by leader basis as we saw it with the previous administration >> steve, thank you very much. enjoy the weekend. joining me now is stephanie ke kelly. head of the research institute stephanie, you heard some of what we were talking about with steve about the dynamic at play with the g7 meeting are there implications on the

policy front and economic front coming out of this >> sure. i think in particular, we think about the kinds of things we heard. vaccine distribution to emerging markets. i think discussions in climate will come down to supporting dec decarbonization. this is a meeting of developed market leaders a lot of the chat they will have will be around how we support emerging markets to get past the covid crisis and to me that is important from the economic perspective. we are seeing the clear divergence with the markets in terms of the speed of covid recovery and long-term growth potential with the climate these have potential implications however, we have to hold our expectations these summits create the big announcements, but the follow

through at the national level is what we have to see. >> so, we have already seen a good amount of performance and key emerging markets around the world. it was a catch up trade. they under performed for a certain period of time now out performing because the valuation gap with them and emerging markets if you look at the policies and spra separate it on the covid side and climate side which has the most implication for investors in the coming months i think most of the covid issue is priced into the markets >> the challenge with this is always around the time scale and it is one of the things that is cautious with the big events and announcements that get made. when do things happen? we know the vaccines that get

distributed to markets will not happen this year developed markets are turning to emerging markets because they have enough vaccines that pushes vaccines into next yo yooir. t year. markets in the past have supported markets to deca decarbonize. that is what investors need to be mindful of. you have to read the tea lives leaves what is announced. >> our report talk about the complicated relationships involved germany in particular. gets a lot of fuel and energy from russia and defense from nato and western allies. let's talk about how complicated it will be with china and many of the countries many of the g7 countries gauge

how it will tackle what its relationship with china will be in the coming years? >> i think that they he will be cautious on the coordinated effort on china. we have seen allies come together on human rights in china. the interesting question is as we see u.s. and china relations continue to deteriorate, which they do, even under president biden. it will continue to happen as that is happening, i think allies will be forced to pick a side on key issues the question is can you tread that tightrope of economic reliance europe, reliance in terms of green technologies for long-term plans. those are compliccomplicated. how do you match that with

aligning with the u.s. with the political concerns and concerns around transparency and human rights i think you add to the mix on top of how do you tread that line i think the decision by most major markets to be aware of the supply chain exposures especially with covid exacerbating that and have more and more technology and intellectual property locally. that continues the deglobalization trend. >> thank you very much for your thoughts have a nice weekend. coming up on the show, more from the hotter in hell energy conference more on brian's interview with andy hendricks. as we head off to break. some of your other top stories the bipartisan group of ten senators working on the infrastructure plan say they struck a deal. reports say the plan will cost $1.2 trillion over the span of eight years and paid in part by

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wondering what actually goes into your multivitamin? at new chapter, its' innovation, organic ingredients, and fermentation. fermentation? yes. formulated to help you body really truly absorb the natural goodness. new chapter. wellness, well done. welcome back the hotter in hell energy conference in houston, texas this week where oil and gas companies discuss demand and output and operations during the pandemic our brian sullivan was there with the ceo of the big rig operators out there. patterson uti. >> we are joined by andy hendricks. they are a land drilling rig operator the best leading indicator of where the industry is going and probably the last person i interviewed at the in-person

conference before everything shutdown >> a little over a year ago. >> we're back together i said the same thing in miami when we spoke a year and a half ago. what are you seeing now? what a year it has been. you have 73 operating rigs what was the low during the lowest point for you >> during the covid downturn, we went down to 34 operating rigs if you remember, we were in miami, we had 126 working. from 126 to 34 now up to 73 we're hshowing a projection of growth we said 80 in july we are in discussions for the rest of the year toencouraged. >> coming double off those lows. obviously the price of oil surprised people with where it is are you still seeing a reluctance to spend a nervousness that 65 or 70 can't last oil has been volatile.

i don't need to tell you that. >> it has been volatile. if there is a pull back from 70 and it comes back from mid to low 60s, that's still okay we're still going to see activity growth. even if you see a pull back in wti because of volatility. i'm encouraged by what we're seeing in the discussions we are having with customers. part of it is because of our leadership position and esg and rehe dducing emissions on rigs. we can help with that. >> how listen, sustainability is the watch word esg is the investing watch word. everybody here is talking about esg at the conference. others would say you are an oil rig company. how are you sustainable at all >> an oil rig company. somebody has to drill. we want to do it better. we want to do things more respo responsibly. we can provide new engines that burn 100% natural gas to reduce

emissions. we have a battery storage solution to reduce emissions as well we are encouraged by the discussions with the operators wanting to deploy the technology >> the companies that hire you, investors have been loud and clear. capital discipline don't drill, drill, drill. we want positive cash flow you want a mix you need companies to spend. how willing are companies to open their wallets right now >> so, you know, certainly it has to show capital discipline this is relative to budgets set at a lower wti there is room to grow activity and it is still showing capital discipline >> the old saying is the kcure i high prices. over drills and over produces and then collapses are we smarter this time >> i'll paraphrase mark twain.

