if it could be segmented and made simpler for different audiences. >> why do people buy really nice watches not to look like a cascio i used to have one of those. but i moved on. >> you've evolved. >> with my members only jacket thanks, tony, we'll see you later. and thank you, sorkin and becky quick. join us tomorrow, squawk on the street is next 3 . good tuesday morning welcome to "squawk on the street" i'm carl quintanilla trying to clear out some excess inventory, you have the 10 year holding. a road map this morning begins with profit warnings, the retailer at target set to slash prices to help reduce the excess

inventory. >> $5 gas at the pump, supply and demand continue with crude prices apple shares are down more than 18% this year and sliding ahead of the open. the company rolls out new fin tech features, software and chips. company as we said cuts its margin guidance announces plans for additional mark downs, canceling orders, jim you weighed in on this morning but radically deflationary in your words. >> i've never seen a wholesale mistake in terms of inventory. misjudgment not just by brian cornell but others the consumers' tastes changed so quickly. last night he was talking about

chasing inventory. what's happened is it's coming home to roost. but the reason i say it's deflationary he has to get rid of the stuff how about if you're trying to put your home together you just got a windfall from target. >> it's a great point. come up this morning, a couple conversations i had as well, jim. the end of inflation due to the inventory. at least in this case. i suppose i'm not sure what you need out of target but if you want anything you'll get it at a bit more of a discount than you might have recently. but can you really broadly say that this somehow is going to be deflationary in a real way or is it indicative of what other large retailers facing as well or a one off >> i think it's more metaphor cal. you get rolling deflation where you have inflation people are saying the housing

afford affordability, the worst it's ever been, way too much inventory. glut glut glut the only thing we don't have is an oil glut. but if the president goes and talks with chevron, exxon any producer, they can make deals but the president doesn't want to be seen with the oil companies because they're considered to be anti-green. you don't go to saudi arabia to get them to produce when the biggest producer is the united states we need to see oil and then jay powell wins. but don't count him out this is positive for the consumer. >> we may have graphics on where we are on seasonal crude inventories. we're nowhere near the range we've been in the last five or six years, david you probably know this better than anybody. but it goes beyond the raw product.

the economy works on refined product and at 60 bucks that has nothing to do with saudi arabia. >> the inventory of refined product is something people are talking about as a concern, as you point out and the value of that refined product, as well. yeah this is something we have to keep an eye on no doubt about it as carl said, it's not about production it's more about the refining side of it >> look, the refiners are making windfall here, they'll have the best profits, why people keep chasing those stocks it's impossible to figure out what a top would be. what's happened is they are making more and more per gallon. i'm sure at a certain point congress will look into it, that's what congress does. that's where the pressure is coming from. i know carl posted this this summer, it's natural gas in short supply, it's going to be used in air conditioning, hope

for a cool summer and the winter months not saying it's like europe but the consumer is going to be tested here. the consumer is flush. there isn't anyone who thinks they're not. this is a test to see how much the consumer can spend and whether david, you're doing the exxon documentary on june 22nd, whether there will be demand because it's so high. >> they have huge refining capacity, we should point out as well we'll show that to you a few more times in the next few hours and talk about oil in the next block of the show. i want to come back to the broader market because you could argue in a strange way, this target over inventory and then disposing of this inventory at discounted prices is a positive. let me pose negatives or at least question marks you have the fed raising rates -- we're going to read about target

got to do that first >> it's okay >> just keep going i'll keep going. ignore what's on the screen. you have the fed withdrawal with qt we've never really seen that you have crypto wealth reversals. real estate values people wondering if they're going to decline. story in the journal about higher rates in commercial real estate prices falling. you have the spac explosion. and then you have energy prices. does that add up to a positive or negative view for you. >> you have to recognize that jay powell is unique, he hasn't said there will be lock step increases. if everything goes his way before anything gets started, how terrific president biden playing a bad role here thinking there's nothing he can do with the oil companies where the oil companies are waiting for him to make deals he's spoken to the oil companies, just doesn't want to

say it because there's a considerable cohort in the country that despices the guys yet they are the key they are really what i think is the last of the inflation in the system, except for housing when you raise mortgage rates 5 to 6%, people with the lock in of the 3, 4, are almost done by mid june they'll be done and see what the market is like when you have to pay higher rates toll has done good work saying they're not hurt the luxury side of everything is not hurt if we sit here and say jay powell is winning without doing anything he's not going to say i want a double win, it's not a double header. keep in mind that you can win without having to do that much and that seems to be, if i were jay powell, thank you target you're the beginning obviously a lot of pork ingestion is related to

ventory. the inventory in china is going to be worth less when it gets to the united states. in the interim we have to have all the stocks marked down analysts didn't know this was coming, they're going to downgrade. >> i know jan, retail analyst on squawk this morning called the target inventory scenario a pig in a python meaning if they clear this out, set you up for a better fiscal second half. i know the "today" show this morning had an entire piece about surpluses. if you think this gets cleared if the back half of the year does look good. >> say you're brian cornell and i spoke to him last night and you have back-to-school season coming up, and holidays, thanksgiving if you're stuck with merchandise, it's taking up space -- david i like to laugh

at these things but there are guys trying to buy kohl's, that's the dumbest thing to do after what brian cornell said. it's no different than tiger global once you're in the process you're full speed ahead. why would anybody buy kohl's knowing what brian said? >> i'm not going to answer that. i'm not going to be able to. i don't know what it is they see as a real opportunity in kohl's. >> will you have some fun with me for heaven's sake. >> i'm sorry i haven't paid close attention to this auction. it does appear to have taken a step forward, no doubt about that that's reflected in the stock price. >> you will not call me stupid because you're a reporter and i'm a commentator. but this is a forced error by this group i said my piece. >> they haven't done it yet, haven't gotten financing yet they have three weeks

