>> but what i -- mitchell, we got to run all i'm arguing is, if delta puts in that information, then all of a sudden the data that american airlines had and thought was valuable is worthless. so -- because you can use one piece of data to do more mitchell, it's a much longer conversation we got a big weekend ahead three days for a lot of folks, but a lot of folks in washington working this weekend to figure out this debt ceiling. we will see you on tuesday have a great weekend, everybody. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with sara eisen and mike santoli david and jim have the morning off. holiday weekend, but not before we chop a little more wood debt ceiling deal reportedly gets a bit closer. citi, upping u.s. equities, and april eco-data runs hot, including core pce highest since march.

our road map begins with the macro outlook. several retail results plus d.c.'s race to avoid default. negotiators reportedly closing in on a deal and ford's surprise ev partnership striking a deal, a charging deal with tesla let's begin with markets, futures holding in there as the dow has now suffered a five-day losing streak. closing below its 200-day moving average for the first time since late march mike, conversation this morning definitely about core pce spending, and this idea that the recession calls may continue now to get pushed out. >> yes pretty familiar theme for the last few months, which is the economy seems to be holding up better than at least a lot of the forecast anticipated, and inflation is a little bit stickier so, the processes we thought that were going to be under way with the fed tightening this much and having the lagged effects of that come through, have not really had as much of a bite as we might have thought. now, where does that leave us? i mean, the market in general,

the typical stock's been struggling pricing in some degree of slowdown earnings are flattening out, but maybe are done being revised lower for the moment, so you have this kind of caught in between type of action outside, of course, of the big marquee beloved mega cap growth stocks we keep talking about. >> i mean, everybody's pushing back against the notion that the market has been so resilient we gets about this tony dwyer, the top performers account for 118% of year-to-date gains in the s&p 500 this has not been a broad rally. >> i think deutsche just weighed in a couple moments ago, and mike, you have been all over there, but they're calling it the narrowest rally in a century. >> it depends how you slice it, which of the stocks you want to count in the anointed bucket, but this is the equal weighted s&p lagging and almost all of this underperformance having happened since svb failed. that's the early march

divergence there by other measures, this divergence is as wide as it's been since 1999 or early 2000 but also 1998. 1998 was a volatile year you had a financial accident in russia defaults and everything else, and then it was a rush into the, quote, safe megacaps, plus a little bit of a tech bubble getting rolling as well. >> it's interesting that the tech trade has held up so well, given the fact that yields have risen, and now fed expectations are changing is june live is july live we have had some hawkish fed speak. we have had some hotter data, including the core pce, which we know they monitor very closely and yet, technology has held up well >> well, you know my take on that, sara, which is that yields have not ever been the only reason that they outperform or underperform, but i do think there's no doubt june's a live

meeting, i think, timat this po. not to say it's a done deal, but knowing what we know right now, assuming there's a debt ceiling deal, i think there's going to be a little bit -- it's a judgment call at this point. it's kind of like exactly what you think the risk-reward of a pause, but you know it's going to be characterized as a pause and not the end. and we'll see if the market can handle that. you know, one of the reasons i thought that stocks could not fall apart when, you know, we get these added hikes coming into expectations, is that it's in a measured fashion. it's a 25 basis point move if we get it every six or seven weeks. it's because the economy's holding up better so you have a little bit of a fallback on that we'll see if there's a limit to that i mean, obviously, the bond market's really kind of upside down with all the bond -- the debt ceiling issues and yeah, fed pricing getting changed. >> meantime, all of this leading citi, at least, to upping u.s. equities back to neutral, and

they're overweighting tech their basic point this morning is, look, the recessionary dynamics that we did expect are not coming together as quickly as we thought. at the same time, europe now looking at one of its biggest leaders in recession in germany. the china reopening hasn't happened they had this whole, sara, u.s. is not exceptional thesis going, and they say there's some cracks developing in that >> a.i. is a big crack developing this that because we have been the center of the action on that front just look at nvidia and marvell technologies this morning, which we'll talk about the surprise has been the stronger u.s. data and the weaker china data and even on weaker europe, we knew that the growth was weakening through, but the german index is near an all-time high. you're still going to have people out there who say, these inflation indicators are lagging, and what's really happening on inflation is that it's coming down quickly you look at the ppi, the wholesale numbers, the leading indicator, that's all the way down into the 2% range in terms of growth.

it was 11% this time last year, and then costco. did you hear what the cfo said on the earnings call listen to what they're saying now about inflation. >> inflation continues to abate somewhat you go back a year ago to the fourth quarter of '22 last summer, we had estimated the time that year over year inflation at the time was up 8%. by q2, it was down around 7% this year, we're estimating year over year inflation in the 3 to 4% range we continue to see improvements in items, particularly food items like nuts, eggs, and meat. >> it's coming down fast that's what costco is saying they're talking about weakness in some of the big ticket discretionary moments. it was a miss for costco, actually, top and bottom line, stocks down just a little bit because they give a lot of realtime indications on their monthly scales but weakness in inflation, and that, you know, that will continue to be a debate. if the fed does go again in

june, whether they're making a mistake and increasing the chances for a hard landing i think that debate is still very much front and center >> for sure. >> regional banks are still down 50% off their highs even though they've stabilized and that's good news. home furnishings, 33% off their highs. paper and packaging, 30% off the highs. so, yeah, the tech trade's been resilient, but there are a lot of other cyclical groups that are way in bear market look at the small caps >> for sure. >> small caps are in bear market >> no doubt about it and i think that's why the market is taking a slightly hotter than anticipated inflation number in stride so far this morning because nobody really thinks it's a trend changer. it's a stutter step in the improvement on the inflation front, and yes, you have all those things about, you have to make a call about credit contraction and if that's going to be a dynamic, and you mentioned small cap, sara, and mid caps or even just the equal weighted, the average stock in the s&p, when people say this has not been a resilient market,

it's been pricing in more weakness, it's also saying, well, it's not really as overvalued a market as you keep saying as well the equal weighted s&p is at like 14.5 times earnings mid caps are under 13. maybe they lbelong there maybe earnings aren't going to come through maybe the economy has more to pay back, but it's, you know, you can kind of complain about one thing or the other, not both at the same time >> that makes sense. if you're looking for, though, on the credit contraction said, which is continuing to be the dovish argument for the fed, that they should see the damage, we did get some new fed lending data out from banks, and continues to move in the right direction, which is lower emergency lending from the banks, from the fed. in fact, we're now at the lowest level since march, which is when we saw the initial collapse. it's not like there's no stress. certainly, there's less borrowing from the discount window, but the bank term funding program, which was the new facility the fed set up, still $91.9 billion and that was up on the week so it's still out there. it's percolating, but it is

moving down. let's turn to the latest on the debt ceiling because a lot of this will depend on whether we get a deal. we've got under a week to go before the u.s. government faces a potential default, according to the treasury's estimate of the x-date here's speaker mccarthy last night on the talks >> we continue working hard. we've got time we're going to get this done >> have you talked to senator mcconnell? >> are you close to a deal >> there is no agreement we know where our differences lie. we've worked throughout the day. we'll continue to work to try to be able to solve the problem, but there's no agreement >> joining us now, pimco's head of public policy, libby cantrell libby, are you guys thinking there's a deal that will come as soon as today? >> yeah, sara, we've been constructive on a deal materializing not likely until the 11th hour but still materializing for not only weeks but months now we think the details of the contours of the deal are being filled in and may be announced by end of today and maybe by

tomorrow, but we think negotiators are very close in fact, it seems like there's been quite a bit of breakthrough over the last 24 hours on the spending component, and that, as you know, was sort of the big -- the big obstacle i think that the fact that they've basically now reached an agreement on that is sort of unlocks everything else and the deal falls into place in a quite straightforward way. >> so, what does the spending picture look like, then, and how's that going to impact the economy? >> i think there's quite a lot for the markets to cheer here. if the deal kind of materializes the way that we think it will. for one, it looks like the debt ceiling will be extended for at least two years, but of course, with extraordinary measures, that likely pushes that back even further so, this could be something that the market does not have to deal with again, if it sort of comes to fruition the way we anticipated. from a spending perspective,

