middle that trap people into thinking we're coming off of the lows, in my trader talk i'm talking about what happened at the end of 2008 and early 2009, when a lot of people did exactly that, and the market dropped again. morgan >> bob, thank you, with the s&p dipping back and forth under 4,000 right now, that's going to do it for "squawk on the street." "techcheck" starts now >> good tuesday morning, looking at "techcheck," i'm carl quintanilla, deirdre bosa and jon fortt. stocks are trying to avoid their fourth straight day in the red brief test at the bottom this morning's rebound disappears this hour we're going to talk about tech opportunities at these levels though. our first guest likes chips, saying there's a discount to be had. paul hickey of the spoke joins us to start the hour paul, good to see you. before we get to the chips, you did say today's trading would be instructive. what's it telling you so far >> what we're seeing is bob

basani talking about it before the show started, we're in the market where you hadn't hold onto any rallies days where the nasdaq trades higher, but finishes lower we've pulled back. highest rate over the last five months going back to 2010. so it's not necessarily encouraging signs from a short-term perspective but you don't tend to see, you know, a straight up, if you are going to rally i mean, it's not surprising given the overall trends we've seen over the last several days, and i think we're just going to see even more of this going forward. >> we did point out some of strength, relative strength this morning, in semiconductors, and we still got the smh up better than 1%. what leads you to them right now? >> it's pretty interesting here, so if you look at the -- you know, we were talking about uber, talking about focusing profits over growth. you look at overall valuations

in the market, tech sector, a lot of the air out of its premium multiple has come in so far this year, but it's still trading at a higher thanaverag premium to the s&p 500 it's trading about 28 #% premium, versus an average over the last ten years of closer to 20% premium. within tech, though, you see the semiconductors, and they're actually trading at a discount to the s&p 500 right now, and historically they normally trade at about a 20 #% premium you see that little bit of a discount there, plus what's really been interesting is since the middle of april, the market -- overall market has kept going lower here, and we're making new lows, relative strength in the semis, i've talked about this over the show, you know, several times over the last several years, is they tend to be a leading indicator of the prodder market you saw at the end of last year, semis didn't confirm a new high. and what you've seen since mid-april, the relative strength

of the semis actually picking up a little bit, even as the s&p has made new lows, that's something that is -- when you're looking for positive things, that's something that's standing out to us. that, coupled with the valuation premium, makes it, you know, if you're going to focus on tech, and go into if he can, that's an area where, you know, they provide a little more safety. >> yeah, i do wonder, though, in this market, paul, whether that's an indication of something you should buy first, or sell last when i also look at what's happening now, i wonder, with these companies, is it important to consider who's got the cash to survive whatever economic difficulty macro-wise we're going through here, the product market fit to innovate and then i also wonder, who's the anti-metaverse right now who's in that space where the narrative has turned too strongly against them? just like a few months ago, the narrative was probably too strongly in favor of the metaverse, and, you know, roblox and whatnot and meta, going to

the moon >> one stock, where there's the sentiment has gotten completely south here is in amazon. i mean, how many times over the last two years have people said, you know, looked back to early 2020, and said, oh, if only i could go back in time and buy amazon, where it was -- you know, back then. well, guess what now you can actually do that amazon is one of, you know, 43 other stocks in the nasdaq 100 that is back down to its pre-covid levels here, but, again, i think some of these stocks, you know, are deserving of it, you know, a stock like peloton deserves to be well believe it's pre-covid levels. but a stock like amazon it's run into trouble, last quarter's results weren't great, but amazon has shown it's one of the most well respected companies not only in technology, but in the entire country and, you know, jeff bezos still owns 10% of the company. he may not be ceo anymore, but he's going to -- if things don't

start turning around, he'll find himself back in here. >> you think he'll find himself back in there, when does that happen, do you think that -- >> maybe not taking over as ceo, but, you know, taking more of a -- you know. >> a role? >> more of an active approach. >> right well, he still is on the board you have to assume that -- >> he's on the chair, yes. >> paul, you mentioned that letter that we got over the weekend from the uber ceo. i think that you're going to start to hear a lot of these unprofitable companies talk more about free cash flow, and different metrics than we've been hearing the last few years. but the ability to execute is quite a different matter on the peloton call, there's so issues mccarthy has to focus on, what should investors look for when they hear companies saying this to actually determine if a company's going to be able to pull more levers, especially coming out of the pandemic when a lot of them were pulled? >> yeah, so, i mean, the

