good tuesday morning i'm carl quintanilla with sara ei eisen. setting the agenda, bharat ramamurti with a debt limit reached in agreement, will the house and senate pass it john chambers is with us he led the downgrade of u.s. debt back in 2011. could we see another downgrade

ahead? later on, citi's chief economist in the u.s., andrew hollenhorsh, at least one more rate hike this year. taking a look at stocks, the tech rally continues to power this market. the strength of the nasdaq, up 0.6% nvidia at the $1 trillion cap market, up sharply this morning. s&p 500 up a little more than 0.10%. dow down 120 carl, somewhat of a relief, i guess, at least a relief rally in the bond market for the treasury deal, although in the equity market is wasn't scared of the deal happening. everyone always said it would be an 11-hour deal, does does it hurt the economy, and jpmorgan and morgan stanley saying, not so much, at least when it comes to the impact of spending because we're going to keep the spending flat over the 2023 levels. >> your point in the last hour, it was hard to get a relief rally when there was no discomfort going into the

situation over the weekend that said, oil below $70 it has not been able to hold above that vix closer to 17 than 18 that consumer confidence number didn't instill any notion that the consumer's just raring to go here. >> no. and weave got that from the retail earnings as well, coming off a week where it was mixed signals on the consumer. lots riding on the next two reports. jobs on friday, and there's another almost 200,000 jobs expected that wage number will be key for a fed fighting inflation and then an inflation number all before the june meeting where there's increasing expectation that the fed is going to go in june >> and if not in june, then july is definitely in play, they say. >> that's the skip, not the pause sane air yoe the market taking it well, if you look at least, and mike santoli would say this, at the major averages, driven by tech. the president and the speaker with that tentative deal over the weekend but the drama far from over.

kayla with the latest. >> reporter: good morning. president biden and speaker mccarthy in full-on sell mode to try to shore up the 218 votes needed to pass what's called the fiscal responsibility act in the house. they each briefed their party over the weekend the house rules committee is set to meet later today around 3:00 p.m. to advance the bill, though two republicans have said they're against it they can afford to lose no more than two, leading to questions about how mccarthy would respond if that did happen the house would then be expected to vote after that the senate would begin its proceedings after it passes the house. but some members in the senate have vowed to slow walk the deal we will see if that drags out into the weekend asked about the chorus of criticism, president biden said any skeptics should talk to him directly and he said he's optimistic about the deal's prospects. >> i feel very good about it i've spoken with a number of the members, i've spoke to

mcconnell, i spoke to a whole bunch of people and feels good. >> reporter: mitch mcconnell, the top senate republican has vowed to get his colleagues to support anything that can pass the house. house republican leadership has pledged around 150 votes with democrats expected to provide around 70 votes. but members today, as they study the bill, could begin shifting their views. we've already seen some on twitter weighing in against the deal we'll see if more come and whether that tips the scales carl and sara? >> i've been watching the twitter nos on some of the lawmakers. anyone surprising? anyone significant from a leadership perspective against it >> reporter: one of the most surprising nos i've seen is nancy mace, a moderate from south carolina she said that the bill essentially sells out the u.s. economy and future generations by keeping spending levels high and that she's a no. she is someone who would have expected to be a quiet yes many of the yess are not

parading out and proud of their votes because it is a compromise, because it is something that, you know, was designed to make both parties happy and, perhaps, make the more extreme wings of each party angry. certainly, there have been some that have been surprising. and i think as we see congress back in session today and reporters on the hill with microphones in their faces, we could see more of that although, you know, there is still a very, very active campaign to get those yes votes and get them in line and get enough of them to cross the finish line. >> kayla, going to be a busy week, even though it's a shortened one. even if a bill is signed by the 11th hour, that doesn't take a credit downgrade off the table necessarily. in 2011, as you may know by now, s&p issued theirs after a deal had already been reached joining us this morning, one of the key figures behind that downgrade, john chambers is with us at post 9 great to have you here. >> thanks, carl. >> that's been said a lot