there's a little for each part to like here, so on the non-defense side, this is where republicans have really been focused. they wanted to see cuts. it will look like cuts, but sort of nominally, probably won't be, but more like a freeze in terms of spending, year over year. and then defense are actually a little bit of an increase. so, that is also something that i think the markets will welcome, because if you remember in the 2011 debt ceiling standoff, there were actually deep cuts that were agreed to in that resolution. we are not going to see that here so, again, if this sort of falls into place the way we anticipate it, we think there will be several things for the market to cheer here and welcome >> libby, good discussion this morning on "squawk" about what the market has to fear if we get a deal in the way of austerity and lower government contribution to gdp and slower growth in the next couple of years. how real do you think those fears are? >> carl, that's exactly what i'm speaking to. i actually think that while

there were those fears, and of course, the republican kind of opening salvo in the house bill did actually -- would materialize in pretty significant cuts, we do not anticipate that being in the final bill here. basically, year over year, flat ending on the nondefense side and maybe even an increase on the defense side this is all nominal numbers, not real numbers, so if inflation is continuing to run hot, then you could see a little bit of incremental debt, but nothing that we think will be a significant headwind here, and this will be a two-year deal, so this sort of gets us, i guess, from the market's perspective, gets you into 2025, when, of course, we could have completely different leadership in washington, both from a congressional perspective but also in the white house. >> in the shorter term, libby, are you able to speak at all to pimco's view of the other fear of the getting it to a debt agreement, which is this potential rush of issuance by the treasury of treasury bills to rebuild its cash balance and

this idea out there that the market is going to maybe struggle to absorb that at a tolerable, you know, yield level or something like that or money market fund just going to be there to take it all >> yeah, of course i mean, yes the treasury has been putting liquidity into the market because of this -- because of the debt ceiling deadline and because they're trying to manage their cash balances. of course, we'll be taking liquidity out in a pretty significant way. so, this is something that we are talking to our clients about. we do think there might be some tactical opportunities here. folks might be focusing on the equity market and of course we haven't really seen a lot of volatility in the equity market around the debt ceiling, we have seen it in the front end of the curve in terms of risk aversion around kind of the t-bills that are maturing in that debt ceiling corridor so, yes, we will continue to see distortions in this market, again, for active managers, we think that could be an opportunity for us, but yes, i think that's a very good point

to raise >> hey, finally, treasury was on cnn this morning and said, i think, obviously, that the 14th amendment can't solve our problems now, but would you expect that if we get a deal and we don't have to worry about this for a couple of years, that the white house will look to settle this over the long-term legally with then a contest about that >> carl, it's a great question honestly, one of the questions we're hearing a lot from our clients, both about the 14th amendment, about the potential of issuing a trillion platinum coin, zero coupon bonds or these other tricks, if you will, to avoid having congress address the debt ceiling, and honestly, to use trader term, we would absolutely fade that we do not think this administration in particular would ever really seriously consider these tools of course, there's the legal uncertainty. but i think that you back to who president biden is he is a legislator through and

through. he realizes that this is actually congress's statutory duty to raise the debt limit, and we don't think these were ever being seriously considered and a little bit befuddled by the narrative in the marketplace. it doesn't seem like, again, it's in contention or even on the table with treasury or the white house. >> although i don't understand why they didn't just raise the debt ceiling when they had the chance before the new congress came in. >> yeah, sara, that is, honestly -- there's already been a lot of -- >> they've got to be kicking themselves >> monday morning quarterbacking in terms of what the democrats could have done, but the reality is what it is, but there will be a lot of finger-pointing, i believe, when all is -- this is all settled. >> sure, and spending too. libby, thank you very much libby cantril from pimco nvidia trying to climb again. my favorite comes from mike today that gained more than

three 3ms yesterday in value >> nine ms >> take a look at the premarket rewe get to our three-day weekend. back in a moment ity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

we are watching shares of nvidia here in the premarket following its blowout quarter this week. good data out of bespoke revealing that the stock up more than 11,000% over the last ten years. obviously, this all comes after

yesterday's monster move, mike, on the back of earnings, and now we wonder, is it expensive is it cheap if we're just getting started? is a it little bit all these questions are out there. >> i think there's a few things we could lay out as general principles, price momentum, fundamental momentum, narrative momentum are real phenomena in the market and they're not something you should pick a fight with too lightly the other thing about it being expensive, 48 hours ago, nvidia was at $305. it was trading ahis year today, it's trading at $380 yess at step function change in what people think the near-term profitability is that it's hard to say that it was totally overdone also, at the peak, the valuation got toward where we were two years ago. in other words, it's not even carving out new ground it's way overheated in the

short-term, but what's interesting to me in terms of all the a.i. bubble talk is bubbles tend to be narrow and localized and kind of indiscriminate, lot of also-ran stocks that's going to happen maybe it already is, but it's still, right now, it's very selective. >> yeah. i mean, yesterday, morgan stanley tried to argue that how durable is the guidance? they argue that nvidia tends to be conservative on guidance. now you got marvell talking about a cagr that's going to run 100% next year on their a.i. revenue, so how many companies do start to promise big? >> get a piece of it, yeah and i think the way you would be skeptical about that is there's this immediate rush by all companies, all players in this area to show that they're spending and taking seriously the opportunity or the risk, and they need to just throw money at the hardware that's what's going on whether it sort of leads to productivity gains, whether it leads to great business models down the road, we'll see about that later, but for now, they got to buy the stuff ever everybody's budget is going up

>> the other thing on the bubble talk, it's not these small, speculative stocks that are rallying it's nvidia, one of the biggest stocks in the market and you know who's not benefitting from this big surge is cathie wood, who has been all in on a.i. remember, she was on here a few months ago, and we -- and i asked her, why she was selling out of nvidia when she was so focused and so bullish on a.i. here's what she said >> why have you been getting out of nvidia? it's considered one of the biggest beneficiaries. you saw the enthusiasm for earnings when they talked about the a.i. lead that they have >> yes and we like nvidia we think it's going to be a good stock. it's priced -- it's the check the box a.i. company, and rightly so we own it in other of our funds, ark-q, ark-w some of our japanese mutual funds. so, we do own it, but for a flagship fund, where we've consolidated towards our highest conviction names, part of that

has to do with valuation nvidia's valuation is very high. >> not a great call. she was basically out of it for the ark innovation fund by january and missed this entire year's run-up. >> do you know what i think was the key part of her answer to you, sara? she called it the "check the box" play for a.i. and if you are a self-styled, i buy disruption, we buy it early, we don't care about immediate profits, when you get a mega cap name that everybody loves the business, loves the story, and it doesn't seem like it's on the edge of disruption anymore, and now you have to worry about regular p.e. ratios and are you pay too much for it. now, they stuck with tesla all those years. even as it got huge. but tesla was never the acknowledged, like, everybody bought into the story, and they can always feel like the maverick and the one that were pushing the edge now nvidia is kind of the incumbent in this particular area not rationalizing it

it seems to me that's where it comes from speaking of tesla, we are going get to this news regarding tesla and ford on that charging network, what that means for the auto business. ton of retailers we haven't touched on weot g costco, but we'll get gap, ulta, rh when we return i'm barbara and i'm from 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.

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you became my banker and now fran is in her third year of college and you're her banker. it's so unbelievable because i'm just 20 years old. [laughing] some of the premarket gainers, you'll see ford on there. paramount is going to lead on a kuala couple of bits of news, including an upgrade at loop as they continue to hold. opening bell coming up, and don't forget, you can catch us any time, anywhere, listen to re: eng llpoe "squawk on th stetopinbe" dcast.