liquidity is going to become a lot less, you know, the hose is going to be more of a trickle now, and so i think companies are going to find themselves into trouble but you have to see, you know, cash flow remains keen in this environment and you have to have earnings going forward another aspect is debt levels. a lot of technology stocks don't have a lot of debt that's a positive for some of these companies. if you're not a cash rich company in this environment it's going to be a lot more tough going forward. >> yeah, that was just sort of the point of dan lobe's letter last week, where he talked about companies, especially in tech, that have used a lot of stock-based comp, are now going to have to sort of revert to increased cash wages, which then leads to margin pressure, i mean, that's a very tough spot to be in, i mean, particularly in tech, right >> yeah, it almost -- you know, it almost just keeps feeding on itself here, and so, you know, you -- these companies, you know, have issues retaining

talent, so only the strongest companies are going to survive but it's going to be an issue where these -- you know, the well established tech companies of the, you know, that have been with us before covid, are going to be the ones that keep us going forward after. so i think, you know, a lot of these, you know, you talk about the nasdaq, half the stocks in the index are down something like 50% from their highs, a lot of these companies were companies that probably would have not had no business being where they were unless we had all the liquidity that we had in the post-covid environment, and when that was back, then you start to see these companies, you know, start to lose that, that benefit, and this is what we see so -- but the well established cash rich companies, companies with earnings, like the semiconductor space, like in amd, which just reported a blowout order and continues to, you know, gain share, improving margins, that's more of a company that you can, you know,

feel a little bit better in, in the tech space, than some of these hypergrowth stocks that are no longer seeing the hypergrowth. >> right, that's a good way to look at, at least the tech, landscape right now. paul, appreciate that. talk to you soon. >> all right, thanks, guys. >> take care, see you. we did mention peloton, the stock is recovering from the lows of the morning, but still down some 15% after reporting misses on the top and bottom lines. ceo barry mccarthy who took over for john foley in february, telling shareholders although the company is, quote, thinly capitalized at the moment, they aim to be, there's that word, cash flow positive within full year 2023. can they actually pull it off? joining us now is shweta -- that was a rough call he was listing problem after problem, saying he hasn't even got to some of them because there's so much to do. is he able to fix all of that, while reaching cash flow positive on the balance sheet? >> well, hi, thanks for having

me i guess the first i think i would point to is his level of confidence on becoming a positive cash flow company, he tried really hard to make that tleer to investors listening to the call that he had high levels of confidence that this company can become free cash flow positive by fiscal year 2023 they have about $880 million in cash, raised 750 million, and they are looking at 8 #00 million in cost savings. so my confidence level seems high at this point that they will be able to get to positive free cash flow the problem with that is, there's this very tricky balance of growth and profitability. so they're clearly focused on driving profitable growth, but it's tough when consumer demand is soft. >> yeah. >> when we have these macro challenges, and they have to drive growth and subscriber base at the same time as driving profitability. that is the tricky execution part. >> so then where does that confidence come from in he even

talked about some churn on that price increase, saying that he actually doesn't even know how much it's going to increase, because the price increase doesn't take effect until june 1st. you mentioned the macro environment. how can ceos be confident in this moment that when they're already losing money, that that's going to suddenly improve this year? >> you can't be, and that's why we have been on the sidelines. it's the number one reason and i don't think that he fully knows either, i think his confidence lies in what is in their control, which is driving down costs, and driving up profitability. but what is not in their control is driving consumer demand, and there -- i have very low level of confidence, at least in the near term, which is why we remain on the sidelines, it is clear that consumer spend is shifting elsewhere to travel and experiences, it is clear that there's inflationary pressure, there's a high level of inventory, they cannot get rid of, and fourth thing is that the price reductions are helping, they mentioned 25 million in incremental revenue just driven from price reduction, but they're also driving up subscription prices, and what is

