always good to see you when we come back -- i shouldn't say. we'll get a final check on the markets. dow up right now 167 points. nasdaq up 46 points. the s&p 500, up. >> we didn't break it. >> we will join you tomorrow that is true and the gang and "squawk on the street" is ready for you right now. ♪ i'll say what i want to say, and if the consequence of that is losing money, so be it. >> elon musk with faber last night in texas, covering everything from macro to a.i. to china to free speech good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla, jim cramer, david faber miraculously is back already. some optimism about the debt ceiling today as we keep an eye

on targets earnings and getting numbers cut on china's recovery. we'll begin with the musk interview. david, just remarkable and really a privilege that we got that much time both on our end and his. >> very happy to have had the opportunity to speak to him for an hour. always things that you don't get to because his views and his everything is so wide-ranging. of course, sorry we didn't talk more about space or starlink, but what we did talk about, i thought, was fascinating, and i hope for our viewers as well, whether it was, as you heard, sort of his position in terms of, he's going to continue to tweet and tweet things that make a lot of people unhappy. he doesn't care. that's exactly what he said. we talked a great deal, though, about tesla, which i think jim is, perhaps, front and center for our viewers more than anything else as a company, coming right after the annual meeting, a little bit of news that we got into in terms of, he may start advertising, something he decided, as he said, in that moment, on the stage, which kind

of goes to how it works to some extent there and then, you know, i said this earlier on "squawk box," but if you ever get a chance to go down there to see the giga factory, it really is astonishing and i know there are others like it i think fremont is even bigger, but oh my. carrie and todd and i were stunned at what you're seeing physically and what they're doing and how they're doing it in terms of making those automobiles. >> you brought alive his term, pathological optimism. something that i think we have not seen in our country since, perhaps, when president roosevelt went to major companies like gm and said, listen, it's world war ii and you must do this it's almost like he's creating this because he understands the future and what needs to happen in our country i found it very reverential to our own country, which could have been. i just want to say for a moment, our partner delivered an

interview. you search your mind, if you're a journalist or anyone who's been following journalism, for interviews that were significant, it made me think of the roger mudd interview with ted kennedy, where the interview starts and ted kennedy is the front runner, and at the end of it, he's out of the race i mentioned it because i haven't seen anything where i feel, i now know what's happening with this man he is knocking others out of the race of not just engineering but even humanity in the sense of the question you asked him about your boy and what happens when they win what happens when they are smarter than we are? i was chilled by that. there were that many moments in this interview where i felt differently about someone after than before. >> yeah, i was taken with the last question or the answer as well, or in some ways the inability to really answer it, which is partially why i asked it a lot of people, though,

focused, of course, on really what was the first conversation, i think, that musk has had around his endless tweeting and the fact that he upsets a lot of people with tweets that seem to link to conspiracy theorists and the like i asked him about it take a listen. >> do your tweets hurt the company? are there tesla owners who say, i don't agree with his political position because -- and i know it because he shares so much of it or are there advertisers on twitter that linda will come and say, you got to stop, man, i can't get these ads because of some of the things you tweet >> you know, i'm reminded of the scene in "the princess bride,"

great movie, where he confronts the person who killed his father, and he says, offer me money. offer me power i don't care >> so, you just don't care you want to share what you have to say >> i'll say what i want to say, and if the consequence of that is losing money, so be it. >> there you go. >> "citizen kane"? it is funny that there are movies in your life, and i know you joked this morning with becky about what -- the amazing lines about montoya gives, but i would say there is something to be said about a man who says, look, i didn't want to buy it. i had to buy it. and even though i had to buy it, i'm doing my own thing

your reference to linda yakarino was very poignant because the previous people from -- who owned twitter, who ran twitter, were very concerned about what happens with the hate speech and how hard it is to get a consumer packaged goods company to go with twitter, precisely because of the things that someone like musk might do. impressions on that? >> i think it's true i think it's going to be interesting to see what and how many advertisers choose to come back to the platform elon would say that many already have chosen to do so he's going to be a lightning rod. there's no doubt about it. and he's going to continue to tweet things that you look at and go, why is he doing that i did ask him a number of times. i'm like, you can have your opinion. why the need to share it but clearly, he feels that need. beyond that, guys, i think so many other things, whether -- i don't know what we've got ready to go or share, but jim, i know

you work from home, advertising, jim, do you want to weigh in, though, on -- we talked a lot about tesla, of course by the way, autonomous, which he always says is coming, and he says is very soon, he did put a number of qualifiers on it, but we also talked about china at least to some extent. and i thought he had some chilling things to say and echoing, frankly, comments you make on this set oftentimes on taiwan i think we may have that as well let's take a listen and get jim's reaction >> the official policy of china is that taiwan should be integrated one does not need to read between the lines. one can simply read the lines. >> do you think that -- >> so, i think there's a certain -- there's some inevitability to the situation >> that would not be good for tesla, conceivably, or for any company in the world, frankly. >> yes for any company in the world

i think most -- almost no one realizes that the chinese economy and the rest of the global economy are like conjoined twins. it would be like trying to sever a conjoined twin that's the severity of the situation. and it's actually worse for a lot of other companies than it is for tesla i mean, i'm not sure where you're going to get an iphone, for example. apple's recently started doing a small amount of production in india, but it's tiny >> not to mention advanced semiconductor chip if they take over taiwan semi you design your own chips but you manufacture them at taiwan semi, correct? >> we use samsung and tsmc >> you seem to think it's likely to happen. >> i'm certainly saying that that is their policy and i think you should take their word seriously

they mean it >> jim >> well, look, since 1949, the break-up, china's vowed to eventually unify taiwan, so of course, musk is right. and by the way, they said at that point using force if necessary. our country's changed its policy repeatedly in 1982, reagan announced that -- acknowledged that the china position is, there is but one china, which would agree with what musk said. and then under president obama, in september of '25, he had a meeting with xi in the rose garden they made it very clear that there was going to be independence and it was absolutely the right of the united states to stay in south china sea, which means stay in taiwan strait, actually, and then immediately, xi abrogated that and sent his navy there now, our current policy is, well, then, trump had a policy which he's told many people, which is that his first phone call was to xi, where he said he would drop a nuclear weapon on

top of beijing if they made a move that's widely considered to be hyperbole, but the president was given to that. our current position is really interesting. we've said speaker mccarthy is going over -- nancy pelosi is going over, but our current position is that we know that without america, taiwan will be swallowed by china china will control sea borne trade with south korea south korea and japan. we'll be back to pearl harbor, which is the lesson of what we hear no longer a pacific power. what we have done is we have put soldiers on the ground we have special forces training teams on taiwan. and our goal is to gradually increase our ground presence to advise on air defense, logistics, defensive barriers, which we believe, al la south korea, will make it so the presence of troops will deter china. that is his current policy there are people within our government that are not as hardline the hardline policy is to make it into south korea.

