it is 5:00 a.m. here at cnbc global headquarters. here is the "five@5. bears breaking loose new numbers on how split the market is becoming. a tidifferent story with te and why the sector rally shows no signs of slowing down. the tension shifting from nvidia to cupertino. apple is expected to unveil the first product since the apple watch. energy markets up ending this time saudi arabia putting the squeeze on oil prices.

later on in the show, after a week of goodwill, tensions rising again with the u.s. and china. it is monday, june 5th, 2023 you are watching "worldwide exchange" here on cnbc good morning welcome to "worldwide exchange." i'm frank holland. let's kick off the hour with the check on u.s. stock futures after a very strong showing friday for wall street with the dow posting the best day since january. the nasdaq with the highest close since april of 2022 22022 the s&p is flat. the dow is seeing a reversal up a few points this morning. we are watching energy a close eye on oil after the largest oil exporter, saudi arabia, is taking it upon itself

to tighten the global energy markets. announcing a 1 million barrel per day production cut as part of the broader opec deal oil this morning with a rise wti is up 2.5% brent crude is about the same. we are seeing a rise in natural gas. up over 2.5% we will have more on the story throughout the hour. we are watching shares of apple as it gets set for the developer conference set to begin at 1:00 p.m. eastern time. you see the run-up for apple this year. up 40% for the year. up in the pre-market up .50% tim cook and company set to reveal a mixed reality headset in what will be the most important hardware device since the ipad launched 13 years ago and the apparele watch in 2015 time to check the early trade in europe withjoumanna

bercetche. she standing by with both. good morning >> good morning, frank we saw a positive hand over from well street on friday. all of the markets ending the session in the green you see the shanghai composite is the under performer up .70%. pmi coming in stronger than expectation. the fifth month of expansion in a row. something to watch out there hang seng and hong kong up .80%. nikkei is strong with the 33-year high up 2.2% we are lifted by the chipmakers and the fast clothing retailer as well. and we are witnessing on the back of the opec plus meeting here with the oil market and switching to the ftse 100, that is up .60%.

dax is in the green up 6 points. we had disappointing import numbers. cac 40 in france is lagging down 8 basis points we see an under performance in luxury names frank. >> joumanna, i know we are watching the financial sector. ubs out with an update on the credit suisse takeover >> yes it will complete the takeover as soon as june 12th. one ubs share for every 12 shares they hold ubs is delaying the release of the second quarter results they are supposed to come out je july 25th. they may wait until august to coincide with the credit suisse

completion. frank. >> joumanna, thank you turning back to wall street. 1.5% jump in the s&p on friday puts it on the verge of exiting the longest bear market run since 1948 that's according to dow jones industrial average market data the position within the market showing how fragile this year's the rally may be data from the cftc shows hedge hundred funds and other investors bet big on the s&p will fall it is the most bearish position for hedge funds and other investors since back in 2007 while the s&p is up 11.5% this year, it would be negative without the boost by big tech companies leaving the markets vulnerable to a pull back with shares of one or two companies start to decline for more on this, let's bring in lindsey bell lindsey, great to see you.

>> great to be here. >> let's talk about it right now. the broader markets. what is your view on the broader markets? are you concerned we may see an a.i. tech bubble that could burst and break the s&p? a quarter of the main index is big tech >> this has been talked about ad nauseam the last several weeks and months i know you mentioned bearish sentiment from the pros of the what we saw is the greatest inflow into tech equities the last week all year long. this is concerning it comes at a point where tech valuations look stretched on both the p.e. basis and ppp.e.g where i think it was positive, we saw an expansion into other

parts of the market to start to perform better industrials and materials turned positive on a year to date basis on friday after that move in the market overall. >> lindsey, you were questioning smart money with the other big investors and you say they missed part of the rally the point they were looking at here is in 2007 before the great recession, they had this view and now we are facing another recession. is there anything in the moves they're making >> sure. there is wisdom to look at the past history is never any guarantee i think that's one thing to remember another thing, on the flip side, frank, what i would say is ryan detrick did work over the weekend. we are almost 20% off the bottom of the bear market here. his historical data shows once the market rebounds 20% off the

low, it has always continued to end positively that same year. there's a flip side to everything, i think, frank everyone picks their own position. >> fair point. the fed and its decision coming up in the june meeting the next inflection point for the market the cme fed watch tool 83% chance of a pause. where do you stand on the pause? >> i think that has flip flopped significantly the last couple weeks. you see that which is normal entering a tightening cycle or coming to the end of it. that is normal the think the fed has room to potentially move higher. i don't think they will do it at the june meeting when i look at the jobs data last week with wage inflation and inflation in general core or cpi. core pce or core services inflation, which the fed has been looking at more and more

