supporting them forever, and it dawned on me, generational continuity enables generational change >> well, tudor jones, i want to thank you for your time this morning. your insights. we wish you a lot of luck this evening with one of the most important causes in new york thank you again. >> thank you so much >> you bet joe, back to you >> beautiful story >> that was. got to go. "squawk on the street" is next ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. active news flow today some debt ceiling optimism as talks resume tomorrow. softer inflation prints in europe and asia, upgrades of schwab, meta, and dupont our road map begins with the

macro outlook, though. investors eyeing new hopes and atlanta fed president bostic casting doubts on rate cuts this year, even if there is a recession. plus, we've got some deals day. one of the world's largest buyouts so far this year and there's a $19 billion pipeline deal jim will have some things to offer on that. as well, we're going to hear about adobe's push into a.i. the ceo will join us later in the hour to talk about that. let's start with this new market week, including these debt ceiling talks and a bunch of retail earnings jim, you have been worried about the x date, and i wonder if any of these reports about so-called progress resonate with you >> i need to hear it from the republicans, particularly s speaker mccarthy, because speaker mccarthy is on thin ice if he makes a deal here. the sitting president, who has a recession or inflation, if it's

first term, has historically lost, so i don't understand why speaker mccarthy would want to come to this deal unless biden's surrendering if biden's surrendering, this market is going to be up a lot more this market is not showing me a surrender by biden, and i'm making that point, because remember, whoever can claim that they caused your social security check to not go and doesn't have any gravitas, the other guy wins if speaker mccarthy says, you know what? you didn't get your social security check because of biden, well, that's who people will believe. they tend to believe the -- that the president has not delivered, not congress so, that makes it so that biden would be surrendering, and i don't know if he's going to. >> remains unclear all of us wish we had some level of ability to really understand exactly what's going on. >> totally >> but it's hard to know >> well, i mean, obviously --

>> throw my hands up >> i was looking at mike wilson, who, look, mike is, i think -- he's a force, and he's saying -- >> well known strategist for morgan stanley >> he's talked to a lot of people, and he's said, there are several clients who are incrementally more worried about a recession this year. most believe it will get resolved but not without near-term volatility we haven't had the near-term volatility that, i think, would be the next new days of course, the president's going away if we have near-term volatility, i think people are going to say, we don't have a deal, we'll never get a deal, and the next thing you know, we're going to get scrip if we own 30-day paper. >> you said you are working on a default playbook can you share what that might look like? >> absolutely. we have a very definitive group of stocks that did quite well in 2011, and these were ones that had been going well, then dropped like everything else during the period involving september to october, and then

radically recovered, and they almost all look like biogen or like serepda does this morning literally nothing to do with the economy. people just believe very strongly that the sequestration followed by the debt downgrade would mean that we're having a recession. we did not have a recession, but that list performed well i'm putting together a list because people don't understand the depth of almost cosmic proportions of how people felt that the sequestration and the debt downgrade would bring a lot of people were very concerned that there would be no currency, that there would be -- that if you had six-month paper, you might not get paid so, david, i mean, that was a level of concern we tend to forget how bad it was, and the sequestration, by the way, was very serious. remember the cutbacks in defense? we never saw that before there's a big -- i'm doing a piece tonight about the cutbacks

in defense, saying we saw them for real, and those stocks are down horribly this year, despite the fact that there's been a tremendous build-up of weaponry in ukraine so, i'm taking this a little more seriously than most, just because i remember 2011 as being a time when people just said, wow, it's not just social security it's not just medicare maybe it's the actual functioning of the government. >> it is important to remind people that if entitlements are off the table in terms of things they're willing to consider for cuts, and defense is also off the table, you have a small percentage of the budget left from which you can exact significant cuts that would make a difference that, perhaps, makes it more difficult to reach some sort of a compromise again, a lot of people still believe that we're just going to get this punted to the fall where you can combine the budget process and the debt ceiling, bring it to that point at least the two sides can say, well, now we're negotiating around the same thing. >> they may be if you're leave, as president biden is leaving for a while. you may have to do that. that puts janet yellen in the

hot seat but what i don't like is that if this is over our heads for a long time, then all that's going to happen is that this is what will be thought about, and i've got to tell you, if i were president biden, i'd be very concerned because there is an election next year >> that's beginning already. >> right >> and you know, the early reads that i'm getting are, look out, president biden. you may not -- you may not have it locked up >> it's a long way away. so much could happen between now and then >> but this is a bad thing for a sitting president. if you feel that it's going to be over -- >> you've made that point. >> you can't do anything other than -- as you know, there's no money. so, what -- you just have a lot of meetings about -- >> meanwhile, tudor jones sees a tra trading range for the s&p. >> have you ever seen a billionaire come on this show and say, this is your opportunity? >> he did have positive things to say about a.i. and

productivity, the kinds of booms that we've only seen a few times in the last 75 years and he did say that the fed can probably declare victory here. take a listen. >> they could probably dechlare victory now, because if you look at cpi, it's been declining 12 straight months. that's never happened before in history. there's a strong downward arc to inflation at the moment. two-year break evens are under 2% clearly, they have to be governed by trailing 12-month inflation. but if we get to the here and now, you can see that inflation, to a great extent, has been wrung out of the market. >> although people looking at empire today, down 31, we were looking for down 3 >> that curious moment, i did a piece for our investment club, saying, listen, don't be scared. you're going to see a series of really negative numbers, meaning, down negative numbers, where you're going to see real

deflation. and what people are going to do is say, well, that is recession. we're going to be speaking to the ceo of dadobe later today an the numbers we're seeing for a lot of retail are very negative. we've not seen a declaration on wages yet. just on prices >> that's positive for consumers and arguably gdp >> well, i think it is positive for consumers. i'm saying, i'm listening to paul tudor jones, but then i listen to an interview with steve liesman with bostic, and he's saying, forget it >> let's listen to bostic speaking to steve liesman this morning. >> my baseline case is, we won't really be thinking about cutting until well into 2024 i think we're going to see an orderly decline. i'm hoping that we see what we've seen over the last several

months where inflation has come from a very high level to a high level, but if you look at most measures of inflation, they're still two times where our target is, so there's a long distance still to go. >> see, that's the problem when you go over the actual cpi, you know, you see a parallel of 0.3, but you can talk to all the apparel companies. this is what i was saying last week about the actual numbers. rental is yes. rents are up avalon bay upgraded today. why not? terrific place to be, because rents keep going higher, but away from that, you really want to focus on used cars? i think the focus is on the fact that when you look at -- if tesla is cutting price, then i'm not going to say that used cars are a problem. i would tell you, david, that bostic is wrong. that we will be cutting sooner than that, but i don't want to -- the one thing i don't want to do is say that -- i'm saying we're going to avoid a recession. >> tesla has dynamic pricing, basically.