there's 100% truth to what -- if we did not do that, to what musk says but our current position, which is the first time ever, actual ground troops in to advise, you could say that's what we did in vietnam. you could say that's what we did in south korea if you believe in the latter, that is our policy, and what he says will not happen >> you bring it up, by the way, it is, you know, if there's a checklist of things that leaders of organizations are thinking about these days, china is always right at the top. it may also be joined now by a.i., something, by the way, we spoke to mr. musk about at length as well, or at least as much time as we had. but this is a -- i mean, to his point, conjoined twins you can't pull these things apart without terrible consequences >> and right now, for instance, we are, again, our policy is to say that you can't take the most sophisticated chips from taiwan and give them to the prc now, chips are made by lam research and initially, lamb

restr research had equipment heading to china and is now coming back. we're at the cusp of two stocks that matter, lisa su at amd and jensen huang at nvidia, those are the chips, particularly the h-100, which is the fundamental of a.i., which relearned the father of a.i. there was some nice hyperbole at some points in an unbelievable interview. >> he believes their a.i. at tesla doesn't get as much attention and that it will have its, so to speak, gpt moment, where they go to full autonomy at the push of a button or a software upgrade, and that will change the world as well claims that if they wanted to go to gpt, they could do that with all the computing power and the chips that they have another area we hit on that we've talked so often about at

this desk and is interesting given "the journal" story yesterday about the fact that businesses seem to be unable to get workers back as much as they'd like them to in the office, is musk's belief, of course, that people should be working five days a week in the office, but he put a bit of a different perspective or certainly one that i have rarely heard on it. take a listen. >> i'm a big believer that people need to -- are more productive when they're in-person. and really, man, i -- the whole sort of work from home thing, it's like, i think it's -- look, there are some exceptions, but i kind of think that the whole notion of work from home is a bit like the fake marie antoinette quote, let them eat cake you're going to make the people who make your cars and your

food, they can't work from home. the people that fix your house, they can't work from home, but you can. does that seem morally right >> i see it more as a -- >> it's a productivity issue. people should get off their moral high horse with their work from home bull [ bleep ] because they're asking everyone else to not work from home while they d do it's wrong >> i had not heard that perspective. the laptop class is in la la land. >> well, i mean, it did feel -- i thought that the marie antoinette analogy was off south africans, remember, in europe, where there were basically serfs and others, i think what he was describing was an inequality period where you basically have those who serve and those who do it was a remarkable moment i had not even for one minute thought there were a

second-class developing because of this. it was a remarkable moment i don't know how many people are really thinking like he is >> it's weird. someone who goes to your house to fix it doesn't need office space that their employer needs to pay for so, you would imagine there would be less pressure for a job like that to come back >> that's true now, the surveys now show there was a peak already in people coming back, and we're back down to 50% the banks are hapless. they can't get their -- a lot of the -- by the way, there's a secret to all this, and people don't talk about it. it's the people who are 35 to 45 and control it they make it sound like it's a 25 it's this middle management. >> it's the middle management that has a decent commute that's got kids at home, smaller kids at home, that makes it very difficult, so why not, if you can work from home >> let's stop blaming the 25-year-olds they're taking their cue from the 40-year-olds >> they want to come to the office, i think, more often than not. >> although he seemed more animated about that than any topic you covered with him >> he definitely was worked up

about that by the way, listen, there's all those people on the factory floor who show up every day and the offices on top of it, the endless, you know, open floor plan there with people all working obviously. >> so, many people asked me after, will he hire your son and i said, that's not the point. >> we want to get to his -- i thought his comments about -- >> we have future of work. >> we'll get to those later in the show >> not to mention, the macro, which auto sector is trading down a little bit on some of that we'll get a lot more, including these debt ceiling talks, whether there's cause for optimism here. target earnings, of course, very interesting picture in there, in the fallout for other retailers. the'a okers lo at futures, pretty positive on this wednesday. st. joseph, michigan. i'm a retired school librarian. i'm also a library board trustee, a mother of two, and a grandmother of two. basically, i thought that my memory wasn't as good as it had been. i needed all the help i could get.

i saw the commercials for prevagen. i started taking it. and it helped! i noticed my memory was better. there was definite improvement. i've been taking prevagen for a little over five years. prevagen. at stores everywhere without a prescription. i struggled with cpap every night. but now that i got the inspire implant, it's making me think of doing other things i've been putting off. like removing that tattoo of your first wife's name. inspire. learn more and view important safety information at inspiresleep.com.

market continues to wrestle with some binary questions regarding the debt ceiling china's recovery gets some question marks this morning. we'll talk more about elon musk and the regional banks as well, getting a bounce on this western alliance update. futures, positive. "mad dash" coming up, and the enbe aer bakre t this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations.

i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. at pnc bank, whose resumes on indeed you can find us in big cities and small towns across the us, where our focus is to always support the people who live and work there. because you call these communities home, and we do too. pnc bank.

you see some of the banks going to be up nicely this morning. let's talk more stocks with a "mad dash" here and one of the bigger names that exists >> well, i just felt that with when we talk about tesla and a.i., we have to figure out who in my travel trust, i have a meeting at noon, talks endlessly about who's really the winner and who's not. now, barclay's puts out a very sound note don't call it a comeback, a.i. has been here for years, saying that you cannot discount all the things that alphabet has been doing, deep mind, apropos of what you talked about last night, and i just say that there is a growing belief that alphabet really is not for show, that they really do have some offerings, that it's not bloated, maybe there's going to be a little gap in revenue, but they are going to have maybe

high single-digit growth in this now, david, when i listen to what you talked about and the curious and somewhat tortured relationship with a.i. -- >> with open a.i >> holy cow. >> elon musk is not happy with oly open a.i he also actually derided weymo >> that's exactly right. i've been trying to go back and forth with the people to the gm about where gm is. they've got to consider -- carl vogst vogt has this initiative i liked what the barclay's piece said if bing is coming back, what is this about that's about the decision to suddenly speed up a.i., or they would say, listen, we've been doing it all along, but i just felt that this is somewhat in reverence and reference to what you talked about, because the a.i. brutality, what it sounds

like behind the scenes, i did not know about until your interview. >> yeah. there's some friction between open a.i. -- i mean, which musk says, of course, would not exist were it not for him and the for profit route they've gone, in part >> was twice and that's from the old article, something about in 2012, when google was saying, listen, we're open and we're not going to make money, and there were these series of -- >> to google, though, the question we have raised to alphabet is, are they behind microsoft now, given chatgpt and how important it is to microsoft's future in terms of the enterprise, the way they're incorporating it in so many of their tools. >> now, against that is, this has become the de facto way if you want to incorporate what nvidia has they've become almost like the accenture or ey for this era you go to them like wendy's did and figure out how to do drive-thru microsoft, you go to, frankly, if you just say, listen, we've got an existing relationship

how do we use a.i. if you want to make it so a.i. is practically integrated instantly, these guys are really making a very strong pitch >> yeah. well, alphabet shares, as you see, of course, had a very good week last week on the introduction of that io, that operating system, and sort of the reintroduction of their a.i. products the opening bell is just a few minutes away in fact, five minutes away, followed by more of my exclusive inrvw thlomuteiewi en sk (funky electronic music) (narrator) breathe in. jump in. strap in. live in. join in. thrive in. if you're all in, it's all in north carolina. ranked america's top state for business.