not clear -- the churn is going to be from the rise in subscription prices. they think it's incremental, 14 million a month but it remains unclear. there are a lot of pieces in terms of consumer demand that are unclear, and that's where at least in the near term it's hard to see that they will see an inflection point up in driving talk line growth look at their next quarter guidance they guided to 18,000 net additions. that's the lowest we'll have seen since the first four of 18. that tells us how soft the consumer demand is. >> well, shweta, i'm worried object about -- i'm not worried, i don't enpeloton, the hardware products versus subscriptions, he's talking about a lot about subscriptions, fine, but it seems to me the hardware products are different -- i'm

not convinced they're designed and built as well. they seem to be spending a lot on building these things, they have rust issues, seeming they don't have control over third party manufacturing perhaps they should are you watching that in particular it's not getting talked about a lot by management, but it seems like if you're trying to simplify and get this country -- this country, this company on track, you want to make sure you're building products as well as possible for as little as possible, and shipping them out. >> that's true the good thing that they have going on for them is that the people who are actually using it, among consumers, they have very high nps force. the satisfaction levels continue to be high, and retention levels continue to be very high, compared to any other subscription, consumer subscription product so that, to me, is, i think that is giving them confidence that their product is godoing well, now, the challenge is, where to really focus, where to put employee focus, whether it's hardware, or software, and given

various experience, and his background, i think that he is -- he does not believe in too much differentiation from hardware he just wants to have high penetration level among households, given the product that they have, with probably modest upgrades to the hardware, but greater focus on the consumer experience, on the software, on the subscription piece, and perhaps even potentially advertising revenue that they can generate, so that, i think, will take away a little bit from hardware upgrades. >> that kind of dove tails with what he said on the call, and that is, they're in talks with a number of third parties to sell their products he didn't want to get into specifics. you said it was early, but it does sound like the bike itself, the physical bike, where it's sold, maybe matters less to what comes after. >> that's exactly right, and, i mean, what is -- that was actually my question on the call to him and what remains unclear is also the economics that will come out retailers are not going to do it for free, and so as is these hardware margins are fairly

slim and when you partner with retailers, yes, it's a great distribution channel, but at the same time the economics of that are also something to be seen, and so what i think their strategy is to really penetrate into as many households as possible as long as they get that subscription fly wheel going okay, go ahead. >> no, shweta, i didn't mean to cut you off there, but that was good insights, thank you, we'll talk to you again soon. >> thanks for having me. back to semiconductors, a chip name that is higher, a lot have been higher so far this morning, is microchip technology, up about 3%, after posting a beat in the latest earnings, record revenue and earnings per share, setting an all-time high, joining us now, microchip technology president and ceo, ganesh morethy. a big part of what's happening here, even though you had the setbacks, geographically, and the difficulties in supply

chain, you're at the high end of your revenue guide tell me, what's happening in iot, particularly industrial iot, perhaps, that's driving some of this. >> so there is strength in all of our markets, including industrial and iot, industrial itself this broad base in the markets -- despite the challenges of manufacturing -- >> i'm having a bit of trouble hearing you. hopefully we can clear up that audio issue. but, you know, i'm also wondering about the supply chain issues in general, and then the debt that you have taken on, that you're in the process of paying down. how does this rising interest rate environment affect that, given that, you know, demand seems to be pretty strong, and your cash flows seem to be pretty strong as well. >> so we've brought down the

debt dramatically over the last three years. we achieved -- rating for the first time in november to triple -- february so we're continuing to work to get the debt down. that's because the cash flow of the business is extremely strong, allowing us to pay down debt and we have significantly paid that all of the variable portion of our debt, which left us a line of credit, which is variable so we are quite confident. >> your connection -- i've got to apologize your audio, not good, really can't make out what you're saying we're going to try to fix that and perhaps try to get you back on that is the ceo of microchip carl >> jon, thanks. in the meantime, dow has swung about 600 points this morning, we've got a component on the other side of this break, as ibm ceo is next, "techcheck"