i mean, they're like an airline at this point. he says they get realtime -- i mean, he said this on the call, elon musk, they get realtime information. there's no latency, unlike all the other automakers, and therefore, they're making their pricing decisions in the moment. >> unless i get that from him, i don't believe it >> well, we're going to have that opportunity, and we're very much looking forward to it, because we can tell you tomorrow, i'm going to be sitting down with elon musk after the company's annual meeting, tesla's annual meeting will be taking place in austin at the giga fact toirory. >> congratulations that's very good >> what we're hoping is at least 45 minutes that's the scheduled time. he makes his own schedule, of course, does elon. >> did he choose to preempt me because he thinks i'm a hologram >> he didn't discuss that. whether or not he thinks you're a hologram >> i'm the lowest of the low congratulations. >> sit down with him to talk about, by the way, nothing's off limits when it comes to musk,

and he's always willing to talk about anything, but my expectation is, of course, we will start, carl, with discussion of tesla, in part, and pricing and see what else comes out of the annual meeting tomorrow because we'll be talking after it takes place >> yeah. the new model in some cases of actual production, which is getting attention in the industry >> how exciting is that. >> yeah. you know, there's -- i mean, i could talk to him, we all could, for three hours. when you start tesla and then twitter, the new ceo, you want to talk spacex, starlink you want to talk a.i., and then given he is the most consequential businessman on the planet, there's just an incredible amount of interest in general in him so, there's no way we'll get enough time, but we're certainly looking forward to whatever we can in terms of sitting down with elon musk tomorrow. thank you, my friend, for giving up some time tomorrow. >> are you kidding me? come on. >> it will be right at jim's show so, taking over "mad money" for a night. >> you know what it's all yours

>> "jeopardy!" "mad," what's next >> to see him will be the ultimate in stock trading. >> it should be fascinating. really looking forward to it as you might imagine, it's been a long time in coming, but we will let you know, and we'll be seeing you from texas tomorrow evening. >> fantastic >> yeah. >> meantime, we got 42% of retail market cap are posting earnings this week, and we'll kick things off tomorrow with depot and target the next day. >> there's been so much negativity about target, i feel like, wait a second, maybe they can do some surprise walmart, i think, is going to have a very strong quarter walmart plus might talk about some numbers that are high amazon is concerned about how good walmart plus is doing, which is why that stock has been so hot i don't want to harp on shantanu narayen from adobe, but certain areas of retail are quite weak

it's all hard goods over and over, and i don't know how to explain how bad hard goods are, other than to say that people have everything that they need i mean, it's a very strange world when you have sporting goods down, appliances down. whirlpool was telling me that appliances aren't that bad, but i look at what shantanu is saying, and i'm telling myself, there is a real decline in spending, and we saw that from bank of america last week, i talked about that. i, on the other hand, am seeing, look out, don't buy into that. people are spending on amazon and walmart. they're spending on costco spending in different places they're not spending at best buy. sonos. that decline was really -- >> sonos had a rough time with guidance there, yeah >> but grocery is walmart. remember, grocery is walmart and costco, up 9% year over year >> and it's the advantage you

would say they have over target? >> yes >> when we come back, we'll look at some of the deals of the day, totaling about $37 billion and also ahead, as jim said, adobe, we'll talk a.i. with shantanu narayen later on this hour we'll talk upgrades we got today of schwab and meta and others. dollar is coming off a one-month high mea more "squawk on the street" in a minute helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward. pnc bank.

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biggest ever m&a deal in the gold lining industry

n numont agreeing to acquire australia's company. they say it will boost its exposure to cooper meantime, oneok to buy magellan midstream. they will gain access to crude oil and refined products which one is more interesting? >> there's been some great consolidation in the gold stocks it's interesting to talk about copper copper was going higher, but there's a lot of consolidation in the industry. for the first time in years, we have actual m&a in the master limited pipeline issue this used to be the denizen of very wealthy people who would use it as a tax shelter, and this is a deal, just so we know -- >> we should tell people, 25 bucks a share in cash. 0.667 shares of oneok per unit they're saying a 22% premium to

the price. >> absolutely. these are two tulsa companies, the pride of tulsa, actually oneok is an amazing natural gas company. magellan is a refined products company, so these are very different industries getting together there's a lot of misinformation about this deal. there's no pipe to the permian a lot of people feel this is a way to get to the permian. this is just a combination of refind product and natural gas, but it's a good product, and it gives you the opportunity to go to the gulf. magellan midstream has been considered the best-run limited partnership. my friend is the ceo of oneok. he was at our cfo council recently the team is sensational there. i think it's a very good deal for magellan they got hurt by ferk. now this is just a great combination. there is a consolidation down there that could start that would be awesome we don't have enough pipe out of the permian. we want everybody to send all

their oil and natural gas and natural gas liquids to the gulf so we can refine and we can make plastic out of them and also export oil this is all part of it i'm not going to tell -- magellan midstream has specific plans we don't know, but this is a terrific deal for that segment that has been dormant, and since 2015, no growth in the pipeline for six months so, look out maybe finally we're going to get some growth. oneok is a fabulous company and it's got a great yield >> that's been fascinating, especially given the activity we've had in commodities we'll talk about the dupont upgrade. >> we got one more thing on m&a, microsoft going to get approval for the activision deal. given what's happened at the uk and the cma, which has said no to the deal, the eu, not unimportant, perhaps microsoft

hopes somehow that it will continue to help put pressure on the cma for making a poor decision, but most of the people that i speak to continue to believe that this is somewhere between mostly dead and completely dead. activision's cfo was in new york last week making the rounds with various investors. and while he certainly did not indicate this, there was a takeaway that this deal, when the current merger agreement expires in mid-july, activision will be happy to walk away with what will be $3 billion in a reverse break fee and $18 billion on its balance sheet in cash. >> they have so much cash. >> and then the question is, how much do you return to shareholders how much do you keep because you're getting 5%? how much do you use for acquisitions >> very exciting, actually, so see what they'll do. >> buyer, not a seller >> they're such a good company >> yeah. >> and that will take us to the microsoft piece, at least, will take us to this downgrade of alphabet over at loop. we'll get a final look at futures here on this monday.

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are all right, seven minutes until we get started with trading here on a monday at the new york stock exchange. let's get to our "mad dash" this morning. >> there's a lot of jockeying about who's really going to be able to use generative a.i. to be able to change their fortunes, and loop comes out today and says, let's think it's going is to be meta, because meta is going to be able to get around the apple restrictions and give you targeted advertising, and that includes consumer product goods that's the holy grail. i'm sure linda with musk would want to talk about consumer packaged goods, but meta lost a

lot of that when it became very convoluted how you could get through the apple's privacy issues no longer. it's good for them at the same time, they downgrade alphabet now, this is because worries about bing and taking share, microsoft taking share away from alphabet now, alphabet, meanwhile, has become kind of the accenture for a.i. if you want to bring in a.i., you go to alphabet they've figured out ways to do it i don't know how much alphabet is going to be hurt, but i know that meta is a big winner here >> as you've continued to believe. and then there's -- there's only one company. i hate to come back to it. >> microsoft >> well, yeah, there's -- but i was going to say, there's only one company that everybody has to go to for their chips >> nvidia. and their chips are so expensive that you have to believe that microsoft would like to team up with amd to make a cheaper chip. >> there's a growing question as to whether, given the allocation that needs to be made to those chips, are there going to be cutbacks in other parts of the datacenter, for example, and/or

the spending in the cloud? from these providers >> nvidia is taiwan semi when i asked them how many h-100s can they make, they said, we'll be working 24/7. they're never going to be able to make enough h-100s until they have the h-200 you can't do anything quickly with alphabet. there's -- nothing else has the power. just imagine that one is a power plant and the other is kerosene. >> yep, the old gpu. the opening bell, five minutes away you can catch us any time, anywhere, listen to and follow the "squawk on the street: opening bell" podcast.