(funky electronic music) (narrator) invest in. believe in. move in. grow in. build in. thrive in. all in north carolina. ranked america's top state for business.

the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. >> the only thing i'm confident about is now we have a structure to find a way to come to a conclusion the timeline is very tight, but we're going to make sure we're in the room and get this done. >> but you're not confident that there will not be a debt default? >> look, i think at the end of the day, we do not have a debt default. i think we finally got the president to agree to negotiate. >> all right, speaker mccarthy last hour on "squawk" weighing in on yesterday's discussions on the debt ceiling in the white

house, jim he's definitely taking a win on process that he got the president to negotiate meanwhile, white house is going to cut short this foreign trip the dems are going to work on a discharge piece. >> a lot of better things. what i thought was interesting, and i use the analog to 2011, and i know it can be boring, but it's when it happened. when you got a process which was the sequestration process, then you began to get genuine movement a lot of people were surprised that republicans offer a strategy, obama doesn't fall for it but plays with it, as painful as it was. it's entirely possible that if they do have a structure that takes the 14th amendment off the structure. maybe it takes the idea of scrip for your treasuries. but i want to see that short-term treasury come down. >> jim, any concern on your part that we get a preemptive downgrade by one of the rating agencies just because we're doing this again >> i would be more concerned if

it were not for the incredible attack that tim geitner launched on the organization, by basically saying they had failed back >> this is when s&p downgraded u.s. debt in 2011. >> a very calming influence, basically would tell you, i've never seen a lack of ringer like that was offered, so i think the s&p doesn't want to go there if they ever want to be attacked again like that, which was so brutal as to make you feel like they were pushing. >> at the big board, it's the energy trading institute and the chairman of the federal energy regulatory commission, willie phillips by the way, happy birthday to the nyse today 1792, i think. at the nasdaq, it is elmo, recognizing mental health awareness month. we fill back in here to 4,130, jim.

i do wonder if you think the market applauds a deal or if then the market gets -- comes to grip with the austerity that would be involved in that. >> this was -- geez. the austerity that appeared to be the case in 2011 just changed the market entirely. so, the stocks that were doing well going into the debt agreement, you could find -- they were broad based coming out of it, with the exception of chipotle, nine out of the top ten were totally defensive stocks, believing that a recession had to be upon us. it didn't happen economy turned ow tut to be stronger, recovered. i'd like to play it that way for those who are focused on recession. you've just tweeted something interesting about you versus me, and i'm definitely a believer that we getthrough with this than there will be an off to the races component that broadens what otherwise has just become a.i. worship >> well, it kind of brings us to

target, and what some are calling in the retail space, hockey stick guidance. we're going to guide lower on the quarter, keep the full year. >> i think brian cornell is a unique merchant in the sense that he is more focused on inventory than anyone else i know and the inventory of the -- remember, david, that the great mickey dressler taught us this his inventory of the discretionary of electronics, areas that have become the dead zone, is very low. so therefore, he does have an opportunity through beauty, through food and beverage, through household essentials, to have, i think, a very good second half. >> it's something you've talked about a number of times, and we've talked about, is shrink or shrinkage if you want to call it that as you read mr. cornell's comments in terms of the quarter and what their expectations are and cost-saving efforts.

what we're talking about when we say shrink is stealing, and guys, half a billion dollars, potentially, hit to profits from stealing is not something to be ign ignored. >> it's like 90 cents. it's a big number. >> it is and brian spent a lot of time talking with me about it, even to the point of talking about, who's behind it, petty theft or organized crime? organized crime is something -- now, let's just understand he's been willing to talk about it, and one of the reasons why he's willing to talk about it is because he has made a statement to certain communities like the san francisco mission suite where i went and saw a breakout, literally a all at once drop one thing, everyone runs out with product. and he said, listen, we're not abandoning these stores. we would just like help with the government and david, i have to tell you, he's a leader in this. he's just not -- he -- i said,

listen, you closed a terrific store in philadelphia. he said, let's not focus on the stores >> i would assume, though, with that kind of a number, it's happening all over the place it's not just confined to some hard-hit metro areas >> others have not been as, let's say, transparent, but the numbers are in -- well into the billions, and a lot of it is often done by website where you'll go and see, say, a home depot -- one of their house brands, and you'll say, i want to click on that home depot does not sell its house brands on amazon >> it's not just store it's all sorts of other fraud, and it's organized crime >> it's organized. and a lot of it is also this is one of the things that brian would not go there, and i don't blame him, but carl, it's at the distribution center. >> really? >> yeah. >> oh, wow >> there's -- for some, there's

been organized crime within the distribution centers i'm not saying home depot, i don't single them out, but the big dcs have been -- home depot has been doing a very good job tjx has been doing an excellent job, but they've put a huge number of people in their stores under cover and that has helped them they had a very bad pilferage. their shrinkage number was reported last time they have cut their shrinkage dramatically by undercover agents, but others have to worry about the organized crime aspect of the distribution center, and how easy it is to pay someone to get that on the web. >> i had not heard that. so, coming off of hd yesterday, and the biggest revenue miss in 20 years, is there a reason to look at rh here or williams sonoma >> well, arh, warren buffett, williams sonoma, look, laura albert is doing a very good job, but this, again, is the problem. we bought everything

remember, we're low on money and short on time. we bought everything we needed at home. that, again, is one of the reasons why brian cornell is such a genius in my opinion, doesn't get nearly enough credit, because what has he been focused on he's been focused on -- and you look at what, i mean, there are remarkable numbers he's focused on threshold, good and gather, cat and jack, up and up, room essentials. what are these i'm reading the $11 billion worth of -- the $1 billion worth of each one of these private brands $3 billion for cat and jack. so, what he's done is make it so that he has what a style that we've only seen from costco with the kirkland brand you're trading up to target goods, and that has helped his margins incredibly >> wanted to come back to a story we followed yesterday, which is the decision by the ftc to try to block amgen's deal to acquire horizon therapeutics, maker of two large orphan drugs.

the complaint is out they filed in illinois they're going to be seeking, of course, a temporary restraining order. stocks up a bit. and speaking of people close to a amgen, they are certain that they have a winning case and that they will, if it comes to it, defeat the ftc in court. those who are less, perhaps, biased and reading the complaint, at least that i have had an opportunity to speak to, think it's a weak complaint. it talks about bundling in particular and the power of bundling that amgen would have with pbms, but in this case, these drugs are not bundled. they're sold directly to hospitals, doctors, because they're orphan drugs, and amgen seems focused on well that showing when it has bundled, it's done bioslimilars to get lower cost drugs into the market or it's bundled not to exclude others, though, from doing so.

again, they feel they have a very strong case, and in fact, there is a belief that you could actually see some period of litigators kind of prepare for six weeks or so and some sort of sentiment around bundling that would not be a major hit to the transaction, allowing it to close. will that happen i don't know but there does seem to be a belief, perhaps, that this thing won't even make it to the inside of a courtroom, jim, because the ftc's case is not really a case. it's just done to chill deals at the behest of both lina khan and elizabeth warren >> i think you're so right when you have these big pharmas, and you see them buy a drug from a smaller company, you've covered all these, david, a lot of it is because they have fantastic people at amgen who can evaluate which of these is right and therefore willing to buy. it's like a farm team that goes to a major, but the fact is the farm team is not beholden to the

major at all that is what you would have. if you had a captive farm team, then i could see maybe they have a case i don't think they seem to understand the way that drugs like great ball players are developed, and it shows you a very lack of knowledge about the process. i'm shocked. ideologically so blind as to make it so the -- back to the lina khan view that mergers aren't making rich people rich, and i wish that were not -- i wish i were making that up >> there's a reason we're going to continue to focus on this, just because it's yet another example in a -- in an area that is rare, has been rare for the ftc to choose to bring an action just -- >> it's rather amazing how about broadcom trying to get that deal done everyone -- a lot of deals that we all kind of thought were just deals that, oh, they announced and they close x, well -- >> you're talking vmware >> yes >> you're talking to cma as well, where they have issues