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all the major averages close to break, or even in the red, as you saw this, the dow down about 50 points. meanwhile, i spoke with ilm's ceo arvind krishna ahead of ibm's think conference where he's keynoting today the context around ibm stock is shifting in realtime as the market tumbles ibm is even with where it traded a year ago, plus it's got about a 5% dividend yield, today that's a lot better than most. krishna shared data about ai's growing adoption in the enterprise he also fleshed out how he says the company's consulting in hybrid cloud efforts, leading to growth. >> investing in consulting, so that we have a bench as we are entering this year we see the demand.

now, by the way, if all of this remains in place, all of this will pay for itself, because as the demand comes through, then all of these people are boing to get fully deployed and it will show up in our top line, and bottom line. and by the way, in the market where these skills are in high demand, that's not my worry of having them. the worry would be if we didn't have them. >> okay, is there a way to scale people, and protect margins? is the combination of software, plus people, the way -- what's your strategy there? >> three things, one, i think that the cost of people in the end, about 6 to 12 # months works its way through the system if people are getting more expensive, you're going to be able to price that into your contracts. it takes months, a few quarters at the most, to work its way through. second, get productivity we talked about ai back, more than that, automation, cyber, applying all of these enterprise software technologies helps you

get more from the people you need fewer of them and we didn't even talk about hybrid cloud which by the way also multiplies the productivity of the people and the technologies. >> let's talk about hybrid cloud. you were main architect of the red hat deal, which is all about hybrid cloud and you've been migrating so much of ibm's business to working in that red hat environment. is that at the point where you envisioned it being right now, do you still have more optimization to go to be executing on your hybrid strategy the way you want? >> on red hot, i'm ecstatic. we've been telling you we'll do high teens, and we have done almost 17% every quarter since inception. so i'd say that that has more than fulfilled the promise, and our expectation. it has become the foundation of ibm's hybrid cloud strategy. a lot of enterprise software runs on red hot. red hot is also widely embraced by all the other public clouds i'd say, yes, it has actually,

exactly what we were hoping for. as i think about where our clients are, almost every client, all 80 #%, believe in hybrid cloud, multiple public clouds, we believe people are also going to use private cloud. that's what hybrid cloud is. that's the reality, it's great to be where the buck's going. >> there were a lot of doubters, and a lot of pushback, when ibm first started talking about hybrid cloudy. it's come around to multicloudy and hybrid i don't understand yet how you get the biggest margin benefit out of that, when customers want to be in some ibm, in some aws, in some azure and broom cloud and oracle, et cetera, how do you make sure you get the biggest benefit out of that situation? >> i think it's -- i think it's pretty straightforward, jon, first, people may do some applications and drive them natively to one cloud. in that case they'll be on that

cloud and that will happen to some fraction. there are others that say, look, i really want to have a common pool of skills that travels all of these clouds. now before every single application, but maybe half the critical applications, if you want a common pool of skills, that means they're not going to learn each native cloud all the way down to the deck that player that provides abstraction comes from the red hot technology red hot open shift, that gives you that commonality that goes across both public clouds, and private cloud. i think you'll agree when there's a shortage of skill labor, that's a fraction of the enterprises, and to what they would view as critical, and they want the resilience of being able to go across multiple clouds that's where the advantage comes in and those things can then run across that environment, and that's how we would then get the software established i actually worry less about margin i worry more about delight, and people consuming it to get business benefit if you get that, margin is an

outcome. >> we also discussed inflation, how it's affecting businesses, and how ibm is advising clients to counter it. a key element of the strategy, sustainability. >> there's a few aspects to this inflation. you mentioned energy, and food, but it's more than that. i think it goes across commodities and a few other areas, demand inflation comes from the liquidity, and the extra consumer demand that is there. but you also have supply side shocks that are going on if i look at this, what we're doing to help customers deal with -- more efficiency on your supply chain, how do you get more efficiency in your operations, can you reduce the movement of goods, which requires less transportation, to some extent, so all the techniques we have ongoing to optimize if you can get 3 or 4%, more optimization, that will drop inflation quite a bit. because if you think of just energy, the supply shock is about 5% to energy supplies, so if you can begin to do that, now