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the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. >> short-term is not a fix is not really addressing that core uncertainty that ceos are talking about. it's just really important to take default and address it and congress has the tools to do that they've done it again 78 times previously >> that's nec director lael brainard on cbs's "face the

nation." talk about whether these staff talks are bearing fruit or not >> i don't want to belabor this. i just think we're in a situation, as david said, where it's like, where is the money going to come from republicans very much want a major change, and this historically has not been the best way to do it. president obama agreed to some very serious things that he didn't want to because he really wanted this done, including cutbacks to some of his major programs i've not heard anything like that from this president, which is why i think there's really no negotiations going on whatsoever >> well, others would say permitting reform is definitely in the mix >> right, but that's -- >> some of the unspent covid money. the harder lifts are things like work requirements and social programs, spending caps. >> senator manchin got very fooled on that i think he'll be fooled again. i think he doesn't understand the environmental concerns that face him, as much as i think

he's in the right, it doesn't matter what i think. look, i just think that what you need to hear is from the speaker. if we hear from the speaker, it's golden, but the speaker has said nothing he's said absolutely nothing that's what i care about >> let's get to the opening bell here and the cnbc realtime exchange rba global celebrating its name change over at the nasdaq, agnc investment, a residential mortgage reet, celebrating its 50th anniversary watching some discussion over the weekend about commercial and thank goodness for warehousing right now, because it's pretty much the only kind of reets that are up >> i think that some of the commercial -- some of the real estate for department stores and for shopping malls are good and for apartment buildings. now, the shopping malls are not -- the stocks aren't doing well but like the strip mall, but

tangers is doing well, which is outlet mall. david, it is discouraging to realize that -- how much commercial space, when you see in all the cities, because i don't want to dwell too much on it there was a target that just closed in philadelphia we really don't know the exact circumstances, but a target that i went to on mission in san francisco, dangerous dangerous places the inner city is becoming a battle between retail that doesn't want to stay or is closing, because of theft -- >> are you sure -- i don't want you to overstate that, because it's certain places in certain areas, but it's not -- >> it also has a lot to do with workers returning to office. >> lack of workers >> there are and we've all heard the stories about san francisco and different -- not really the case here in new york, for example, that i can -- >> mayor adams sat right there, and i asked him about the theft

going on at the walgreens and cvs, and he said, it's a real problem. >> it is a real problem. it's actually a very small group of people, and it's the same people it's a problem but they haven't closed any of these walgreens. >> on the sl green conference call, they talked about bail reform that's typically not what you get. >> you want a commercial real estate conversation, it's much more focused on office space it's much more focused on how many landlords are going to give the keys back when their loans come up, and they need to be refinanced and what the banks are going to look alike at that point in terms of their willingness to work with the borrowers r whether they're just going to own these buildings and then over time work their way through them that is a big issue. i don't want to say huge it depends on timing it depends on how it's done and over what time period, but it's a lot more important than whether somebody's closing a walgreens. >> i had evan greenberg on he's the foremost insurance expert in our country. he's saying a lot of these are owned by insurance companies >> the insurance companies

obviously are big financiers of this kind of real estate, without a doubt. it's also on a lot of bank balance sheets, including a lot of regional banks. >> no, well, when you get to the regional banks, we barely talked about them the stocks have been kicked to the curb then you look at what they have, and you realize it is more than just the problems that we have had with held to maturity and available for sale a lot of these places, the bedrock aspect of them is center city real estate >> and you know, we had the ceo of prosperity bank shares, carl, join us on last week's show. on friday. and at the very end of the interview, he talked about i think a hundred million dollar real estate loan, 50% down, and he still couldn't get it approved that just gives you a sense as to the credit crunch or lack of credit available to the real estate -- >> he also made a point to say it would be favorable to long-standing clients, rather than new money that's coming in.

the schwab upgrade is interesting at ray jay we see balances stabilizing beginning in q3. >> we did a piece saying the bank within schwab is very small, so it is a great time to buy schwab, but no matter what happens, there's raids on schwab constantly i say raids because people say, well, this bank can overwhelm the incredible core business they have. i don't think it can i think schwab represents an opportunity, but we know that -- how easy it is to spread rumors about these banks, and it's terrible what's happened particularly, david, on some of the west coast banks people just tell you, listen, stay away from that, jim, they're going to hit you on that one. you don't want to be in a situation where you're vindicating an outfit tackhat cl be raided in a second. >> hopefully that won't be the case again, it's at least good to see a little stability in the regional bank shares today and towards the end of last week >> i spoke to first horizon.

>> okay. >> brian jordan. it's funny, this is one where the whole thing, fhn, the whole thing was because toronto dominion didn't get approval but the bank itself was doing quite well it was not -- it did not want an offer. it really didn't but it came. the offer came, and brian jordan was not going to do anything that was bad for shareholders, so now you have a company whose stock was at 16, 17, 18 when they got the deal, and now it's at $9. and it's the same bank with the same good balance sheet and just did a really good deal with hibernia, a terrific move from all the way down there in louisiana and texas. memphis is probably one of the strongest areas in the country look at this thing it was a $13 billion deal. rather amazing >> i know. it was a great deal of downside there, and there was not a lot of clarity in terms of exactly what regulatory hurdles td was

facing we subsequently learned it may have had to do with the money laundering statutes. >> didn't you find that curious? >> i did >> canadian money laundering >> i do. >> well, i mean, nothing more than that? >> let's change it up and move over to biotech for a minute, guys, because serepta therapeutics is a company that's developing a therapy for d muscular dystrophy got approval the panel vote, 8-6 in favor of accelerating approval for the company's latest gene therapy. remember, the panel says, and then it goes to the fda. you never know we've seen some -- well, in the case of the biogen alzheimer's, the panel said no and the fda said yes in this case, it's 8-6 the fda said sarepta did not

offer unambiguous evidence that the therapy will help people with this horrible disease very positive for sarepta. positive for biotech overall, and then some would say, should have been a positive for catalin because they were in line to manufacture a lot of this for them but these guys just keep figuring out a way to screw up a free lunch >> the more people talk about it, the more people realize it might be worse than we thought >> they delayed their earnings again. here they get this potentially good news on sarepta getting potential approval, looking like they're going to get approval. these guys are in a position to manufacture for them, which would seem to be a positive, but then they say, we're going to delay our earnings >> as bad as the stock has been, at least they didn't stub their toe and buy catalent remember when that was the rumor? instead, he bought the commanders that deal is holding up. >> along with josh harris and

irvin johnson and a few other people >> oh, man to lose again in the seventh game of the conference semifinals >> let's move past that. >> you didn't make -- one of your teams didn't make it to the finals for the first time this year >> howie roseman has some special things coming. >> it seems every day we have elliott with a new situation last week, it was goodyear today it's nrg, where they own 13% of the economy or at least they say an economic interest, about a billion dollars. i remember when this company was run years ago by david crane, remember him that's a long time ago >> dave from princeton he was a friend of eliot spitzer. >> they're talking about adding new independent directors with strong power and industry expertise to refresh the board they want operations improvements, including $500 million of recurring ebitda accretive cost reductions.