>> exactly trying to get that done. >> in england, again, which we've talked about with microsoft activision oftentimes. it continues to be a real question >> we've got a record now for terminated bank deals in a year, actually after td first horizon, and you know, pfizer, the c-gen deal, moving the corporate debt market on that they're down 20 bucks on the year >> look, again, that's the same thing. you have a franchise, well, there, they need the franchise i mean, they don't have it they need the cgen drugs, which are a very particular cancer david, what i wanted to ask you about is abvi was very interested in prometheus abvi has an autoimmune franchise second to none ftc would just say, are you kidding me your franchise is so weak that you have to go close off your own franchise and not put more money toward that? if the ftc goes down this path,

none of the smaller companies has the ability to make what they think prometheus didn't have enough money to launch the big stage 3 trials they needed >> that is often the case, and that's why we report on these deals, usually at very large premiums, where big pharma is buying a company that is still in phase two, there's still some risk, or early phase three, but to jim's point, it's very expensive. a lot of these companies don't have a sales team to begin with as well, if it's a drug that's going to be broadly sold in that way. and so, that's what they do, and the idea, again, back to horizon is if you chill that, you know, are you actually stopping innovation as opposed to enhancing it guys, wanted to talk a little more about a.i., as we should every day. many of us listen to sam altman on the hill yesterday. and i sat down with elon musk. we got to a numb number of his

thoughts about a.i., including whether it has the chance to destroy humanity >> you talk about enhancing humanity i'm curious, then, about a.i many people say it will lead to great productivity gains you showed those robots. i mean, i can imagine what they conceivably could do when powered by a.i but i'm curious, because you've certainly been concerned what percentage do you give the chance that it will destroy humanity >> well, the advent of artificial general intelligence is called a singularity because it is so hard to predict what will happen after that i think it's very much a double-edged sword i think there's a strong probability that it will make life much better and that we'll have an age of abundance and there's some chance that it goes wrong, and destroys humanity hopefully that chance is small, but it's not zero.

and i think we want to take whatever actions we can think of to minimize the probability that a.i. goes wrong. >> you've called for a pause, along with a number of other people >> look, when i called for the -- a friend of mine, max, a physicist at m.i.t., wanted me to sign on to the letter it's like, i knew it would be futile >> it is futile. >> i knew it would be. i just want to call it -- it's one of those things, for the record, i recommended that we pause. did i think there would be a pause? absolutely not >> would not go into any detail whatsoever about x a.i., which is his nascent attempt, it would seem, to compete with open a.i./microsoft and/or alphabet said it's too complex for a conversation right here, so don't have much to share on that >> he said, now is not the time to talk about that kind of stuff. and then trying to, like, i think, take credit for open a.i., and yet, take credit for being cautious, telling larry page he was being cavalier i thought that was interesting >> he's mentioned a number of

times, this conversation he had with larry page many years ago around deep mind when page called him a speciesist, meaning he was in favor of the human species, implying that somehow page is not. i will say, though, the robot video that was shared at the annual meeting was fascinating he has talked about and did again at the meeting the possibility, i mean, this could be a product line for tesla in the future i don't know if we have the video. if we're even able to show it. powered by a.i. potentially, at least a.i. in the datacenter communicating with the robots, but there could be one for every person on the planet if not more in fact, yesterday, he upped it. previously, he talked about one for one. now he's talking about two for one. 16 billion or more of these robots that was a little scary. >> i wish he had gone a little bit more into what seems to be a subtle rivalry between musk and

jensen huang, who also showed me the robot that i could have that could bring my coffee to me and do other things. remember, the reason i mention it is because who makes these chips for autonomous nvidia spend a huge amount of money developing fantastic chips. obviously, the slight against waymo was brutal by musk when it comes to -- >> he really does feel as though somehow they don't get credit for it one reason he seems to be considering doing some advertising. he feels like, you know, he's -- he doesn't want to just continue to preach to the converted he wants to actually spread the word about what tesla has done, where its prices are, its safety record, and what he does believe and has said so many times and not delivered on yet, full autonomy is so close >> i think it explains the timing of your interview too, right? and some of the others that he has done i think we'll see -- he's going to have to do more earned media and paid media >> yeah. he may

he talked about advertising in a very general way but wants it to be beautiful, wants it to have real content that is of interest to people. again, had not thought it through very much at this point. i don't know that we'll be seeing tesla ads on during our breaks >> you mentioned super bowl. i thought that was terrific. i mean, wouldn't that be something to see a steve jobs-like apple ad at the super bowl we'd all talk about it for years. >> we will share later in the show, carl, i think, his final answer, which i just thought was fascinating in terms of the future of work and what it will look like and how you would advise kids going into the workforce, not now, but stay tuned for that >> that was great when you asked about your own kids and the conversations we're all thinking about as parents >> then there's those moments where nothing's said, and i have been in those interviews where i said something, and the nothing said was then the mic's ripped off, and you say, oh, darn, i didn't mean to go there. no, he was so thoughtful, damn it >> he just pauses to think

he really tries to think about it which is fine. it was interesting to be a part of that, just watch his brain. >> i think he understands the impact of his words, so he's not going to mess around >> yes >> well, yes -- >> and no. >> and no. >> good point. on the banks today, jim, there's more discussion about western alliance maybe playing this post-svb world pretty well >> i thought that was -- i'm so glad you mentioned that because i've been waiting for the short squeeze to develop people are concerned about the fees if you talk to wells fargo, big position for my travel trust, it's very clear that the banks are a little bit more strong than people realize. everyone has kind of distanced themselves from the banks that went wrong the banks on your screen are all susceptible to a short squeeze, given the fact that none of them seems to have much in the way of deposit depth. key and huntington, particularly, are pointed out as

doing quite well fifth third doing quite well if you want to know which one you want to get, they're all part of an etf, so it's difficult to get it going. >> service now, going to get into the buyback game, and that's going to be a three-month high >> i think that was a very good analyst day. i wait to see what they're doing to do. in a.i., they have a chance to be a leader. by the way, marc benioff is doing a lot with chatgpt, not necessarily with nvidia, but service now, yes i think that bill mcdermott had -- has had a much better run than people realize here, and the stock is beginning to reflect that >> barclay's on win, a rally just getting started >> that stock goes to $150, we think, because they finally got out from under china but vegas is the star there. and that's something that no one thought. this one has -- people thought it peaked, and i do think if you go back to where it was a few years ago, it can go much higher >> we'll keep our eye on that.

some travel names doing well in fact, the best gainer of the week so far is going to be rcl maybe it's month to date it's going to be rcl, 20% gain bonds this morning, we'll watch those as well as we keep an eye on the debt ceiling discussions. ten-year is around 4.1% as the dow is up 115 and the s&p, 4,125. don't go away. what if you could make analyzing a big bank's data... no big deal? go on... well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across multiple systems globally,

then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. . ..to make quick decisions? check. aaaand check. that's the hybrid cloud solution ibm and a global bank created. what will you create? ibm. let's create.

you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

busy week for retail as you know tjx one of the bright spots today, shares highest since about the middle of february they say fiscal q2 off to a good start. decent conversation about margins and eps. we're wahi ttcnghat with walmart on deck tomorrow take a short break and be back

here in a moment

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. ♪

time for jim to stop trading. >> club members, if you parse the home depot call you heard many positive things it was weather and lumber i thought the stock was unfairly beaten up. and it's now down 80 cents from where it fell yesterday. so you're basically talking about a stock that's unchanged as people realize home depot had a good quarter and forecast. so this market is a forgiving market it was a market we prepped for disaster and didn't get it that's what matters to me. >> filling the earnings gap this morning. >> exactly some say it's a head and shoulders i know david was thinking of that interviewing musk >> what is the line about revenge in "princess bide" >> offer me money, offer me power, i want my father back. >> so many great lines i've used the mostly dead thing

for weeks now, months. >> ideation suicide. great deal about suicide >> jim, how about tonight? >> yes we have chuck robinson, cisco and then we have on-semi, the number one semi in this group. and autos we know autos are the hottest paraof what's left of an economy that people think are in at th tatters that i disagree on >> we'll talk autos as we slice and dice david's exclusive with elon musk last night dow up 90. don't go away.