the numbers are greatly exaggerated. we still need energy as countries get vaccinated, this will be demand for energy. >> do you see demand for oil and gas remaining fairly strong? the energy minister on the opec call a couple of weeks ago for zero is la la get there is an transf transformation whether it is 10 years or 15 years, investors want to be in oil and gas. >> big interview there thanks to brian and pa patterson-uti for the inter hihinterview. and ahead, the march to new highs despite rising inflation if you have not already done so,

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all right. that is a live view of times

square at 5:50 a.m. eastern time just below there is our colleagues over at "squawk box" getting ready at the nasdaq market site in eight minutes time traffic is picking up with pandemic restrictions easing up a bit. the markets are largely shrugging off the hotter than expected consumer price index with the s&p closing at the record high for the 27th time this year. suggesting that investors are buying into the fed stance that the round of inflation is transitory the next guest says investors need to straight optimism from hysteria growth will be harder to come by in the second half of the year matthew, thank you very much for being with us this morning let's talk about whether or not the markets have it right because equity markets at record highs and fixed income markets showing interest rates falling it sure doesn't feel like

inflationary environment >> it doesn't, dom thanks for having me on. you know, i think the underlining dynamic that the global marketplace and global economy has been dealing with for a year now has been liquidity. coming from central banks all over the world ecb and the fed are the two prominent players in the liquidity game the liquidity continues to flow. we see that in a number of ways. what you saw yesterday was once we got past the cpi report, investors decided it was time to put that money to work that went into a variety of asset classes. treasuries and equities as you noted noted. >> let's talk about why interest rates are falling, matt. is there any fundamental reason why we are shaking off a few

months of hotter than expected inflation data and still have yields react the way they are? what gives >> dom, i think what might be going on is the idea when you are dealing with cost push inflation, you know, when companies or businesses raising prices, despite demand outlook from the perspective that might not be that great and you are really talking about potential for softer growth in the future. that might be one of the things that's going on right now. in fact, earlier this week, the small business survey and the nfib survey came out some of the data in there was concerning we saw that small businesses were planning on raising prices pretty aggressively over the next three months. the expectations for sales over this period were actually still depressed which is a bit odd why raise prices when your

expectations for sales are not going up your own costs are going up and forced to raise prices that is not great tfor the demad outlook, dom >> transitory is a key figure word is it transitory is it not? we have been talking about inflation fears for a long time now. we have not really seen them come to fruition yet transitory is still something that is controversial in how people view the inflation or price hikes. what can you markets glean from this or tell everybody street o the pressures are here to stay >> dom, when we look at the inflation basket, there are things that are transitory used car prices will not go up 10% per month forever. that's a component that will

soften at some point in the future, we think there are other components of the cpi basket that we think will have sustainability to them for example, in the report yesterday, one area of strength that we think could be sustained over the coming years is owners equal rent or housing component of the cpi basket. that is something the fed will pay attention to as the housing market continues to do well and the component of the basket continues to inflate, that will contribute to the sustained rise in inflation. some of the larger components like used cars, dom, those will come back down. >> we have seen the hotter than expected parts in the market as well stocks like auto parts and dealers have been reacting in kind matt, what is the positioning that you are looking for where should investors be

overweight or underweight? >> dom, we still have a risk on bias in our allocation recommendations. the liquidity dynamic is dominant here. r ultimately, you won't get the best returns in the treasury market yields are low we're continuing to recommend more riskier asset classes like equity or corporate credit >> we are watching those moves as well. quickly, oil prices. do they keep going higher? >> we think that some of the commodity markets including oil, prices are disconnected to a certain extent we are looking for a con consol consolidation. slightly lower prices in the future liquidity will have a role to play there, dom.

it's a tough call. >> matt, have a great weekend. that does it for us here on "worldwide exchange. "squawk box" is coming up next the s&p 500 closing at a record high yesterday have a great weendke

good morning markets in focus after the s&p shrugged off hotter than expected inflation numbers and closed at a new high meme stocks are taking it on the chin we'll show you what's moving right now. striking a deal. bipartisan group of senators reaching agreement on the infrastructure package now they have to get their parties on board elon musk taking a victory lap last night as thatesla relee

the model s plaid. we have the latest ahead it is friday, june 11th, 2021. "squawk box" begins right now. good morninge to "squawk bo cnbc i'm becky quick along with andrew ross sorkin joe is off today the dow is up 60 points. s&p indicated up 2 points. nasdaq is up under a point markets shrugging off the consumer price data yesterday. it wasn't just the stock market that shook things off. check out the treasury market. treasury yields actually dropping on the hotter than a anticipated news 10-year is lower today the yield is down lower toda