the issue becomes one that i'm not sure we can solve all by ourself, is that that is not a statement that applies every single place my statement is one that will apply to the globe at large. one company in europe, it could be there, not going to get solved so quickly and easily that's what i think the world is dealing with right now but i believe if we can do 5, 6 #% in terms of reduction, and total demand, if we can begin to work on sustainability, if we can begin to work on clarity, those are maybe slightly longer answers, but those are probably more sustainable, that's a pun on the word sustainable, for probably the next decade to come. >> so it's an interesting situation here where some of the historical knocks on ibm, in this economic moment, might be turning into pluses, like, oh, look, they've got so many people well, they've got a skilled technology workforce, at a time when others need people with technology skills and, oh, hey

look the stock is dead money, hasn't moved in a year it hasn't moved down either, and they're paying the dividend, the question still is, though, can they grow from her has arvind fixed the company to a point where they get out of that trap they've been in for a while? >> they haven't moved over a decade as well yes, i would agree, john, this moment is different i can't get over it. he said i worry less about marijuana, i worry more about client delight that sounds like a mature company with a call return program versus the rhetoric we heard from the uber ceo over weekend. let me ask you this, the company expects revenue growth this year in the high, midsingle digits. jon, is that good for a cloud, an ai company, wouldn't we expect a higher rate of growth, or is this sort of as good as it gets, and that's okay for big blue does it ramp up from here? >> well, i think you've got to wonder what the margins are on that growth, and as he was saying, can they raise prices

this their consulting business at the same time now, they're in a mainframe cycle. that's great revenue-wise, and profit-wise, carl, you know, if you get revenue growth and that leads to, you know, an uptick in the stock versus what everybody else is doing, that's not bad. >> yup, i always think of morgan stanley. katy, he went to overweight on april 14th, and the stock is higher from the date of that call pretty interesting as she called it a good place to hide. that was really good, jon. almost half past the hour, time for a news update with morgan brennan. >> carl, good morning. a new all-time high for the average price of regular gallon of gas just over $4.37. that's according to aaa. in california prices are costlier with a statewide average of $5.84 for a gallon. there are early indications it's getting easier to find a house to buy though, realtor.com says april's inventory of homes on

the market was 12 #% lower than the same month last year that's still the smallest year over year decline in more than two years, and in the last week of april the inventory decline was just 3 3k9 from last year. and tom brady has a job waiting for him when he actually does decide to retire from football the fox ceo says the 45-year-old tampa bay buccaneers quarterback will join fox sports as the broadcast network's top nfl color commentator. he tweeted he's excited. but still has unfinished business earlier this year he announced he would retire but changed hid month over a month lair. >> morgan, who knows when that's going to happen? thank you. meanwhile, president biden set to make remarks on inflation. any minute now, we will bring you that live right when he starts, "techcheck" is back in a moment

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let's take a closer look at the volatility, minneapolis federal reserve president saying she's focused on controlling inflation rather than the overall performance of the markets in an interview with squawk yesterday, take a listen. >> i'll be honest with you, i never focus on the stock market as a goal. we day attention to asset prices as it comes back around into psychology and spending behavior, but ultimately it is our duel mandate that drives us. >> our next guest pulled no punches, responding to those comments taking to twitter with choice words, as you can see here, northman trader founder and lead market strategist sven henrich joins us today what happens now, and how does it change your forward view? >> hi, carl, good to be with you, look, regarding that comment, the feds spend a lot of time last year actually explicitly saying they want to avoid a chance -- a point of reference to what happened in

2013, which is specifically outlook on the stock market, and now to pretend they're not looking at the stock market is a bit rich in terms of where we are now, obviously a massive fair market in all asset classes, not only in stocks and crypto, but also in -- that makes this correction here a lot more challenging than we've seen in many years before. it's also the lengthiest correction we've seen. since 2009 the fed always intervenes on market drops this year it's getting much longer in the tooth. and it's a lot like what we saw in 2000 when we had this big tech bubble coming about and it's breaking down, and that's what we're seeing now with a lot of individual stocks, and, of course, massive drawdowns in the netflix, facebook, it's not only contained to speculative stocks but also more broad based stocks now we're getting to a very interesting point because a lot of what has happened obviously is yields have risen dramatically since last year, last october, november, i put

