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tv   Squawk on the Street  CNBC  May 18, 2023 9:00am-11:00am EDT

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if you're watching the nasdaq, it's down about two points ten-year yield continues to climb, now sitting at 3.629% after starting the morning below 3.6% that does it for us today. join us tomorrow when it will be tgif "squawk on the street" begins right now. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange coming off the best day for stocks in a couple of weeks, nasdaq at new highs for the year that labor market data this morning comes in a little warm futures do lose some gains and that two-year yield back to 4.2% our road map begins with retail and the consumer walmart rallying after raising their full-year guidance plus we've got the return of that big-tech trade, nvidia and meta, they're both up more than
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100% year-to-date. names such as apple and microsoft have also rallied shortly. we're also keeping an eye on shares of cisco. they are moving ahead of the open let's get to walmart up in the premarket, company posts a quarterly beat, raises its outlook for the full year, although the current quarter guidance is just shy of consensus. u.s. comps up 7.4% we were looking for something with a 5%. e-commerce, though, up 26, jim, after amazon, 11, and target, down 3 >> i'm so glad you pointed that out. the two surprises are e-commerce and international. yesterday, brian cornell, you know, otherwise i thought a really good call from target, mentioned, hey, of course you know that e-commerce is slowing down more people are coming back to the stores and it was said in the notion of, of course. well, of course, walmart continues to build e-commerce, and david, you know how you first brought out that amazon could have this amazing
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advertising business >> yeah. we discussed it sometime back. >> walmart making money >> are they? >> yeah, a lot of money. and you've got john rainey there. >> john david rainey apparently he likes to go by his full anytime >> i was jimmy cramer on the trading desk >> that's what courtney says in her notes here john david rainey. >> listen, princess bride, there is -- the early read is so positive on walmart that it makes me wonder why anyone felt -- i mean, did people really think it was going to be bad after target it's better than target, but a lot of it's food, but then again, who cares food may not have the margins, but the fact is that they pivoted big, and it's interesting that they're talking about how people are buying smaller form factor. they should be buying the walmart brand, which tastes really good. i could do a taste test with
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you. you wouldn't know. string beans >> really? string beans there's a walmart string bean brand? >> it's about as good as it gets >> interesting >> i didn't know that. >> yo, yo, yo, david giant, it's fantastic. one for one. i did taste tests. >> why wouldn't you be doing taste tests for string beans >> channel checks. >> let me check the string bean quality today at walmart because i have nothing else to do >> really granular research. >> we'll get to that >> let me tell you, okay >> the cfo does say consumers are trading down to smaller pack sizes. >> that makes sense because it's the big ripoff >> and also says discretionary spending on home electronics, apparel are selective. >> the canes at target was an amazing dropoff. look, i just think that when you look at what walmart's doing, the operating margins are really
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good, and i think -- point that out within the confines of how much they raised people's salaries remember when they had that $14 salary, and you thought, wait a second >> i remember when -- a long time ago, my second documentary -- it was ten bucks. that's what they were talking about. that was a debate around $10 that was a long time ago >> does walmart not know about the 13th amendment then you did amazon, and my father said, did amazon not know that they freed the slaves those documentaries, they reminded me of -- it was like they were with a factory floor behind them. >> that was different. but to your point, it's a long time ago, and wages have gone up dramatically, and we don't talk about it we don't talk about that as a -- as an issue any longer for walmart. and frankly, amazon led the way to a certain extent. >> how about target putting so many people through school nobody cares people care about esg more than they care about this
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these companies have made major changes, and yet they are so impressive in how much money they've made and how big they became during covid. it was obvious that w.a.t.c.h. just took huge market share away from everyone. and they did it -- by the way, home depot, it did -- it was bad weather in california. it is one fifth their stores i didn't think home depot was that bad i think lowe's will tell us. you'll see it's not that bad home depot was up $10 yesterday. i think that these companies have pulled away a lot of retailers closed during covid. forget that there were these -- it was really hard to get the special payments, the ppp. what happens is the marginal guys closed, and then it's, look out. and walmart is a big winner during this period >> they also increased that whole picking up at the store -- ordering online, picking up at the store, using the store as a distribution center. >> and people -- walmart really did well with that target did well too.
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again, i don't want to -- this quarter was excellent for walmart. excellent. >> as a percentage of sales, e-commerce, now 17% versus 6% in 2019 that's tripled during covid. >> these guys know how to do it, and they did it in a way, if you use it, the whole thing is completely automated it's just 100% -- look, this is like 100% digitized. and you have just got to applaud them >> we'll talk about that, the reaction to home depot, target, even yesterday, but first, steve liesman has breaking headlines from fed governor phillip jefferson. hey, steve >> yeah, let me explain why phil jefferson, the fed governor, has been nominated by president joe biden to become the vice chair of the federal reserve board so we do listen to what he has to say. it's a complex message here from the fed governor he says, a year is not long enough to feel the full effects of rate hikes. that's a guy who sounds like he
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might want to be on hold here for a bit. but he goes on to say inflation is too high with gdp slowing considerably the effects of slower gdp, however, have not been seen in the labor market so far. he does expect, however, a slowing economy to reduce job growth gradually, raising the unemployment rate over time. that's the expectation but the pace of wage growth, he says, is not consistent with a 2% inflation target. inflation has come down substantially, he says, but it's still too high, especially the core service sector, housing inflation progress has been slowing. that's an important thing that we're hearing from fed officials, that they're not happy with the pace at which inflation is coming down it remains a challenge, he says, outside of energy and the food sector he also says that he expects the economy to go more slowly in the second quarter and throughout the year the base case, not a recession, but that slower growth is what he expects for the remainder of
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2023 on the other side, he sees tighter financial conditions, lower consumer sentiment, and a decline in household savings when it comes to risk to the economy, there is downside risk in the degree of bank lending restraint. sounds to me, guys, like a guy who wants to be on hold for a bit, but he could be convinced to go higher if, indeed, the banking stress does not lead to additional tightening of economic conditions and a slower economy. carl >> steve, yesterday, atlanta fed goes to 2.9% and claims just gave us the biggest drop since 2021 i mean, if you didn't know there had been bank stress, it would have been hard to see it in some of these numbers >> it's not showing up in the job market really interesting numbers this morning in the claims numbers. because the claims number, you know, week to week, was higher, but the continuing claims has dropped, which means -- it tells you that at least in a one-week basis here, people who are losing their jobs are finding jobs, again, relatively quickly,
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such that there's not continuing claims out there this economy has remained a puzzle, carl, over many months now, especially in the week of the pandemic slowdown and now the job market won't quit. the gdp forecast, as you say, are actually for an acceleration in the second quarter, so not precisely clear what governor jefferson is talking about with slower second quarter growth >> we'll watch it on the heels of logan's comments as well, steve. thanks talk in a bit. steve liesman today, busy day for fed speak. let's talk about the big tech retail yesterday. with today's gains, nvidia and meta are both up more than 100% for the year the two best-performing stocks in the s&p and also two of the seven largest, jim, nasdaq high, best day yesterday for small caps versus large since november >> these are stocks that i have owned for my travel trust, you know, look, i make mistakes, no doubt about it, but for ages, and the reason is because, well, meta, we just got montana, if
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we're meta >> tiktok ban in montana, you're talking about. >> reels is doing very well. but nvidia, i mean, look, yesterday, cisco, and we can talk about cisco's quarter later, but it is so clear that cisco's trying to get the wires out of nvidia. everyone wants the wires out of nvidia by the way, just now, jensen huang, who was great in an interview jyesterday, revealed something to make gamers have the best gaming chips. there isn't anything this man doesn't have right now, but the most important thing is that you cannot run any of these a.i. formats without his chip >> without the h-100 without the gpu that you need manufactured by tsm, designed by nvidia, which is now, by the way, a $750 billion market cap company again. >> $40,000 for h-100 by the way -- >> to your credit, you've been talking about a.i. and nvidia for a very long time
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in fact, even back to the time that nobody understood what you were saying, because you would talk about these things called da vinci >> i said i wanted to listen to henry iv part ii the only thing he didn't have was shakespeare. >> shakespeare will be back. nvidia, microsoft, now alphabet with the recent rally off their presentation from last week, which seemed to encourage investors after being discouraged about where they stood on a.i meta now maybe tesla. if you listen to musk, what he said the other day >> that's where i was going. there's no love lost between tesla and nvidia >> but they use their chips. >> they used to. they were pals but it doesn't sound like they're pals now >> we have -- >> jensen is one of the most diplomatic people on earth you saw him with bill mcdermott.