lately but i think your take is if this does get passed, maybe we cannot talk about downgrades? >> irs if of all, i would say the fact we have this debate and we're still one week out and we haven't passed a bill yet, and if we don't pass a bill, with he might default, validates standard & poor's decision to downgrade. it's not consistent to have a aaa rating and a prospect? a week that's going to run out of cash. on that front, i think standard & poor's having a aa rating -- >> you feel vindicated by that >> yes i agree. it's very welcome we have a bill but, of course, if we don't pass this bill you're going to have a default, you'll have mass turmoil in the markets, you're going to have -- even if you have sequestration of ordinary payments, it's going to lead to a recession. that's a very bad outcome. in terms of downgrades, you've got standard & poor's at aa plus, moody's with aaa with a

stable outlook they are indicating the rating is not likely to go down fitch last week put it on their scale, credit watch negative and there's the possibility they might cut the rating, like we did in 2011. >> even with a deal signed >> even with a deal signed >> that would be because of the structure we currently have regarding budget and debt ceilings >> i think their analysis was similar to ours back then. you have two major problems, one is the fractionness of the environment, and a failed coup d'etat would be an indication of that and the second is the debt trajectory even with this deal, if it gets passed, the debt burden, the amount of government debt as a share of economic output has continued to rise. and although that in itself is not a problem now, you need a medium-term fiscal correction because otherwise you're going to use up your am mimunition wh

you do enter a recession when you have a major problem to face, a war or something like that, and you want some dry powder ready for eventualitieve. >> i'll just play the other side, john, as i've done over the years with you on this that is, both the politics, which agree, it's not deal, bu ultimately we end up reaching an 11th-hour deal and avert default. and then the long-term debt trajectory, neither of that changes the creditworthiness of the u.s., does it? >> your capacity to pay debt is how much debt you have outstanding. the more debt you have outstanding, the more difficulty you might have rolling it over the more difficulty you might have in servicing it that's what the rating speaks to and it's not the only factor that goes into a rating but it's an important factor. >> the market hasn't shown evidence of any trouble servicing the debt. >> if you look at credit default swaps, if you look at where the

june bill is trading versus the july bill, there's a fair amount of dislocation in the market credit default swaps for the u.s. trade worse and, you know, than a dozen other nations >> that should come down that should narrow now after the deal and if it gets passed >> it will narrow but it won't be eliminated. i think the united states will permanently face a few basis points higher, interest costs on its debt for a risk premium. when you have $31 trillion, a few basis points is a lot of money. >> where do you think the debt needs to go on a dollar basis to start talking about more stabilization in ratings over the long term? >> well, ratings or no ratings, what you want to have is a stable rate-to-debt gdp, to get that -- depending on other factor, but generally you need to have your budget in balance before interest payments you're looking at a deficit of 2% or 3% of gdp as opposed to 6%

or 7% of gdp we have now. >> in your view, would that require us to address spending outside of nondefense discretionary? >> it's going to require not only addressing spending, but you're going to have to raise taxes. as far as i can see, the only way you're going to get there is taxes that would at least cover half of the difference. >> and that is tax rates, not necessarily addressing the tax gap through additional irs agents or something else >> in my experience, enforcing greater tax compliance can get you a few basis points of gdp, of extra revenue, but it's not going to be able to get you all the way there. >> john, what's it been like being the guy that downgraded the aaa u.s. rated debt? i heard you had a higher security - >> number one, it was a committee decision after the decision i got death threats and i had a body guard it was -- it was -- it wasn't very pleasant. but, you know, that's -- that

was then and now i'm retired and so i live in serenity. >> good for you. >> john, your institutional knowledge helps us out at this particular moment. thank you for sharing. >> thanks for having me on the show. still to come, the white house's response to a possible debt ceiling deal, what it means for the economy. national director of economic council is with us live from washington. forget about a pause citi says the fed is hiking two more times before the end of the year their chief u.s. economist will join us when we're back in a couple of moments with the dow down 130