for direction of where inflation can go from here, they remain elevated they came down from high levels, but so far away from the 2% target they remained sticky i think the fed may have more work to do >> lindsey bell, thank you welcome back i know you took some time off and starting new ventures. great to have you back hail to pitt >> hail to pitt. a lot to come on "worldwide exchange," and the one word investors have to know today first, we are live in vienna with the opec agreement. saudi arabia said it will cut 1 million barrels a day starting next month. and the goodwill tour and this week is starting off on a very different foot. we are live in beijing. later on, more on what is said to be apple's biggest

hardware unveil since the apple watch. a very busy hour when "worldwide exchange" returns. stay with us of the -- stay with us absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with global secure networking from comcast business. it's not just possible. it's happening.

welcome back to "worldwide exchange." we are watching the global energy markets wti and brent popping. both up over 2%. this after the world's largest oil exporter saudi arabia said it will slash production by 1 million barrels per day starting next month that is on top of the deal from

opec plus to limit supply. we have dan murphy from outside opec headquarters in vienna. dan, good morning. take us through the agreement. >> reporter: frank, good morning. oil prices are spiking here after oil ministers in vienna agreed to extend production curbs to 2024. the surprise for is from the saudi oil energy minister who shocked the market with the additional 1 million barrel cut to production starting in july with the option to extend the cut over the next few months he called it the saudi lollipop. the sweetener the traders were looking for. in the interview with cnbc, he told me opec plus is willing to do, quote, whatever it takes channelling mario draghi here to ensure the markets for the second half of the year.

>> opec plus is the most effective international market which is committed to the serious commodity and we are doing it with a great deal of respon responsibility we cannot enforce that i don't know what else we can do >> reporter: the production cut comes against the back drop of what has been challenging for the oil market we are tracking weaker demand in china. there are also broader concerns with the macro economy and the united states and robust russian supply into asian markets like china and india. the key question now is will opec have to deepen cuts further if it doesn't see the market stabilization and it doesn't see prices move higher from here

i have been speaking to analysts here in vienna the view is we will see markets tighten in the second half one analyst says we could see oil back at triple digits by year end fend. frank. >> thank you, dan. time to get the latest from viktor katona. >> thank you >> give us a sense how should we view the production cut from saudi arabia and the move is the biggest in years. how do you see this impacting prices beyond today? >> i think saudi arabia will do everything that it requires to keep prices close to the $80 per barrel that is the fiscal break even level. it is important to keep in mind in the period which people would

think going into the summer peak driving demand and buying across the universe is still very much robust opec would be afraid to cut production or saudi arabia would be afraid to do unilateral one-off massive production cut, but they did of it goes to show that demand is weakening with a tremendous amount of chinese data coming in >> viktor, you are hitting the point. the price is point do you have a price point? dan murphy says they see it coming back up to $100 a barrel. and the saudi cut will create a deficit of 3 million barrels a day in july. will it reach $100 a barrel in the next few months or more end of the year? >> i think we will not have triple digit prices this year. i think the overall assessment that july will be tight.

we still don't feel and have it reflected in the prices. july will be tight and i think the new normal will be between $80$90 that is where they want it to be it is good for the budget and it is not high effectively, if it goes above $100 a barrel, why do we consume it right now, it is nuance. no one is afraid of oil at $85 over $125. the end of the year will be weaker than the current period the current period is where they should be cutting if they want a price response from the supply and demand balance. >> i like that nuance. the opec meetings pull back the curtain on the different companies and long-term

strategy give us a sense. what have we learned going forward with saudi arabia and russia and the prices and production cuts? >> i think they are thinking long term. they are not thinking short term they are thinking about the stable market which is a predictable price to invest and returns they will see will be reflecting that. they don't necessarily think about the smaller private producers. i would say you could see that in the case of the west african countries where the quotas were redrawn to reflect production levels which are current ones. the real ones which are in reality. this is not necessarily good for the private producer who wants to invest in nigeria or angola they will have a limitation of how much they can produce. i wouldn't say that the opec heavyweights care that much about the private producers.

they care about their own feeling in the market. they care about the stability and they care about predict ability. those two things go across the range. in july of 2023 or december of 2025 or ten years later. >> viktor, we have to leave it there. oil could get up to $90 a barrel the year's high is $87 a barrel great to see you thank you very much. ahead here on "worldwide exchange," a new note from morgan stanley and what is now the most bearish stocks to date. the wall of worry and the target for the s&p. we have that and more when "worldwide exchange" returns stay with us ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪

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drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. welcome back to "worldwide exchange." time for a check on the global hot spots and huge implications for the economy and investments. we start in ukraine where president volodymyr zelenskyy says his forces are ready for counter offensive against russia volodymyr zelenskyy says ukraine is making the plans despite russia having superior air force and high risk of casualties. this comes after secretary of state blinken said the cease-fire could come if it completed a withdrawal from the russian military to turkey where erdogan took the

oath of office on saturday and one role that could stretch his term 25 years. it is feared that recep tayyip erdogan could push the nato country further to the right and strain western ties with the nation that is paramount voice in the region. now to china, u.s. defense secretary lloyd austin and the defense minister of china trading barbs over the war ships in the taiwan strait eunice yoon is here with more. eunice, good morning >> reporter: frank, the foreign ministry reiterated the beijing position that the u.s. is one, quote provoking risk and defended its war ship encounter with the uss destroyer called on the u.s. to correct its mistake and wrongful action for the joint sailing with canada near taiwan this comes after the u.s. navy

released a video which showed a chinese vessel that chris criss-crossed in front of the u.s. destroyer it was 150 yards in front of the destroyer. u.s. and canada were conducting a routine transit in the strait. the chinese military, for its part, is saying it handled the situation and is really using this in the state press as a way to try to shore up the credibility of the pla showing it shows the pla capability and courage and able to move the destroyer and alter its course this encounter comes days after another encounter between the u.s. and china in the sky where one of the planes, u.s. says chinese military plane, buzzed one of its own jets.

it also comes, frank, the security conference in singapore where secretary austin was there and not able to speak with the chinese defense minister who rejected his approach to try to have those conversations they were able to shake hands, but the defense secretary said this really wasn't enough in terms of encouraging more communication with the two sides. >> eunice, we talked about corporate america and jamie dimon and elon musk in china if this was a goodwill tour by america, how do you describe what we are seeing now >> reporter: it looks as though t what we are seeing is the clash with the business initiatives and political. we see the china and u.s. are

seeing national security is important to the future of both countries and at the same time, the economics, in some respects, is obviously very important. some say gets in the way in the chinese state media today, they brought up that one possible way to avert a worst-case scenario is to encourage some of the ties with what they say are peace loving parties including elon musk and jamie dimon. they are looking for the u.s. business elite to continue to sow fences as we understand it, the u.s. is reaching out to china. trying to encourage these communications at different levels u.s. team is in china this week to try to get those conversations going. >> eunice yoon live in beijing great to see you thank you.

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it is 5:30 a.m. in the new york city area we are just getting start ed on "worldwide exchange. the rally following the jobs report is not carrying over to the trading week investors turning to the fed and the call for bearish stocks. big tell run rolling on. nasdaq up 25% this year. they out weather valuations for the tors preparing to roll out new rules in the wake of the turmoil that rocked the financial sector it is monday, june 5th you are watching "worldwide

exchange" here on cnbc welcome back to "worldwide exchange." thank you for waking up with us. let's check out the stock futures on the back of the friday post-jobs report rally. a mixed picture. dow jones industrial average up fractionally the s&p and nasdaq is down back to the bond market. we watch the bond market at this time yields with the3.74. the 2-year treasury is elevated. we saw investors running for safety dealing with the debt limit negotiations still seeing elevated yields on the short end of the curve we want to look at the energy sector and oil especially on the saudi arabia daily cut the u.s. benchmark is $73 a

barrel off the highs from earlier this morning. same story for brent at $77. time for the check of the top stories with silvana henao >> frank, good morning u.s. regulators are claiming new capital requirements for the biggest banks. according to the wall street journal, the move would involve forcing larger financial firms to boost overall capital requirements by 20%. the journal adds the precise amount will depend on the business activities with the biggest increase expected for mega banks the paper says that regulators could reveal the new rules as early as this month. the wall street journal reporting cava is set to launch an ipo that may begin as early as

tomorrow the paper adds that cava which filed for ipo last month and plans to sell shares between $17 and $19 each at the high end, that would value the company at $2.2 billion. the latest animated "spider-man" movie swinging to the top at the box office. pulling in more than $120 million in the debut now that marks the second biggest opening weekend of the year and the third biggest opening weekend for any "spider-man" film. frank. >> silvana, you are excited. >> i want to watch it. >> last time we talked, it was about "barbie. >> it is all about the "barbie" movie, but "spider-man" too. thank you, silvana now to tech. nasdaq trading at the highest