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help you know what to say, even when you don't. hi! constant contact. helping the small stand tall. the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. as we count you down to the opening bell, one big mover today is going to be gap

it's surging in the premarket, up almost 10%. this tells you nothing about the consumer and everything about companies' abilities to cut costs right now. the whole story here was a surprise profit, one cent. that was about 13 cents better than wall street was expecting, and a big margin expansion gross margin expanded 560 basis points, 200 basis points better than what wall street was estimating this is a company that is really hurting right now. sales trends are pretty awful, and they are cutting to the bone between this year and last, we learned they cut about 25% of head quarter roles, reducing all sorts of management. they did another cut it's not like anything is going well old navy was down a little bit gap was down 13% sales banana republic, down 10%. athleta, down 7% sales and they don't have a ceo >> you wonder if at some point

the bull case that athleta can be a big enough part of the company it has value outside it's a $3 billion or maybe a little less than that market cap. the number of legacy chain retailers that are at or below $3 billion that we have heard from, urban, abercrombie, kohl's is under $2 billion and they're all at these priced to sell levels they're priced for permanent decline, so now they're just trying to harvest the cash along the way. >> let's get the opening bell here at the big board, it's atmos filtration technologies celebrating an ipo today we're going to talk to the ceo in a couple of hours at the nasdaq, seal sq, a developer of post-quantum technology hardware and software products celebrating its listing. sara mentions gap where arguably the bar was a little low conversely, the bar for ulta might have been considered quite high, and that's why some of the tweaking of the margin guidance has that name opening down 11,

guys >> comp stores up 3.9% so still going strong people are buying make-up. the mass market beauty as they say is actually doing better than prestige, but they were comping 18% a year ago so there's clearly a moderation, i would say, in demand a lot of people also focused on the 1.5% decrease in average ticket, which means that customers just aren't buying as much when they go. but there's an 11% increase in transactions things are healthy at ulta, but to your point, carl, the expectations were high this was a stock at one point, mike, that was hitting a record high every single day. the other thing i would mention on the profitability front is they mentioned shrink, theft, which is impacting the company in a bigger way than initially expected they're trying to work with other partners, with other retail and law enforcement to try to fix this, but it's impacting guidance as we've seen from other retailers this cycle, like a target, for instance, putting big numbers on how much that's hurting

>> just to the point of, like, where the hurdle was for ulta relative to the others it's up, 15% on a one-year basis. it trades at a kind of market multiple, but like over two times sales where all those other long-time retail chains trade at a fraction of their annual sales, so clearly it's priced as a growth story and you have a very small number of those in retail. you could talk about ulta, tractor supply, of course, tjx to some degree and arerh, depenn on where we are in the rebuild cycle. >> year to date, at one point, in april, it was up 17 for the year now down 7 so, all those year-to-date gains are wiped out. i do wonder, i mean, unless a retailer is willing to quantify the shrink impact, like target did, is it like blaming the weather and the classic thing that we know retailers tend to do >> yeah. i mean, i do think that ultimately, it does get quantified in a filing or something like that. they probably have to attribute it to something like that, write

it off, write off the inventory. but no, it's tough to know exactly how much a part of the shortfall that is, and i mean, it's no doubt a chronic problem. sometimes people just feel like it's the cost of doing business, but it's become a little more extreme. >> it's become worse the analyst from bmo points out this was the first time in about four years that management only reiterated full-year earnings guidance for ulta. they're used to raising guidance, at least investors are, just because it's been such a strong category. >> one final note on some of these tailwinds in terms of freight costs, s&p had a great chart yesterday. it's not just that inventories have come down, but what's left, the turnover in that inventory is also falling. they're not able to get the mix out as quickly as they did before, and then costco, we mentioned it, but they're now out of that emergency shipping operation where we know when times were tight, they had to take matters into their own hands. there's no need to do that anymore. >> that's what accounted for the big miss on the earnings number, which is why i think the street is forgiving them, because

ultimately, it's a good thing we're moving into more normal freight conditions this has been a theme. gap brought it up. freight costs coming down, that certainly increases margins. on costco, we hit the numbers before comps, 0.3%. 2.8% was expected. so, that was a miss. e-commerce comp store sales were down 10%, and they blamed that on lack of demand for big-ticket discretionary items, electronics, jewelry, home furnishings. we've seen that across the board with some of these companies home depot and lowe's both taking down that guidance. >> for sure. target has been quite weak, unde underperforming a bit. that could be because of the pushback to some of the changes in their merchandising with regard to the pride merchandise. i think it's a social campaign against that company but that aside, it of course is in the tough area of retail. by the way, though, we were talking about the pce inflation number, the actual pce personal consumption numbers, a huge upside, 0.8% last month.

it was like almost double the forecast growth. a lot of it, though, skewed toward auto and auto-related so, it seems as if, yeah, there were goods that were being purchased, but it was shifting over toward cars as more inventory there came around. so, not a bad story in terms of the consumer in general. did outpace personal income. but definitely been shifting in a different direction. >> also some manufacturing b barometers with the early durable goods numbers that came out. very strong on the headline number but if you take out transportation, the move was only down 0.2%, compared to 0.1% expectation so that's a good proxy for sort of capex demand from companies on big -- from people on big-ticket items >> next week, of course, heavy on the labor date as we'll get to adp, j.o.l.t.s. and the jobs number rh, we're used to volatility and certainly a lot of color from gary friedman.

the quarter revenue is a little bit lower. he does expect luxury to remain challenged interestingly, guggenheim names it a best idea today, $325, but here's what friedman said on the call >> i think what we've seen is, you know, an increase in headwinds from a demand point of view, and you know, a slowing of our cycling through our discontinued inventory as we've increased our markdowns. it's going to cost us more to cycle through the product, so we're going to have to take deeper markdowns than we thought because of the greater headwinds that have developed. >> doesn't sound inflationary, m mike >> not at all. at least not at that level for any category that thrived in lockdown that's really been the rule that's been -- that's applied to a lot of this. >> one reason the analysts are so bullish is because the

pipeline, the development pipeline of stores and the way they talk about these stores and build out these stores with the restaurants and the hospitality and the luxury, and that's what dominated the call usually, gary friedman talks about powell and yellen and has a lot to say about the rate picture. there was very little of that and more excitement on what they're doing, opening in the uk, for instance, which is what some of the bullish analyst takes are focusing on, because those are the drivers. >> i think the guggenheim titled note is, "off to england" or something like that. that's where the resilience is >> that's what the story was about. also, the buybacks, people like. the stock has been beat up -- >> a bit >> -- with the whole decline in home furnishing. the fact they had been so reluctant to bring down price, and now they are talking about doing more promotions, perhaps the street is taking comfort in that >> i think the street certainly likes the idea that they can elevate into being one of those

resilient luxury players on a lesser level than some of the big european luxury brands, but it just always seems like there's more money in that tier that they might be able to tap into we'll see if it does play out, though it's aggressive. he's not one to, you know, be timid about this stuff ton of news in the auto space. tesla now on the cusp of overtaking the toyota corolla as the world's number one selling model. hyundai going to open an ev battery plant in georgia of course, that twitter spaces yesterday between elon musk and jim farley in which ford will get access to tesla's network of chargers by sometime next year take a listen to that. >> the idea is that, like, we don't want the tesla super charger network to be like a walled garden sh we want it to be something that is supportive of electrification and sustainable transport in

general. >> meantime, musk is almost back to taking the world's number one richest -- a little closing the gap between him and arnault. >> yeah. following that race very closely. ford shares are up, by the way, 2.3% on the news some of the analysts out early saying it's a win-win for ford and tesla. but actually, could hurt some of the ev charging stocks >> right >> that are competing with the tesla. >> it was for a long time, certainly a secondary or tertiary part of the tesla bull case, but this idea that they would become kind of an industry standard and have that ability to be a vendor to the whole industry on the charging side and just technology, even some software >> it's interesting to see the whole market the sectors are higher today consumer discretionary is leading. tesla and ford are a big part of that story the cruise lines are doing well again as well. what's weaker today are staples and utilities, which are the