exclusivity. >> yeah. >> it certainly is -- one would expect has to be seen as a positive for the potential sale of this company, jim. but to your point, i don't know what they're thinking. adding leverage to a retailer that doesn't seem to be getting it right right now in this environment may not be the best move but at the same time kohl's price expeckatations have have been >> this is like the burning bed, do you remember that >> yes are you going to make reference to that, a failed ibo. >> made before brian cornell, have a chance to walk away, should walk away once you put your name on it and are excited about it it's hard to realize that everything you have except e.l.f. cosmetics is probably wrong at kohl's. when you see something like

this, you can say you know what, maybe a good sign this outfit is buying target. you should say, what a stupid sign because these guys don't know what they're doing. that's okay. you have every right to be as stupid as possible in this group and that's one of the reasons why i find this business of ours so exciting. >> a few calls in terms of looking for names jim that perform well in economic times planet finatness, best mid cap idea go to 10. but smuckers doesn't always work. >> the food group is so bad, except general mills is doing well hormel blew up beer does well, cosmetics does well, which i elude to e.l.f. on tonight. there's fewer stocks in this environment, you can stick, carl, with oil there's people that want to

shuffle oil and say i want to downgrade chevron be in the june 22nd profiled one, exxon give me a break. it will be a good market but don't try to put lipstick on this particular pig. >> okay. i guess we won't >> yeah. you won't go with me on anything even over 3,000 miles can you say jim you got a point there, but -- >> i did i said that at the top of the show very top of the show i said, it's a great point on deflation. that's it you get one a show. >> where was matt from >> where was who from? >> he was from where yale >> i didn't hear who you were referring to. >> your jeopardy winner, for heaven's sake. >> matt. >> out of nowhere, matt it's a

year ago i'm going to say matt you know who i'm talking about. >> i slapped you down on kohl's, i'm giving you a win june 22nd. >> i'm going to see you in the morning, how's matt, how's matt doing? >> great i love that matt. >> we'll talk about the surge in gas prices why one firm said exxon is cheap, look at the premarket and get to apple and peloton and union pacific and me others as well on this tuesday. don't go away. to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night.

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to climb, regular gasoline marching toward a national average of $5 a gallon currently $4.92 according to triple a 13 states and d.c. have gas at five and higher with california the most expensive at $6.37. jim a year ago $3.13 and j.p. morgan's view of $6 in august appears to be on track. >> what's happened when we've seen it historically, the building of homes in areas away from the center city slow down but you know what, david, work from home. >> work from home. >> that's changed things. >> yep. >> it's going to mute the problem of higher gasoline. >> it may mute it a bit. but i got another one for you.

china reopening, that's not going to mute the demand worldwide, is it >> no. i mean, look, china, if you take a look at the problems with target by the way, how much of it was the fact that china didn't produce fast enough what we want? david, i have to believe at a certain point people are going to say oil is so bad i want to sell, that's a mistake the reason it's a mistake, eventually oil takes care of itself people stop using as much. that itself could be negative. we weren't in an era of work from home. you can say i'm not coming in, i'm working from home, gasoline is too expensive we never had that option before, david, and that's important to think about. >> that's a good point there's also mass transit available as well in certain urban areas to avoid getting in the car. but there's plenty of cars on the road, miles been driven in the summer season, gas rarely higher than it is right now, and

there is the discussion of demand destruction it figures into everybody's view of the market overall, you hear it every day, what if we go to 200, what's it mean, what if china comes back online in a big way, what if they succeed in keeping russian oil out of the market in a real way and on and on people can stay home more so than they might have for work, but they still got to hit the road for a lot of other things >> i talked to bill muir last night and he remembers dramatic times in 2008, so we have to put it in perspective, is it 2008, 2000 or 1994 we have to put things in context. this is not as bad as 2008 but there is going to be an

adjustment in prices and stocks are going to go lower and when they go lower it's an attractive moment but maybe we have to get adjusted to higher gasoline as a fact of life and the fed has to factor that in there's nothing they can do other than hope texans prevail and start pumping more. >> i want to get you on the ever core notes downgrade of oxy to inline, they keep 74 target the challenge is discerning to what extent the tail winds are reflecting in the stocks outperformance this year. >> you have the negative scenario that david traced out but i think what you get a researcher comes in to an oil analyst, you've been riding oxy how about switching to exxon so they get more sales going. exxon is the one that has lagged since 2013 when it was the largest in in the world. don't you think it can catch up because it's never been this

cheap? >> they seem to think it will. you have goldman moving price target to 117 and expectations in terms of brent prices to 135 a barrel from 125. >> that's big. >> ever core, it makes exxon to an outperformer, $120 target listen, let's look at exxon because we talked a lot about it thank you so much, where are we at 35? it would have been helpful maybe there. nchts >> right. >> actually go back more, that's the last six months. >> they point out missed the first 50 bucks, playing for the next 50 bucks. >> only the first 50 on a stock far less than 50 there it is. where were you let's call it 2020 to '21. a real opportunity there it seems. we'll take it for what it is >> you can give us insight no

one has. you spent time with exxon. do they feel we're a great company, should be the best stock, too >> darin wood doesn't talk about the stock per se in terms of we should be the best stock he thinks about shareholders who are very focused, it would seem to me on return of capital as much as anything else and the fact that over time you put less and less into cap x to get oil out of the ground. i'm talking over the years here as you transition to the new energy future. doesn't mean solar and wind but it means more in carbon capture, biofuels and hydrogen, all of which is our focus on the 22nd these notes, spent time talking about permian, because that's where me walking and giana near university that's where the oil comes from and the production increases are going to come from giana and the

permian. >> the president has not gone to the permian and said to you guys, come on, we'll give you some incentives if you do more green esg but please pump more it's not happening because the president doesn't want to be seen with any of these people because they're bad for the electoral college. >> part of exxon's plan. they're doing it no doubt about that, it still takes nine months to a year, permits and everything else. but their plan is to pump a lot more out of the permian. >> if you want to find a way to get oil lower, some day let's have a conversation between permian producers and the president. versus saudi arabia. >> well said, jim. when we come back we'll get cramer's mad dash, get ready for the opening bell