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people should understand that was a service now -- you raise 50 points there. if you're in the same room as jensen, your stock goes higher >> yeah, kind of like with snow where the ba of a desk says, well, they had a.i. mentioned next to their name last night. >> it is like that there's one that we haven't talked about that has a.i. and cloud, and it's evaluated at nine times earnings. alibaba. >> they did report earnings. stock is up a bit. they're doing a spin >> on their cloud business >> well, parking lt of it, yes >> yeah, but you get a.i., whatever the government will give you in terms of a.i the stock is down? are you kidding me >> i saw it up three bucks earlier. >> that's just wrong david, you're getting their cloud business >> let's look at notes here.
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>> it's a pure play. >> they're also splitting the company up into all these different components, right? six major business groups. each of which will have an -- will be independently managed by their own chief executive and boards, and they're able to do their own capital raise. and they are, as jim says, also going to be spinning off their cloud intelligence that's a stock dividend distribution to shareholders >> how could the company that has cloud in it be worth nine times earnings when we have our -- well, maybe it's the prc doesn't. >> the core business is not growing right now, right i mean, tabau and timau are not growing. they did say in march they started to see an inflection toward dwgrowth again as the chinese consumer started to come back >> it's an interesting situation, versus nvidia, which is just an insane situation, big keynote at the end of the month about what he really means,
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jensen >> there's also the question as to whether the big will just get bigger here. lina khan, a guest on "squawk box" last week talked about it >> is she angst about this >> i think she's angst about a lot of things, but you do need to have a very big balance sheet in order to support the computing power you need, certainly for these generative a.i. models and these large language models. >> if you want a card -- first of all, you can't get any. they're sold out for ages. but you try to make a special deal with nvidia that's what happens. >> special deal? how do you make a special deal >> you call jensen, and you say, i'd like to make a special deal. >> what does he say? >> he doesn't -- look, it's $40,000 on ebay. >> doesn't he say, there are no special deals? >> no, he makes deals. he's like everybody else >> so you just need a phone? >> i lost my phone no they have a business they told you. alphabet, oracle, these are companies -- look at this guy.
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>> little tar, i think, i saw. >> getting ready >> it's a very big deal to make that phone call and get the chips if you can get them. it's taiwan semi, and we must preserve taiwan semi because it's very clear to me that the united states says they should not be a colony. that's, again, a play on what you said >> oh, well, no, what musk said. >> when we come back, we'll get more to cisco as shares are moving lower, despite that quarterly beat you'll hear what jim robins told jim last night on "mad money." meta has news. we'll get to micron and others as futures lost some gains and trying to unboce a little bit on the heels of jefferson's comments don't go away. conventional thinking delivers conventional results. at allspring, we break away with purpose.
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cisco is down in the premarket despite this quarterly beat there were some concerns last night about declining orders last night on "mad money," chuck robbins did talk to jim about the backlog. >> we're going to endthe year with a backlog that's still double what we would normally have at the end of any given year we have $32 billion in rpo we have $24 billion in arr, and so we have a reasonable amount of visibility to the next 12 to 15 months, and so it's something that we're working through, but it's reflective of the customers' desire for our technology >> now, there's lead times
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involved they're asking us to look sequentially, not annually >> right, and look, i'm just going to take it right from the bank of america piece, because it just represents the conventional wisdom, but orders declines, 23%, which is very big, suggests demand environment is weak. now, chuck contested that's not the case, but he did mention elongation he used that word, which we never want to hear we talk about macro factors. you're stuck in this situation where you have all sorts of records, operating cash flow, revenues, just fantastic, but people have been saying, look, once things -- once there's more availability for product, which they had had a problem getting, you're going to see a dropoff, and the oddest thing is that chuck came on our show and said this was going to happen they got it. and yet, everyone still freaks out. and so, i think that i almost want to say that the stock's been cursed. because if you look at what chuck's done in terms of revenues, in terms of the
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earnings, in terms of, by the way, the balance sheet, which is going to be buying back a lot of stock, in terms of getting things to be much more subscription, it's all good, but it's not fast enough for people, and people, when they look at cisco -- >> it's five years it's just hanging out. >> just hangs there. >> and i feel like this is what happens. some quarters, and then others, and you never really get anywhere >> and he's telling us the middle of a.i., but nvidia, which is a.i., had a system that really gets into the hyperscalers that was another brilliant -- $6 billion or $7 billion acquisition by jensen huang of a company from israel that sewed up all of the plumbing, not just the brain. >> we'll get to more on that we'll get cramer's "mad dash" and countdown to the opening bell as we'll look for some follow-through to yesterday's rally as we're once again bumping up against the top end of this range. back in a montme at pnc bank, you can find us in big cities and small towns across the us, where our focus is to always support
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all right, "mad dash," seven minutes before we get started with trading here on this thursday at the new york stock exchange what do you got? >> i'm going to throw a ball straight down the middle a fat pitch is what it's called. f fedex. there's a catalyst called buy idea from deutsche bank. it is so right i think it's going to be a monumental quarter i think, don't forget, you also may have problems with u.p.s. strikes, but what matters about this is they changed the ceo, as you know, put mr. subramanian, and he has changed everything. they had five companies. suddenly, they have one company. they had this ridiculous structure where everybody -- there was a ceo of everything. there was -- i mean, the ceo of
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this, the ceo of that. no there's one ceo, one sheriff, and he's brilliant, and this stock, as you know, david, there was fat here, like you wouldn't believe. well, guess what in this huge fat pitch right down the middle, maybe move a little further, closer to the mound. >> i'm going to try and throw it from the mound >> good luck, because it's 65. >> i know, i know. >> i love the fedex piece. i love the deutsche bank work. it's very rigorous, and i think it's going to be very right. >> $500 million reduction both express and brown. >> it's lowball. >> targeting just under half of its $4 billion cost target to be realized by fiscal '24 >> this is just looking for -- people are looking for ideas they are the markets move so much here's an idea fedex. remember -- >> does it get waylaid by the economy? it's one thing to cut costs, but another thing to be operating
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when there's less demand >> i think he's derisked by saying, listen, i'm not doing this with any economic wind behind my back that's why i like it >> keep an eye on fedex as carl told you as well, lot of other things >> who we playing tonight? >> the rays. it's today, by the way, day game >> holy cow. >> yep yeah best team in baseball. we're going to get a winning streak going, talking about the mets, but we'll also talk about the markets right after this
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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. you know, i'm reminded of the scene in "the princess bride," great movie. >> great movie >> where he confronts the person who killed his father, and he says, offer me money offer me power
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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. >> it's elon musk referencing "the princess bride" while defending his tweets in david's exclusive on tuesday one of the film's cast members responded, tweeted, i do not think it means what you think it means. and i guess there's going to be that kind of reaction. >> that was from the movie as well >> mandy, oh, he's a terrific guy. >> i do not think it means what you think it means great to see reactions, though, regardless >> he's been in the revenge business for so long >> i don't know what to do >> patinkin is pretty active on the platform that elon owns. there's that let's get to the opening bell.