and this is ready to go online. any questions? -yeah, i got one. how about the best network imaginable? let's invent that. that's what we do here. quick survey. who wants the internet to work, pretty much everywhere. and it needs to smooth, like super, super, super, super smooth. hey, should you be drinking that? -it's decaf. because we're busy women. we don't have time for lag or buffering. who doesn't want internet that helps a.i. do your homework even faster. come again. -sorry, what was that? introducing the next generation 10g network only from xfinity. the future starts now.

welcome back wall street continues to get more bullish on the market and on earnings. last week we heard from citigroup and bank of america. b of a hiking its earnings target rbc raising its year-end s&p target to 4250 from 4500 let's bring in mike santoli. a little chasing going on. >> there's no doubt there's chasing going on in the parts of the market that have been performing best. that's actual money chasing. here i think it's adjustment of sell side predictions that are really just allowing the first quarter earnings beats to run

through their models and then the economy really not softening up as most had anticipated. even with this target raise that rbc, you know, more or less getting it to where the market is trading right now the median sell side target for the s&p 500, i believe, is still below 4,200, which is where the market is hovering at the moment it shows you that we've had this reservoir of kept skepticism citi is making this case that corporate earnings could be a bit more resilient, even to an economic slowdown than they had been in times past, whether because of inflation is still in the system and they're able to keep pricing or simply because of the mix of companies contributing the most to the earnings of the overall index. >> mike, i'm thinking back to the b of a note. the title was don't be so negative on corporate america. i assume that points to the adjustments they've made in the

way of expenses in the past, say, six to eight months it makes me wonder where we'd be if, in fact, the china recovery had been as robust or at least as robust as some thought would be at the beginning of the year. >> that's a good question. there's even downscaling of how excited people are about other parts of the world, like europe. you might actually be looking at kind of a break-even year in terms of overall earnings. now, there's a lot of year left. it's a little while before we start trading on what still seemed to be potentially enthusiastic 2024 earnings it shows you this has been an unusual cycle because of the level of nominal economic activity in the system the credit markets have remained relatively accommodating there has been some anxiety running through there but big companies are not at the whims of the parts of the financing markets that have been under stress right now so far it's a muddle through type scenario and i think the market in a way reflects that. it's certainly not cheap but way

less overvalued if earnings are just flattening rather than set to fall off a cliff as many saw coming into the year >> we'll see what the 198 school says later on. mike, see you soon so, with strong sentiment on the streets, strong data on jobs and inflation, a debt ceiling deal, regional bank stress abating, is the market wrong in thinking the fed is set to pause in june. our next guest says, may be. pointing to two rate hikes joining us is andrew hollenhorst. have we checked all the boxes, do you think >> i think that's a full -- if you look at pricing for june, we have 14, 15 basis points priced in of 25-basis point hike so i think markets are coming around to this view, too. >> what about those counting on m2 collapsing and lots of -- disinflation traction, are those not factors anymore? >> so, you're seeing some of

this liquidity drain that's going to be amped up by what's going on with the debt ceiling. you'll gett issuance. in terms of the inflation numbers themselves, if you look at core pce last week, on the year-on-year basis we moved up to 4.7 there's a sense of disinflation proving sticky. >> is that why you always were at two rate hikes? you were way out of consensus when the market was expecting a pause in cuts. >> what we do is try to forecast out the data just like you're saying, look at where inflation is going to come in and then try to understand what can the fed do in that situation and this is a fed, i think it's very important, this is a fed regaining credibility after inflation overshot so, they're really trying to show that they're responding to higher inflation that's probably part of what's going to push the hike in june. >> do you not sympathize with the view they could pause now and just continue to see what the impact is going to be of 500 basis points of tightening,