>> they bought vivan, which was so dumb. >> they are not happy about that deal >> one of those home security things like adt. nrg, they had gotten on the right path before. now it's just been awful the quarter was good >> they announced that vivant deal at the end of last year, december 6 not well received by shareholders and you can see the move in the stock back in december, what happened there and jim, elliott is familiar with this company, because they were a shareholder back in 2017. they say they got what they wanted now they're back hoping they can do it again. >> this is a fabulous company, and also been very positive on ev, but they lost their way. when you get involved with this home security, there's a lot of companies involved in that, and after a while, i mean, even walmart's involved with home security, because you can have them put things into your refrigerator i would rather have walmart do that than almost everybody other than my kids coming into the

house. >> speaking of being engaged we've got engaged shaq as that stock is down to levels from marc march of last year >> how do you like that? what do you think? it's an interesting group they're putting together >> i'm not as familiar with what their plan is at engaged in terms of what they would like to see. >> maybe more burgers and fries, because it's so good it's delicious >> is it still delicious remember when it was a special treat? shake shack. >> my sister and i went there when my father died. we said, let's have a damn good meal if there's ever a day you can have fattening food, it's that day. >> it's that day >> we remember him by going to shake shack. you could do worse >> we know qsr has been doing quite well unit growth, productivity, a.i., wendy's, we talked about that last week. >> i thought people didn't make

enough of that wendy's deal, because when you see what chat can do, look, i want to see -- i haven't talked to mastercard or visa about this, but why do you need call centers? because that's interesting to see that humans cost a lot of money, and i mean, i was at a starbucks yesterday and was line was around the corner, and i wanted to tell luksman, are you kidding me people are like -- i'd like a three special venti -- like, people didn't know how to do it. a human would be able to communicate, but a machine would be able to tell. the machines can tell what you want triple venti cappuccino with skim milk. oh, that's the cramer. these guys didn't know they thought i was there to use the facilities >> well, the numbers will fuel productivity >> people are misinterpreting. it may be in the end the customers that do the most when

it comes to a.i. we all focus on the providers. i think what it's going to do to industry is going to be rather amazing. >> meantime, s&p down just fractionally dow is down 60 still to come, we'll talk a.i. in this exclusive with adobe's ceo, shantanu narayen, and as we go to break, we're going to get at least a dozen fed speakers this week. we'll get three today, bostic and goolsbee already done. kashkari and barken later today as the two-year inches back to 4% back in a moment (cecily) you're looking pleased with yourself. (seth) not to brag, but i just switched to verizon. (cecily) so you got an awesome network... (seth) and when i switched, i got to choose the phone i wanted. for free. not bragging.

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♪ don't miss it, tomorrow, after the tesla annual shareholder meeting, going to be sitting down with elon musk live from headquarters in austin for a one-on-one interview that i certainly am looking forward to. i can't speak for him, but i think he's going to -- apparently he's in france

meeting with macron, and then he comes back, does the shareholder meeting, and then we'll have a chance to talk don't miss it.

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adobe expanding further into

generative a.i., partnering with google's bard, and i've got the ceo, shantanu narayen, from adobe himself, joins us to ask you. shantanu, it's great to see you. people are very excited about adobe firefly, because it's working for advertisers and merchants. tell us how it's doing >> it's great to be back on the show, jim. clearly, the world is abuzz with everything that's happening with generative a.i., and so from adobe's point of view, we clearly see it as expansion of our addressable market opportunity. so, the first thing that we did was we said, given the amount of data that we have, how do we create a foundational model which only a few companies in the world can do to deal with images that will, again, be expanded to deal with video and animation and 3d, and that, as you point out, is called adobe firefly it's very unique and

differentiated because it respects the ip with which you can get that piece of content. but the foundational model is just one part of what we are doing, jim the really exciting part also is how we integrate that product, the term that's being used in the industry, certainly, is autopilot, and so within all of our all of our applications, whether photoshop or illustrator express, you're going to see that on ramp, that generative a.i. does, significantly enhanced through the work flow. so it's a very exciting time enterprises can use that foundational model and also train it with their data, so whether it's nbc or coke, or somebody like a netflix, they can enhance adobe's model and really ensure that data that they provide is unique only to them last but not least, i think you alluded to this, i think the ecosystem of partners who are excited about partnering with adobe, whether nvidia on the chip side, training, microsoft with azure or something exciting

with google and how within bared you can now say generate me an image and that becomes top for adobe because we can then tweak that within our application. exciting time. >> i thought you would go with the small business person because, you know, a small business person i know uses it, makes everybody look like they are the most professional of all. you can change colors and use your commerce system it's an incredible thing for someone who might have to take four or five days to change something in five minutes. and that is something that the small business people have never been able to do. >> that's right. the whole point of technology, people talk about the disruptive nature, but people don't talk enough about how it enhances productivity and democratizes the ability of people to have the footprint they want and personalize the content. i heard you talk earlier about how you wanted your personalized

coffee first thing in the morning and now we can allow every small and medium-sized business on the planet to say how i do get the right content and personalize it for the people i'm trying to do. the whole process from content creation to monetization, how can we accelerate that even for our digital marketing business and as people are dealing with all these new streaming platforms, how you get your ad tailored in the right way to the people that you want to address, we've accelerated that process like never before. >> in the meantime i was very concerned to see while grocery prices are up, you have all the numbers for everything online, grocery business is up year over year, but personal care up 3, appliances down.1%, sporting goods down 6.4 there's an aversion to hard goods purchasing, isn't there? >> the adobe digital index you're referring to, jim, gives us really good visibility into

what's happening with commerce worldwide. actually, if you look at the price of goods it does appear for eight months in a row right now that inflation is being checked. you point out correctly different goods that are in demand versus where they may not be as much secular demand. i think the trend associated with combatting inflation i think is a very positive trend. >> i feel like we've been talking about the dangers of deep fakes for a long time now, and it's more relevant that now that a.i. story is getting embraced by the street, but i wonder if you think we're a making sufficient progress in regulating that and whether that needs to happen through companies or public policy >> well, carl, the real thing that adobe has been focused on, as you're aaware what we're calling the concept of initiative it has multiple facets to it when we think about it, first, let me give you the quick

update there are a thousand companies that have signed up and when you think about the content work flow, whether it's camera, manufacturers or chip manufacturers up front, they are certainly saying we want the content credentials. a company like adobe, when somebody creates the content we're ensure that prove nence of who created it and whether that's been altered we've done that on the distribution side, everybody who is distributing that content is also now saying we will continue to keep that meta data, whether it's a checkmark or being able to determine whether carl created it or jim created it, that part has also been done i think the last step in this content is ensure that customers ask for it how you train the customers to think about, i want to know where that piece of content came from and whether it was altered, i think that's the last step in the process. the plumbing is really there i think the ask will

increasingly come because a.i. allows you, whether from the audio or video, to create any piece of content i think as it relates to legislation, i think there's a meeting in d.c., our general counsel is going to be there, i think we will continue to push the envelope on that at the end of the day it's the customer trust and customers trained to say, i want to see that piece of content and who it came from, i think that's going to be another step in the education journey that's important for all of us. >> i don't want to spend one more second, but what i've seen with firefly, you don't need an advertising firm you give chat what it needs and it comes up with better copy have you seen similar in. >> well, i think firefly is incredible technology and our teams did this incredible job because unlike other people who, perhaps, scrape the internet, we were very, very insistenten on