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pretty good mix of news here this morning in terms of activity you have target we'll talk about the reaction to apple's conference yesterday which continues this week. oil is a little bit red. vixx is up but still below 27. and the opening bell in less than five minutes. when you need help

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time now for crammer's mad dash union pacific looking down a bit this morning, jim? >> it wasn't that long ago, end of march, they traded 278. it was 225 going into -- coming out of yesterday's session going to be down because they

gave a talk and updated their guidance, the cfo. this is interesting. they say that incremental costs are going up, they're not going to hit their margin targets and say it's fuel prices along with cost inflation a rail gets about 400 miles to the gallon, and they do pass it on, they say this. i don't know i prefer to believe what's happened is they just weren't ready and i think there's just, throughout the system, inflation. and all that inflation has to come out of the system before we see a bottom the way it's done is that business gets bad and union pacific is signaling that business is not as good as it was. >> read through here, any of the other rails? >> all the rails all the rails trade together csx, maybe it's come down. norfolk southern think will benefit from coal because coal prices are soaring but no one was ready.

you realize they're still lucrative and become interesting. i like union pacific very much and if it trades to 200, you have to buy it >> unp definitely one of the points of the market this morning, the guidance on that operating ratio. opening bell in the cnbc real time exchange. the big board, railway norfolk southern celebrating the 40th anniversary. and nasdaq, fuel cell energy doing the honors we'll watch target which is now 46% from the high about six months ago i think it's just above the pre-covid peak and i wonder where you think long term value is in the name once you strip away seasonality, cyclicality on inventory. >> brian cornell is a good manager. he's taking his medicine when you take the medicine you have to deal with a sock hit but in the end you're talking about a company whose stock has

come down so much you have to figure a certain price -- not far from it, maybe 130 you begin to get a situation that completely factors in all the negatives, but you need to have the analysts come out tomorrow and say they're disappointed with brian cornell and unhappy with the situation and they're going to take it then you get probably a 3% yield and you have a quality retailer that is, basically, said listen we're ready for the fall so you have to -- but it's a two-day process. you have to have the analysts come out tomorrow and say misjudged target we thought there was a bot tom and then you get a situation where people say we have to downgrade retail because everybody has too much inventory. but you have to two through the process of pain before you can get through the gate which by the way, how about some kohl's, david? >> what about home depot and lowe's, down about 1% premarket.

they are talking specifically about home. >> remember, target doesn't have the heavy duty appliances. i know that home depot is having a good spring, the weather has gotten better. i think that home depot is different. it's different because this is related more to home and home prices have held up. home depot would tell you as long as home prices have held up, people feel it's capital making more money with what they have, as opposed to expense. if home prices go down, another thing jay powell wants to have happen, then you're talking about almost everything going down and almost everything being deflat deflationary but we have to go through the process. so we're going to have a lot of stocks that yield three with interest rates not going up further because they don't need to keep watching the things that are tractable, as opposed to the

intractable. which means any inventory glut in the system. the glut is coming the gut is what you need there's no glut in autos autos are still selling well a lot of analysts are trying to jump saying the autos are bad. it's not happening yet ford is having a good quarter. >> ford may have a good quarter, but as a stock it's not having a good year, down another 1.4% tesla down 3%. gm down 2% rivian, though it has not revisited the lows that occurred right around the sale, the initial sale by ford i think 7 million shares that i reported on is nonetheless down another 5% you like ford here >> yes, i like ford because it's been cut in half and they have a new lineup at a certain point it does matter what they sell. they have the f-150 lightning, can't make it fast enough, the

mustang, the maverick. these are all doing well ford has a very good product line gm will tell you they have a good product line, ford's is better and ford has done its best so under jim farley it only sells what they make a lot of money in do you want to buy an auto company knowing you don't buy auto companies going into a decline or recession you have to play it out. it's not what you buy at this stage in the economy and that's what you're seeing. there's a lot of stocks people are buying that you shouldn't be buying right now you should buy health care, oil, oil is up a lot, consumer s staples we see from smucker consumer staples have a lot of costs they haven't been able to figure out and a lot of them are figuring out now, wait a second, they don't have the same mojo for lack of a better term as they did stay at home.

smuckers had jif peanut butter and it had a salmonella recall that's causing the numbers to not be that good people are taking out the recall saying smuckers is going to be fine here. >> it has turned around from the premarket. i know your theme has been there's more pain in store from mega cap tech. but a lot of discussion about the apple event yesterday, specifically the m 2 chip and the power of the chip itself is accelerating the innovation, which is making the ecosystem stickier than it was. >> there was a lot of bogus, jump ahead stories by how what apple announced yesterday isn't significant. the m 2 is good, i like the buy now, pay later, almost no defaults anyway. we're waiting for estimates from china, we enjoy it's 4 to 8 billion we need people to say it's 8 billion i don't trust the analysts with

apple. apple to me is a point of pain service now had on bill mcdermott. broadcom, i have hok tan tonight. people are liking the vm deal. do you think it's a good one >> it's too early to tell but hok does have a lot of fans who believe the company is able to bring to bear rationalization of certain operations without threatening their ability to grow how's that >> perfect analysis. >> they're saving money. if you want to know which semiconductor can lead us it's broad come it's the behemoth in the group. >> and getting bigger when and if they complete the vmware deal >> and 50% in software.