which is a lot in a very short time period as we're getting towards the end of the fiscal stimulus, as we're getting toward, you know, this massive issuance of treasury a lot of still questions, regional banks, yes, it's abated but we don't really know what's happening there. >> a lot of moving parts like you're going through. >> i can make an argument on both sides. >> yeah. and that is a reason that, you know, as you get to this final stage of the rate hike cycle, you might want to be more careful and think of this as fine tuning. the issue comes back to communication. if the fed doesn't hike in june, even if they say that's a skip, we're not hiking in june but we may hike again in july, we may hike down the road, does the market interpret that has a skip or does the market just say, that's a pause, that's the end of the rate hike cycle and now we're looking for you to cut rates, bring interest rates lower and actually restimulating the economy. if you looked at house prices this morning, house prices were up that's an issue for the fed. >> it makes me wonder whether or not the chair, when he said that

tweak to guidance was, quote, meaningful, if he wishes maybe he could have that back. what do you think? >> what the fed has been trying to do in all their communications over the last month or so is just keep all options open they really want maximum optionality here like sara was talking about. you don't know how much the economy is going to slow by so you want to respond. when you look at the data, the data keeps exceeding expectations on growth and inflation. >> on the notion that excess savings are getting whittled down and there's -- eventually the consumer will end up having to face reality, some argue that might actually get pushed back because the job market is so rewarding. does that make sense >> yeah. it does make sense we've all been surprised at how powerful that floor from excess savings has been you see consumers continue to spend out of excess savings and now we've had a very strong jobs market month after month if you're adding 200,000 jobs a month, that's a slower number than where we were a few months

ago but that's putting a lot of income into the economy and driving things. >> thank you. as we've been talking about all morning, debt ceiling bill set to work its way through congress joining us live from the white house to break it down is national economic council deputy director bharat ramamurti. does anyone like this deal the republicans are complaining it doesn't go far enough with spending cuts, democrats are complaining they caved on work requirements and to other republican demands what's your take >> there's usually a compromise but i think we have a good, fair deal that reflects the divided government situation we have a deal, number one, takes the possibility of default off the table through 2025 and protects our economy from the possible recession that could have occurred if there was a default. a deal that protects social security, protects medicare,

medicaid, important priorities for the president. number three, all of those signature pieces of legislation the president passed in his first two years in office, the inflation reduction act, the c.h.i.p.s. deal, all of that is protected as well. all those important investments will continue to flow into the economy. we think is a very good deal and something we would like congress to pass well in advance of the june 5th deadline. >> does it impact the economy at all? >> overall what you have is roughly maintaining the level of spending we had in the last fiscal year. i think the macro economic impact of this deal is likely to be fairly minimal. as your last guest was highlighting, what's driving the economy is an incredibly strong job market 3% wage increase at the lower end of the income spectrum when the american consumer is strong, the american economy tends to be strong as well. >> we just had john chambers,

back in that day part of the s&p downgrade in 2011. who says in order to get an escape velocity from this crisis from the debt ceiling, you have to address taxes taxes have to go up. who's going to let that happen on their watch >> democrats successfully imposed some new taxes on very large corporations in the last two years. 15% minimum tax so no company that's making billions of dollars in profits can get away with paying zero dollars in corporate federal income tax that's just went into place last year i'm not that negative on the possibility of getting taxes into place the president's budget calls for the very wealthy and big corporations to pay their fair share. historically when democrats are in office, they're able to get those targeted taxes into place and i remain optimistic we can do it going forward as well. >> you think the compromise is being made regarding the funding of irs agents is going to significantly impact compliance for the worse? >> what the irs and treasury

department are saying that the nature of how this funding was shifted because it was shifted towards the back end of the budget window means in the short term, the irs can continue full-speed ahead on all of the improvements thanks to that funding infusion it got last year part of that is enforcing our existing tax laws, making sure people can't get away with evading their tax obligations. another big part of it is just improving the quality of service at the irs we have already seen some of the benefits in the short-term some the data irs has put out, refunds are getting out the door quicker, people calling the irs with questions are getting calls answered much faster it's to make government work well for the people who are funding it. >> one of the other risks to think about here, it's one you raised yourself in previous interviews with us, is the precedent that this sets now every time you have, let's say, a democratic president, republican house, or vice versa. the negotiation. the fact that, up, you're