more defensive parts >> rate sensitive. >> have also done a little better so far this year. >> utilities have struggled recently, but yeah >> staples have been up a bunch. >> yeah. >> staples, you know, they're down 2% this year, but that's an outperformance >> utilities are down 8% this year and i think that's kind of a -- sort of the pure rate play. it is interesting. i mean, we continue to have this sort of net defensive investor posture combined with an economy that isn't failing as quickly as people maybe were positioned for, and we get churn around those themes you know, the bank of america, their weekly flow report showed year-to-date inflows into cash from investors $750 billion that's basically just sort of taking it out of other financial assets, and equity flows are basically flat so, flat probably makes sense after you had mass i ive influxr a couple years, everybody ended up overloading with stocks, but that's been normalizing, so you

don't have people feeling they're overextended, even when you have five stocks that are going to the moon. >> workday's probably worth touching on. eps upside, again, beating on operating margins. that's really becoming a theme in this particular round of earnings they do raise the low end of the full-year sub revenue guide. stock's added a hundred bucks, almost, mike, since november that's a 52-week high. >> yeah, and that's part of a little bit of, i don't know, rediscovery of some of the sort of cloud application software, business-to-business software stocks that were, you know, huge favorites, again, in 2021, all got reset lower, and now you know the ones that are entrenched and have the business are doing better so, they're all still look expensive. people will tell you you can't just use a straight pe for software, but definitely a part of the market's getting slowly dragged up with some more people looking for ideas within tech outside of the obvious >> speaking of, marvell

technology is the nvidia of today. the stock is up about 22% right now after the semiconductor company talked up the increased demand related to a.i. was this a surprise, that they were -- that they were so out front when it comes to the a.i. technology look at the reaction here. >> i don't know if it's a surprise that they were a participant, but it feels like everybody was caught flat-footed by the speed and magnitude of the investment that's already reached the vendors. in pretty much every area. of course, it's definitely a winners versus losers dynamic, because pe-related, intel struggled for two tase it's seen as a net loser on this i think it was bernstein's note this morning off the desk saying that amazon was down yesterday, in part because it's seen as a non-winner in this a.i. investment cycle also snowflake's numbers dragging the expectations down >> it's interesting. there was some conversation yesterday that the rush to a.i.

spend is so large, it will crowd out traditional networking spending, dram people had questions, how does micron fare in that environment? we might be talking about a fresh year high in micron soon >> it's true i guess nobody quite knows how fast the pie is getting bigger and what it's drawing from but again, i find it remarkable that with all the people covering nvidia, trying to get an edge on the stock, you can have a revenue guide at that degree >> 50% above consensus >> and it just got past everybody. it didn't get past the market, arguably, because the stock wouldn't quit on the way in, but in terms of people publishing estimates and models, it wasn't there. >> well, and marvell too so, the surprise was they said they're already making money off a.i. they make the chips used in the datacenters. a.i. revenue of $200 million already in the most fiscal year, but they expect that a.i.-related revenue to double to around $400 million in the current fiscal year, rise to

$800 million in the next fiscal year that's what has everyone so excited today. meantime, really quick, touch on some travel name. it is memorial day weekend phil lebeau was talking about travel in "squawk. i think tsa, thursday, new pandemic -- post-pandemic high in screen passengers, and today, morgan stanley does reiterate, i think, their -- yeah, reiterate overweight on american express, and that comes the day after we had the action in the cruise lines and the story in the "journal" about ccl and others >> it's just a question for these consumer discretionary stocks, which is how much spending power does the consumer have left. and at these very high prices, and it keeps getting pushed out, i will say,and there's still a lot more pent-up demand than anyone expected from covid, mike, but they haven't acted that well because when the consumer pulls back and you start to price in recession, this isn't where you want to be. >> i mean, just look at the airlines they are essentially implying that these are good times, running full planes, it's not going to -- you can't

extrapolate. that's the way -- it's way close to, you know, the lows of 2020 than to the highs of 2021 in those stocks the airline index. so, that just tells you the market's unwilling to say this is going to last >> what's different is that this time, i mean, in a normal cycle, they would be adding routes, adding capacity. they can't because of the -- either the equipment or the pilots same in hotels there's not going to be some rush to new development. so, you might argue that the -- at least the rates -- >> they're maxed out, yeah >> and durable >> yeah. >> or sticky remember what solomon told -- >> hard and sticky that's the inflationary outlook. >> the lollipop economy. >> you have some people say, look, 1/10 higher than expected pce deflator today should not make a fed rate hike in june >> i grant that. >> but it's evidence that the inflation is here and that things are a little bit stronger than the market could have expected what tells the story of the

week, again, mike, is that the dow is down for the week the s&p is a little bit weaker for the week, and the nasdaq is higher >> right >> and that's been this continued divergence here in the market with -- that speaks to big cap tech and the a.i. theme. >> which makes me wonder if, all right, let's say we do another round trip to 4,200 and we have the same conversation again about where the bull ceiling is. is it any different with at least a printed nvidia guide does that make this particular round trip different >> i it might to me, the bigger question is, if we find ourselves at 4,200 and you start to pull back, and most stocks have been struggling already, is most of the market going to be oversold with a little bit of a pullback in the index before we have to have the big flush, or is it showing that there's really weakness and nobody wants to buy these things and they have to come lower to refresh demand you could play it either way in history, it's gone both ways,

so it's hard to know how exactly it's going to turn >> that said, decent action on this friday. 41, almost back to 4,180 let's check bonds as well. two-year did get to 4.61%. highest since march. ten-year around 3.82%. we're not done with data either. umich coming up at the top of the hour don't go away. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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ford and tesla announcing a surprise partnership during a twitter space event, of course, with elon musk and ford's ceo jim farley phil lebeau joins us on what it means for both companies. >> sara, this is really win-win for ford and tesla here are the particulars of this agreement between the two automakers ford ev owners will get access starting early next year to tesla's super chargers in north america, about 12,000, little over 12,000 of them. this may be more important, ford's second generation electric vehicles which start coming out around 2025, they will be equipped with the tesla

standard, nacs charging standard why did ford make this deal? here's jim farley on "squawk box." >> we really like the tesla standard from a customer standpoint when you look at how easy it is to plug in, if you drop the cord, the tesla system is more robust the other standard is great, and we'll have adapters for that, but we also really love the locations. >> in a nutshell he's saying tesla has built a better mouse trap when it comes to charging stations if you take a look at where ford is in terms of its ev market share after the first quarter the thing to keep in mind about 7% of the vehicles sold in the first quarter were evs it's still a very small part overall for the industry of the market having said that, when you look at what's happening here, ford is basically saying to their customers, we want you to have as many areas to charge up in

the future, about 50% of the super chargers will ultimately be available and from tesla's standpoint, guys, remember they've already told the biden administration they will open up their network to other vehicles in order to access the $7.5 billion in federal funds for adding more public chargers and, think about this, they now get ford owners in their ecosystem maybe not completely but a little bit, and that is going to be critical as they continue to grow their brand over the next several years. >> what are the economics of something like this, whether it's ford having to buy certain components to have adaptability or to tesla directly >> right well, at least initially, there is going to have to be an adapter for the current generation of ford vehicles so that the protocol used on ford vehicles and almost everybody else's vehicles, the ccs standard can work in the super chargers which have the nacs standard but down the road, mike, here's the other question, we don't

know what the pric going to be. you have to wonder how many people will probably do it through a ford app, the vast majority of them, but how many may say i'm going to access the tesla app and pay $12.99 a month and easier that way. and other automakers have to think about this do they want to continue or make a deal with tesla and should there be one national standard instead of what we have right now? >> phil can cover travel weekend, industry dynamics, wherever he is thank you. phil lebeau. by the way, if you missed faber's full sit down with musk don't miss a special encore monday on cnbc that begins at 1:00 p. stn me 'lbe.meaertiwel right back. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that?