design for commercially safe it will accelerate productivity, but i think the term co-pilot as opposed to autopilot is appropriate pause i think people's ability to personalize it is important for the foreseeable future it's this disruptive technology that we've done an incredible job with, but i still think that human innew whichty and ensure you use that is going to be an important part in this for many years to come. >> there's a lot to watch, and i'm glad you came on our show. thank you so much. >> thanks for having me. >> shantanu narayen. i've seen it work myself from adobe. it's an amazing advertising program. we do have some news that's possible, western digital might be merging with a japanese firm and what this could do, would really help very much micron because these are -- these companies do a certain kind of

storage and there's been a lot of price cutting western digital and kioxia i think you will see an end to the price war in memory chips. my micron with everything you have, hand over fist. >> consolidation getting attention today. >> it would be good. >> busy week. >> it's going to be great. thank you xoch. >> we'll see you tonight as we go to break, losses to start, dow down 106. don't go anywhere. conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring.

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welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber live for you as always at post nine of the new york stock exchange take a look at stocks. only the nasdaq positive and barely s&p down 0.2% and the dow is down about 96 points it follows a streak of losses for the dow. last week dow ended lower. nasdaq higher. 30 minutes into the trading session. here are some movers we're watching right now starting with meta and alphabet.

luke capital upgrading meta to a buy and $320 price target and downgrading alphabet to hold with a $125 price target wedbush downstock not taking it whale down 10.5% charles schwab, the firm saying charles schwab's core banking business remains strong and the stock could gain as much as 30%. it's up 3% speaks overall to the market we watch when we come in the morning, what's happening with the banking index. as far as any news the data on friday after the close from the fed on deposits and lending. deposits down slightly for big and small banks. really slightly. nothing dramatic then lending down slightly for big and small banks as well. not enough to move the naeedle. the kre has held back the

market. >> discussion today less about liquidity and more about earnings pressure and how that's going to result in broader earnings pressure for the s&p. morgan stanley looking at the survey, what's happened to cni loan demand and how that argues leads corporate earnings by a couple quarters and going to use that to back up his long-standing base case. >> which was bearish and we read him closely but also pointing to the debt ceiling he'll take any bearish argument he can get there are a lot of arguments and investor positioning has been bearish. this week is about the consumer. we get some good earnings reads from target on wednesday and walmart on thursday, tjx, ross stories, alibaba, home depot overall the earnings trend has been better. actually goldman sachs reiterated last week why they're positive on earnings and stocks because revenues were better and even margins were better than expected i will be interested, david, to hear what we get from these

retailers. it's always been, remember, walmart doing better because it's heavily exposed to staples and groceries vcr sus target which is more discretionary. let's see if the trend is intact and they've all been saying the consumer is in good shape. we'll see if anything has cracked. there's evidence that things are slowing. >> what evidence would that be >> so we got the consumer confidence report. university of michigan, he preliminary may numbers on friday, that was a six-month low. it's a confidence reading. the other thing the bank of america institute data on credit cards and in particular, they raise the flag on high income households they're looking at people who make more than $125,000. they show that jobless benefits rose 40% in that high income group in april now, easy comps, sure. but it's a trend worth watching because that's a group that has an outsized impact on spending in the economy, more than 60% of consumer spending from the high

income consumer. so i think jobless claims will be important on thursday last week was an anomaly. >> an empire today, maybe the third hard landing data point you've seen in the past say five trading sessions. >> all comes down to the consumer and when it comes to the consumer it comes to jobs. that's why the bank of america chart really stood out to me on high income consumers and they saw a contraction in credit card spending for april which is the first year over year contraction we've seen they still say we have high savings buffers and things are okay. >> lot of cash. >> the context is important. if we're looking for a deterioration in the economy start with the - >> hear anything from bostic or goolsbee not to mention paul tudor jones, all "squawk box" guests - >> st. leve liesman will join u >> i'm curious what steve thinks president the pushback from bostic on cuts into 2024 and goolsbee was a dovish member it shows the fed is going to have a -- they might have a good

discussion, if not opposing views inside the fed, about thoug keep it on pause or when to cut or even whether they should be hiking which everybody expects june will be a pause we got to get more data out. >> we will let's get to mike santoli who is looking at the market and whether or not it can get unstuck from this narrow range i think it's six straight weeks s&p futures up moves. >> it's been a remarkably static but also reflects internal tension as we've been talking about. we know the way the market has stayed within a couple percent of its year to date highs. the growth sector to date, you see things like tech relative to banks. it's really dramatic right there in march they went different ways also you have things like small cap stocks, kind of on the verge of some more definitive breakdown, even 10-year treasury yield. if it gets lower from here it will look like a breakdown people who have been sitting

vigil for the recession to really kick in, if they really expect it, it's been frustrating because the consumer has been fine not fine, but basically able to sustain a relatively high spending level earnings are flattening out. they're not being raised for the following three quarters so that takes pressure off i think that you have people unwilling to get very bullish because if you look at previous times when the bank index was down 35% over three months, you think that we were in some kind of mass panic in the economy, right. it happened in the global financial crisis it has happened like, obviously, in covid beyond that it hasn't happened why we've been able to weather it, one of the reasons the banks are upside down is that something like 80% of all mortgage holders are locked in below 5% the consumer is strong and consumer has positive carry.

buy money market funds at 5ish and paying, you know, under 4. i jokingly mentioned that apple issued 30-year debt last week, 4.85 most people have a house less than that. >> i looked at my adjustable rate mortgage. when is this adjusting it's not until '26 i'm going to wait until sara gives me the all clear. >> you'll get to the fed cuts. >> i have to say, seasonals, things don't get better at this point. look at the credit markets they're indifferent, not terrible the longer the fed is on hold if it's going to pause before cutting, historically that's better for stocks. the pause is okay. when they start to cut that's the problem because usually means the economy is falling apart. >> do you think today's action reflects any kind of debt ceiling sogginess and do you -- would you expect that to graduate to real destructive momentum >> i think today is more of the wait and see

banks are bounce 2g% would suggest it's not an economic panic. it's the apple resistance, backing off a little bit we're definitely on alert for bad stuff on the debt ceiling. the 2011 example in our minds. we were up 7% this moment in 2011 year to date. we're up 7% in the s&p it was fine, fine, fine, for another couple months until you got the debt downgrade and then a gut check. >> it's a problem because you need the market to throw a fit for washington to make a deal, but you need washington to make a deal to justify the calm who's going to blink first. >> we think we need the market to throw a fit we'll see if that turns out to be true. >> thanks. mike santoli lot of fed talk this week as we mentioned and today on cnbc, our steve liesman caught up with bostic and goolsbee and joins us with the highlights and what i thought was interesting was the discrepancies and the views. >> yeah. definitely slightly different.