holding a gun to the economy's head for trying to prevent default, what other demands can be exacted the next time around? is it going to go into abortion? is it going to go into immigration? is it going to go into contentious issues >> look, as you noted, this only happens with one particular alignment, when you have a republican house and democratic president. for whatever reason, house republicans feel like it's a reasonable thing to do to take the global economy hostage to secure whatever partisan aims they have. what's important to realize in this situation is that nobody thought that default was an acceptable outcome once everyone made that agreement, once speaker mccarthy acknowledged that fact, along with the other congressional leaders, what you really had here was a standard budget negotiation, the thing that happens annually, the thing that happened last year when the president sat down with democrats and republicans and got a bipartisan spending bill through congress at the end of the year

if you look at the terms of this agreement, it's similar to what you would have gotten under any circumstance with a divided government situation i think while that hostage taking was unnecessary, it was irresponsible, caused some economic harm, at the end of the day i'm not sure it exacted any additional concessions from our side. >> they did get the work requirements for welfare programs that's something you were against and they can claim as a victory for one. >> i think it's important to no et on that front, first, they pushed for expansion for work requirements for older workers, those between the ages of 50 and 54 what we did was pushed for and got in the deal change so that it's easy for the homeless and for veterans to access those food benefits. i think some analysis has already found the net effect of those two changes might be a slight expansion of the benefits available to people on that program. so, i don't view that as a large

shift in favor of a -- >> does the white house have an expectation as to the timing of these votes and do we think the senate may bleed into the weekend? >> that's going to be up to speaker mccarthy and schumer when is clear, based on secretary yellen's most recent information, is we can't go past june 5th whatever the exact schedule is, our hope and expectation is that this will be on the president's desk and signed into law in advance of the june 5th de deadline. >> you mentioned treasury. when this is all done, hopefully, and taken care of, if we'll go back and revisit, i guess, what some were calling a threat to treasury's credibility on the timing of these x dates is there any reason to believe they were trying to build urgency to help these talks along? >> absolutely not. i think that is -- there's no basis for that claim whatsoever. i know secretary yellen diligently was looking at tax

receipts and other information as soon as she had the information, was updating the hill on a regular basis from the beginning. she provided a range of possible dates and tried to indicate what the earliest possible date a default would be as she got more information, provided more specificity. i know both democrats and republicans acknowledged she did that in a fair way i don't think anybody would question the secretary's credibility on that front. >> finally, are you confident you have the support of the house democrats on this deal >> over the weekend we saw a large group of house democrats, the new dems, i think it's 90 members or so, come out and say they were supportive of this agreement. at the end of the day there's going to be support from the democratic and republican side and we're optimistic it will get through the house, the senate and get to the president's desk in advance of june 5th. >> thank you very much for taking the time today to talk us through it appreciate it. >> bharat ramamurti from the

white house, deputicy nec director. later this hour, international opportunities. it's not just buffett looking at japan to drive returns the nikkei is at more than a three-decade high. can that rally last and how do you buy in. and we're watching ford upgraded at jeffries goes to $16 a share. stay with us

we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to

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

s&p back in the green after briefly going red. let's get a news update with bertha coombs. >> here's what's happening at this hour. nine people were hurt on monday evening when shots were fired near a crowded beach in hollywood, florida police say someone pulled out a gun during a fight just before 7:00 last night and open fire.