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we're always lucky to get santoli for a full hour. >> 6:00 tonight, a special taking stock, finish up the week this way and see if we have a debt ceiling deal to talk about. >> you have to beat the taylor swift traffic in new jersey. >> or join it. >> sounds like they're having fun out there already. >> of course next hour, don't miss transportation secretary pete buttigieg talking the travel

ahead, ev infrastructure and more we'll take a quick break here with stocks going strong we've got the dow up 200 points. the s&p up about 0.6 most sectors in the green except for utilities right now. we'll be right back. a car that goes as far as it does fast. as sleek as it is... spacious. as smart... as it is beautiful. introducing the lucid air. experience the best. ♪

welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla. live for you as always from post nine of the new york stock exchange david faber has the morning off. looks like we'll end the week on a high note. s&p up 0.6, hopes they are coming to some sort of deal, we haven't heard an announcement on the debt ceiling, data to chew on as well s&p up 0.6%. still down for the week about 0.4. the nasdaq has had a good week, up more than 1% on the week and 1% in the early action as well we've got strength across the board. it's a different kind of feeling today. consumer it discretionary, tech, materials leading the charge 30 minutes into the trading session and three movers we're watching we have to start with marvel tech surging on the back of beating the top and bottom line expecting growth to accelerate in the second half of the year, talking up revenue from a.i.

gap, another big winner today rallying despite posting net losses and declining sales a big improvement in margins the stock down 25% year to date. and then retailer not faring well this morning, tulta, sliding, as comparable sales grew less than expected sending shares lower by about 12%. had a nice run up into the print and higher expectations, as beauty remains a category that consumers are buying. >> amazing we've worked through durables, income spending, core pce. let's get to sentiment with rick santelli. >> yes there's surprises here you look at those yields, they moved down just a little bit university of michigan sentiment stronger than expected, 59.2 that's the final read. of course it replaces 57.7 if we look at the current conditions, 64.9, replaces 64.5. an improvement there and what lies ahead,

expectations, nice improvement here mid-month 53.4, moves to 55.4. here's the surprise, if you look at one-year inflation, 4.5, moves to 4.2 doesn't sound like a lot, but in many ways it is. 4.2 is the lightest level since march. we were at 3.6 so we stopped the bump up. if you look at five to ten year inflation, it moved from 3.2 to 3.1. that's good news 3.2 would have been the hottest since 2008 3.1 joins a long list of 3.1s we've had all along, really starting in early '22. we're moving lateral on those five to ten-year expectations, made progress on one year and you can see yields slipping a bit. i would not be surprised to see them slip a bit further. sara, back to you. >> you see the reaction in stocks the highs of the morning across the board. s&p, nasdaq and dow. rick santelli, thank you.

of course, it wouldn't have been good news for the fed or markets if we saw those inflation expectations in that number rising because that was the big surprise last time we got the numbers, the five to ten-year expectations were high, 3.2, saw a little bit of a moderation and as rick noted a bigger moderation in the one-year inflation expectations. the fed is sensitive to inflation expectation and want to see it remain anchored to show that they are doing their job when it comes to bringing down inflation of course you put this with some of the other data and the evidence we've gotten, inflation has been moderating. that's good news but not fast enough. and it's proving tricky. you saw that in the pce nrnlgs the fed preferred inflation rate which came in 0.4%. >> nice combination of results out of michigan with the sentiment and the lower inflation expectations maybe it has something to do with the areas in which consumers have high frequency touch. we mentioned costco and lower

inflation in food and meat, and eggs, gasoline prices, obviously, we're going to memorial day even though inventories aren't all that high, with gas, obviously, well off year ago levels. maybe that resonates with consumers when asked about this stuff. >> also, we saw consumer spending starting off the second quarter stronger than expected if you look at today's personal spending numbers, they were higher 0.8%, more than expected, adjusted for inflation, 0.5% it was one of the best reads of the year, so it's not like the consumer is falling apart, but we have gotten some mixed signals from the retail earnings not talking about recession, but they are talking about moderation for instance, listen to costco's cfo how he describes the current environment. >> our average daily transaction or ticket was down 4.2% worldwide and down 3.5% in the u.s. impacted in large part from weakness in bigger ticket nonfoods discretionary items how much elasticity is there

driving business by lowering their price. some categories, some of the bigger ticket categories right now, there's not an appetite by the consumer necessarily for that, so how do we add value to the item or do more things to drive business. >> also, carl, we heard rh, which is really held the line on higher prices, being affected by the macro environment, finally talking about how they are going to put in place some promotion because similar to what you heard from costco, the demand environment warrants that. listen to what we heard from rh. >> an easy demand environment, you know, i think the world prices up and we know that because inflation went to 40-year highs, right and, you know, that is going to affect things, and i think we -- we're probably somewhat too arrogant in our ability to raise pricing in an easing demand

environment and easing demand environment has waned, and, you know, it's required us to kind of really challenge is our value equation going to create the level of demand, you know, that we believe is right for the business. >> so where are we what do we make of these mixed signals? it's very confusing and it's a tough call for the fed and why you talk to ten investors, five of them say they should be raising rates and stay hawkish and five say they should be pausing because they've done damage and inflation is coming down it's not straightforward what we got from the data today is that spending and price pressures still remain a problem, but they have moderated and we're in this in between zone where the consumer is not falling apart and it's not clear whether the fed still has to do more about it. >> meantime we've basically erased all of the expectations for cuts in the second half of the year and then we're looking

at things that you would imagine would come late cycle like housing. jpmorgan said the signs appear that housing is stabilizing. maybe at lower levels, but that drag on gdp that comes from housing, might be marginal from here on out. that would have big implications too. >> home builder sentiment bottoming in december and the numbers turn better. you heard from toll brothers this week, the supply-demand mismatch, it's just not making the higher mortgage rates as much of a problem for sales in the housing. we thought housing was going to get crushed as a result of the fed hikes. we're back up to 7% on the 30-year mortgage and yet there's still this shortage and everyone is locked into low mortgages and these interesting things happening post-covid, which is sort of like the consumer picture. if you're in home furnishings you're getting crushed but in beauty and groceries things are booming. it's tough to figure out. >> a good chance to bring in steve liesman ahead of his chat

with fed president meister we're talking about the consumer consumption and sentiment and the conversation is going to turp to how secure i guess people feel about the job market. >> yeah. no rest for the weary here and trying to make sense of this is difficult, as sara was suggesting i'm really struck by the 0.5% real consumer spending increase. that's going to feed into gdp. the durables number was good, too. remember the banking crisis which was going to reduce lending, borrowing and investment by business didn't show up in april may be yet to come, but it's not there now. the fed has its work cut out for them i think the idea is that all of this is ammunition for the considerably large hawkish wing at the federal reserve that has suggested we need to do more remember, i think it's important to go back to waller who talked about the idea, well doesn't know if we should hike, pause or

skip, okay where are we now he said there were basically three essentials pieces of data. the pc data today, that leaned in favor of a hike the jobs number coming next week early indications that may be strong and then you have the cpi number coming for june 13th, first day of the meeting at least what do you want to call it, strike one, when it comes for the doves at the plate. they have whiffed on this one. parts of inflation are not going down fast enough parts of inflation actually are rising that thing that, i don't know, you guys had that -- what did they call it the super core whatever you want to call it, that's a key indicator that powell is looking at >> so what do they do? they -- if they don't pause, they keep hiking and then what what is happening on the credit side of the economy, which is what the doves point to, right we've had bank failures and haven't seen the impact.