out this chart about the ten-year yield, which had a technical pattern, started off at 1.59 #% in the technical target was 3.2%, and guess what, we hit that precisely yesterday, and reversed i mean, it was amazing as a technician, i love when technical plays perfectly. the big question for me, what you say it going to reverse there? it did, so far it has. but obviously stocks are still under pressure at this very moment, but i think it's absolutely critical, what happens with this because in 2018 the stock market fell apart when the ten-year hit 3.2 3k9. why? because the debt construct had already gotten so large that markets could not handle it, and obviously what happened was markets dropped, then the pit flip-flopped and cut rates in 2019 with unemployment at 3.5% since then, we've added over $8 # trillion in debt so there's no way, mathematically, the system can

actually handle these type of yields at this point that's why i think this whole notion that the fed is going to raise rates, ten, 11, 12 times to get the funds rate of 3% is not realistic. because from a mathematical point of view. that's where i'm at. >> how far do they go, do you think? >> well, if you look at the long-term trend, it's been a show of lower highs, and lower highs over the last 30 years the reason for that is is because of precisely of the debt each time they're raised they get to a point, everything falls apart, and they're cut again. the long-term trend on that chart, basically says, you know, 1.75 maybe 2.25 or something is the most they can get to, if they're lucky. that's the trend and they have to prove to me that they can do anything else beyond that. so my view is, what the market needs right now to stabilize, is to see a sustained reversal in that ten-year from below 3.2%.

the fed maybe meeting them somewhere in the middle, and then stop, and pause, and that would be kind of the pivot, and that would be maybe the bullish outcome out of all this. it's critical that happens fairly quickly. >> sven, you've been quite critical of the fed and you've kind of outlined what you would do, raise them halfway to where the market expects right now what's the risk that that doesn't halt inflation, and we get a stagflation situation? >> well, that's, you know, part of it is, you know, the difference between demand and supply, we continue to have supply issues, obviously, with china and everything else. that's very uncomfortable. where you're sitting in the box, and you can't blame the fed for that, certainly not, what i obviously have been critical of them for is that they printed relentlessly into an overheating economy and now they want to tighten into a rapidly slowing economy. it's just backwards. and what we can only hope for is that we actually have seen or

are in the process of seeing so much demand destruction, which is also tied to the stock market declining, that actually inflation data year over year is coming down. i'm not saying the inflation problem is going to go away, but at least year over year pressure towards the upward side is coming back down and we're seeing a lot of evidence, already, in a lot of the commodities, used cars, shipping rates and so forth, and that's why, tomorrow cpi print, i think, is going to be highly important to look for signs that maybe we're seeing some relief on that. if we do, then this would be supportive of yields maybe coming down as well. >> sven, i want your technician's take on how much farther things could fall from here, within the context of amc, talking about some risk assets here, still well above where it started 2021, so is game stop, and bitcoin yesterday bounced hard after dipping below 30 k, so it doesn't seem like those

who are excited for a comeback are willing to take risks, have given up in this market. >> no, that's the notion, in a barrel market, it goes down, and so it stops, right, it's a simple answer here, here it is, still a lot of leverage in the system, and it's been -- we have too much fluff in the system and it's coming out, it's the cleansing that needs to take place. as a technician i look at key levels and obviously what happens. for example, today, to me, a key area that needs to hold, otherwise you can easily go the 3800 or 3850 # well, not that far off, anyway, at this point, in the cycle. but right now, right here, in the 3950 # to 4 240urkz area, it's key that it holds tomorrow with the cpi report, we have a key trigger point. >> right, sven, it's one thing to work your way through the cycle, and go to levels that technicians are targeting, but

it's another to start incorporating what the fed's financial stability report argues, and that is risks about liquidity and commodities or housing risks or certainly destabilization, and crypto. how much of that are you actively thinking about right now? >> well, liquidity is extremely low right now, now, we know why. right, the free money party has ended. we have a lot of pressure on -- bring it back down to the yield issue. you know, refinancing costs are going up across the board, and besides we not only have a tech bubble, we have a housing bubble and we have a bond bubble. this is the concern is here that if people or funds are overleveraged that we see forced liquidation, and that always risks obviously risks volatility 45, there's an open gap i'm looking at there as well we haven't seen anything dramatic yet