good wednesday morning welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber live for you on post nine of the stock exchange s&p up .1% led by more cyclical groups, financials, industrials, industry materials all higher today. tech is lagging for a change

the s&p 500 down a quarter on the week 30 minutes into the trade session. some movers we're watching, target topping estimates as sales barely rose year over year all about the guidance, which was disappointing. western alliance shares rally after the bank said deposits have grown by 2 billion giving other regional names a boost today. and wynn resorts, the best is yet to come for the operator you have the biggest mover of them all. >> tesla shares are up today as well as sara referenced yesterday we spoke exclusively with elon musk live from the gig factor in usa t -- austin, texas. it was a 6:00 p.m. interview we hit a wide range of topics including the pricing of his

automobiles and fed policy. >> you mention affordability, it's something you discussed during your meeting. you've also discussed it on the earnings call recently as well in relation to the federal res reserve raising interest rates you think it's a tough 12 months ahead. you said that a number of times. >> for everyone, not just tesla. >> understood. >> you can think of raising the fed rate as a break pedal on the economy, frankly it makes a lot of things more expe expensive. suddenly things bought with credit but it has downstream effects on things that aren't bought with credit so if the car payment or your home mortgage payment is absorbing more of your monthly budget you have less money to buy other things so it affects everything even those things not bought on credit and my concern with the -- with the way the federal reserve is

making decisions is that they're just operating with too much lay t t latency, the data is stale they were slow to raise interest rates and now i i this they're going to be slow to lower them >> that may be we spend a lot of time talking about that on cnbc, perhaps too much but latency that takes me to pricing. you discussed latency in the inability to understand what's going on in the market for those cars, as opposed to many of the legacy and other competitors. >> yes we have real-time information on demand so we know how many people place an order for a tesla yesterday so the computer calculates that all and literally every day we get, you know, an automated email to the exact staff that says how many people placed an order, in which countries, for

which cars so we know the orders were yesterday. and right, you don't want to overreact to these things because sometimes you get little dips for reasons that are hard to explain. >> do you look at them every day? >> yeah. you -- if the week is slow, you don't want to overreact to that. but if you look at the trend, say, for the -- over two-week span or something like that, you can see this, for some reason, the demand is less than it was or it's higher >> do you just price to that >> yes >> are you almost like an airline at this point in terms of kind of dynamic pricing model? >> yes so we're basically adjust pricing to match demand. and we obviously did a big price

drop in q1, january is usually a terrible time for car buying there's seasonality to car purchases. january is often the worst month. so we had a price drop and then recently we did price increase so, as i mentioned to the audience, the reality is that all companies do -- all car companies make significant adjustments to price because you have the msrp number and if demand is high, dealers charge some premium over msrp, if demand is lower they have manufacturing incentives so you can actually see a very big difference over the course of, say, six months between the peak to trough of all cars it's just that tesla is immediate and transparent it's not msp and then markups or discounts. >> after your last earnings a

lot of investors came away wanting to talk about your margins and your pricing in particular i think you talked about vehicle cost reduction you sort of even said, it's hard to explain the technically selling cars now for no profit and still yielding tremendous economics over time. >> yes. >> i'd like you to explain what more of that means you did a bit in the meeting as well talking about the move from manual to autonomous and the value add that comes along with that but explain to people why that's profound and why conceivably, not that you want to, you can sell automobiles now for no profit and still make an enormous profit in the future. >> yes so tesla is the only car company selling cars where we believe the car is capable of achieving full autonomy with a software update the value of a fully autonomous car is, we think, perhaps five

times more valuable than a nonautonomous car. >> why >> the utility of a car, typically a passenger car, is ten hours a week, maybe 1. if you say someone is going to drive an hour and a half a day, on average maybe an hour commute per day and then occasional long trip. but say 10, 12 hours a week is typical for a passenger vehicle. and then you also have a lot of costs associated with parking, a garage, buy a parking space, or get a parking ticket at the mall, there's a lot of costs associated with cars and if you have a car that's autonomous that can go around and essentially be like an autonomous uber, the utility i think is going to be -- well, it's going to be much higher perhaps -- this, again, so much

speculative. >> it is somewhat speculative. he is talking about autonomy coming soon, something he's done previously, of course, and it hasn't and this we try to understand what exactly the model looks like in terms of revenue share with the passenger he said it's part of the tesla agreement at this point but revenues will go to tesla and will actually accrue to the person whose car it is that is obviously becoming a tesla robo taxi >> i'm trying to glean from the comments, david, what do you think he -- what was your takeaway about what he said about tesla demand because they're making these dynamic pricing, right, moves, and at the same time he says it's a rough year for auto makers and the fed is going to be late when it comes to cutting rates, which is bearish, but that tesla continues to do well and the average selling price is below other cars, and then do ads which reminds me of a traditional auto maker

so what kind of shape is tesla in, do you think, after meeting with him >> i think it's fine shape but he's concerned about the auto sales. you know last year was the weakest in 11 years. i don't think he sees that i improving any time soon. i do believe he sees this great opportunity and tesla bulls will tell you they do as well, quoted ka kathy woods, for example, when they go to the autonomy upgrade what it means for the value of the automobile >> and the question of whether he views smaller chinese rivals as a threat, at least on price, and clearly annoyed at george sor soros. >> i can tell you this, george

soros one of his friends i don't know if he knows what a tesla is let alone has anything to do with selling the stock he doesn't sell or buy stocks. hasn't done that in a really long time. >> i love when he said, i'm not anti-semitic i'm pro-semitic. >> pro-semite. >> yeah. >> it was interesting. >> a good line. >> it was a good line. >> turning to target eager to hear what musk has to say about a.i. but let's hit target the company beat on earnings expectations amid a slow down in sales. comp store sales flat for the fiscal first quarter sticking with the previous full year guidance, though the q2 guidance is what disappointed some on wall street. interesting to see the stock up given what target said about the quarter. i had a chance to talk to the cfo about what they were seeing. and why the more cautious stance

on the q2. first of all what he said is he's happy with the current quarter, saw traffic rise even against flat comps he said that tells him even in the tough environment people are choosing target. we had traffic up in the quarter. which is evidence to us that amid a challenging consumer background guests keep picking target he noted the consumer discretionary items, which we know where the pain is, home apparel, hard lines, which are things like electronics, those were soft. what was strong? beauty, mid teens growth there and food what they saw in the quarter was the discretionary items deteriorated they started -- they ended weaker than where they started for the quarter. we think it's prudent to plan and position cautiously. the trend softened during the quarter. the trend is appropriate you know, target has lagged this

year, and a lot of this is pretty expected. so perhaps one reason why the stock is up. and the market, also, potentially rewarding the inventory, which they continue to draw down and emphasize the profitability. and i asked why keep your guidance for the full year expecting a weak q2 and seeing trend soften >> he said they've been doing these efficiency restructuring things to boost earnings power and that will materialize in the back half of the year. >> hockey stick guidance as we said with jim. to your point about discretionary down 5 to 11, beauty up 15 we'll talk to david about margins which are showing sequential improvement and whether or not that's the result of these tough measures that have been put in by all kinds of companies the last couple of quarters. >> he emphasized they're not cutting jobs, not doing layoffs, not the cost cuts we're seeing in tech companies, but a lot of