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at the big board, it's arena group celebrating the launch of the 2023 "sports illustrated" swimsuit issue at the nasdaq, it's alchemy investments acquisition corp. 1 celebrating its recent ipo so, jim, the highest close of the year is 4,179, and we started to move in that direction yesterday. >> we're back in that market, but i don't know how people remember how long. it was 2012 to 2020 where we had a group of stocks called fa f.a.n.g., and they moved it. they moved the market. they became so large that they could do that. i'm just going say, we're back, except for we've added a couple of selective ones, nvidia being the one that is probably the most exciting. and david, you know what there's a sense among a lot of people that it's phony, particularly the rich people, the billionaires, they say, it's phony. fortunately, there's one
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billionaire who likes it and is very honest about it, and his name is steve. he just comes out and says, it's good tepper likes them too. but i just think it's fantastic. he's pretty bullish on the markets thanks to a.i., and you know what? >> cohn quoted as saying that essentially, this has helped create a new paradigm, sort of, and a new kind of growth phase for certain parts of the market. and makes it more positive >> but it's interesting that when we hear fed people, they never mention -- they never mention, look at the layoffs that are coming. the layoffs. what we're going to spend next year talking about is the reinvention of corporate america. i mean, service now yesterday, you can ignore what bill mcdermott says, but you basically don't need as many people there are so many divisions that -- where you go in, and you say, you know what we actually don't need most of these people, because of what you talked about in terms of how powerful a.i. -- in terms of the worry.
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like, you could do hr. you could have hr be a.i but maybe you program a.i. incorrectly, and hr does the wrong thing. >> it may. we don't -- listen, it's moving so quickly the impact of gpt 4, other generative a.i., what it's going to mean. we just don't know but we do expect that it's going to replace a lot of functions. i should mention, the reason we have this baseball here, given we're mentioning cohen, he did say one thing to me because i'm throwing out the first pitch today is, don't bounce it. he doesn't really speak to me very often, so i guess the prospect is he'll never speak to me again if i do bounce it >> what, do you get a million dollars if you don't bounce it >> i'm not going to bounce it. >> i practiced so long when i did it in 2016 >> for the phillies, not the mets, obviously. >> for the phillies. what i did was i started 20 feet, then 30, then 40. i practiced every night with my team howard, molly, thank you it was just -- there it is
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that's me. >> there it is >> it was -- there it is look at that that's a strike. and it was -- i just nipped the right-hand corner. i took down the phanatic >> i want to wish you great luck it is the most exciting thing you might ever do in your life >> hopefully, we'll have good video tomorrow of me throwing. i figure around 65, 70, right down the middle. >> we'll see >> david, you might to hit the corner like i did. you don't want it to be hit out of the park. i got to speak to chase utley, my hero. >> it's not going to be 50 cent. >> or tom brady. tom brady didn't do it so, chase utley sees me. he's my idol >> what are you guys doing here? he says to me, hey, i'm short apple, and i said, you know what why don't you send me an invitation to your funeral
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i got him to cover oh my god, these are really priceless. >> by the way, travis kelce bounced it also. >> we just saw jordan. you'll be in good company if something goes wrong >> people think it's so darn easy they think it's so easy. i practiced for three months >> i went out a couple of times. >> kareem helped me. >> we'll see how it goes >> i had people on the great staff we have from "mad money," after every show, we would go out. my arm was just -- holy cow. >> you don't want to throw your am out >> i iced my arm every night >> you only get a few dozen pitches before you need rest >> the diamondbacks management let me warm up david, i'm sorry, it's -- it's just such a highlight. >> look at that. four-seamer. >> i shook off the first pitch he wanted me to go fastball. some people say i hung the curve. >> you kind of came off the mound a little >> i was so excited. i couldn't -- it's just such a great thing.
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>> yeah. i was going to ask elon whether he wanted to go out and throw a little bit, because that would have been a good day >> you interviewed him >> we didn't get there let's get back to the markets. everything we're talking about, apple, meta, alphabet, microsoft, all up. >> icahn enterprises >> which one does not belong in that list? >> you looking at my screen here i'm just keeping an eye on it. nasdaq is up a bit, but this is sort of the trade that we have been talking about for some time should mention tesla and then, netflix, to bring back one of your old, with the market responding positively saying they have five million subscribers to their ad tier i would have thought it would have been higher am i wrong in expecting the number would have been higher? >> i thought it was going to be seven. then i thought it would ignite disney if they did seven igniting disney would take, what, seven batteries of patriot missiles i don't know what it would do.
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look at this walmart walmart is up four this is the largest retailer in the world, and it's trading like a small cap. very exciting. i mean, i know it didn't jump around too much, but everybody goes to walmart. >> we mentioned them all walmart, cisco, baba amongst the bigger companies baba is now down almost 4% >> that's amazing. by the way, procter -- >> its adjusted ebitda number, there's a lot of change going on at the company in terms of the six different decisions, and there's real concerns about the chinese consumer we've seen this bifurcation that you have discussed in terms of the highest end, seeming to do well, but below that, the middle class perhaps not as willing to spend there. >> late-stage capitalism that's exactly what marx said would happen to capitalism, but it's happening to communism. marx is rolling over in his grave. you know what i mean right now. >> he is >> david, there is a call, i
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happen to love procter & gamble, and i think it's going to have a monster run as the costs come down, the sales continue higher, but it was downgraded in a very -- in truist, bill saying valuation, enough. just too high. and i find this painful, because we're in an era where you're seeing these companies, the behemoths are taking charge of the supermarket and procter's doing so well. but i point that out because there is no doubt about it, that bill has a lot of power, and he's a very good analyst i want to go against him here at these levels but he's a good analyst. >> if you look at cpi for march and april, food at home prices have been negative and are we going to get to a point where the consumer with still a good labor market can once again afford maybe an incremental discretionary item >> well, procter would say in their defense that the brands are so powerful that people will not trade down, and there's been very little tradedown for procter. in the meantime, there's about 11,000 ingredients that go into
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different procter proeducts, and every one of them is down, but when you go to the store, you don't pay much less. so, that one and then i'm just going to jump over to take two, where strauss gave you two-year guidance, and some of it is "gta," which has been the greatest performing entertainment property of all time, but he's also getting the benefit of this new nvidia, g-force rtx which is on average 2.6 times faster which will make grand theft auto even more lifelike than it is now. people are still playing video games, and strauss was the most -- after having come on my show and saying he was very upset with how he had done, he then gives two-year guidance, which is just unheard of in this business >> it's an $8 billion revenue number for fiscal '25, despite the fact that the guidance on the print is not that great. >> a lot of people are going to
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say, there must be a new version of "grand theft auto" coming down the pike. >> it does put in perspective, obviously, the highs that were hit over the last couple of years and still well below it. >> absolutely. >> and the last five yeah what does that mean for activision any read-through at all for what will most likely be an independent activision >> this is tough, because -- >> or ea >> everyone waiting for "grand theft auto," but i would say that i know this is -- it's not pie in the sky the nvidia people really believe that you'll want to have -- that this refresh is going to be very exciting i've seen -- >> that's where it all started, of course. the gpu was originally for these. >> i saw the early version of this, and i saw the storm troopers from "star wars," and i couldn't tell which one was the actual versus which one was from the movie theoreatrical and then
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there's game players, and you can't tell the difference anymore, which is all what we saw coming you can't tell the difference between the real and the -- and what's made by a.i >> two things. one is gold man's guidance that a.i. over ten years could boost net margins by 400 basis points and earnings by 30% on the s&p >> that's what i say we're going to be sitting here, and we're going to be raising numbers for so many different companies as they figure out what is -- what divisions can be redone. >> and you think that's why qqq is here, 52-week high? >> yeah, i think that obviously, listen, i obviously listen to "fast money," listen to "halftime" with scott, and the -- all of the people on there are trying to grasp about when it's -- when is it just too much of a bubble >> right now, it's still in -- listen, it is being used even more -- let's not forget to write code as well but it's still more of an
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experimentation stage at present, being used in certain areas. to your point, jim, and as it only gets more powerful, i mean, they're probably testing gpt 7 right now, who knows >> i know. >> as it gets more powerful and more capable, and companies really have a better understanding of exactly how to use it, it's going to greatly enhance productivity, potentially. jan, the chief economist at goldman-sachs, talking about that sometime back, and/or it's also going to end up replacing a lot of employees >> what did he set it up for, jensen, besides gaming it was for the digital twin of the factory so you could figure out exactly, you could build a factory, its digital twin, and then cut waste by 30%. jensen's an esg guy, but it's not like, oh, let's do this so we can get votes he's deeply concerned about waste. that's why he blew it out. that's why he thought it would be so great. >> right >> and if you can cut out the waste at a bmw factory or, by the way, let's cut to the chase,
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ford ford and nvidia. >> what am i supposed to make of ford and nvidia? >> well, you can figure out how to make -- if you're listening to a fellow that you interviewed the other day, musk, he talks about the advantages that he has. well, ford has to make everything cheaper, manufacture with less expense. and you bring in nvidia. >> and they recreate it for you digitally, visually. >> and you don't have to stop the assembly lines normally, you have to shut the ass assembly line for weeks to make it better. this is the main thing that he wanted to use it for >> right now, to your point, tesla's got a great cost advantage in terms of how they're able to manufacture. and by the way, the manufacturing process for the cybertruck is also completely different. or not completely, but quite different. they had to design their own equipment to be able to create these crazy shapes, for example. >> all right, well, did you feel that the cybertruck's going to be boutique?