level since april of 2022. it is involved in the longest win streak since january of 2020 investors pile into meta and nvidia and alphabet and others the rally is confidence it is a key revenue drivers and several names hitting levels means valuations are too high or is there more room to run let's ask rocco strauss and nancy tengler. good to have you here. rocco, i'll start with you nvidia is a great example trading at 51 times forward earnings is that too expensive of what the stock offers with a.i. chips? >> let me start broader. it looks like they are coming to the peak of the hype cycle hype cycles are a lot shorter

than the implementation cycles i think what is interesting is that when you look at valuations, it is not unprecedented. we have seen when you go back to the 1999 or 2000, you see cisco triple in value, but this is just a question of if the concentration you have and stocks you have is healthy especially with the investors sticking to valuations >> rocco, you are talking about the dot-com bubble and tech bubble nancy, are valuations getting too high nvidia is a stock running up on the hype cycle 51times forward earning compared to nasdaq? >> it is too expensive for us, frank. i was investing in the tech

bubble period. this is not that that was cheap earnings and multiples at 80 to 100 we are in trough value that doesn't mean they will go straight up from here. they will recalibrate of we will use that if the recalculation is material to step in and top off holdings we have been trimming because we are overweight technology across the strategy it is important to note short interest is elevated and that leaves room for further short covering you will see some melt up in the rest of the year in the near term, we are sitting tight. >> one stock that has had a big run up is apple. not really tied to the a.i. thing, but they have a huge

announcement later today you know, the mixed reality a.r hea headset. it is hardware >> i guess when you want to look at the characteristics of the likely a.i. winners, you have to look at three things one is computer power and ability to spend in cap x. you have to have first party data and environment like i0s. you have the ability to build applications you need a lot of engineering talent when you look at apple, it is less clear what they can do in the short term, but they can play the privacy card. their own device data to train local agents without needing to up load data to the cloud and run large language models.

that is the advantage. >> large language model is the buzz word and everyone figuring out thohow to work it in. >> nancy, apple will reveal the mixed reality headset. we are looking at the wall of big releases of apparle over th years. is this as meaningful of the ipad or apple watch? what does it mean for the a.i. race >> putting a computer on one's face is something that people will sort of shy away from i think from a technical standpoint, this is a critical moment for apple it has been eight years since they launched a new product. one strength, frank, they sit back and not necessarily first to market, but sit back and build the process around the

technology with the software acquisitions and hardware have led to this development of the mixed reality/reality pro. i do think this is critical from that sfitandpoint. it remains to be seen what developers decide to do with the hardware that will drive, i think, acceptance and adaptation to this particularpiece of equipment. >> meta has not had a lot of success with the a.r./v.r. headset. rocco? >> come back to apple. when you think back to the apple watch. many projecting 20 million sales or 30 million sales in the first few months it was a few million or so it was less about how many consumers will adopt it of it is more what developer

environment can you build around it and give it a few years that is true for meta as well with respect to a.i. applications before you see revenues come in. you have a lot of lumpy up-front costs for a.i. and the real revenue generation sits probably five years out. >> we are getting in the weeds one thing for sure is apple is up .50%. meta is down .50%. interesting. rocco and nancy, thank you i appreciate it. coming up here on "worldwide exchange," developing story. labor strikes across the west coast paralyze the flow of goods. the latest on what the white house is doing to get shipments moving again the latest when "worldwide exchange" returns. stay with us of the -- stay with us

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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. welcome back to "worldwide exchange." time for the morning call sheet where we check the upgrades and downgrades perhaps the stock story of the day. apple. price target hikes from bank of america and evercora head of the developer confidence summit. evercore is from $190 to $210 a share. apple is up .50% morning deutsche bank is moving from hold to buy. with rio shares up 20% from this

year's high. it is underpinned by a cash value business shares are down this morning morgan stanley with a double upgrade to equitrans looking at shares this morning up more than 4.5%. turning now to the developing story on the west coast. workers at several facilities not showing up for work the last few days with contract talks with employers now at a standstill lori ann larocco has more. >> reporter: good morning, frank. the largest terminal at the port of long beach, will be closed for the morning shift and the afternoon shift today.