>> yes 50% after they complete that deal you're a believer, you're saying this is a company built on acquisition, do the bigger roll up, once the music stops the question is can they sustain that kind of momentum? so far, they're getting out there now, vmware is a big deal. >> it's a huge deal. >> what's next, it has to be intel. >> certainly larger than intel they're going to buy intel if they keep going. >> that's my point. >> you're right. carl, there's some technology that can be a winner here because they lower the price of your business and some technology is a winner because it's, again, cyber security against the cyber bad guys i had cloud strike last night, the growth area in technology is trying to stop the bad guys from shutting down your product line or leaking information you don't want to read

we didn't talk about coin base, by the way and possible regulation, which i think what happened of these cryptos. but what is amazing is george came out and said once again, there is a desk for if you decide to break into someone's account and they pay ethereum to you. the people at -- the bad guys have kind of like a bank and you can choose ethereum, you can choose whether you want to pay with bitcoin they offer a service as high level as some of the outfits that we talk about the bad guys do. amazing mp >> right. before we move on from big cap tech we talked about the move in amazon yesterday, jim. significant one, the 24-1 split has taken place. yesterday we were talking about alphabet we forgot -- >> they're doing one. >> yes

a 24-1 split >> i hated that. >> it happens. >> now we corrected it we corrected the record. >> exactly now we're done >> i think you were in giana when it was announced because of the june 22nd special on at 8:00. >> i think i was listen, it helped, it provided a lot of momentum to amazon. we're just -- we're going to crush you with that. >> people want to sell amazon as if it has inventory. the whole model of amazon they don't have inventory we're seeing a lot of people reach every single negative conclusion let's just play it through and recognize not everybody is dumb as wood. and we just have a situation where the market has to correct. it's been correcting go buy some health care. just go buy health care if you want people say wait a second, interest rates are going up, can't buy health care. there is a way out of this, which is to think about what happens three months from now. people are reluctant to think three months out.

>> on the flip side, smaller market caps but dave and busters interesting story, may walk in comes up versus 2019 to our point people buying things and doing more things. >> people want to go out one of the things with e.l.f. is people like to dretss up, go ou, have special occasions and dave and busters is birthday parties. you spend a fortune with the claw trying to pick up something worth 3 cents. that's what -- you know, that thing -- >> i do. i know what you're referring to. the claw it's also in "toy story" yeah. >> here's what you don't get you don't get an iphone you get a plush doll that your dog eats in two seconds. >> and it costs you, as you say, 30 bucks for the claw for that 5

cent piece of fur. >> have you been to a dave and buster's >> no. >> been to a kohl's? >> yes >> would you pay a lot for kohl's right now you like their home section? >> reporter: you really don't want them to do thisdeal, do you? you're against it? >> i don't mind it i think it's like spirit air people do things that are so radically stupid that's okay. again, david, i am urging people to recognize that radically stupid things do not prevent you from making money. >> they don't. it may well be the buying group here that has three weeks to potentially reach a deal and secure financing believes it has a way to reposition this retailer and that it's going to be great and able to do it while it's a private company, load it up with debt going into a recession, nothing to worry about. >> like elon musk with twitter >> that's by far the biggest

spread in risk >> elon doesn't seem to be happy with the due diligence doesn't seem to trust a lot of -- how many percentage of his followers are dummies, don't exist. >> bots? >> what do you think >> we don't know he said a lot more than twitter would tell you is the case >>, you know, i've said when are they going to sue him? they're going to wait. the board is going to wait to sue him until he doesn't close when he should but it does seem based on everything we read from him that we are going to end up in court on this. and delaware will make a decision as to whether or not the facts, in some way, indicate this company has not sufficiently told investors what they should know and therefore it's a material adverse change in some way from what we thought and he can get out seems highly unlikely but we don't know >> seems like the regulator, the

texas state attorney general >> all politics are local. >> it's like ken paxton. ken i love you, stop it. i mean it a lot, ken, i love you. >> you do, you love ken paxton >> no. i'm saying people are doing things right now that they should just, i don't know, go home watch hbo-max, sorry watch -- no you can't watch netflix, watch apple plus it's pretty good. >> jim, you're supposed to say, watch peacock. yellow stone isn't that on peacock. >> stranger things 4 right now is the lion's share of minutes watched. >> that guy lives next door to me >> "that guy" you mean the sheriff dude. >> yeah. my wife wants to talk about taking out his trash. >> david harbor, that guy. it's as good as matt. >> i didn't want to mention his

name you've blown my cover. stranger things has helped flicks. >> netflix >> it has. we'll see, netflix could use a hit. >> yes >> what about that chart david, look at that chart. >> i am looking at that, jim it's not good. >> there's only one chart right now that looks great you know what it is. >> exxon mobile. >> i'll give you a hint, 8:00 -- >> you know, when you look at that -- yes. don't miss this by the way, we're not "kidding you got to watch >> it's probably the most timely one you've ever done david. >> it is very timely jim when you look at netflix's chart. wow, exxon, piercing that 100. back in one of the -- i think top ten now. >> first time since 2014. >> now you're talking. >> you are talking

so much for all that capital that was avoiding it you look at that netflix chart, you think an activist might look at that and go, maybe we can get them to stop spending 20 plus billion dollar a year on content. or do you take a pass on that? >> people think streaming is over, people go out now. but target's market cap is only 70 -- their market cap is 70 billion. netflix is 86. the market caps have come down to a point people may look at the companies it's too cheap -- there will be no activist pressure in target a lot of stocks have come down and no one seems to care that's a mistake you know what's really bottomed? the inventory that tiger global has. the hedge fund that was done 52%. but then seemed to make a lot of money on the venture capital arm. >> yeah. i don't understand where they're marking privates tiger fully 64 billion is what

the journal reports. d-1 down 44% in the public fund and 52% is the public fund in tiger. we talked about it a lot last week it is a stunning reversal for a firm with such great success for so many years until recently but i can't figure out how you can be down that much in a short amount of time. >> did you read about snowflake? they own snowflake watch it as an indicator of how low a company that was incredibly powerful is going now it's only $40 billion. >> down 200, pretty weak here, almost every sector is red, except for energy. let's get to bob >> the market ran out of steam yesterday, interest rate moves up several days, that's a problem. today target costing futures about 20 points around 7:00 a.m., home depot, lost 70 points

of the 200 point climb energy strong again today as you heard from carl. health care doing well too merck and litlli and pfizer doig well and if you look, of course, retail here, target down rather notably. the question here is what happens with the rest of the market here and how they take it whether it's company specific or broader issues in retail or even in the s&p 500 in general. if you look at s&p we've been in a narrow range, 100 point range of around 4180 so we're testing the lower end of the trading range for the last seven or eight days the big question is whether target is a company-specific story. it looks that way. they were talking about inventory issue.