>> you know, sara, we've been watching in the h 8, which is one of the things you get most excited about, as do i, which is the deposits and the lending of the banks. we focused on the deposits and want know, was money flowing out. what we haven't focused on so much is the lending side of that and lending has been, you know, hanging in there, despite the decline in the deposits. so it may be, sara, that the tightening of credit standards does not have a pro fund effect on the economy, something the doves were hanging their hat on and why the fed could pause. you have to start thinking ability another rate increase. one thing that's important, though, you pointed this out, this decline in the one-year expectations for inflation at university of michigan, means the fed is relatively tighter today than it was at 9:59 this morning. take the funds rate, 5.12%, back out the 4.2% inflation

expectations, and you're now about 1% real. there's a question should the fed be 1.5 or 2% real. there's further for it perhaps to go, but it's better now with that inflation expectations number being down. >> there was a big sigh of relief across the markets and holding the gains on stocks and on bonds yields moving down as well on the inflation expectations read in the university of michigan. thank you. steve liesman see you next hour. wall street is focused on washington as well, with time ticking away on a debt deal. there's optimism out there today, kayla tausche what are you hearing about the negotiations >> sara, safe to say from talking to sources that conversations around a potential deal are taking shape. directionally those conversations are heading in a two-year budget deal that would see defense spending go up roughly in line with the president's fiscal 2024 budget and steeper cuts elsewhere in other discretionary programs that republicans have been pushing for, but republican

aides are quick to caution that there's actually been no agreement so far even at this late hour on the overall top line level of spending, the breakdown between defense and nondefense spending and the length of any debt ceiling lifting, whether that's one year or two years, although if you talk to the white house, the white house officials would suggest they'll settle for nothing less than two years. but there are some areas where both sides have been willing to deal for instance, take funding for the irs. the president's inflation reduction act last year provided $80 billion to ramp up tax enforcement at the irs republicans have taken aim at that and tried to claw it back but we've learned from sources that democrats are willing to give away or chip away at some of that funding in order to preserve some domestic programs more important to them in the order of 10 to $20 billion certainly a move in the right direction. but at this point, sources can't say exactly how close we are and how close a deal is within reach

with president biden leaving around dinner time today to go to camp david for the first part of the memorial day weekend. so what does the timing look like well the timing is really important here because there are a lot of steps that have to happen before any deal can reach a vote you have to reach a deal, most importantly. then say you need about 24 hours for the deal to be turned into legislative text then speaker mccarthy has said that he will give his conference no less than 72 hours to read and study that bill before voting on it and then potentially throw in a score from the congressional budget notifies there at some point, too, and you're looking at possibly best case scenario a vote middle of next week before that june 1st deadline and that is if the vote is certain. messaging is going to be difficult on this one with the far wings of either party very unhappy with directionally where it's going we'll see what we get throughout the day today but today is the critical day. >> absolutely. could be a working weekend for you. thank you very much.

kayla tausche. as we head to break, here is your road map for the rest of the hour get ready for a very busy travel season as americans head out for the long memorial day holiday. transportation secretary pete buttigieg joins us with the lay of the land. >> plus, nvidia and a.i. stocks are fueling this rally, but is the a.i. craze entering some kind of bubble we'll talk about that. ford and tesla striking this partnership on ev chargers what that means for the both of them and the ev race when "squawk on the street" continues. 66 ahhh! coach k, there's a goat here. the story of my life. no coach, there is a goat here! whaaa! what's this? a thousand dollar hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaap! get help with expenses health insurance doesn't cover at aflac.com the first time you connected your godaddy website and your store was also the first time you realized...

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. millions of americans headed out for the long memorial day. travel expected to surpass prepandemic levels phil lebeau joins us with a special guest. hi, phil. >> hi, sara. pete buttigieg, secretary of transportation joining us at o'hare this is the big test this weekend. what are you most worried about? >> we're watching the system closely because we're going to see some of the biggest volumes of traffic since before the pandemic, so far, so good. as a matter of fact, yesterday, preliminary numbers suggest we did see the most passengers getting on airplanes we've seen at any time since before covid the system held up well. we saw less than 1% of flights canceled we do have weather coming in what i'm looking for is resilience in the system you can't control the weather but when you get weather in a certain part of the country or an issue comes up how quickly can the airlines recovered we pushed them last year to build more resilience into the system and we're seeing a lot of indications of that. >> you know that you have the

situation where you've got pilots, flight attendants added, but we talked to scott kirby ceo of united airlines not long ago and said look, we still need more air traffic controllers and he's concerned that when you add in the potential for the fines that have been proposed for excessive delays there could be a safety risk in the system. when you hear him say safety may be called into question what's your reaction? >> the idea that an airline can't operate safely while also compensating passengers if you get stuck by covering your hotel or giving you a cash compensation makes no sense to me i expect every airline to always put safety first we require that, and it doesno

add up sometimes in washington, it's a great example of how something doesn't have to be in the pentagon to be extremely important for our economy and country and it's why we're going to continue working with the funds we have and seeking to get funding to hire air traffic controllers, modernize our systems and do the things that public counts on in terms of bang for our buck we have an incredible return on the investments that are made in the faa. when you think about the fact that we have 60 million flights a year and in this complicated

air space air travel is the safest way to travel. >> but not the most efficient, with all due respect everybody in the industry admits technology could be better. >> yep. >> we could have more air traffic controllers you could train more controllers, and yet seems like a continual we need more, we need more, and congress dant want to give you that money. what do you say when the budget talks are going on >> what i will say is you get a good value for money when you invest in our transportation systems, whether it's the operations at the faa or whether it's the infrastructure improvements including at airports around the country that will make them safer, sometimes the best technology is concrete. we're designing end around taxi ways to make it less likely you wind up with a runway incursion. aviation, roads and bridges and all the work we're doing there, rail transit, all of that adds up into a foundation for our economy to grow and we take very seriously our responsibility to take these funds and put them to

good use. >> i want to ask you about the ev industry. ford striking a deal with tesla so that they will have access to the tesla super chargers and use the tesla system, the protocol, n nacs protocol. should there be one system are we looking at a beta max versus vhs system? should it go over to the tesla system >> we're not going to pick winners and losers in terms of what standard prevails in the end we'll merge toward a system that is for everybody one important difference is that there are ways to use adapt sores that one kind of charger can charge another kind of car tesla has built an extraordinary network already and in a country that's racing to a national charging network we think it's terrific news. it needs to work in a way we have access to my early impression of this deal it's going to support exactly that we don't pick, you know, which business or technology is going

to prevail we do set a basic standard so that everybody can benefit from any kind of charging network where taxpayer money is involved and see that happening. >> what do you say to those who use the public charters out there right now, mainly nontesla ones, and they say they're broken, they're not working, they're slow, inefficient. >> yeah. >> does there need to be more of a push to say, if you're going to put these chargers in place make sure they work? >> absolutely. we're pushing on reliability, we're pushing on price transparency, interoperability too. imagine if you could only fill up at a speedway if you were a member of speedway and had their app, not at bp we would never accept a 10, 20, 30% down time at a gas station we can't accept that on electric chargers either. one of the reasons we're raising the floor with the standards that are attached to our investments.