the nine injuries include six adults and three children. all are in stable condition. one person is in custody, but police are looking for more suspects today nature too will send additil forces to kosovo following clashes with serb protesters tensions are hitting a boiling point as albanian mayors take office in the serbian majority northern kosovo after the serbs poi coted elections in april. the tsa says traveller totalers over the long holiday weekend surpassed pre-pandemic numbers. agents screened 9.8 million people at airports across the u.s., which is about 300,000 higher than the same holiday weekend in 2019. friday was especially busy with 2.74 million travelers, a new post-pandemic single day record.

it was crowded on the roads as well, sara everybody was getting out. >> yeah. well, memorial day weekend that's a good sign for the economy. bertha, thank you. bertha coombs. coming up, elon musk and jamie dimon are both in shanghai what that means for u.s./china relations next is. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?!

a mixed session in europe with investors in a bit of a holding pattern, perhaps wauting to see if the debt deal passes in u.s food and beverage stocks lagging behind the broader story is china with jamie dimon and elon musk in china. it's the first trip for musk to china in over three years. investors weighing whether china is open for business a lot of talk -- a lot being made about what it means for u.s./china relations, the worst in decades and the fact businesses are caught in between with leaders like this making visits not just them, we've seen starbucks, ralph lauren, and they're investing in china at tense times it makes you wonder if things get worse geopolitically, what happens to

these businesses. >> or, in turn, those executives try to replace any kind of diplomatic channel, right, and at least keep tensions from getting worse. we do know hang seng shares were flirting with bear market territory and china is worried about some of these restrictions, not just from the u.s. but japan as well they're not the growth story of asia. >> the sentiment has soured on china. the chinese yuan, the currency has weakened and the chinese love it. they set the reference point for where they want it to trade in a weaker position. part of that could be the fact that there's an expectation that still lis is coming in china there's a good piece in the journal about china sort of peak china and we've seen this from the economists as well, some structural growth problems coming into play, that it's not the economic miracle it was in the last few years they point to youth unemployment, they point to underlying structural issues like the property market and the fact there is rising debt and the demographics as well. >> there's also some weird assem

tri. you don't see high-fro file chinese executives coming to the united states and meeting with government leaders and yet here we have dimon and musk in shanghai and beijing >> you talk to some corporate leaders about it, american leaders. they say it's impossible to decouple it's clearly a really promising consumer market, and so, yeah, we'll see if they can kind of walk the fine line of diplomacy. coming up next, speaking of japan, the stock market there, as sara mentioned, three-decade high with strategists across the street making the case that that bull market may just be getting started. we'll talk about what's driving the gains and how to play it lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find

the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. (dr. aaron king) if you have diabetes, getting on dexcom is the single at&t 5g is fast, most important thing you can do. it eliminates painful finger sticks, helps lower a1c, and it's covered by medicare. before using the dexcom g7, i was really frustrated. all of that finger pricking and my a1c was still stuck. my diabetes was out of control. (female announcer) dexcom g7 sends your glucose numbers to your phone or dexcom receiver without painful finger sticks. the arrow shows the direction your glucose is heading-- up, down, or steady-- and because dexcom g7 is the most accurate cgm, you can make better decisions about food, medication, and activity in the moment. after using the dexcom g7, my a1c has never been lower. i lead line dancing three times a week,

and i'm just living a great life now. (donna) it's so easy to use. dexcom g7 has given me confidence and control, everything i need is right there on my phone. (female announcer) dexcom is the number one recommended cgm brand. call now to get started on dexcom g7. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

we have more money in terms of equity securities in japan than in any other country in the world. >> that was, of course, warren buffett on "squawk on the street" when he was in japan last month he's not the only one bullish on japanese stocks. the topix and nikkei with 0-year high bank of america seeing the topix with a bull case of 2400 goldman sachs saying they expect

the market to benefit from structural changes in that economy. where might investors look for opportunity? joining us is neuberger berman despite the tremendous run-up in japanese stocks outperforming the world, you think there's still a good opportunity here? >> hi, sara. thanks for having me yes, i do think so, because if you take a look at where japan's fundamentals are in terms of the economy, it's in a pretty solid position personal consumption is healthy, inflation is moderate. we've got an accommodative central bank and then a weak currency of course, the structural reforms you just mentioned about earlier, this is something the tokyo stock exchange launched at the end of march they basically announced to over 3,000 companies they have to get their act together in terms of capital efficiency and trying to improve roe and rie above cost