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or do you think it's going to be mass >> i don't know. >> because the f-150 people would tell you, boutique >> i don't know. we'll see what it drives like. elon says he's going to be using it as his main car >> well, jim farley reminds me that of our party, there was -- at the nbc party in washington, powered by the f-150, and he told me to power the entire tailgate of an eagles party. i may power a taylor swift concert with my f-150 that's on order. >> are you going to go see taylor at any point? >> she's in boston >> i passed up on it >> do you have any extra tickets? >> i had a lot of extra tickets. >> i do have a 17-year-old daughter who's going to be back in town. >> i had ten tickets >> ten >> wow >> what'd you do with them did you sell them? >> oh, then i have to say
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something too? can't i just go like that? >> it's 12 seconds >> micron is a name we're going to watch too in the chip space, jim. they're investing in japan on some next gen chips. this is not that far from the 52-week high as well >> sanjay, one of my favorite ceos, of micron, is drawing a line in the sand he did tell us as recently as the washington correspondents dinner that he did think we were getting near the end of the chip glut, and when he's committing this amount of capital to japan, and people don't know it this is a man who is a very -- he's not a blowhard. he's an operator but when he puts this much money out, what that says is, you're done going down, amd you're done going down, hp amd has been a remarkable stock, but i'm just saying that the amount of spend he's committing, he's saying that the glut is done, and it's time to go long, and when micron has these periods, it goes up between 30%
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to 50% not this little gain >> what about the argument yesterday that it really was about leadership broadening out? some say bears capitulating, looking at cyclicals we've got a catalyst call by on fdx today on deutsche. >> i love that but 2009, we had as much cash now as we had in 2009 on the sidelines and then we were worried about the republic now, we're just worried about first republic come on. this is really one of those moments where people have way too much cash on the sidelines >> have your debt ceiling concerns rolled off? >> i just think that the president, when he decided to cut back on a very important trip to an ally, made a statement that was important, that i think that the republicans wanted to see. i still think there have to be glitches because it's just theater down there, but that cut-short trip was something that i think people said, you know what? he knows he needs a deal he can't afford to not have a deal, because he's running for president. >> when you mention cash on the sidelines, though, the
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difference now is you're getting 5% it's a little less motivated to move when you're at least getting an actual return >> but if you can make 20%, 5% looks pretty awful we saw some good numbers did you see the numbers one of the firms put out about after a tightening cycle is over the last two have been remarkable you're right, david, it's never felt so comfortable to be in cash, except for the fact that when your clients call you and say, like, look, if i wanted that, i'd just put it in cash. >> is great analog is when you have cpi five points off the peak, which never has happened a dozen times in 60 years, but when that happens, and it's likely we'll get it next month because of these base effects here on year i mean, we're going to be looking -- talking about three handles at least >> i think that we are sorely mistaken -- i think we're going to get some wage -- look, i think one of the things that's happened, and we all know it but
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nobody talks, i think we know people have been laid off. these are people who would have been fought for -- i have a lot of people i know who have been laid off >> you do? >> yeah. oh, don't musk me. >> no, i don't >> really? >> just trying to think about it >> that's interesting. >> i do. >> i know a lot. some of them are younger people, and some of them are people who are making a decent wage, and some of them, i think, are being laid off because of, yes, indeed, a.i. >> you saw bt over in europe huge telecom broadband provider, 40% of their workforce >> these are people who had jobs, and they were doing well and next thing you know, you came in, and well, everybody i talk to, i always ask every company, can you find workers? they're like, yeah, no kidding >> it's a big position for patrick. remember him sotheby's?
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likes leverage lot of leverage. >> there's a lot of people looking for jobs the fed's going to win >> for now, dow is down 100. 4,160. take a look at the markets here as we bounce around this range but obviously, coming off strength yesterday you can always get in on the cnbc investing club with jim big update this week you can sign up and find out more at cnbc.com or we like to provide a little qr code on the screen as well takes you straight there as we go to break, we got jefferson and logan comments, and we'll get more data at 10:00 with existing. for the time being, that two-year, back to 4.2% got some attention.
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let's get to jim and stop trading. >> the theme of the quarter is people are back to the mall and bath & body works had a great quarter. this is go buy it, smells good one of the things that people have to focus on, i know people say that it's -- people go on vacation they're getting out of their house and going to simon properties and they're going to federal. nobody believes this but they're shopping at the stores and i must tell you that if that company has an upside surprise, you better believe people are going to the brick and mortar. >> goose and boot didn't have such a great quarter. >> boot very bad, they called it a re-set i just said geez, is that the end of the western wear? that was a terrible quarter. >> bath & body did earlier in the year. >> remember -- >> victoria secret the cats and dogs that turned
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out to be not so bad. >> yeah. >> i don't know. i come back and say let's see lowe's exciting week. it's been all overshadowed by a couple of a.i., but there's some big companies reporting and walmart is a major story for me. just major. >> yeah. how about tonight? >> well, i'm working on the junior growth companies and this may be my favorite which is celsius. i have to tell you, many people, i'm looking at one, who start with celsius, and i am going to blow this one out. i think this is the pepsico story. and this is real a lot of people thought it was a short and ridiculous. >> what do they do >> kind of not a five-hour energy drink, more of just a fresh and natural energy drink i'm switching. i am switching to celsius from five hour.