room for just being more efficient in the overall business when it comes to delivering product and getting through the system they're continuing to invest still, though, in things like pick up at stores and online delivery and that thing. the other thing people are talking about after target is the problem with theft shrink in the industry. >> we talked about it in the last hour. half a billion dollars that has to get a lot of attention. >> for the year. >> for the year. half a bill in potential profits leaving the store and/or the web. >> he said we're seeing an increase in theft and organized retail crime increase in shrink that was more than we expected it's part of the cautious around q2. >> i said is this on the coast, a san francisco store? he said, no, we see it across the united states. it's a problem that's not just target specific. seeing it across retail. so these retailers need to be working harder with law

enforcement and investing in their own security protecting their goods because it's an issue now for profitability and a sad commentary for what's happening in retail now. >> it is what levers do they have in terms of being able to have law enforcement crack down on the organized crime rates? >> they're going to have to pay to get their own security in their stores and to guard certain products and keep an eye on it. clearly it's worse than expected. >> as jim suggested also involves a supply chain not just the store front. as we said after the break goldman's chief equity strategist joins us. we'll talk about the volatility, debt ceiling, margins and more as we lost some gains from the open but still hanging onto a 64 point gain

welcome back to "squawk on the street" house speaker kevin mccarthy earlier this morning on cnbc showing opt micimism of avoiding a debt default. >> the only thing i'm confident about now we have a structure to come to a conclusion the time line is very tight but we're going to make sure we're in the room and get it done. >> you're not confident there will not be a debt default >> i think at the end of the day we do not have the debt default. i think we got the president to agree to negotiate finally >> joining us is david kastin.

that's an important message for the markets with the volatility we've seen >> absolutely. the expectation is there will not be a default the investor market has been flat i looked at my calendar. i was here on april 11th the stock market traded at 4109. last night it was 4109 it was flat. that's the expectation as the market will be flat. as you pointed out there is a kink and risk about the debt ceiling but the vulnerability of the market, it's suggestive there's more risk not less that's why we're adopting a more defensive position and 4,000 is the target for the next nine months. >> you're above consensus on where you think earnings are coming in. >> expectations are in line. it's a flat level of earnings p p the first quarter results, the end of that right now, earnings

down 3%. revenues are up, inflation helped a lot of companies on the top line but margins came down that's the issue we've seen now three quarters of margin compression. third quarter, fourth quarter and the first quarter this year all showing margin compression that's i think an important dynamic. probably reset at these levels around 11% or so and that's a headwind. the economy is growing roughly 1% think about the economy, earnings, valuation, and money flow and the risks around all of those, in our base case, is a flat market. and we think we're optimistic with respect to the economy. there's one in three probability of a recession in the next 12 months consensus two out of three likelihoods. two-thirds probability that would say if our expectations materialized, the market is trading at right now cyclical stocks versus defensive stocks trading in line with a 1% gdp

growth only one out of three probability of recession is suggestive where we are today. the distribution around earning is margins go lower not our expec expectations margins lower this year and next year flattish around these levels the expectations is margins expand a lot p p that's a possibility but we'll see if that materializes. our view for earnings next year is roughly 5%. valuation we're at 85th percentile it's one of these things we talked about market is highly valued absolutely and relative to interest rate one thing you pointed out is the interest rate environment, the money flow drivers, 5 and a quarter percent on t bills and 5 1/2 percent earning yield. so the money is flowing, $700 billion into money market mutual funds this year and out

of u.s. equities it's a challenging environment and that's why where the opportunities are in the market. >> a great piece on the tape this morning about how recession calls have gotten pushed out and they say we feel good about saying where we were on our recession based case your view earlier in the week was the negative revision cycle on earnings probably the worst is behind us. >> correct. >> explain that. >> a positive development that the cuts that have traditionally taken place have been sort of materialized already and the expectations coming into the quarter were that earnings would be down 7% year over year, ended up being down 3% that's slightly better than was feared in terms of the earnings results and the cuts we've seen have sort of ebbed and now we're at the neutral position between positive and negative revisions. a positive development that earnings or margins sort of hovering around these levels

>> could you go as far as to say there's upside to earnings and with -- either an extended pause or rate cuts that the picture gets brighter? >> that's interesting. the idea if you had cuts what's the impetus for the cuts is it because the economy is weakening, the recession, that would have some consequences under gridding the earnings would be questioned. on the other hand is it because there's inflation eased in which case it's a positive story expectations of my colleagues is that the fed will not be cutting in the second half of the year they're paused they've hiked to these levels and they'll be at this environment, the forward market is pricing three cuts, not our view so in that environment what's the reasons for that cut basically forward market is suggesting maybe recession likely. >> others argued take your gains in europe, nice ride china's recovery, cutting their

target on china gdp, data this week soft. does the u.s. look better? if. >> china has been a laggard, up 3% year-to-date in terms of the index. we talk about the opportunities with the u.s. thinking better, more clarity, not at lot of upside we'll think of opportunities we have the russell rebalancing taking place this week a set of preliminary constituents will be added that scenario we talk about with clients. think about more stable growth companies. the idea the uncertainty in the economic environment suggests that companies that have stable earnings are some of the consumer staples had a conversation with goldman, jason english my colleague, a lot of positive takeaways from that that's an idea energy stocks very undervalued, cheapest in 30 years those are pockets of opportunity we loo at. otherwise the market itself is a

flash environment. the market has been really efficient since march 8th when you had the silicone valley situation, financials down a lot, cyclicals somewhat, tech is the leader. >> when you say flat market, markets expensive. the market performance is ten stocks so isn't it hard to make a forecast for the s&p >> that's right. incredibly narrow breath and that is not usually a confidence inspiring thing from the equity market rallying over time. we need to get -- not need but one would expect a higher market led by not just a few number stocks so those few stocks are delivering most of the runs here. you have the big stocks that have doubled in value this year. >> but also sara's point, the market cap of a handful of companies represent an enormous percentage of the s&p. >> you say the s&p target are you factoring in if what you think happens with nvidia, tesla, microsoft, apple?

>> absolutely. look at this, we look at a two-prong market, forecast for five or six stocks and then you have 494 stocks and think about how that's going to play out and those leaders have to deliver. that was the challenge last year, the expectation of the revenue growth has diminished. for a decade it was the driving force of the market. it was these few stocks but specific because they had better sales. now the expectation had weakened a bit and now reasserted itself expectation wise, part of it is the alternative generative a.i if that's the case they can deliver. it's a story of revenues and margins and those companies have been leaders in both of those variables which are the key factors we talk about. >> david, thank you. a lot done there. as we go to break, banks are leading today. about a one week high. every component green.

see coamerica in there key, fifth third, all up 5 and two thirds pack in two. ♪ (upbeat music) ♪ ( ♪♪ ) constant contact's advanced automation lets you send the right message at the right time, every time. ( ♪♪ ) constant contact. helping the small stand tall. - psst! susan! with paycom, employees do their own payroll. - what's paycom? a magic payroll genie? - it's a payroll app. - payroll is way too complicated for the average person.