this comes on the heels of insufficient labor on friday and weekend impacting terminals at the ports of los angeles, long beach, oakland, seattle and the largest auto port in the west coast. the portland of oakland is shutdown as of friday with no labor coming in. the fight for fair wages is the center of the showdown the union is asking for members to get paid for work and moving the trade that generated the ocean carriers profits noting during the pandemic, long shoremen died during the pandemic now this needs two or three truckers to clear containers officials tell me it can take up to two weeks to clear out the congestion this extra labor and fees are costing shippers

the items in the boxes are back to school and holiday products >> lori ann, what do we hear from the white house >> reporter: cnbc and nbc news reached out. the white house and department of transportation and department of labor are monitoring the situation closely. the white house is encouraging all parties involved to continue to negotiate in did fa-- in good faith. we are hours away to see if this is a repeat of friday. >> thank you, lori ann. coming up on "worldwide exchange," the one word every investor need to know today and a new warning for markets. the key factor one major bank says could slam the brakes on the rally. june is pride month on cnbc. we are celebrating and sharing the stories of corporate leaders with you here is equinox leader

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welcome back to "worldwide exchange." time for the wex wrap-up saudi arabia, the largest oil exporter, will cut oil production by 1 million barrels per day as part of the deal with opec and al los lies and investors with the bearish bets on the s&p are hitting the

highest level since 2007 according to the bespoke investment group china defense minister trading barbs with lloyd austin over the close call by three war ships in the taiwan strait calling the interaction a clear prove indication and ubs will take over kricredit suisse by june 12th. and open a.i. onc,eo is speaking out over israel and jordan and uae and india. and taylor swift in argentina is making the ticket sales a bargb bar

bargain. it is just going for $150 u.s. back to the market and a note from morgan stanley suggesting a drop for the s&p which could put a stop to the rally. the liquidity back drop is likely putting downward pressure on the valuations over the next three months, but we see eps disappointment ahead morgan stanley sees s&p shares coming in at $185 compared with the median of $206 it sees the s&p closing out the year at 3,900 compared to friday's close of 4,82 -- 4,282. joining me is malcolm ethridge great to see you >> good morning, frank. >> give us your view, malcolm.

are you worried the run-up may be fading? >> i do think it is reasonable to think it is fading. the market is in a melt-up moment where it is defying gravity and showing it wants to go up regardless of technicals i think there are very good reasons to be bearish here you want to hedge your bets, pardon the pun i think the validity to that thinking >> walk me through it. how big is the fed part of your thinking we are showing the cme futures with the fed's decision coming up on the 13th and 14th of june june do you think we will see a pause? is that what the market needs to continue the run >> i don't think a pause is what the market needs a pause is what the market is

expecting here i don't think that helps us so much as having a very clear indication of where the terminal rate is in jay powell's mind, if he knows at this point it is where the hiking cycle the stops that we actually find out how bad it will get and we can make longer term plans from there. we are all finding out together. whether a skip or pause, that leaves the door open for additional hikes in the future at the same time, we are having the liquidity issue due to the debt ceiling it makes a very choppy market where there is not a lot of long-term prediction to make as an investor. the pause sounds good sh short term >> let's talk long term. i want to come full circle what is your take on a.i.? you talk about the hype cycle about a.i. i see your pick. microsoft. a lot of people see that as an a.i. stock why are you so bullish on

microsoft now? you were questioning the strength of the rally on the back of a.i. >> longer term, i see microsoft as the one true winner or obvious winner in the a.i. hype cycle. quote/unquote. it is not fair to say bubble with regards to a.i. the companies are not the -- it is not like the '90s with a bunch of companies becoming public that we never heard of before the companies leading the charge are amazon and google and microsoft and nvidia these are companies that can afford the multi-billion dollar capital outlay to develop the language models it takes to create the tech that each of the companies that will become public in the future will build on for now, the incumbents large tech names leading the charge,

make me feel better. >> malcolm, you know we have to go i'm surprised you feel this way about the money they will spend when the street really hates it when meta continues to spend on the metaverse of malcolm, great to see you. thank you. this will do it for us on "worldwide exchange. anmi unebox" is congp xt thk you for watching at if yo ing a big bank's data... no big deal? go on... well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across clouds, 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 solution ibm and a global bank created. what will you create? ibm. let's create. is it possible to protect my business from cyber threats? it is, with wh comcast business.? helping every connected device stay protected.

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good morning oil markets surprise saudi arabia will voluntarily cut output we'll show you how crude prices are reacting. and labor turmoil. the largest terminal at long beach won't open today

details ahead. big weekend for "spider-man" at the box office. how much the film brought it it is monday, june 5th, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. the three of us together it's been a while. >> it has. >> let's look at the u.s. equities on this monday morning. you see the dow futures are higher once again. indicated up 43 points s&p futures relatively flat. down 1.5 nasdaq indicated off 38. this comes after friday's big