>> transportation secretary pete buttigieg joining us here on a calm day at how o'hare back to you. >> don't jinx it phil, thanks check out some of the biggest leaders on the ndx for the week there's marvel and nvidia and amd leading the p tothree. dow is up 300. back in a minute 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.

as we get closer to a potential default and that x date ahead of any debt ceiling deal what could that mean for crypto prices? dom chu has been tracking that what was the an until. >> it could be downside and we've seen it play out over the course of the last month to your point. if you take a look at what has happened with bitcoin prices specifically and more broadly speaking crypto in general, take a look at bitcoin prices over the course of the last year, we're still down about 9% over the span, but we had a sharp rise to start the year toonly t see things tail off around the debt ceiling negotiations in the last month or so here. if you look at it in context of where it was with the stock

market, the curious part is, bitcoin prices have started to react a little bit more to debt ceiling uncertainty, more than stock prices have. if you look at the invesco qqq trust it's up 11% over the last month, the s&p 500 from a broader standpoint, we know it's more tech heavy, 3.5% gains there, versus a 6% drop in bitcoin prices in the same span. a risk aversion type trade playing out with the green line which is bitcoin prices. to put all of that in context, carl, sara, the data team at y charts looked at the numbers and checked out the trading relationship or core relation between the invesco qqq trust versus bitcoin prices. over the last year we're hovering near the highest levels in terms of trading relationship meaning that bitcoin prices and qqq have kind of followed each other more broadly we've seen a rollover in the last month or so, but carl, in the last year we got as low as about 0.4 just kind of in the

fall of last year and by the way, that just kind of puts more in context for just how much of that risk aversion trade is playing out. curious about what trading relationship has been over the long term over the last five years, i just tweeted out that chart for you and the viewers out there. >> very nice thanks when we come back, tesla and ford announcing the surprise partnership on ev charmers we're going to ask mark fields what it means for companies and the ev race overall. zeroing in on 4200 once again and the nasdaq 100 year to date gain, almost 30% from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too.

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welcome back to "squawk on the street." i'm contessa brewer with your cnbc news update the sec awarded a record $279 million fee to a whistleblower in a bribery case against the

telecom company ericsson according to the "wall street journal. the reward reportedly stemmed from the $1.1 billion settlement the swedish company reached with the u.s. in 2019 over allegations that ericsson conspired to make illegal fimtsz win business -- payments to win business in five countries. they voted to whether to impeach ken paxton a republican led committee recommended his removal. four staffers accused paxton of ac sechtsing bribes and other misconduct and settled their suit for $3.3 million. after years of scandal paxton says testimony to that committee was manipulating and misleading. the billionaire ceo of granite telecommunications rob hale helped graduates celebrate with an unexpected gift. rob hale gave them $1,000 each in cash and could keep half for

themselves and donate the rest to charity thousand for you, thousand for you. look at that as if graduating college isn't enough. >> exactly that was like oprah-esque. thank you. so far in 2023, speaking of, america's tech billionaires have had a banner year and this week another ceo added nearly $7 billion to his wealth in just one day. our robert frank has that for us i think we can get who that is having a very good week. >> our viewers if they've been watching jensen wang adding $6.5 billion yesterday, that's equal to a mark cuban or ralph lauren. the nvidia ceo worth $33 billion moves him up to 37 on the global billionaire list he's got a lot of cash and sold over $600 million worth of nvidia stock over the past two years. that last sale of his was in march of 2022. now this a.i. gold rush creating a huge amount of wealth for the

big tech billionaires. the top ten adding more than $250 billion to their net worths this year. the biggest in dollar terms mark zuckerberg, doubled his wealth to $91 billion, back in the top ten. elon musk is up almost as much adding $41 billion on that tesla stock run. jeff bezos adding $33 billion to go along with his new yacht and new fiancee. bernard arnaout, who despite the lv stock pullback we saw this week he's up $27 billion for the year and still the world's richest person but musk now closing in, only $10 billion behind and the alphabet, larry paige and sergey brin, adding to their wealth sergi gifting $600 million of his shares probably to charity guys >> robert, we don't hear that much about jensen and -- as we hear about bezos and musk and

everything else. what is his story? he's a co-founder of nvidia, right? >> he's a co-founder of nvidia and owns about 3% of the shares. until recently when that total market cap is closing in on a trillion dollars he wasn't really in the public eye outside of being an extremely smart tech genius who had a small share of the company, and now it's just because that market cap is close to a trillion dollars, certainly getting there, that he's -- people are going to ask who is he, where does he spend his money. he sold $600 million of shares over the previous two years so he has a lot of cash i think there's going to be more attention on who he is and how he spends all that money. >> i noticed "the washington post" headline how nvidia became one of the world's most valuable companies, we know it hasn't happened suddenly but the world is figuring that out it's interesting to watch. thanks robert frank. let's stick with a.i. and what's to come for stocks connected to it and bring in

piper sandler's brent bracelin a nice note trying to frame how we're going to think about this and one of your pieces of advice is to basically challenge any bias that you've hereto for had, right? >> it's interesting the time we're at right now things are moving so fast. i know just four months ago, we were talking about maybe a handful of large language models ruling them all. today there are 50 plus large language models trained on a billion plus parameters and it's important because we're trying to make an assessment of where the world's -- what the world is going to look like here in the next three, four, five years, and the ground is literally moving underneath us very hard to be super confident in some of the conclusions, so yes, our first observation after 100 investor meetings and company meetings and bus tours around a.i. is really question

everything. >> what do you do about consensus? even a lot of desks this week who by the way have been extremely active, have said look, this is going to be a contest between those who want to ride this wave and yet challenge it or somehow assume it's an enormous pull forward of spend. how are you thinking about that? >> so our thesis is, not to fight consensus early on i remember back in the dotcom era, right, the brick and mortars were dead, right, and those asset classes were impaired for a long period of time and end up being basically an overstated risk at this point in this cycle i think it's really important to not fight consensus. the consensus is on a.i. the big get bigger and i think that's going to continue to be the best way to play the a.i. trends here. that's where you're seeing the microsofts of the world now. just in a matter of five months scale to a half a billion dollar revenue run rate. >> microsoft sure, but brent,

you put oracle on your list of a.i. all stars, which it was curious to me because we haven't heard a lot of hype around oracle and usually that's not one of the sexier ones. >> yeah. they have a business called oci, which is basically a competing alternative to an aws or even an azure. it's a $2 billion business today. we think it actually has some really interesting design characteristics that lends itself well to this a.i. movement they have a gpu super cluster. they're basically now the infrastructure layer for nvidia's offering as well, so they're very close relationship with nvidia there and so i think you're going to see that $2 billion business scale to $10 billion, largely driven around some of these new a.i. workloads and custom application workloads. i think that changes the growth profile of oracle and i think you're going to see improving margins over time as well.

>> wow talk about a nice annual gain on that one as well maybe next time we'll talk about what it's going to crowd out, if anything, but for now, have a great long weekend thanks. >> you bet take care. next hour, don't miss an interview with cleveland fed president loretta mester at 11:00 a.m. eastern time as we wonder whether the fed is going to be raising rates in june. it's sof a recalibration of where the market was a few weeks ago on the back of new data including today's showing hotter inflation. stay with us

ford making a surprise announcement striking a deal with tesla to gain access to rival charging stations in 2024. joining us to discuss what it means for both companies ceo ross gerber, tesla shareholder and former ford ceo cnbc contributor mark fields. good morning to both of you. mark, how surprised were you about this collaboration