of capital this has launched a flurry of buybacks going into next year we'll see more reforms coming through. next year we'll see tax exemptions for japanese investors investing into this market i think there's quite a bit more upside to be had in this market. >> it's so funny some of the reasons you listed for why you're bullish are reasons that investors hated japan forever. low inflation. you know, they were in this deflationary spiral. they could not get out of easing and a lot of people were worried that the u.s. was following in the same direction it's interesting how the world has changed and, therefore, it's made japan more appealing. but aren't these long-term problems, ultimately, for japan? >> yes no, i'm definitely not going to sugarcoat that this is deeply structural issues deep-rooted in the market. if you take a look at the latest inflation readings are up, compared to where you are in the u.s. and europe, still very moderate a lot of people have been focusing on rising wages, which

has been good. it's a positive. if we want that sustainable growth in inflation, you need that uptick in wages on the other hand, if you take a look at the bank of japan's most recent forecast for 2025 cpi ex-fresh food they're reading 6.5, 6.1%. it still hasn't reached the trend growth line they see key to sort of move the next step ins terms of monetary policy i think we still have ways to go in the meantime, it does mean the bank of japan will remain accommodative. >> i do wonder we talked for so long about what that deflationary spiral did to the japanese consumer mindset. i wonder if you can talk about how that shifted and whether or not the opportunities there are consumer-centric or not? >> yes so, that is a very important point and that's something we look at very closely in our portfolio. this is something that, you know, warren buffett took a look

at as well pricing power is absolutely crucial in a market like this. if you have deflationary mindsets that's been well ingrained, how do you continue to raise prices without losing market share all of these factors are very important. that's why, you know, going forward i think it's going to become increasingly important to pick your stocks, make sure you're invested in companies that have good pricing power and good growth potential as well. not just in this market but overseas as well >> so, what do u.s. investors do to take advantage? do you buy multinational american companies that have good sales exposure to japan do you buy the etfs? what do you recommend? >> you should buy japanese equities for sure. no, i think the best way -- as i mentioned earlier, the gdp story in japan is actually quite solid, i think you know, personal spending has been up. but in the earlier segment you mentioned about the slowdown in

china. i think one of the things we noticed is that the growth in other parts of asia has been relatively strong so we've seen a good influx of inbound tourists coming back to japan. that's been a strong support for spending in this market. so, to get exposure to those type of plays, i think it is good to have, you know, companies that have a good exposure to domestic economy and then i think, you know, you also want to take into consideration the weakness of the currency as well >> kei, appreciate coming on, pounding the table for the japan story. thank you very much. >> you bet thank you. meantime, nvidia is hoping that $1 trillion market cap this morning. also, a quick check on tesla. first peak above the 200-day since september as it's revisited 200. up 21% this month.

want to stop lower body pain before it starts? there's a dr. scholl's for that. new dr. scholl's prevent pain insoles are the only ones clinically proven to prevent pain from muscle-induced joint stiffness and strain. so you can stay pain free.

nvidia's new entry into the trillion dollar entry club the latest in the ai boom. the focus of today's "tech check" with deirdre bosa >> we may need a new name or moniker for broadening market gains. faang no longer captures others like nvidia that power the new ai revolution. bernstein suggests the

magnificent seven, notes that if there was ever a year to the group are up between 35 and 180% nvidia up nearly 50. also nobody wants to look like cathie wood who bailed out of nvidia too early broadcom calls bofa the most underappreciated if you could call a stock up 55% year to date, 27% since that call, they may be expecting another nvidia like a blow-out, a very high bar to achieve the first phase of the tech cycle is taking shape with the semis. could broadcom be another?