the good news is they seem to imply this is temporary. the margin guides is 2%, it was 5.3, that's what everybody freaked out about. but they said back half of the year they should be back up towards the 6% range if that is true, that is certainly good news. i can tell you the overall street is generally concerned about declines in profit margins. and remember what happens, last -- during covid one of the reasons the market was so strong in 2021 where margins hit historic highs americans had pricing power. cut costs during covid but when the revenues recovered, a lot of cost savings were intact so corporate america booked record profit margins. look at the second quarter of 2021, first quarter down to 12.1%. and most believe we're printing

somewhere in the 11% this year margins are under pressure but remember the historic average was 9 to 11% that's why the margins were so outsized because of the huge gains in revenues and the cost size the issue is how much more corporate america is going to have to deal with margin pressures. the big story is inflation this week the cpi is on friday do you have a peak inflation fla fl narrative or not it was 8.5% in march, 8.3 in april. is this the narrative? maybe. but most people said it's not going to change the federal reserves glide path not those numbers not right now. >> a quick reminder here, you can get in on the cnbc investing club with crammer, find out more, use the qr code on your screen to take you straight there. the bond report.

the ten year did hold, 3% in the early part of the session. just south of it now at 2.985. and yellen begins at senate finance in a moment. we'll be right back.

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quite a bit of red on the screen, but although stumbling out of the gate at the open on the target news, we have seen a bit of nibbling in the first few moments. back above 4100. dow has rrednaow its losses. dow has rrednaow its losses. we'll have more, aftersinesses . fields "open". who doesn't love "open"? offices. homes. stages. possibilities. your world. open.

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jim, you've got quite a lineup tonight >> well, ceos have come on and say good things, had their stocks move. crowdstrike has been fantastic broadcom, palo alto, and probably the king of cybersecurity. i'll tell you, you buy lipstick during a recession, and his stuff has been incredible, e.l.f., and the questions to ask john zimmer, is the world big

enough for two rideshares? thank you guys for the time. >> and we'll see you on "techcheck," too. >> of course i'll be there today. >> we'll make room for you on the graphic right there. >> thank you. we'll see you later today and tonight. of course, "mad money" 6:00 p.m. eastern time when we come back, a lot more reaction to the inventory moves, in a moment. ♪♪

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good tuesday morning, welcome to another hour of "squawk on the street. i'm here with david faber and leslie picker, live at post 9. morgan brennan is on maternity leave. the stock itself is quickly narrowing its losses we'll talk more about it in a minute >> and retail really a focus, our big movers we are watching, kohl's shares are popping, but after news it's in talks

franchise group up about 8%. smucker's in the green after a beat on results, warning of a prolonged uncertainty. smucker's shares up about 4% right now. finally target shares falling this morning carl just mentioned it, after announcing a series of moves to, quote, right-size inventory levels, though target shares now down about 3.7%, definitely off the lows there our becky quick spoke to brian cornell about his outlook. becky, were you surprised by this news? was brian surprised he had to make these moves >> i think a the lo of people knew there would be steep discounts. what comes as a surprise, just three weeks ago, they were telling us while they a lot of excess inventory, think thought inventories would remain roughly

the same so people were looking close to -- they warned because of all these moves they're taking after surveying the entire retail landscape and seeing what's out there, that the operating margins, will be closer to 2%. that was the surprise, that's why you see this move lower on the street today this is not kneelly the move down we had seen earlier we were down more than 9% about an hour ago. now you're talking about down close are to 4%. brian cornell telling us, look, we will be looking at much better operating profits in the second half. they're hoping for closer to 6%. if that were the case, that will be better than traditionally seen in the second half. so that would be a big improvement, but you have to take it on a leap of faith and that's a bit of a gamble when you realize how quickly things changed just over the

last three weeks look, this is very important the steps they're taking are decisive it's important to clear the deck to say make sure they can get ready for back to school, back to college, but they're hoping by doing all these things, they will be ready to go for the all-important second half of the year forecasting related to consumers preferences. which i heard you discussing do you think the retailers are learning any lessons in terms of their ability to be more nimble? or consumer preferences which i think you alluded to being more of a teenager these days. >> we were laughing. it's not just retail, you can see it almost in every industry.

every retailer has been running flat out they had to stock up on things like bicycling, big-scream tvs, the supply chain issues have really added to this, too. they had to order 12 mondays at you couldn't get a bike last some summer the consumer has kind of moved on now they're looking to get out, and as target just told us, they had huge levels of luggage -- that was a big demand item toys that everybody was try to go buy as they go back to birthday parties for the first time in a couple years they are doing things like being five more distribution centers

over the next two fiscal years but brian cornell told me the other parse of the reason they're doing that, they expect to see sales continue to grow. the numbers of increases -- over the last two years, since covid started, they have seen significant top-line growth, they are continues to see very strong traffic, see sales gained. >> i think that's completely the story. something that make people are starting to pick up.

>> one thing that's stuck with me, about whether it's deflationary, i think you can have deflationary and inflationary at the same times, even within a single retailer. they talked about they're going to offer steeper discounts to get rid of the stuff that nobody wants. but they will also be raising prices in other areas to try to deal with the higher costs they're facing so i think what you'll see them do is raise prices in places like household essentials, food, and cpi numbers will come out and this week we'll see more cpi numbers coming out you could see the headline number start to moderate, but if

ear looking at core ex-food, ex-energy, if you're looking at just the core, it could stabilize, but you could see the headline continue to grow. that's going to take away from what they would spend on some of those discretionary things they've been spending. in. guy, is nottage expected chop regarding mix, inventory, just a supply of goods rather than a comment on the broader

consumer >> if you think about the past two years, you've had a move toward good spending that is now unwinding, as we push further that's also causing the current market dislocation you're seeing a dislocation in the most expensive stocks is also changing, and a dislocation in the stay home stocks. >> that's what you're seeing that we think will eventually alleviate as this pushes through inflation also that good side is now going to be pushing lower which will have a dampening effect on core inflation, and bring it down. >> michael, is that your view? they're saying, look, don't