in this sense things are still fairly orderly maybe at this point -- this is a fairly solid bare market rally in 2000. this is important for everyone to understand, because we're all obviously still focused on the other -- these big up moves and big down moves in 2001, the tech bubble corrected hard, and a lot of families have gone underneath. the major indices trail traded in large ranges, up and down, up and down, up and down. it was vicious, for about a year while, you know, the market was starting to realize that maybe a recession was coming around, and then new lows came we're not at a recession point yet, and that leaves room for bare market rallies, in 2000 we saw about 20, 25 3k9 of rallies all the time, before the big selloff. everybody, this is a trader's market, be aggressive on selloffs and lighten up again on

big rallies. until you have certainty on the macroeconomic front. >> you're echoing what bofa's long standing call has been, we're working through rate shock, which will eventually morph into a recession shock, and that leads you to the ultimate lows. >> yes, i mean, that's -- i mean, i think it's very -- i mean, we can delay a recession, maybe, if yields drop really hard but you still have to structural inflation issues you're seeing a lot of stress and consumers right now, that's piled back into credit card debt and savings rate has dropped dramatically my worry here is that the fed is again underestimating the economy in the sense that obviously they're presenting it to be extremely strong, but with all the equity drawdowns we're seeing right now, and last year having seen more retail money flowing to stocks than ever before in the 17 # years

combined, that risks francly that consumer spending, now that people are sitting on a lot of losses is going to be curbed down a lot more. consumer sentiment is already in recession territory. >> we've seen some of those most popular names mopg retail investors get absolutely slammed. what would be your advice if you think we could see another bear market rally, would you sort of tell, especially those investors that got in over the last few years, to hold onto cash at this point, more cash >> well, the beauty of big bear market rallies is, and there's a lot of psychology involved, that's when people get foolish again, right, i think we use bear market rallies to build up cash, and then if you have big selloffs, then you can deploy the cash you maintain flexibility, as it all unwinds here in the next couple of years. to be absolutely clear in the futures markets, already pricing and rate cuts for next

year so they're already basically acknowledging that whatever the fed does now in terms of catchup to what happened in yields, is going to be temporary, and that the recession is likely at some point as we're still working through the excess. >> right well, you have been patient, sven, and it -- your call has proven right, sven henrich, we'll talk again soon. thanks the president delivering remarks on the administration, and how they'll plan to fight inflation. we will be getting that after break. don't go away.

welcome back, a bad date, match is suing google over a pending billing channing, having more ramifications for the app industry julia boorstin joins us to explain. >> well, jon, match is suing dwoogle ahead of the june 1st deadline for android apps to pay a fee rather than giving consumers the option of perhaps choosing to pay in app directly. match group saying, quote, ten years ago google was a partner to match group, today we are its hostage. match alleging in its suit strategic manipulation of markets and abuse of power in acquiring match to use google's billing system it increases consumer cost by

allowing google to charge a 10% fee on subscriptions and up to 30% on other in app purchases, this builds on a similar suit filed by 37 state attorneys general against google last july, and also on epix lawsuit against google forcing it to go through the google play store, similar to epic's suit against apple. match group, google responds, saying it's looking to pay the significant value they receive from the mobile platforms they've built their business on. google going on to say, quote, match group's apps are eligible to pay just 15% on google play for digital subscriptions, which is the lowest rate among major appellate forms. jeffrey's analyst saying trying to tackle google in court is a long drawn out process, impossible to call but he says every app vendor is cheering match on to make economics more diversified for everyone, and

not just google. other dating apps such as bumble would benefit as would video game apps such as those owned by zynga, take to and activision blizzard spotify is the one company that's struck a pilot deal to have lower fees, though no word on when they plan to expand that google pilot. >> i'll take that back, julie, we don't know what that fee is, but to your point, maybe the point isn't to win in court but get us talking about it and sort of a pr assault. julia, thank you. today's biggest laggers on the nasdaq 100, they are on your screen, as we head to break, and not helping the cause as the index looks to break a three-day losing streak, noz dak is on the flat le. 'rba iju aoment.