- paycom guides them through it. missing or duplicate punches, pending expenses, unapproved pto, on and on. - why would employees wanna do all that? - this could be a stretch, but i think it's 'cause they wanna get paid correctly. i like getting paid correctly. we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you

have no idea! hey, guys! you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

we are keeping our eye on washington this hour, just getting word that president biden will be speaking around 10:45 a.m. eastern about the debt ceiling remember, he's set to go today to a group of seven meeting in japan where he said he's going to be very much in touch with lawmakers to stay tuned to the negotiations we'll wait to hear from him this morning about where those negotiations stand on the debt ceiling ahead of the june 1st x date set by the treasury department we'll bring it to you live when it happens we're back live in a moment on "squawk on the street.

♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

i'm pippa stevens here's your cnbc news update. legislation banning most abortions after 12 weeks of pregnancy will soon become law in north carolina. the generally assembly overrode general roy cooper's veto of the

bill it restricts abortion to 12 weeks with exceptions to rape, incest and other scenarios the new law is set to take effect july 1st. the demand for mortgages dropped last week. new numbers show applications dropped nearly 5% last week. a shortage of homes for sale is also taking a toll on demand the san antonio spurs hit the lottery jackpot last night landing the number one pick and the right to draft one of the most highly touted prospects in history. the 19-year-old center is expected to make an immediate impact in the league back to you. >> thank you san antonio. tim duncan, david robinson perhaps another dynasty in the making yesterday we had an interview with elon musk in which we spoke about a wide

range of topics. china, artificial intelligence, and even advertising >> i believe in listening to shareholders and i actually was surprised by the level of enthusiasm for advertising since we have not historically done that but it's some good logic to it in that if we're simply sending information with the tesla account we're preaching to the converted and not reaching people that are not already convinced, essentially so i think they have a good point. >> am i going to see tesla ads during the nfl broadcast on a given sunday, monday, thursday, the nfl is always on >> bear in mind i just agreed to it so i don't have a fully formed strategy. >> how much time does go into these things is it something you decided to do on stage or did you know

coming in if this comes up i may go there >> the questions are not scripted in if any way >> right. >> so -- >> so in that moment you said we'll do some ads? >> that's right. >> so we're like 20 minutes later and i'm asking you detailed questions you don't have answers, i guess. >> like i said, i believe advertising should be informative about a product. it should be ideally aesthetically pleasing, some artistic element to it and it should be something you don't regret watching after it's done and i think if advertising fits those criteria it starts to approach content you want advertising that is as close to content as possible such that you don't regret the time you spent watching it. >> i would like to get to china, which is obviously an important market for you i notice the chart you put up, byd is the only company that seems to be making money so far. are you concerned at all about,

you know, ruthless pricing at the low end of the chinese market and what that means to your market share there? >> currently limitation with is the production rate of our shanghai factory, it's not demand so i mean, i -- it -- so it -- that -- there's some constraints on our ability to expand in china. and so, it's -- we're making as many cars as we can. it's not a demand issue. >> you'll be making batteries soon as well >> yes yes. for the megapack mostly for non-u.s. markets. >> are you concerned at all about the growing belligerence between china and the u.s. >> i think that should be a concern for everyone >> i think you're right. i think it is shared by many people who run large organizations and smaller ones do you think, for example, china

will make a move to take control of taiwan? >> the official policy of china is that. >> taiwan should be integrated one does not need to read between the lines. one can read the lines so i think there's an inevitability to the situation >> that would not be good for tesla, or any -- any company in the world frankly. >> for any company in the world. >> i think most -- almost no one realizes that the chinese economy and the rest of the global economy are like conjoined twins. it would be like trying to separate conjoined twins that's the severity of the situation. it's actually worse for a lot of other companies than it is for

tesla. i'm not sure where you get an iphone, for example. apple recently started doing a small amount -- >> twitter, sam altman was on the hill today and he said a.i.'s ability to manipulate disinformation is a significant area of concern. >> yes. >> it's moving so quickly. >> it is an area of concern. >> i'm curious whether you agree with that, how you see that playing out on twitter with people who -- who knows someone can look like you and me and use our voice -- i don't know what it could be. >> that is happening big time. so the -- so the reason that i'm asking people to be verified on twitter, and that we're saying verification means you have a phone number from a reputable carrier. you've passed through whatever

their security mechanisms are, that you have a credit card so you now have passed through whatever security mechanisms the card has and there's some small amount of money paid per month that increases the cost of fake accounts and the -- with the latest a.i., it can bypass basically every test for are you a human so then how do you know that a million accounts were created -- how do you know that those are people >> i don't know. how do you. >> exactly you have to do account verification >> and the thing that makes -- like if i -- i sort of put myself in a position of if it was my goal to manipulate public opinion or create millions of accounts and make it seem as

though the topic is trending and this is what the public believes but in order to do so i had to get a million phone numbers, credit card numbers, pay 8 bucks a month and have that not be traceable or clustered, i would say impossible impossible so the goal of the twitter verification is fundamentally to prevent a.i. manipulation of the system i would say that -- and i mentioned this at the shareholder meeting. that tesla has actually tremendous capability in real world a.i. in fact, it is far ahead of any -- >> i know people on twitter prior to our interview were saying, he never gets asked about how advanced his a.i. is at tesla always talk about the other names. >> tesla a.i. is, like i said,

it's like -- it's -- i'm not sure who's second, frankly. >> why is that what are people not understanding about what you have and why are we talking about chatgpt and generative a.i. at open a.i. and what microsoft is going to be able to do with it and not about tesla >> i don't know. people do talk about it online i think tesla will have sort of a chatgpt moment if not this year i say no later than next year. >> say that again. you'll have a -- >> sort of a chatgpt moment. >> you will? in terms of suddenly it will -- >> suddenly 3 million cars will be able to drive themselves with no one. >> that gets back to our conversation earlier about the value add proposition that certainly the bulls in tesla believe will be there which that suddenly 3 million cars able to drive themselves, creating that robo taxi fleet he's been talking about for years that hasn't come to fruition yet.

>> he said this year >> he put a number of qualifiers on it. but he's feeling optimistic, yes. >> that's good. >> i guess. >> the china stuff is not so optimistic. >> it's not. it's not there's a lot of -- who knows. jim went into a sort of long analysis of what we're doing right now, in terms of what we're doing in the u.s. or how we're defending taiwan but that is a concern. >> i wonder if he's making any tragedy moves operationally in advance of that, if that does feed his overall world view of what will happen in the next five or ten years. if that's altering on the margin, his willingness to invest or engage with leadership there. >> it's a great question, carl the battery factory is just beginning to be built. it will not be shipping batteries here as e had said but to the rest of the market around the world. but china is obviously important

and an important component of profits for the company as well as a number of companies we also know well. >> let's continue that conversation this morning bring in wesley group, steve wesley. it's great to have you. >> great to be here. >> the street is zeroing in on the macro and the idea that the auto business is in for a difficult 12 months. i wonder what you make of that >> well, look, yesterday was interesting day, top level, tesla just posted a record quarter 4022,022 cars. they 'growing year over year, no one is close in the auto industry and posted their 15th quarter of profitability so i think they're in good shape. three interesting things that came up yesterday. jb straubel is coming on board

that's great china is the biggest competition. you'll hear more about that in the future and they'll be selling on u.s. shores in '24 or '25. i think the biggest news, a little under covered here. is for 41 years in a row, the number one selling vehicle in the united states has been ford f-150 selling 650,000 vehicles a year tesla will start selling the cyber truck in september, they have a bag log of 1.5 million orders they'll be coming out of the austin plant probably a capacity of 250,000 a year. if tesla manages to take a big piece of ford's auto production with their most productive line that would be a game changer for me that was the big headline yesterday we'll see how things shape up. >> when he says i'll say what i want to say and if the