count on any kind of pause in september, for example do you think the mountain is still counting on that >> yay e. i think you brought up a good point regarding what is happening with target. it's the top-line numbers. the choppiness you're seeing those inventory adjustments i think are temporary. i think investors could look at this as very positive news >> if you look at some of the names, i think the key is to be investing in companies that are selling product at cheaper prices >> one name that's not on there

is costco. those kinds of names i think will be -- from what's happens with the consumer. >> michael, just to follow up you want that you believe any kind of recession that we might see, which doesn't appear to be your base case would be mild given where the consumer is now. is there any sense that could answer quickly, obviously the price of gas isn't helping things there are certainly are factors that could change the picture somewhat, right? >> that's true, everything is subject to change, but right now the u.s. economy is roaring ahead right now. could the fed possibly tip us into recession yeah, they could, but i think

it's important to remember the fed reserve oftentimes uses their words, as well as actually just interest rates as just necessarily. so it would not surprise me if they say, yes, half a percent is on the table , but remember, there's a massaging that happens it's important to keep in mind, as they keep ammunition ready to take action either direction >> do you think that's necessarily to fully push higher in 2022, this idea that, you know, the fed would have to do something that's more dovish. >> at least in a sustainable way? >> yeah. that's what people are focused

on. certainly the consumer is going to get weaker, but they started with such a cushion. >> we appreciate that. we'll talk more about macro nest time thanks for the help. >> thanks, guys. plus we'll get a check on the consumer and travel with the ceo of hyatt later this hour. >> finally apple unveiling the multitude of new hardware and software where the stock could go from here e g ows ea sstay

with us.

ed. investors searching for signs the chip shortage could be over, but the recovery might just be where you look kristina, what are you looking at >> companies are suggesting that it's starting to ease right now. even ford's ceo at the latest annual meeting, they all said

they anticipate the chip shortage by the later half of this year. even apple supplier foxconn cited supply change improvements in china at invideo, the ceo said he expects better availability ahead of the holiday season, they're aggressively adding -- another concerning contributor, though, a slowdown in demand combined pc and handsets compose about 50% of the semi's market demand has been slowing. new april data shows it's decelerating on weakening units. that's why piper -- and citi

lowered their estimates for intel, which means even though the chip shortage may be easing, not everyone will walk away a winner kri kristina, thanks for that. apple announced the redesign of the mac book air, features the m2 chip. joining us today is goldman sachs analyst rob hall welcome back good to see you against. >> good morning, krcarl, thank yy you. >> you think far and away the m2 is the most important. >> actually the mac book air is the high-volume mac. and a redesign of that is the most important thing financially, so we kind of flagged that there are some other interesting

things coming out. the fact that advertise sergeant fingerprinting changes didn't happen a lot of the people in the market had been worried about that going into this there were some other things going out, but the financially the buy now/pay later, and the mac book air are the two most important things what do you think the m2 means long term? >> it means that apple continues to take share in the laptop market that's one of the -- you know, i'm a bearish person on apple, but one of the more bright spots in that model is they take share with that silicon. these are fastly superior to intel-based laptops.

they are very expensive, so, of course, that affects who can afford them, but they're superior products. >> you mentioned the apple pay later feature. the model is becoming increasingly under scrutiny from regulators i'm curious about the timing of apple delving into this area, reg latorss -- are you concerned about the timing for apple launching this something that they haven't done in a big way >> yeah, i think that's a good question sometimes being late to the party is a good thing if consumers ten to weaken, and we think they will, we believe that

consumers have been over-spending, you saw the target numbers this morning, and you'll see more scrutiny on the buy now/pay later systems, because consumers will have a harder time, but being late to the party might be a good thing for apple. >> hey, rod, just coming back to the stock itself, you indicated you are neutral on it. your price targets have been higher than where we are right now. what would change -- what would lead you to change your opinion at all, it if anything, that you might see on the horizon here? >> well, we -- just kind of every time i come on, i emphasize the fact we're neutral. why are we neutral and not cautious or more optimistic. the reason we're neutral is we went into covid in 2020, thinking things would be bad that was clearly wrong we have become more humble about our opportunities to predict

what's going to happen what i'm looking for is that data point that suggests either apple will sail through this unscathed. i doubt that's the case. or that apple's earnings and revenues will deteriorate the same way we're seeing with other retail-exposed names i think that's more probable, but humility is a good thing as you exit a pandemic, and that's what we're trying to maintain. >> finally, ryan, one of the more curious elements was the expansion in carplay and a lot of fan speculation, that the ability of carplay to handle more, what was your take a that? >> well, i think i've said before on the show, carl, i don't think a figure car makes sense for apple. that's just not the market apple wants to get into. if you think about the iphone it added a lot of utility to a

phone. you think abouta car what is going to add utility to a car? it's not electrifying it, it's making the car drive themselves. when the cars drives themselves, they become a utility. so does apple want to be supporting that kind of utility? i'm not sure they want to do that, but i think the car play extension wants to open another strategic option you could have the carplay system connecting to all the systems in the car, and then there might be service you could eke, including autodriving we'll see what the cars look like, but i thought that was an interesting develop. with the lack of the alark, or for me the two big strategic events that came out yesterday. >> yeah, we'll see what else we get. the day you move off the neutral, rob, will be a big news

day here. >> all right thank you. adopt miss the ceo of hyatt just after this break, but first trying to navigate the volatility, but i may want to hold on to your cash your sharon epperson explains. >> holding on to some cash is critical in a market downturn. in a recent poll finds only 37% of boomers say they have made progress in creating an emergency fund they recommend keeping sufficient cash reserves that is separate from your investments that way you don't have to tap into equities or long-term assets if you need money, and oiloinavd ckg in losses when stocks slide for cnbc, i'm sharon epperson.

while consumer demand is headed higher, things like rising gas prices, of course, labor shortages and more could cloud the outlook a bit. mark, great to see you nice to have you with us. >> good to be here