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time for a gut check this is an ugly one. shares of up start getting absolutely crushed this morning, down more than 60% it did beat on the top and bottom line, but that was completely overshadowed by its slashed outlook. the artificial intelligence lending platform saying the current macro environment is expected to weigh on loan volume the stock was hit with three downgrades citi taking it to neutral, and it will take time to adjust to the macro environment. upstart is down 80% of the year,

as i said, carl, just 60% today. >> indeed, and leading to a lot of hand wringing about other names in fintech, particularly, and anything leveraged to the consumer dow, meanwhile, down 180 here, d we're back to 3,973. don't go away. entral. oh hi caesar. we were just talking about you. yeah, you should probably get out of here. ♪ ringcentral ♪

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morning. another stable coin issue, neither stable nor perhaps coins. crypto is in the cross hairs kate rooney explains what's going on kate. >> yeah, bitcoin holding above 30,000 after a pretty rough week it's still trading like an amplified tech stock sentiment is taking a hit with 40% of investors under water and there's a major seller out there adding to crypto market jitters. it centers around ust, price should be paying 1 to 1, known as a stable coin, but it has lost that stability. yesterday, for example, it was down to around $0.60 unlike some other so-called stable coins, it is not backed by short-term debt it's backed by other cryptocurrencies like bitcoin and says it relies on an algorithm to keep that peg as ust loses that stable price. the project behind it has sold roughly a billion dollars in bitcoin reserves investors are worriedabout som

of the selling pressure. the cofounder says it's not exiting its bitcoin position all together that goal of building $10 billion worth of bitcoin reserves had been seen as a driver of demand this year, and boosted prices a couple of weeks ago. not the case this morning. our ylan mui, yellen saying stable coin legislation is a great idea as she put it and that ust quote simply illustrates that this is a rapidly growing product, and there are risks to financial stability. we need a framework that's appropriate. investor sentiment not looking good by one popular measure. the bitcoin green index, that's looking like a 10 out of 100 that shows extreme fear levels at this point, and all of this is driving down crypto stocks, coinbase down 19% yesterday. reports earning today, and based on publicly availabletrading data, it is seeing a sharp slow down in retail trading

micro strategy, another big one down 25% block also taking a hit. >> we have talked a lot about stable coins in the past it's an al goe algorithm point, a lot of cash, a lot of other things does that make the case for them, like does that make their lives a little bit easier because there was this other one that's so obviously something like this is going to happen. >> all of these are new, economic experiments until you have a moment like this where there's a lot of pressure on the markets. a week like this you can't know if it's going to work. this seems to be proving the case that an it's not backed by anything other than cryptocurrency is not working at least they're not keeping its stable price one of the reasons people have been buying into this, versus usd or tether, the other big stable coins out there is because it offers 20% yield. there are a lot of other die nam

-- dynamics going on here it could make the case for things that are tied to the financial market ss. >> we'll see how it plays out. >> thank you, guys let's get to the president. >> to address the number one challenge facing families today. inflation. this will not be my only speech on inflation i'm sure, but we look at the economy today, it's clear we made enormous strides and our plans and our policies have produced the strongest job creation economy in modern times. in addition, 8.3 million jobs in my first 15 months in office, record unemployment rates down to 3 pn.6%. the fastest decline in employment to start a presidential term ever recorded and in addition, americans have applied to start 5.4 million new

small businesses last year 20% more than any other year on record and i see -- as i see it, everything across the country is as we go across the country, our economy is gone from being on the mend to on the move. but for every worker i met who's gained a little bit of breathing room to seek out a better paying job, every entrepreneur who's gained the confidence to pursue their small business dreams, families across america are hurting because of inflation i understand what it feels like. i come from a family where when the price of gas or food went up, we felt it it was a discussion at the kitchen table. i want every american to know i'm taking inflation very seriously, and it's my top domestic priority. and i'm here today to talk about solutions, and there's going to be more we'r