we have two fed presidents on cnbc this morning both content to hold rates at current levels and the 500 basis points of tightening on the u.s. economy atlanta fed bostic said his bias is towards higher rates if inflation doesn't recede. >> if i had a bias between going up and down as our next action i would say we might have to go up what we've seen is that inflation has been persistently high, consumers have been really resilient in terms of their spending, and labor markets remain extremely tight all of those suggest there's still going to be upward pressure on prices. >> now bostic pushed back against the market's pricing in for rate cuts with the funds rate for 2023 at 440, 75 basis points below where it was. now chicago fed president austin goolsbee said that they still have concerns about the impact of banking turmoil on the system

here's what he said. >> the thing that made it a close call for me is the big ske mark about what is going to be the impact of this on credit conditions and in our business contacts and our look at the data, it didn't look in that period like it had gotten notably worse yet. >> now just a few minutes ago we had neel kashkari on from minneapolis saying the fed has more work to do and inflation is too high there is a difference developing among fed officials, but right now the market has hold in june, hold in july and rate cut in september. so i don't know. inflation has a lot of work to do if we're going to get to a fed cut by september. >> so is it your sense that goolsbee is kind of on his own in terms of the dovishness to me it sounds like more are speaking in the bostic tone, even williams last week. they're not committing, first of all, to a pause in june, despite

taking out the language in the statement and talking about restrictive for a long time. >> i do think it's likely they will take a break in june. that's what i'm hearing. data comes much stronger on inflation it might change it if -- austan is an outlier but barely he voted with the 25 basis points rate hike at the last meeting and talking about prudence and patience. i don't think he's -- he's not in the cut camp right now. i thought one of the most hawkish things about bostic was him saying look, i have a bias to raise rates from here. >> yeah. >> steve, thank you. good stuff lots of fed spoeak. >> another stock we're going to be keeping an eye on this week tesla. the company's annual meeting is tomorrow, and afterwards i will be sitting down exclusively with

ceo elon musk. that will be following we're going to do a live interview at 6:00 p.m. eastern we'll be coming right off that annual meeting, so certainly tesla will be front and center, but you can just talk to this man for hours, couldn't you, whether it would be about tesla or twitter or spacex and starlink, a.i. and so many other interesting topics certainly looking forward to the opportunity to sit down with mr. musk tomorrow, 6:00 p.m., live, eastern time. >> that is exciting and so unlike elon to be having an interview after a shareholder meeting on cnbc. >> yeah. we've never had a sit down with him. we've had him on the phone a couple times and stuck mics in his face, but we are certainly i'm happy after a long period of trying, to finally get him to do that and you know, always things to discuss. things change quickly. he has done some recent interviews on any number of different areas, whether with tucker carlson or the bbc or

bill maher, but even at twitter things have changed given he announced a new ceo last week. >> you can go, obviously, industry talk but also macro he's not been constructive on the global economy and certainly pessimistic about the impact that this rate cycle has had on the economy. >> yes saying it's too early to tell in terms of what it's going to mean for people buying a car, given they typically do it by taking a loan and there's going to be an impact where rates are right now. that goes back to their pricing strategy which is almost dynamic at this point given how much information they get in real time as opposed to some of the other makers waiting for things to go to the dealership, sold out of the dealership and reported back in. >> is that what shareholder meeting is what are the top issues? >> i don't know. i will be attending to listen and see what is for

the rest of the hour. >> two big commodity deals this morning we'll tell you about them and what it may be saying about the environment. >> after the break, time ticking on the debt limit. larry tribe, adviser to three presidents, why he has changed his mind on big issues the dow down 130 stay with us

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we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch. we moved out of the city so our little sophie could appreciate nature. a literal ton. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far.

(chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch. watching shares of h&r block and intuit dropping on news that the biden administration could create a government-run online tax filing program which would allow people to file their taxes electronically for free through the agency's site. companies provide free services, democrats and consumer advocates have been pushing for a while for free online filing as republicans in companies fear loss of business those stocks down but nothing too extreme. >> meantime another round of debt ceiling talks expected to resume tomorrow. our next guest wrote an op-ed on

why he changed his mind about the debt limit harvard law professor emerry tis larry tribe. great to see you >> great to see you. >> your op-ed made waves in which you ask whether or not there can be an arbitrary dollar limit on spending, you think the answer is no i wonder if you think this has made headway in your piece about the discussion >> well, i don't know for sure because i'm not talking daily to the president, of course, but during his press conference after meeting with kevin mccarthy, he said that he had considered my views and was taking them into account he's not ready to necessarily agree that 14th amendment requires him to meet all of our debts regardless of the debt ceiling, but he's considering it i think that's right because i have looked at it very closely and i concluded that if congress

fails to do its job and raise the $31.4 trillion ceiling, at that point the president will be boxed in there is nothing he'll be able to do that doesn't involve violating some law that congress has passed either he violates the law that arbitrarily sets the ceiling, that's codified in title 31 in section 3101, or he violates the laws that congress also passed that require him to spend money on various programs in violation of the 14z 14th amendment. there is a unanimous supreme court decision called train versus city of new york in 1975 that says when congress has required the president to spend money on various programs, in that case it was on a clean water program, he must do so so if you've got to choose

between violating all of the laws that congress passed for social security and military spending and other kinds of spending, or violating that one one arbitrary debt ceiling, it's obvious which choice he ought to make and that is, violate that one law. i must say that there are a number of commentators who have just stated the law incorrectly. they've said the president will then have no borrowing authority. that's not true. his borrowing authority, which is also in title 31, comes from a group of other sections of the law, sections 3102 through 3106. those are the ones that authorize borrowing. they will still be in place even if we hit the ceiling which is in a separate law section 3101 i know that you guys are used to getting into the nuts and bolts,

technically he will be borrowing with the authority of congress it's just that congress' instructions that he has to stop borrowing at a certain point those have to be disregarded so he can pay our bills. >> right where you ite at the end of the piece, it's a chilling line, the only way out of this forest is through the trees and certainly in this kind of scenario we would monitor the marks's reaction to this legal fight how quickly can this be settled if it could be settled >> it could be settled quickly because there is a lawsuit pending naming the president and the secretary of the treasury as defendants it's brought by 75,000 federal employees whose jobs are on the line because it's not clear that the president is going to follow the path that i've described that case could shoot right up to the u.s. supreme court very quickly and this is not one on which you would expect

conservatives and liberals necessarily to split in the usual way. the court is likely to favor the conservative path of paying our debts and might achieve that saying you have to work it out rather than working it out itself if congress leaves it to the president to pick and choose who are the winners and who are the losers, which debts to pay, that is an unconstitutional line item veto so the only constitutional way through this fors right through the trees and the trees really have to be taken care of and we have to pay our bills. >> i spoke to janet yellen the treasury secretary last week she mentioned earlier in the week that triggering the 14th amendment would be a constitutional crisis and didn't want go there and what would happen if we didn't -- if we had a technical default, it would be up to the president to decide

who gets priority. the bond holders, social security payments, and she didn't want to go there either it does feel like that's where they're leaning as a last case resort, least worst options. >> except for the president to decide who gets priority is a lot worse than for the president to simply keep the borrowing going. the interest rates would go up, but they would go up more and the crisis would be even worse if the president started acting like a junior varsity legislator and deciding which bills to pay and not pay. that's the worst of all options. >> i'm curious your evolution on this in 20 11 one would assume you gave it time and thought when you didn't think it was possible so what was key behind your change and view? >> well, i guess one way of putting it is the matter does not appear to me the way it appears to have appeared to me then

i have spent a lot of time looking at these in this greater detail, i suppose with age comes wisdom, it's not politics, because in those days, it was president obama who had one view and i was saying he ought to stick with it, despite president clinton, the former president telling him he should pay all the bills. now it is president biden who is trying to make up his mind i'm simply trying to do the best i can and figure out which of the options open to the president is the least damaging. and it's pretty clear that borrowing money in order to pay all our debts is a lot less damaging than leaving any number of people out in the cold and picking and choosing whom to leave out there. so i've looked at it and i think that best answer is pay our bills, follow the 14th amendment, don't play the role of a legislator picking winners and losers

that's not conservative either. >> if we get there and the markets are dealing with this, possibly roiled as you point out in the piece, i imagine we'll talk again professor, we appreciate it. thank you. >> good to be with you activists taking aim at shake shack and the stock is rallying it's up almost 7% only sector higher is financials materials popped into the green as well. we'll be right back. .