>> i notice rev par is up even in may of 2019 that would seem to be a good sign. >> clearly leisure and travel has led to -- and bookings are looking very, very strong. we made a big acquisition late and bookings are up. overall bookings are up excluding the asia pacific the big change, i think, the big progression between april and may is typically with spring break ending in april, you tend to see a shift to more business travel, and it came. so we're seeing group business, really, really seeing a lot of momentum our bookings in may alone were

40% higher that may are '19. so we're about 65% --, and leisure are all firing on all cylinders. >> in terms of conferences that didn't occur, or skip two years at this point. back to the consumer, what are you seeing in terms of foreign travelers into the u.s.? some of the peers on from hilton, marriott talking about this as well some gating issues there they do spend more time than domestically consumer. >> foreign travelers to the u.s. spend more than domestic travelers do there are some constraints also testing requires that are

still -- discussions with the administration about >> i know gina raimondo have been speaking to her i assume you've had conversations. are they ready to say no more testing requirements >> not yet, but we are trying to make the case that the things they're trying to protect against are not being served by the testing requirements it's creating a lot of friction. foreign travel into the u.s. is still down significantly from what it was pre-pandemic i'm curious, other hotel operators how they're not able to actually run at full capacity, given the fact they can't staff certain floors or do certain things. railroad facing the same challenges. >> if you go back for fourth quarter last year, we had maybe a 20% gap between open positions

and filled positions that is downed to less than ten now. we changed our hiring procedures dramatically we changed scheduling to make it more flexible. a lot of people still needed to be home caring for parents or kids we're also trying to pull people into our industry, so across the board those things have made a big difference in our hiring capability i personally don't believe we'll see equilibrium take hold under next year. all the savings that people talk about with consumers, it's had an impact on the predilection to come back into the labor force it's gotten better it's still not where it needs to be, but it's gotten better. >> one thing about remote work, has it extended the average duration of a stay or changed

the peak of the week >> it's funny you asked. we looked at the data. thursday nights and sunday nights were always sort of dead nights they're both up dramatically in the last quarter. >> because you have probably have friday and monday off >> even if you don't have it off, you're working from wherever you want to work from and now have an extended weekend. so you can take your family away and work from the hotel. we've seen increases of occupationy, which i think is a perfect indication of this work and leisure combination. >> anybody who may have been planning a vacation recently may have had some sticker shock. it doesn't seem to be stopping people from moving forward, but i wonder if there's any demand destruction at some points along the way. >> yeah, so a couple things.

supply and demand driven business, costs have gone up so labor rates have gone up. so, yes, rates are higher, but costs have gone up as well and you're right, people are willing to pay, because there's so much pent-up demand and the urge for humans to be together is so trstrong we really are serving a higher-end traveler and higher price point. even if there's some slowdown later in this year, we don't think it will have a material impact on our demand. >> luxury still very strong? >> very strong our rates in may were up something like 8% globally, but our luxury hotels and resorts in the united states were up over 20 in rate so luxury is going strong.

>> mark, appreciate you stopping by great to see you in person. >> great to see you. >> thanks. take care. let's get to an update with contessa brewer. >> russia says it now controls 97 97% of ukraine's region. it wants to control all of the donbas region. the world bank says the russian war against ukraine is one of the factors with its outlook and warnings many countries will find it difficult to -- and could bring back 1970s-style stagflation, slow economic growth, combined with rising prices. a runway at honolulu's airport was closed after a fighter jet made a hard landing,

because the landing gear didn't come down. it's reportedly a taiwan military training yet. we haven't had reports of any we haven't had reports of any injuries so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... "squawk on the street" will be right back. g optimization tech. uh, how long are you... i'm done. i'm okay.

target warning of weak are margins, stock is in the red, but well off its lows, coming down our next guest maintains a buy rating on the news, lowering his price targets. michael baker joins us now thank you very much for being here you pulled down the price target from 205, but you still have that same multiple you had before, adjusting for the factors. why maintain a buy rating? >> well, thank you for having me

on, leslie >> obvious the the stock is down a lot less than that so it feels like it's sort of hitting a bottom here, we think, so now, the stock is painful, and what they're telling us is, you know, it's not a great environment, they're doing the best to clear as much as they can in the sect quarter. >> do you see this, though, as a one-quarter issue, not something that will endure >> we got more darche last

september. the acronym is not that the is in ruins, rates, ukraine, inflation, no stimulus we've seen that -- right there it's at least a two-quarter phenomenon, and we do think we'll see it in the back half, but just a bit less. >> taking a lot of medicine here we do think it would be a lot less into the holidays do you think we'll see more announcements as the quarter goes on? >> i think they're seeing the same consumer change i will say target was probably more aggressive in some of their discretionary inventory. in that sense they're feeling

more pain than others. compared to walmart as an example. but at their analyst q&a session, they seemed more upbeat i think that's a bit less, than does target, so a lot of companies are seeing it. we think they're seeing it a bit more than others because of the inventory they have. >> are ammists starting to model out, once these new distribution centers are in place the level of immunity that it gives them from price swings in oil >> in a sense -- i wouldn't say implicitly, but our estimates and i think other estimates do have margins bottoming again this year, given back all the of the pandemic-related space

they've had, and we do have margins better in 2023, so in a sense that does imply the benefits from some of the things you just cited is that ball they made a pricing decision >> i think as much as anything it's what they're seeing from other retailers. other retailers also have an inventory overhang >> in that sense, this will impact all retail you can't maintain a high price if your competitor is marking things

down i think that's the one change that they'll see from others, causing them to match. there's going to be some bargains out there in the next couple months. >> michael, thank you very much. appreciate it. >> sure. thank you. well, bothss -- that at leat to the workforce survey. steve liesman pushes back a lot on the whole idea of going back to the office's well but he's there >> yes, there is a certain lack of objectivity about this. david has been mocking me working from home for two years. i believe i've been incredibly productive many intend to keep it that way. it shows they are more satisfied with their jobs that way, david

faber, but take a look here. 32% before the pandemic, 43% over the next year to still be working at home. those numbers are skewed much wider. salaried employees plan to work at home. it had been as high at 71%, 58% in the future. 32% was the peak, and 33% is what they expect in the future so not really a whole lot of change there relative to the salaried workers work from home workers are more satisfied in general if you work rarely or never from home, your extreme satisfaction, 36%, 44% are very satisfied while working from home, and big gap there in how you feel about your wages if you're working from home. now, we really have seen two different classes of workers those with salaries, those over