>> well, it's a bit surprising, but it's also very, very practical by the ford team they have these products in the marketplace, they have the products coming, and listen, the bottom line is they needed access, widespread access, to super chargers and with tesla having the most super chargers out there, actually a two to one ratio over the other standard, it made it pretty simple for ford to say i'm not going to spend the time working the network, take advantage of the tesla one. it has good reliability and good locations and takes one of the inhibitors or impediments for customers as they think about evs. >> ross, as a tesla shareholder do you like it >> i love it i think it's a wonderful move by tesla because you have to look at the business as different sections and tesla charging is one of the most important and valuable parts of tesla today. the network works so well compared to the competitors, so ford is making a super smart move by plugging into the network and for tesla, that gaeg

to get all these fee revenue from ford joining the super charging network which will end up being profitable for tesla. >> i was going to say, what was in it for elon is it about the fees or something more to it i can easily imagine a scenario in which they decided to have a wall and step on the throat of the legacy oems. >> listen, there's a number of advances for tesla it reinforces that they're leader in this space when you have a traditional automaker like ford saying i'm going to use their standard and in their products coming in 2025, ford's actually going to adopt their north american charging standard which is a big deal. but secondly, you know, they also get -- they qualify for the ira funding from the government to help build out further build out their charging infrastructure, so again, they're getting federal assistance, if you will, to aid their business and, you know, i think one of the most ironic things is prior

to this, the traditional automakers were buying ev tax credits from tesla now that's waning. guess what now they're going to start to be able to gain some new revenues and profitability from providing, you know, the charging stations, so i think there's a lot of advantages. the only disadvantage if you're in a cyber truck and in a line behind a ford f-150 or mach-e, that's a bit of a problem. >> there had been some, i would argue, in the industry who were bringing their adoption curve, their long-term adoption curve, down a little bit maybe because less urgency, sticker shock, gas prices are cheap i wonder if we get this interoperability if those curves need to be raised again? >> well, i think one of the things is that when they started the charging thing, they wanted to have one standard across the entire world, and a lot of people balked at tesla's standard and didn't adopt it this is a reversal of something

from many years ago that was probably a mistake for these companies. ford adopting it is really good. but what really is going to happen is the new model for tesla charging are these massive charging areas like they put in santa monica with 150 stalls the worry about like cyber trucks being behind fords and all that i think is legitimate maybe short term, but longer term, there's going to be tons of charging stations this is win-win for the climate. it's for evs, for ford, for tesla. and it will help mass adoption of evs on a much greater scale you know, i'm very, very excited about this because ultimately our goal is to see evs become a dominant, you know, vehicle in the global, you know, driving world, you know, and so that's -- this is going to help a lot. >> although it's also going to help the other guy from a tesla perspective, it helps ford with its mass adoption of evs and makes it easier for them at a time where

we're wondering about tesla's brand reputation and just what those price cuts mean. >> right well tesla is more related to elon's personal political woes than the demand for the product which people love so really people love teslas and buys toni tonings of teslas. ford is competing against itself selling a gas car versus an electric, let's say, f-150 and the electric f-150s are better i don't think ford owners want to buy a tesla per se. they're going to buy a ford an ford needs to create products for their customers who want evs. that's exactly what's happening. so there's no negative to tesla by having more evs on the road because it further increases adoption from the general public, still only buying maybe 5 to 10% of the united states in eves in california it's down 20%. if you extrapolate out this is good for both companies. >> mark, makes you wonder

whether gm is going to make a move like this as well and some of the others. would that be beneficial to them >> that's the big question i mean to the point with ford and tesla in this deal, i think it's win-win for both, but a bigger win for ford for the issues that we raise i do think getting to this one standard is really important when you look back in the history whether beta max or vcr or ironically back to the late 19th century, ac versus dc around the electrical power transmission standards, edison was pushing dc and ac won out and guess who was backing ac, nicolas tesla. >> tesla. >> it's going to be really interesting to see if some of the other automakers say we have these products coming, we need, you know, greater access to super chargers, and if they start jumping on this bandwagon i think you're going to see the industry potentially move over time in north america to one standard, and it quite possibly could be the tesla north american standard. >> right would that be at the detriment

of tesla in. >> i think at the end of the day, first off, as long as they keep bringing out compelling products there's going to be demand, but this does add -- this provides another, you know, revenue model for them and, you know, the more that they can charge other oems for access to their systems and potentially a cut of the tape, of customers when they charge, i think that's going to be all incremental to them. >> all right we'll leave it there thanks for joining us today. good discussion. ross gerber and mark field. get a check on the markets here bulls making another run at 4200 less than 1 point away now the question is whether we can take out that 4212 intraday high for the year on may 19th stay with us ♪ ♪

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a number of retail companies updating guidance this week while results continue to be mixed lots of uncertainty heading into the rest of 2023 charter holding ceo ray washburn joins us with what he's seeing

his company, owns indoor and outdoor malls in the mechanics mechanics area we're trying to figure out just how much the consumer is slowing down here into the end of the year what's your perspective? >> sure. thank you for having me on we have centers in dallas, asheville, aspen, charlotte. we really cover the highest part of the luxury tip of the sphere, as we call it. in conversations with them, the last two to three weeks they've seen traffic increase and we've seen traffic in our centers increase as well we're encouraged going ahead if you talk to them, sales between now and 2019 are up between 50 to 200% accessories they're selling a lot of we're very encouraged going into the year the headwinds we're looking at going into this summer are primarily supply chain issues for a lot of these brands, just getting supply into the stores

>> so, your view is more from a luxury standpoint and you don't see slowing down it sounds like you're seeing acceleration in traffic there, is that right? >> yeah, big acceleration. also we're seeing that, you know, across the country throughout our portfolio we're the very highest end centers you could possibly have. and i was at the international council shopping centers earlier this week in las vegas walking through those malls in vegas, i know they always seem like that, but all the luxury out there was jam-packed as well >> ray, we've had a lot of discussion in retail about shrink i know might not be as big an issue on the luxury side, but are there interesting ideas circulating about how to fix this structurally across retail? >> well, you talking about -- define what you mean by shrink, exactly. >> any exit of inventory of

inventory -- >> theft shoplifting is what your talking about? >> in a sense. >> well, it's been around since the beginning of time. our centers, we have a heavy security presence that people can see on the streets most of the stores have security in the store and we pretty much all our retails and jurisdictions prosecute. we haven't had an issue at all what's been interesting, we spent our security teams a lot of time on is credit card theft and people trying to pass false credit cards into the stores that's something our security team has had to spend a lot of time on, getting calls from the stores saying someone is trying to pass a bad card but as far as theft and people walking out with things, again, we have a big, big presence. our store sizes are not that large so it's not like a large format store where someone can walk out there are a lot of eyes on customers in our centers.

>> are you expanding in in environment with the cost of capital? >> absolutely. we made this week a very large offer on a luxury center in another market. but we are actively, actively trying to buy. we think the luxury market is something that's going to grow and it's an yash that's kind of a unique perspective because it's primarily outside of the malls and we're open market, you know -- open area type the brands are expanding they like what used to be considered secondary markets, let's say a nashville, charlotte, areas like that those are areas they wouldn't have considered in the past but today that's where all of the expansion is coming into the market as you know, i have a large real estate -- i mean, a restaurant portfolio. i'll speak to that this real quick as well. we've seen -- we've got a very extensive portfolio and thousands of employees in that business we're seeing sales there kind of

flat customer traffic across the portfolio has been flat. our sales are up 4% or 5% but that's primarily because menu prices have gone up. between now and 2019, restaurant sales are up around 20%. and we've been encouraged there, but the supply chain issues you hear in other places, we're seeing in the restaurant business as well people wouldn't think chips would have anything to do, other than eating them in a restaurant, but things like refrig refrigerators, margarita machines, we're having a difficult time getting them because they're sourced through china. if you want your consumer margarita -- >> you don't have margaritas >> we do, we just have to make sure machines are in working order. it's very interesting. we're seeing commodity prices in the restaurant business pretty flat going into the fall beef prices, that's something to keep your eyes on, the herds, we're very thinned out in the last couple of years there could be a pretty good shoot up that's what we're hearing from

our suppliers, beef is going to be affected in the fall. other commodity prices we're dealing with are -- they're not going down but they're not going up >> ray, it's a good snapshot thanks for joining us with all that color really appreciate it >> thanks for having me on. >> ray washburne. coming up at the top of the hour, cleave fed president mester with steve liesman.

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good friday morning. i'm sara eisen with carl quintanilla live on the floor of the new york stock exchange. a cnbc exclusive with cleveland fed president loretta mester is she ready to call an end to the fight against inflation or does the fed have work to do alli mccartney is with us. saying hope for the best, position for the worst, which might include selling tech. cummins joining the spinoff trend. its tech business going public at the nyc we'll speak with the ceo after successful pricing. >> we've been here before.