consumer related names, activists setting their sights on shake shack and auto zone and o'reilly hovering at highs kate rodgers and phil lebeau are tracking that action and we begin with kate. good morning. >> good morning. "the wall street journal" reporting activist investor engage capital taking a stab at shake shack looking to add three board seats. the two sides have been in talks for months but not able to reach an agreement as you can see still up more than 50% this year one of the best performers in the space. despite being higher end for consumers in terms of price.

in response a shake shack spokesperson telling cnbc we are executing our strategic plan and making substantial operational and financial progress adding our stock is up more than 50% year to date and we are well positioned to continue enhancing value for shareholders similarly darden getting an upgrade from ruth's chris steakhouse for $715 million as it allows it to tap into the fastest growing sector of casual dining which is steak houses it's getting a price target hike from 165 to 180. the stock up 7% year to date, but it's been out performed by competitors including bloomen brands owner of olive garden and speaks of the broader trends with the consumer. all brands are reporting this year expressing cautious optimism mcdonald's, starbucks and chipotle are seeing strong sales and loyal consumers. those three have very different stock performances year to date. mcdonald's up 12%, chipotle one of the best performers in the restaurant sector up 50%,

starbucks 7% mcdonald's ceo saying during earnings consumers are expressing more caution, particularly in europe around spend, but all feeling, you know, good heading into the back half of the year. >> as you're saying it's so much macro, what inflation is doing and the consumer is doing, where the -- what income level is impacted what's the around shake shack in particular and is there a vulnerability there? >> yeah. i think it was around some of shake shack's performance if the lunch space because the broader trend is people are not returning to office five days a week and impacted some of its business the stock performance in 2021 was greater even though shack is still up 50% year to date right now. it's around the profitability in the plan there as well. >> thank you kate rodgers. to phil lebeau with more on why shares of auto parts retailers are near all-time highs. >> sara, it's about the age of the vehicles we're driving new data this morning from s and p global mobility shows that the

average age for a vehicle in the united states has once again hit an all-time high now 12.5 years. closer to 14 years if you're looking at cars, lower at trucks and suvs it brings up the question what is america driving right now the numbers from s&p global mobility 284 million passenger vehicles in service registered in the united states. of that 30%, about 84 million vehicles, are at least 16 years old, and just under 10% or 25 million those are models built before 2000. if you know somebody driving a '98 honda civic they're not alone. there are a lot of people throughout great news for auto zone, o'reilly auto parts. the auto parts retailers why? because the sweet spot for that market are vehicles between 6 and 11 years old guess what that's where the bulk of these older vehicles in this country are right now. that's why you're looking at a

five-year chart for these stocks close to all-time highs. not surprising people want to do what they can on their own in order to make sure their vehicles continue to drive as we take a look at the auto dealers, whether talking about auto nation, group one, penske auto group, they benefit from the service side that's really where they make their money. not selling new vehicles it's the service side as well as the trade in and the sales of used vehicles. that's what's happening with the american consumer when it comes to what they're driving and why they're driving it longer, guys. >> interesting day for ford amid these reports about layoffs in china and this admission they are not competitive from a cost stand point there. >> yeah. they've known that for a while not surprising i saw the news and thought this is jim farley saying if we ain't winning we ain't playing he knows that within china, the electric vehicle market is where it's at and where is ford strongest when it comes to

electric vehicles? xhar shall vehicles. that's what you're going to see them focus on much more in china. so they've been losing their market share for a steady rate over the last several years and as that has happened, jim farley has said, let's refocus. yes, it's the world's largest auto market, but if you're not competitive and not winning, you got to find the areas where you are and that's what they're doing in terms of readjusting and so these cuts part of that. >> another busy day on your beat phil, they don't make any other kind see you soon. a news update with contessa brewer hi. >> good morning, everybody turkey's presidential election will be decided in a runoff after president erdogan pulled ahead of his chief challenger but fell short of an outright victory the second round vote will determine whether the nato country remains under the president's firm grip into a third decade. ukrainian president volodymyr zelenskyy is visiting britain to meet with prime

minister rishi sunak at his country residence. sue knack pledged his long-term support for ukraine promising missiles and attack drones in an effort to change the course of the war. this marks zelenskyy's second trip to the united kingdom since russia invaded ukraine last february. vice media group filing for bankruptcy protection to facilitate its sale to a group of lenders it caps off years of difficulties and executive departures the company listed assets and liabilities in $500 million to $1 billion according to a court filing this has been a challenging period for several technology and media companies. we continue to watch to see what fallout is. >> absolutely. thank you. after the break we're going to check in with goldman's former chair of asset management jim o'neill as stocks are under a little pressure. s&p down 0.1%. nasdaq holding firm from meta, the chip makers are doing well

apple and tesla weaker and industrials and materials now green. back in two minutes.

microsoft deal to acquire activision has gotten approval from eu. this would be an important milestone in the company's ap tempt to complete and close the acquisition of activision. not so this time because as our viewers know a coupleweeks bac the regulatory authority in the uk came out with an unexpected decision given they had reversed what was opposition to continue to oppose the transaction at that time saying they concluded the merger would result in the powerful operator in the fast developing market for cloud gaming 60 to 70% market share. that's a market that doesn't really exist in any significant

way at this point so the uk regulator making a judgment about a market that has yet to fully develop. nonetheless as we said at the time that dealt close to a death blow many believed to the transaction. therefore, why the eu decision while an important one, not nearly as important as it might have once been it still may be used by microsoft as an example of a very well thought of regulator at least saying hey we have no problem with this. what is your problem, uk don't forget it's not that many years ago the uk didn't have an antitrust regulator because it would have been part of the eu and their antitrust regime the government of prime minister sueknack has promised to issue guidance as poart of a push. again, vast number of people i speak to do not believe microsoft has much of a chance,

if any they expect that this deal will expire when the merger agreement expires in mid-july. activision cfo making the rounds with investors last week in new york talking about what company would look like in that case with $18 billion in cash, what they would do with that cash, and their plans and so forth so we will wait and see. by the way we should mention the ftc is opposing the deal, but again, that would not happen right now in front of an administrative law judge until august, the deal extended if they want to move forward with the appeal of the cma. you still need to get the deal most likely extended past the current merger agreement which would cost microsoft more. all of which is to say, it's still mostly dead. >> i think it's interesting that europe goes a different way on the uk and political implications we're open for business. uk and their brexit, not so much europe is typically a tough antitrust environment.