$75,000, paid annually and can work at home, those with lower salaries paid hourly and can't work at home the gap 47 to 37, and 69 to 38, if you look at the next screen, satisfied with the personal financial situation. guys, we have only begun now to think about how to think about the differences in pay, and lifestyle that could be done from home, and how to treat those workers who have to come into the office, david. >> yeah. steve, listen, it's an issue we talk about a load with leaders of organizations it's still evolving. it seems likely we're never going back to five days in the office, but i wonder, to what extent the leverage will change, if in fact -- and this goes to something you cover closely, if the economy worsens, employees

have less leverage with their employers, who may desigre to se more people in the office more often. >> i have a friend who is in charge of a lot of people, and he's waiting for the next downturn, to telling those kids that tell him they won't be coming into the office -- some people did talk about the isolation of working from home that's an issue. other people, though, are really happy in this context right now because of high gas prices some of the write-in comments were, like, hey, i don't have to worry too much about gas prices, because i'm working from home. >> yeah, jim brought that up earlier as well. we know you have a great deal of power, steve >> i don't have so much power, as i have 10,000 extra miles on my lease, david.

so that that means a higher car value. >> it was good to see you in person last week. >> it was great, david nice to hear about the kids. >> yeah, yeah. steve liesman -- >> take care, david. >> steve liesman at the office inglewood cliffs, and looking good. exxon hid a new high a couple upgrades today, a price target raise, goldman sachs as well that could be the best day, by the way since may 4th, and a quick reminder, we'll have a documentary that premieres july 2nd -- june 22nd we go deep into the company, and also the energy transition that's coming. plus, in just 15 minutes, cramer will sound off on the top

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we've had quite a swing here in the early part of the session. the session low is minus 290 the s&p is green, the vix is back to 25 through the month of june, we are celebrating pride month. here is coassandra's story. >> my son opened up to me about his true identity when he was a freshman in high school. his ultimate goal is to be a commercial airline pilot and fly internationally, before there are 71 countries where being gay is a crime it's punishment by death in 13 of those countries pride is a perfect time for allies to commit or recommit to

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welcome back to "squawk on the street." i'm dominic chu. stocks have turned higher. at session highs for the s&p, up about .3%. we're seeing outperformance in energy nearly every constituent of that sector is in positive territory. apa, philips 66 and exxonmobil also, marathon petroleum trading at record high all those moves come alongside a rise in oil prices which have reached session highs in the course of the last hour or so. keep it right here, watch the $120 mark for oil prices we'll have more on "squawk on the street." stay with us right here.

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[ roar ] ♪ ♪ you coming or what? welcome back new data from the irs shows wealthy earners are moving costing states like new york and california billions in lost tax dollars. robert frank has been tracking that money flight. robert, what did you learn >> well, good morning, leslie. we know the wealthy have been leaving high-tech states for years. the pandemic effectively doubled

this migration of wealth you look at new york, they lost nearly $20 billion in taxpayer income in 2020 that's more than twice the losses in 2019 california also nearly doubling its losses to $18 billion. you look at connecticut, new jersey, and illinois, all losing a combined $11 billion you look at where most of the winners were, mainly low-tech states, especially florida florida adding a net $24 billion in personal income texas adding over $12 billion. arizona and nevada also seeing strong gains when you drill down to the state-by-state level, you see the taxes are not the only driver new yorkers did go to florida, that was their top pick, but the second most common destination was new jersey, which gains $5.3 billion from new yorkers who moved there. even california gained $3 billion from new york, but california ended up losing more than twice that to texas and arizona. now, the average income of those leaving the high-tech states continues to move higher

new york lost 1.6% of its population but nearly 3% of its income that shows the people who are leaving are the bigger earners and the bigger taxpayers >> so interesting, that data and yet rents at all-time highs in new york and apartment prices which you track closely seem to be strong too. it's hard to figure out. we talked a great deal about s.a.l.t. tax, which there is a workaround for >> well, the people who are buying certainly 80% to 90% of those at the high end are not primary taxpayers, not primary residents of new york. the rental market is perplexing, but we do have this disconnect we'll see what happens this year >> yeah, we know you will be following it for us, robert. $97 billion budget right here in the city of new york, larger than the state of florida's. robert frank, thank you. >> treasury secretary janet yellen defending president biden's 2023 budget on the hill

this morning ylan mui has the highlights for us ylan >> david, that hearing is still ongoing and yellen started by calling the current level of inflation unacceptable in response, he outlined a list of targeted investments she said could be offset by higher taxes on the wealthy and corporations. >> to dampen inflationary pressures without undermining the strength of the labor market, an appropriate budgetary stance is needed to complement monetary policy actions by the federal reserve. >> she specifically called out clean energy investments as well as lowering prescription drug prices, affordable housing, and child care subsidies those could form the basis of a democrats-only slimmed down reconciliation package, but of course, republicans push back against the idea of any new spending and warn that raising taxes could threaten the recovery there's still about two hours left to go in the hearing so we'll keep watching and keep you

posted >> thank you ylan mui reporting on that for us >> we got a market that turned around a bit kind of funny. >> can we take credit for that >> i kiddingly talked about 10:27 on june 7th when i said when is this going to end? total joke 10:37, seemed to have a bit of a move there all right, that's going to do it for us on "squawk on the street." "tech check" starts now. >> good tuesday morning. welcome to "tech check." today, a deep dive on the consumer and what that means for your money targets warning of shrinking profits from that unwanted inventory. we have the impact on amazon and other retailers. plus, can apple reestablish itself as a safe haven for investors after that worldwide developers conference? we'll talk about where to search for opportunity. and then we're joined by the ceo of mongodb live from their investor day and gitlab. an