consequence of doing that is losing money so be it. i know he's referring to twitter really but i wonder if he's referring to tesla too and investors should take that into account? >> i've known elon for 25 years, if nothing else he's brill i can't want and unpredictable i think he does say exactly what he thinks at that time and the board will have to decide if he oversteps his boundaries but it's hard to argue with the performance of tesla. >> let's talk about the cyber truck, i got a look at it yesterday and walked by where they're manufacturing it he feels optimistic it'll be here later in the year it's a new manufacturing process. what are your ultimate expectations because it's different than anything out there from a design standpoint as well. >> well, i won't be buying one but who cares what i think the reality is, ford has made a pretty darn good ef-150 to take

on the legacy and hopefully bring the young ev truck buyers with them. rivian has a good vehicle on the market but ford only managed to sell 16,000 of the units last year. it's all about production. i think they may double or triple those sales volumes this year but tesla, has experienced manufacturing, the others don't. their facility can do 250,000 units a year i have a hunch they'll come in at 25 or 40,000 this year but next year i think over 200,000 if they execute on that, there's going to be real pressure on ford stock we'll see if they can ramp up manufacturing. we know the demand is there, 1.5 million orders in the queue. even if a third go away, tesla's cyber truck could be a game changer we'll see. >> how do we move to the openness of advertising that he talked about

one hand great it could unlock sales but the other hand it makes you think tesla is acting like a traditional auto maker. it never had to advertise because it was acting as a league of its own with demand. >> i have mixed feelings about it number one, elon has done something that nobody has done before, created probably one of the top ten brands on the planet while spending zero advertising dollars. business schools will talk about that for decades but this is the big picture point is elon is carefully at tesla done things behind the scenes for the last ten years to bring cost of production of vehicles down, they have the lowest cost battery production in the world today they have robotized the vehicle lines. and they're the first to get selling over the air software features which dropped

profitability to the bottom line the punch line is, they are more profitable than anybody else out there. they get twice the profitability on every car they sell than toyota, 3x volkswagen and 5x what ford gets they can afford it, they can go from a more expensive vehicle to a lower cost vehicle and elon hinted a little bit about the potential for a $25,000 tesla. if that happens, they'll be in a league of their own. he probably should be advertising with the beer commercials on the super bowl. we'll see. >> the white rabbit that everyone is trying to chase, as some say steve, fascinating and great to get your reaction to david's interview. thanks steve westerly >> you bet, thank you. speaking of that interview, one last excerpt to share with you. we spoke with mr. musk a good deal about a.i. towards the end of the hour we spent together. and my final question was really

much about the future and really the future for many of our kids. take a listen. >> i want to end on one a.i. question you have a lot of kids i have some kids i have one who's actually soon to go into the workforce i struggle with how to advise him about a career when this technology exists and will only improve. i'm just curious when you think about advising your kids on a career with so much changing what do you tell them is going to be a value? >> well, that is a tough question to answer i guess i would say to sort of follow their heart in terms of what they find interesting to do

or fulfilling to do. and try to be as useful as possible to the rest of society. you know, if we do get to the magic genie situation where you can ask a.i. for anything, and let's say it's even -- let's say it's benign scenario, how do we find fulfilfulfillment? how do we find meaning in life if a.i. can do your job better than you can i mean, if i think about it too hard it frankly can be disparaging and dem-motivating because i put a lot of blood, sweat and tears into creating

companies. should i do this if i'm sacrificing time with friends and family that would prefer -- but then the a.i. can do these things, does that make sense? i don't know to some extentremain motivated so i guess i would say, just, you know, work on things that you find interesting, fulfilling, and that contribute some good to the rest of society. >> a somewhat somber note to end our hour on. i was struck by his sort of inability in many ways to answer that question. i haven't been able to answer it, either, by the way >> also, neither can sam altman. he was asked about it yesterday on the hill. is ai going to replace all the jobs and what do we do about that and i don't think there is a good answer. because we don't know, exactly >> no. >> which jobs will be replaced and how to train future workers right now to deal with that.

>> we just know things are going to change a great deal so i thinkyou have to be flexible >> yeah, and you're struck by the way that he phrases it, even in a benign situation, right, where things are working in -- with no malfeasance. >> in a positive way for humanity, or at least a potentially positive way >> he says, what happens to -- where will we find fulfillment but what happens to human choice, if at any point, we can say, what is the best thing to do, and it tells that -- going to dinner tonight, where should we go? you would never have to think about that again what happens to the wiring of the human brain. it will be fascinating to see. >> i had a great application of ai this week when you apply for a home, you know, you have to get recommendation letters on condo boards in new york city. turns out chatgpt does a great four-paragraph on that >> in three seconds. >> in three seconds. i don't know that that eliminates any jobs, but it certainly is a productivity tool for my time. >> and it is happening so

quickly. i'm going to write down his answer, though it's a good -- i think there actually is something optimistic about it do something that you find interesting and care about and hope that you don't get replaced by a machine >> in the few years we have left on this planet, right? >> before they come for us oh-k >> it was good in so many ways, because it made him think. and it was better to watch on tv, because of those twitter pauses i kept thinking, we lost audio on tv, nothing replaces it taking a look at stocks here we are higher on the s&p 500 and the nasdaq has joined the party as well. thanks in part to a rally in tesla, amazon and nvidia, higher just by some weakness in apple s&p a third of 1%. we'll be right back, waiting on the president on the debt ceiling.

lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. (swords clashing) at-had enough?t, -no... arthritis. here. aspercreme arthritis. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

expecting to hear from the president in a few moments from the roosevelt room about the debt ceiling before his trip to asia begins today. a trip that's been cut short, scheduling wise, because of these ongoing negotiations one reason market's a little bit bright today amid optimism that a deal could be done you listen to the speaker, maybe in a week, hard to say >> communicating the urgency by cutting the trip short i think taken as a good thing on all the research notes they just want to see that the talks are ongoing and the urgency is there to get something done we heard that echoed by the house speaker on the morning show here on cnbc. and all positive, but we don't have a deal yet. we wait to hear from the president to see what happens on that front guys, i'm paying attention to the rise in treasury yields and the u.s. dollar. because one thing we haven't talked about is the data has come in pretty good. housing construction data today,

strong, adding to -- we got the home builder sentiment yesterday. adding to some evidence that the housing market may have bottomed and is turning up. it's not exactly what's supposed to be happening here, with the fed raising interest rates so is there enough evidence for the fed for them to feel comfortable pausing in june and not raising again, even later than that. i think that's something the market's grappling with. >> yeah, even as goldman up there, a q2 gdp tracker yesterday. some discussion even this morning that maybe jolts are overstating the demand for labor. we'll watch and wait for the president. "squawk on the street" continues teth afr is

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. purposefully divergent. ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel,

and grow. constant contact. helping the small stand tall. i'm andrea, founder of a boutique handbag brand - andi - and this is why i switched to shopify. it's the challenges that we don't expect, like a site going down or the checkout wouldn't work. what's nice about shopify is when i'm with my family, when i'm taking time off, knowing that i have a site up and running and our business is moving forward because we have a platform that we can rely on. that is gold to us. start your free trial at shopify today.

good wednesday morning i'm sara eisen with carl quintanilla. president biden expected to speak momentarily with the ongoing talks. kevin mccarthy telling cnbc that the u.s. won't have a debt default. >> jeff solman joins us on why he thinks the market has not priced in the worst. busy week for the media as well. we have hulu's future on the air for netflix ads and new number