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>> you could use a little energy. >> i bought the five-hour energy, my wife threw them away, why don't we have a five-hour heart attack it doesn't have that much caffeine i'm going celsius for now. >> see you at 6:00 p.m. eastern time as we're down 122. tech is leading today. vix still below 17 don't go anywhere. >> strike.
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good thursday morning. welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, live for you at post nine of the new york stock exchange. the dow down 100 points. s&p 500 unchanged because tech is having a good day again semiconductors in particular, rallying with the nasdaq up a third of 1%. not a ton of follow through after yesterday's rally. 30 minutes into the trading session, three movers we're watching right now, walmart topping the list, moving higher on the latest earnings raising the full-year forecast, reporting 8% gain in sales for the quarter. much more on that in just a moment watch shares of take 2 this morning soaring, better than
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expected revenue in its latest quarter and a strong future gaming slate which could fuel growth alibaba also out posting mixed results, revenue falling short of expectations. the company announcing plans to list its cloud division as a separately -- separate publicly traded company the stock is down about 4% let's get some fresh data with existing data, rick santelli. >> april leading economic indicators leading economic indicators, down 0.6%. that is the 13th consecutive negative month in a row, which rivals the last big run of negatives which was from mid 2007 to early '09, when you had 24 consecutive negative months in a row we also have april existing home sales out and for that, we aim east to diana he olick diana. >> existing home sales in april
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fell 3.4% to a seasonally adjusted annualized rate of 4.28 million units along expectations sales down just over 23% year over year. and realtors are blaming much of it on still tight supply at the end of april there were 1.04 million homes for sale. that is up just 1% from the year before, but at the current sales pace, it represents a 2.9 month supply, six months is considered a balanced market. the median price of a home sold in april was $388,800, down 1.7% from april of last year. but prices are getting very different regionally they were higher in the northeast and midwest, the midwest being the most affordable region. prices fell in the south and west where prices had been hottest, where demand was hottest and buyers are priced out. the median is also being skewed by what is selling and sales are weaker on the higher end of the market above half a million dollars. there is also concern in the housing market if an agreement
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isn't reached on the debt ceiling, mortgage rates could rise sharply and already higher in the last week due to concerns over that. >> thank you we'll talk to the compass ceo about this later headlines out from the federal reserve in the last few hours moving the markets dallas fed president lori logan and jefferson out as we close out a busy week. i want to highlight what lori logan said, it surprised folks we've been hearing from fed members and leaned hawkish but seemed okay with a pause not so much lori logan after raising the target rate at each of the last ten meetings we have made some progress, but the data in coming weeks could yet show it's appropriate to skip a meeting. as of today we are not there yet. we haven't yet made progress we need to make and it's a long way from here to 2% inflation. remember david, when i said they were not sounding pausy, from
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lori logan this morning which is, you know, jolting a market that was expecting a pause in june doesn't mean they won't pause in june but does mean even if they skip june, the bar is pretty high for cuts, which the market is still pricing in 50 basis points of cuts this year i think they're -- the market is looking at the comments and others lately and the data, carl, saying hey, maybe we're a little too excited about a pause and a few cuts this year. >> how far in advance of a 2 handle do you pause now that jefferson also this morning says there's a lot in the pipeline, goolsbee reiterated that early in the week. not fully aware of what the stress will be like in banking in the coming quarters and what that will do to lending. it's, again, the old don't scald yourself in the shower thing because you turn the hot water up too much, eventually it will get hotter >> walmart's cfo making comments about people being more careful in their purchases, about
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electronics and things of that nature waiting for sales. anecdotically i'm hearing things are even in the market, obviously, the very high end, but wonder in terms of carl's reference to the pipeline and how long it takes. i don't know it's a balancing act. >> the whole discussion at the fed is going to be, is there enough evidenced that things are really starting to slow, enough to bring down inflation? we're seeing signs of cracks, no question about it. the walmart, the walmart deterioration in the quarter, echoed the target deterioration in the quarter which they saw, basically that april was the weakest. and yet, you still hear the consumer is strong we heard that from the cfo of walmart. i think we have the comments he made to cnbc on this david rainy talking about the consumer here he says there's some strain on the consumer, and he used the word strain, but resilience has surprised us i think we have this quote there we go. strain on the consumer,
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resilience surprised us and i think that's important because dot, dot, dot personal balance sheets are stronger than they were prepandemic yes, david, maybe some strains and cracks, but even home depot, which is seeing a drop-off in what people are spending on home supplies and pad tio furniture, said the consumer is strong. to put a point on it, the atlanta gdp now tracker, which has been more accurate lately, came out, guys, guess what the estimate is for the second quarter? it's early. >> 2.9. >> that's not recessionary the fed is not necessarily targeting gdp but if you add that -- by the way drop in jobless claims which confirmed the fraudulent data in kentucky last week that people were freaking out about last week they fell by 22,000, back to 242. not seeing so much of a crack in jobs seeing inflation come down drastically. the whole debate is going to come down to what you talked
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about the with elon musk, latency. is the fed looking enough at forward indicators and are the forward looking indicators showing that it's time for them to stop? >> how much does the lack of a new banking crisis figure in as well, if things stay acquiescent. the care rate down a bit and we still have the question as to whether there's going to be contraction and significant contraction? lending and how that's going to play out, how they figure that. >> there's evidence it's happening. it's not happening as severely every day there's stabilization in the kre it bodes well for, first of all, the economy, but also for the fed not having to pause and to panic because we know they were watching that closely and they were involved in the emergency matter. >> that's why i mention it if you stay calm through that, through the next month, maybe that gives them some room. >> it does. >> the market would be surprised by a hike, right we're not there yet. >> i don't think they're going to hike. i think the pause -- the 100%
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that they're going to pause, let's see. we still have an inflation report and a jobs report, and if they're both hot, it's hard to argue that data is signaling they should necessarily pause. even if they do pause and say let's wait and see the impact, the bar will be higher to cut and that's the thing can they cut rate wrz inflation is still at -- rates where inflation is at 5% and the rates in the 3% range. i'm not sure wells fargo out with a note with the strategy saying that part of the rally this year built on liquidity driven by the fed emergency measures the lending system to complement the discount window and now that's reversing because the bank stress has ebbed, that's a headwind for the market. unclear the market is tracking the balance sheet in that way, but it was helpful. >> harvey has been a bit of a bear, but that was an interesting piece as well. bring in mike santoli. sara mentions the kre, best
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three days since 2021. >> shows life. a little bit of a higher low shaping up on the chart, so look, it should have bounced more before this point if it was going to prove itself to be washed out yesterday was just a little bit of a rejoineder by folks who are, you know, essentially saying that cyclicals have gotten pretty depressed and you have a firmer economy than we anticipated. the big question in today's data and the conversation here exactly captures it, which is how long can it stay linked. we acknowledge the late cycle. can it state late and growing with the fed on alert for having to do more for a long period of time it was like this in 2019 four years ago and it was like this in 2015. both those times as the market is unsure if things are really weakening and if the fed is going to have to come to the rescue, big growth stocks kind of carried the market or supported the market for long periods of time. it's not atypical weight going on right now the perfect elegant rotation
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from here would be those nasdaq stocks looking like they need a breather at the august highs recaptured a little more than half of last year's under performance of the nasdaq 100 versus the s&p it's coming from a deep hole if they were to back off and take a breather and then the other stuff, the financials, and the consumer cyclicals take a little bit of a leap, that could get you the equilibrium point we've been in search of for a while. i don't think we're going to get any kind of all clear on the fed front, not on the recession or no recession front any time soon. so the market keeps having to kind of go along the shades of gray in terms of what the environment is earnings, have they flattened out and bottomed is it just kind of a stutter step on the way down that's a big question. i don't buy the idea and i think it's fascinating what you mentioned, that somehow the market has become awash in this liquidity windfall it's banks d. >> i knew you wouldn't.