how generative ai is monetized so the beneficiaries in the next stage are not as clear yesterday. that may happen faster and develop here in the mobile internet cycle data remains king and the secret sauce and the companies that have it may be considered the next stage winners that is big tech but there could be other ones, too, good at collecting all of that, the snowflakes which we've talked about. the buyers of all ofthe ai chips from nvidia, do we know who they are the next wave early on in the cycle and spending money on it >> good point and they were the beneficiaries. it's the infrastructure plays, the hyper scalers, the microsoft, aws they have a lot of data and google those are krpd the next ones

are they good at crunching that data a salesforce acquired tableau so they're well positioned but this takes longer as we showed you for the market to recognize. you can make the case not so because you've seen a google, microsoft, amazon runup there could be other players and the software side of it, the last stage where chatgpt and bard sits there will be many more of those. a lot probably companies we don't even know of yet >> we know the ai market is doubling quarter on quarter so everybody is going to be able to say they're a part of that but they may meanwhile be exposed to traditional refresh which is going to get crowded out budgets aren't changing all that much >> it's a good point because there was a note last week that said you can't just slap an ai chatbot on to everything and say you're part of this revolution the spend to get there as well,

you need to upgrade your systems and that's what the cloud companies are having to do costs will go up for the players that serve the large language model. costs increasing on one side >> nvidia surged last week thank you, deirdre wall street buzzing about a new deal for nba tv rights ahead a quick look at apple, shares up 36% this year. not in nvidia but outperforming e rk f se. ♪ ♪ every day, businesses everywhere are asking. is it possible? with comcast business...it is. is it possible to use predictive monitoring to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic

across all of our locations? yeah! absolutely. with global secure networking from comcast business. it's not just possible. it's happening.

wall street's buzzing about the nba this morning as some new bidders entered the arena for future media rights. julia boorstin joins us. who is in the mix? >> you've been glued to the playoffs and as the nba finals start this week, dwonegotiations are heating up and the stakes are really high as the other major sports rights are tied up for years.

espn parent disney and tnt owner warner bros. discovery are in exclusive negotiations to renew their contracts that expire in 2025 they're paying about $2.7 billion a year both disney's bob iger and david zaslav are showing their interest in sports rights and likely to make a move if they're not tied up already amazon is already partnered with the nba streaming some games in brazil while apple brought up the streaming rights to not just baseball but also soccer now with growing concern about cord cutting, there is increasing attention to the value of live sports to drive viewers. ratings for the playoffs are at the highest they've been in years. sources tell me the league would like to split its rights between at least two companies, and

while streaming is expected to be front and center in negotiations, still reported want broadcast stations to reach the biggest audience possible. sara carl >> the playoff ratings have been good, haven't they, julia? >> the playoff ratings have been good we're trying to aggregate them but the highest in 11 years, up 9% from last year. that's for some of the channels. we're trying to get all the final numbers. an increase in the playoffs and notable the ratings were flat last year regular season though there has been court cutting since them >> "little mermaid" truist did trim back to 105 today >> truist did trim their disney target they have a buy rating on the stock. the thing with the family films, it's not like a superhero movie that has the teenage 20-something audience. these films are designed to hold up over the long run

we'll see how it does next weekend. >> i was too busy with "succession. julia, thank you it was amazing they stuck the landing 10 out of 10 i was buried >> that's all anyone can talk about. >> except for you. >> meantime we'll get hp tonight, maybe more on ai and the pc refresh let's get to the judge and "the half." carl, thank you very much. welcome to "the halftime report." i'm scott wapner, front and center this hour, the heavily hyped ai trade, whether there are signs of bubble trouble as nvidia tops a trillion dollars in market cap. joining me for the hour kari firestone, josh brown, joe terranova, steve weiss let's check the markets here i do have a mixed day for stocks the dow industrials down by 120. the s&p is good for 6 1/2. action in the nasdaq, two-thirds of a percent nvidia the first to get to the billio