>> exactly. >> people look at the cma decision as an outlier although there's a belief that they're aligned with our ftc. >> meantime about an hour into the trading day we are shaving some losses. the kre up 2%. let's see what's moving with bob. >> sideways in the trading range but some of the -- a little bit of risk on and a little bit of a reversal of the trends take a look at the sector. we have banks up, semis up, even some of the metal names doing a little bit better. those are three names, three sectors that haven't done well recently and the sectors that have held up reasonably well consumer staples the qqq, the nasdaq 100, the invesco qqq down look how this flipped around a little more risk on. for the quarter it's been the opposite so far. the nasdaq 100 has been a star this quarter, mega cap tech, consumer staples have held up. elsewhere, banks, metals and mining, semiconductors have been a disappoint

there's a dichotomy in tech. the biggest big cap tech is doing well and everything else is splitting off you can see this in semis. semis down 6%. isn't that strange here. micron and nvidia and lam research are up a little bit on the quarter, not a lot, but most of the other big cap semi names are to the downside. st micro, intel, taiwan semi and qualcomm and skyworks, apple suppliers for the quarter are weak some of the tech people are calling this the mega cap mirage, an appearance that tech group is holding up really well because of these names these are the top five names in the s&p, apple, microsoft, alphabet, amazon, nvidia, i'm excluding berkshire. the names are so big they're dragging up the tech sector and s&p 500 creating what some are calling the mega cap mirage and technology is dominating the game elsewhere, other factors are sort of faded. the china reopening, remember

that was big in february, that's faded a little bit here. oil stuck around $70 and industrials, materials, energy, there's your global cyclical play that would have happened. nice move up into february and held on. but really has faded recently and so we're not getting any energy out of the cyclicals. where are we right now, the bottom line simple if you look at cyclicals here, and the lay of the land here, stocks, traders are kind of on the sideline low volume and volatility trading sideways is not getting active traders engaged the sentiment is bearish money on the sidelines hope the fed is ending their rate hikes earnings, the bottom line here, sara, they're holding up really well the first quarter has been higher, raising the numbers and the second half of the year has been stable. as far as i see here, the risk right now, is on the upside right now. particularly as we get news on the debt negotiations. >> right everyone thought earnings expectations were too high turns out they were too low in

this quarter thank you. bob pisani let's get more on the macro view of the markets and the economy. joining us now is former goldman sachs chief economist and current northern chairman jim o'neill. good to check in with you, jim how about what bob said about china and the momentum and industrials and energy you spent a lot of your career studying china and the economy everyone expected this big bounceback postcovid what's happening >> i wish i knew nice to see you, sara. >> you too. >> you know, i'm focusing on that oddity myself it's going to get a bit more complicated even further because when we get all the data for april in imminent days, i guess, it's going to show probably a very strong year on year rise on the chinese indicators, but it does fail anecdotically and from

the scattered reports, as bob reported, the markets aren't carrying on this china recovery theme. it may well be that some of the structural issues and the inconsistencies between president xi's desire for strength versus trying to encourage the private sector to do more isn't really taking off. that definitely requires watching really carefully not least because if you link it to the rest of the world, given the central importance of china, look at the latest purchasing managers indices where the global manufacturing one is essentially saying we're in recession, whereas the services one, especially if some many different places, is showing including the uk intriguingly, signs of a pick-up and indeed an accelerating pick-up

then you've got all sorts of contradictory things going on with inflation data. it's pretty tricky i'm glad i'm not in the business every day of my anymore. >> when people ask you should i invest in china. we're coming off a few decades of growth. an economist that covers china powers about to peak, what's happening in the geopolitical situation with the u.s. and china, is it a place to invest in for the long term now >> i read that piece with great interest it was on the one hand this -- the economist will always be famous for a very regretful piece they had about the coming -- japan about a year before the whole japan story completely finished. focusing on it tells you that is the mood of people about china

and had a lot of good stuff as to why china might be peaking. against that, if you look at valuations, and if you look at the cyclical momentum coming out of covid lockdown, and the sheer fact that the population is turning, there's 1.4 billion nearly and plenty of ammunition for the government to do more, i would lean cyclically, slightly to the positive camp although they need to address some of these fears that people have all over the place, including not just them, also in the u.s., this seemingly never ending rise in china and the u.s it's a major issue for world markets. >> what other fears? i'm curious now. you mentioned that one being a central one. are there others as well that we're not as perhaps aware of as

we should be >> i think i've talked to you about this many times i've been on, and it goes back to my very active days, not least because i think the fed pays a lot of attention to it, but look at the latest university of michigan inflation expectations, i think was friday,the five-year, everybody focused on the one-year one coming down consistent with improving ppi and lots of other data signals we get, but the five-year one show the rise of 3.2% which caught my eye. if the next one showed the same thing, i think you would get even stronger messages coming from the fed while they might be durngs the idea of the rates they would put cold water on for a market that has made gains in the sector that relate to the interest rate sector that is, obviously, a hugely important thing to get right.

>> you think the market is mispriced? >> i was with the market and everything that i look at these days i quickly add, suggest the inflation picture has been improving. if you've got long-term inflation expectations going back up, that is definitely not a good sign at all. >> yep saw that in the university of michigan sentiment survey. see if we get more evidence. good to check in with you and get your thoughts. >> take care, guys nice to see you. >> you too jim o'neill. >> still to come, we'll talk about two deals in the commodities area and also as a quick note, as we head to break, tomorrow night, don't miss it, live interview with elon musk. they will be there in person following the company's or tesla's annual shareholder meeting at 6:00 p.m. eastern and we're just going to hope he

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doubling over the next year and a new copper mine takes around 16 years to come online. this acquisition is a way for companies to increase output the deal, which would be the largest ever in the gold sector, is still pending regulatory approval a big pipeline merger, oneok announcing it will buy magellan in $18 billion cash and stock deal at 22% premium to where magellan closed on friday. oneok currently only moves nat gas so it will give it exposure to pipeline and refined products the deal still needs regulatory approval and expected to close during the third quarter raymond james saying the news came as a surprise but calling it, quote, a bold move to redirect the long-term strategy of both companies. this is not the last deal we'll see in the commodity space this year. >> no. you talked about permitting as well, pippa, which is an important part of their business overall -- i would assume -- i

don't know how that figures into this or whether the lack of permit sort of forces consolidation, does it >> it's much harder to get any new project permitted. if you're trying to grow your footprint, acquisition can be the only way that's both true in the pipeline industry as well as mining especially >> pippa, thank you. and remind you one more time, and not for the last time, tomorrow night 6:00 p.m. eastern, you won't want to miss a live interview with elon musk. yes, that man right there. that's tomorrow, 6:00 p.m. "squawk on the street" continues right after this (cecily) you're looking pleased with yourself. (seth) well, not to brag, but i just switched my whole family to verizon. (cecily) oh, it's america's most reliable 5g network. (seth) and it's only $35 a line.

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good monday morning, i'm carl quintanilla with sara eisen. setting the agenda today the future of the fed dominating the headlines. austan goolsbee says the rate impact still in the headlines. jones says the fed should take a victory lap. we'll discuss that with pimco. will the consumer continue to save the day? flood earnings and key data set to hit the tape. gerald storch joins us. later on the letters of the