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>> you never thought the market was correlated with the balance sheet. >> of course it's correlated but not perfectly timed and causal and proven that's what was going on it's amazing because it's feeding into the other view that a debt ceiling deal is bearish the treasury will go from spending down the cash balance to issuing a ton of treasury bills and going to suck all this liquidity out of the system that it hasn't had to do for a while. >> bank of america said that's worth a 25 basis points hike nick wri for the system. >> it went down half a trillion in the second half of last year. i don't remember people saying things are loose and the market is doing great it's a convenient argument for now and could be a swing factor if the market finds itself bumping up against the top end of the range fun people who didn't say in january, hey, good news, going to be a liquidity windfall are saying bad news, the liquidity windfall is ending. >> i love when you get worked
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up, mike so fun. >> you manage to do it. >> or when he disagrees with me. i know. >> i rise to the debate. >> it's hard to disagree with that man, he's very smart, but sometimes i'll take it on. >> sometimes wrong >> sometimes wrong not always right, as all of us mike santoli, thank you. our road map for the hour includes the ceo of compass helping break down the housing data we got. >> as tesla gets set to try advertising for the first time the women who ran meta serves on the board such as disney and coca-cola and under armor. >> cisco, the biggest laggard on the dow. why as the s&p making otanher run out of the red up 5 points don't go away.
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mad, but we're -- we care enough about the truth we're willing to give up advertising dollars in order to have the most -- the
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least inaccurate. >> right. >> the least inaccurate. elon musk talking advertising in general. our next guest ran meta's ad business for ten years and on the board of disney, coca-cola and under armour, senior adviser, joining us on set, carolyn eeberson good to have you here. >> great to be back. >> we began our interview on tuesday by talking about the news which was, did it on stage, decided at that moment of the annual meeting we're going to start doing advertising at tesla. i'm curious, what you or how you would advise musk to start advertising at tesla what would be sort of an appropriate way to do that >> well, i think elon approaches everything from a very engineering point of view. he tries to solve large-scale problems that he believes are going to impact and improve humanity if you take that point of view, how he thinks about the world, the advertising in tesla should be additive to the experience of
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being in that vehicle. you're starting to see that now with a lot of niche platforms. uber's ad business is projected to be a billion dollars, that came out of almost virtually nowhere. you're seeing retail media networks increasing their ad businesses substantially, because what they're finding is consumers want to have a valuable ad experience in that moment i'll give you an example, like this morning, it would have been great for he me to see an ad on any of my platforms for a discount to a coffee because i get that every morning that ad in that moment would have been more valuable to me than just a generic video ad of a product i might not be interested in. so in the tesla environment, i suspect elon will lead the way on using generative a.i. from a marketing standpoint he'll understand, he knows his consumers. he's got real-time data from an inventory perspective. he knows where they are and i think the ad experience could be quite actually spectacular. >> he talked a bit about wanting it to be beautiful and wanting
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it to be content that was comparable to the content you would find other places, not necessarily what we think of as a typical ad. >> that's exactly right. i think the promise of generative a.i. in marketing is that ordinary ads, mediocrity will no longer be acceptable one of my former colleagues at meta, mark darcy, the chief creative officer at brand tech has a saying about it, he said we're going to basically take the everyday things and make them impossibly efficient with a.i., but we're also going to be able to make the impossible possible every day which is like a great summary of the promise of what a.i. can do in marketing. >> what's an example of that, that last part in. >> yes so i will give you an example from coca-cola i have the privilege of sitting on that board. coca-cola in the midst of a massive marketing transformation 50% of their spend is on digital. they were the first to partner with openai and they just
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completed an amazing campaign, it was only 11 days, in march, and essentially they have 120,000 creators submit images that could be used to sultsly in london piccadilly circus and in times square, and it was called create real magic and take the assets of the coke brand that people love and have such an affinity for, but let them build out generative a.i. images with chatgpt and it was extraordinary. it could be done so efficiently, so quickly, and it really brings the community into feeling like they're part of the marketing of a brand they love. >> quincy was excited about it on the last call and in his interview here there's a downside, right? is a.i. going to replace marketing jobs there are all these hedge fund short lists, short a.i. lists about who gets replaced. and advertising companies are on those lists from what i hear.
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>> i think there is no question certain jobs will be eliminated across the board as a result of a.i. i've also seen the counter point of view, for example, when a.i. is used in marketing or even in the sales context, they can increase productivity of those teams anywhere from 50 to 100% i think there's going to be a mixture of both. i think the jobs are going to evolve i think that a lot of creativity is going to be done through generative a.i. through an image, vows over, film creation, images, but i think there's going to be humans in the process that help to oversea there's still a lot of questions. we don't yet haveregulation that we fully understand yet the, u took the first step towards it like they did in the privacy days there's still a lot to be worked out. i'm excited and i think it's going to be transformative. >> if you're a studio are you thinking about that regarding a strike, for example? that's in place right now. seems like a natural where it could strip out a layer of
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development that would end up saving you some money. >> i think the writers strike is there's no question that's going to impact scripted shows in the next season and you saw that this week in the up front presentations. a lot of networks scrambling and putting things into their program and their show that they were not expecting, leaning heavily into things that were nonscripted like sports. there's definitely a concern across the board i think there will be some writing done by a.i. i think there will be image and video images created through a.i. there's to question. we have never seen a technology -- i've been in technology a lot of my career -- we've never seen anything like this at the pace it's changing used to be two years, two months, two weeks, and things are iterating almost every 48 hours if not faster. this is big and i think every marketer and every major company needs to be thinking through their strategy and not be afraid of it. >> every 48 hours. how are you as a board member approaching it with your
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management teams how are you pushing them and/or questioning them and what is the conversation like inboard room coke and disney. >> i have three major corporations, but i sit on four private companies. one actually happens to be an a.i. company called unitary which is very early stage, but they do trust and safety for platforms like tiktok and really helping companies understand the kind of content that's on the platform. it's a wide spectrum that i see. part of the reason i structured it that way is so that i could be in the cutting edge of what's happening in the start-up and private community, but also understand how it impacts large companies. i think the role of the board has to be intellectually curious. they have to understand what's happening, ask management the questions, where are you testing it you have permission to test and learn. you need to be agile do you have the right talent structure in place that is going to embrace this or be fearful that it's going to take away someone's job or fundamentally
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change it. i think you have to lean into these technologies i saw the mobile transformation happen i was sort of in the front seat of that. i remember certain companies, i remember visiting the high-end retail companies and designers who said to me, there's no way anyone is ever going to buy something expensive online you have to be in the store. it has to be an experience look what people are doing so typically you get get rewarded, fortune favors the brave. you have to be bold and brace embracing the new technologies and i think boards need to be very much on top of what's happening. >> you're on the board of interesting turnaround stories, restructuring stories at disney, under armour what is -- what are the biggest issues what are the biggest concerns? is it about the economy and the changing consumer environment? politics >> china >> i think all of the above are topics very much in the board room no matter which board meeting
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i'm in, particularly the larger companies of under armour, coca-cola and walt disney, always the setting the stage around the geopolitical and macro economic situation are we going to have a soft or hard landing i have the privilege of serving on under armor's board with mohammad el arren. we get his perspective i sit on the board with santander with larry summers and hear his perspective on the economy. macro economic conditions, what is the consumer doing, we saw from walmart's results 60% of their sales are driven by groceries. consumers are not spending as much on discretionary items. we saw that from home depot and target as well we have to be mindful of the consumer delivering value to them there are a lot of questions about china. if, you know, china could change in a moment's notice if something were more aggressive to happen and a lot of the companies that i certainly sit on are doing business in china
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we have to be very mindful of that i think, interestingly enough, the russia-ukraine war, a shock to the system, believe it or not the cee advertising market is one of the higher growing markets this year. the market has absorbed the shock of the war and settled in and is actually performing quite well so those are the main topics that we talk about and then it comes down to the business and what is the business doing to serve the consumer. >> right just to get your -- you said a.i. is transformative or this generative a.i what would you compare it to >> i think it's hard to compare it to a technology development that we've seen in our lifetime because i don't think we've ever seen the pace at what is happening here. >> in the introduction of the internet >> electric, pc, we get that a lot. >> yes i think people do compare it to that and, of course, it could be. i think the challenge is that a lot of those developments are what i would call linear, meaning people adopted the
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mobile phone and you could see the chart going up to the right is mobile phones were bought and used i don't think we understand what that line looks like with generative a.i i think it's going to be partly because it's going to replace a lot of what we understand and do as humans and it's still too early. anyone that tells you they have the whole path figured out, well, they're definitely seeing the future in a way i don't think anyone else is yet it's very unpredictable. >> good luck regulating that. >> musk a bit at the end there the other day. thank you. >> thank you. >> thanks for having me. >> always appreciate the conversation. >> i appreciate it thank you. after the break we talks cisco and the latest quarter, stock off the lows of the morning as the street wrestling with the backlog discussion. we have shaved losses. s&p up 12, dow almost flat
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stocks getting some gains here dow has gone positive along with the s&p, as speaker mccarthy is on the wire saying he does see a
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debt limit deal on the house floor possibly within the next week he's been quoted as saying we are in a much better place because we've got the right people in the room discussing it in a very professional manner with all the knowledge and all the background from all the different leaders. so one more box that markets can check if, in fact, some deal in principle at least comes together in the coming days. >> helping the better tone in the market right now stocks pop a little. a lot of people attributing yesterday's rally to the better tone out of washington from leader mccarthy and president biden. no deal yet, but signs of progress pretty good to hear for the markets. shares of cisco, big mover today near the flat line after the report yesterday it was an earnings beat, but there were some questions about orders frank holland joining us to explain. frank? >> it wasn't just earnings beat. also a current quarter guidance raised in the soft macro environment all overshadowed by the trend of declining product
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orders that fell more than 20% for back-to-back quarters. analysts highlighting this as an issue of concern the company highlighting a surge in orders in the previous fiscal year including 34% growth in q1. i spoke with the cfo who emphasized cisco is retaining pricing power with two increases last year but says drove market expansion. a metric becoming more important in the so-called year of efficiency on "mad money" last night the ceo pointed to a.i. as a growth driver. >> for the a.i. infrastructure, i believe we're better positioned than anybody else to become the networking infrastructure for these large a.i. networks which are going to be massive over the next five to six years. we're excited about that, in addition to cyber security and hybrid work and multicloud. >> cisco modest revenue growth next fiscal year with eps outpacing that credit suisse put out estimates and believe that translates to about 2.5% revenue growth on the top line and the stock flat
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lined after falling very hard after hours and in the premarket. >> frank holland, thank you very much david, i've been wondering why you're with a baseball all day here all morning here on set. >> i know. >> you have to leave early. >> yeah. you weren't alerted, i'm sorry it's a day game. yeah. >> you're throwing out the first pitch. >> i am. >> that's very cool. >> life-long mets fan, pretty exciting. >> don't screw it up. >> i'm really going to try hard not to. >> there have been bad pitches. >> we are going to have a cameraman to make sure if i do it's shown in a running loop. >> 50 cent is not my model here. >> oh, my gosh i think i could do better than that. >> poor 50 cent. >> i don't know who that is -- >> okay. >> that was bad. >> that was bad. that was - >> mariah. >> when we get to jordan that gives you cover. >> michael jordan wasn't good? >> at least he threw it over his
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head. >> threw it in the right direction. >> he actually played professional baseball. michael jordan. >> you're going to - >> no. i will promise you, i'm going to be better. >> we'll get the cortisone sho shot ready give them hell have fun a quick break here with session highs. back in two.
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news out of the supreme court. big tech in focus. to kayla tausche.
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>> the supreme court ruling section 230 that protects social media companies from content posted on their platform is safe for now. the high court deliberating on two cases involving twitter and google filed by families of victims of isis attacks in recent years both cases alleging the social media platforms allowed isis content to proliferate and recruit members and incite violence in the twitter case, the supreme court ruling in favor of twitter's bid to throw out the lawsuit that alleged it violated federal anti-terrorism law and then in the google case, the court declined to address the section 230 issues, merely pointing toward the twitter opinion. so certainly this is a victory for social media cases and shows the supreme court is not willing to touch the liability shield for now, despite some political pressure to do so. carl >> kayla, thanks for that. kayla tausche. we'll continue to watch those
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developments. let's continue that conversation and some of the potential implications for bitcoin, joined at post nine by wells fargo chairman and cohead of global internet investment banking bob peck i don't know how much you want to address that breaking news, but the overall environment feels like it's shifting >> yeah. >> if you can talk about how. >> thanks for having me. yeah ligament on section 230, obviously, a big ruling there. a very important, you know, it ultimately speaks to the content moderation, how do you police it and prevent these things from popping up should the liability be with those platforms? i don't think this is the end of the case there we'll continue to hear more writ starts getting interesting how it plays into a.i. a.i. is one of the top themes we're hearing across all of our companies. the boards are mandating the c-suites have a view how can we leverage a.i. is it an asset how can we use it as a tool? is it a threat what do we do there? with generative a.i. how do you police that content as well, the
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platforms liable for that. very big topic that will continue for many years. >> do you think right now the actual stuff to know is within the board's ability to understand i mean how much of this gets -- has pinwheels in the board room? >> i think it's very much in flux right now i think everyone is trying get a grasp of what's going on hear sam altman or elon musk talk about it and they don't have their hands around where this can go and impact you in the public markets we've seen examples of public stocks getting hit because a.i. concerns we've seen examples of the large platforms in a.i. getting a bump to their multiple because of a.i. you're seeing impact public stocks, but it's really impacting the private companies as well and how you think about to leverage this or how you view it as a threat and what do you do to thwart it. >> you're the banker how do you determine the winners versus the noise >> a couple winners are going to happen you heard carolyn talk about it.
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you will have platforms, cloud usage will grow and benefit from that, chip usage you've seen nvidiaed double its market cap over the last year. you've seen facebook double over the last year. google and microsoft, obviously, their cloud platforms and amazon, so you'll see some platforms that will benefit from the stuff, but i think right now at this point the actual impact to each company is still very much being figured out. >> it's hard to know the nvidia boost is it priced in with high expectations or just the beginning? >> yeah. unclear, right i think right now, pwc estimated there's a $1 trillion tam around a.i. impact to gdp, impact to companies. that's by 2030, right. you're talking about something starting out nascent right now, zero basically, going to 17 trillion in six or seven years so really hard to get your arms around it right now and it's very much like when web 1.0 came out, what's the impact to
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distribution and media and how do you think about these going forward. >> discussion as to whether it favors incumbency, some of the giants calling for regulation, the smaller guys say why are you pulling up the ladder. is this different in that aspect than mobile or general tech innovation >> what's interesting if you look at vc funding over the last six quarters or so you're seeing preponderance of seed starting to bloom and blossom while vc has been pressured, you've seen more down rounds and lower valuations in the b through f sort of range, if you look at the seeds the seeds are up 40% as far as valuation and when you look at those seeds and what it's comprised of, a good third is related to a.i. you also couple this with what happened in 2007 and 2008 you had the economic turmoil then and when you saw the birth of the my platforms like airbnb, like uber, right and you think about it, think forward to today now with the layoffs, very smart engineers across amazon, google, pick your
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platform, as they go out and get the seed funds, can they create the next generation of platforms and capabilities to be leveraged. >> two questions one is do you think the recent experience with crypto and memes and spacs will bring caution to this cycle and if not, how long does this hit this room right here with ipos >> you have to be cautious i think the boards need to assess what are the risks and the potential capabilities we can use. as far as ipos, so this year you've had a dormant year about ten ipos year to date down from 20 all of last year in 2020, down from the peak of 300 in 2021 as we look forward and talk to our companies, almost all of our companies want to be ipo ready, right. you have 50 s1s in registration and keeping their numbers fresh. i think the preponderance of them will be in 2024, you may have some going in 2023, but think about the a.i. implications you think beyond
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the ones going to 2024 is that a next generation. will that just sort of be the next generation of tech to go public. >> in tech and not in a.i. >> yeah. >> you're nowhere not getting funded and going public. >> i would argue if you're in tech you have to be in a.i., right. you at least have to know how it impacts you and the risk to your core business and more importantly, how do you leverage it and turn it on its head where you can increase revenues, increase your particular begins. >> thank you it's good to have you here what an amazing time we were in. we thought it was amazing an getting more amazing bob peck, thank you again. we are getting news regarding a name that you know on our air and anybody in real estate has known for decades. >> sam zelle passing away with a press release. 81 years old regular guest on cnbc on a number of our shows and considered a great business mind
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and success story in america you know, most notably in the real estate industry where he was the chair of five different public reits one of his famous deals the leveraged buyout $39 billion of his reit sold to blackstone. he was self-made he was very opinionated. often contrarian wasn't afraid to say what he thought. he was also a very generous philanthropist from the university of michigan where he went a number of jewish causes as well big chicago man personality. and business leader. sam zelle will be missed our thoughts with his family and miss having him on cnbc. we'll be right back.
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let's talk about the housing market home sales are down 23% from last year. our next guest says buyers have
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accepted 6% mortgage rates as the new normal but cease the index as a silver lining i remember when you came on and said we bottomed in december and if you look at home builder sentiment it does suggest that was the case we're on the upswing in housing? >> look. i have an advantage, we have 30,000 of the best agents in the country and so i have a very good pulse on the market from them but, yeah, i feel like it -- we're on the upswing it's not great market. but it's not bad market. it's an okay to good market. more buyers and sellers. there's enough demand to meet the inventory. it's really a lack of inventory that's the key constraint. 30% less new listings came online this year than last year. >> it should be a worse market, shouldn't it, with high interest rates, the fed is trying to hammer out inflation, especially
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in the housing market. demand is softening. >> arguably they've done their job. prices are 1% lower than the same period last year and so you're not seeing the same housing inflation we've seen in the past. >> new york rents in new york city i can tell you that, why isn't that coming down >> with housing affordability has become an issue because of mortgage rates and prices and people have moved to the rental market. >> it's like the used car dynamic. not enough new cars or lease renewals and people needed used and they rush to use just like they rush to rent. >> yeah. the fundamental issue we have is that 30% of homeowners are locked into mortgage rates at 3% or below 70% locked in at 4% or below if you have a 3% mortgage rate you consider that a financial asset and don't want to lose it. >> how you've been constructive since december i was looking at a perspective buyers traffic, back then 20, 28, 31, just hit
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33 what does that number do if, in fact, we get some relief in rates? >> so i think the market will be somewhat of a sideways market. not a bad market or great market, a sideways market until mart gauge rates get to low 6s and when it gets to the 5s, pandemic craze all over again. if you have a 4% rate you don't want to roll that into a 6.5% mortgage if we get to 5%, 5.25% you'll sell your home and get 5 and 5.25%. we're seeing a lot of these owners that have three 3 or 4% rate, they're buying a new home and renting out their existing home and taking the existing rents and low mortgage rates >> how do you deal with the inventory problem? why is it so severe? >> it's going to take time and we have to see -- we're going to have to see mortgage rates come down to have it resolve itself in a systemic way.
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that said, people do have to move they get married there are life events they have kids, get a new job. >> lose their job. >> exactly we're seeing return to office drive activity in seattle the condo market is almost like a bull market for the first time in that will be a real fissure. >> the real winners in covid were the low tax, warm weather states you have carolina, texas, you have florida, but i do think with return to office, and that is going to happen, that it will bring people back to the cities. we're already seeing it in seattle downtown so, if you live in san francisco -- if you have a company that -- you work at a company in san francisco, you
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should buy now before everyone comes back because then you'll be able to get the low price. >> the cover of the ft weekend magazine, this weekend, is sfo, d view of ivy growing off the building and no one is coming back. >> fear is in the headlines. people are expected to go back to their office in san francisco. when that happens, just like seattle, the prices will go up >> robert, good to see you always >> good to see you coming up in the next hour, we'll continue the conversation with the ceo of taylor morrison, one of the largest home builders in the country that's coming up at 11:00 a.m. eastern time take a look at the top gainers on the s&p as we're four t ythhiescle e ght os ofheear. if you wake up thinking about the market and want to make the right moves fast... get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events
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live shot of the senate banking committee holding a hearing over the recent bank failures witnesses include the chair of the fdic, the vice chair of supervision at the federal reserve, and less illie picker s been monitoring.
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>> today's concern caps a three-day capitol hill marathon digging into bank failures regulators, michael barr, fdic chairman, face lawmakers who at a high level really wanted to know why, despite numerous warnings to the defunct banks they weren't able to prevent the failures sherrod brown accused regulators of being asleep at the wheel. >> regulators, they diplomat just miss the plane, they allowed a couple of plane crashes. let's be clear, bank regulators are -- banks are not regulators customers, they're not your friends, they're not your clients. regulators serve the public, or at least they should >> republican lawmakers expressed concern that overregulating the banks will restrain credit. the fed's barr told legislatures he takes full responsibility >> let me be absolutely clear.
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i accept full responsibility with respect to the supervisory failings at the federal reserve. i have been clear about that from the start and i remain clear about that today >> thank you, mr. barr. >> the buck stops here. >> thank you. >> and i am committed to fixing the problems we've had in supervision and regulation going forward. >> suggestions he gave include evaluating capital requirements, supervising a bank's management of interest rate risks and liquidity risks, particularly against the level of uninsured deposits, and he called for more oversight over incentive compensation for bank managers on the subject of expanding deposit insurance, the fdic said it would require an act of congress he said the banking system has evolved in ways that could increase exposure with deposit runs thanks to social media. >> "squawk on the street" ntueafr is
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good thursday morning. i'm carl quintanilla with sara eisen at the new york stock exchange setting the agenda, the state of the housing market with taylor
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morrison ceo sheryl palmer, up 40% on the year. can that rally continue or will rising rates put a lid on the move proceed with caution walmart posting better than expected earnings for last quarter, keyword, last, but also the latest retailer to warn the current quarter is not looking as pretty. dana telsey breaks down the winners and losers straight ahead. deutsche deepak puri's saying why the market doesn't justify a fed pause yet. the s&p is up 0.50% on the back of a rally yesterday. tech is leading today. nasdaq is up almost a full percent. information, technology, consumer discretionary, that's at the top of the market financials, materials and industrials, carl, have joined the rally so far today stocks holding up well in the face of two things that i'm watching in the background, which is ris

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